<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 17, 1998.
REGISTRATION NO. 333-48563
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
----------------------
FINLAY FINE JEWELRY CORPORATION
(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 10175
(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) 808-2060
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
----------------------
Copies to:
<TABLE>
<S> <C>
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
</TABLE>
----------------------
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 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, 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 13. 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.............................................. $ 44,250
NASD filing fee................................................... 15,500
Accounting fees and expenses...................................... 50,000(1)
Legal fees and expenses........................................... 250,000(1)
Printing and engraving expenses................................... 150,000(1)
Miscellaneous fees and expenses................................... 75,000(1)
--------
Total...................................................... $525,000(1)
-------
-------
</TABLE>
- ------------------
(1) Estimated.
ITEM 14. 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 similar
to the provisions in the Restated Certificate of Incorporation, they provide
greater assurance to
II-1
<PAGE>
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--Senior Notes.
3.1 -- Certificate of Incorporation, as amended, of Finlay Jewelry (incorporated by reference to Exhibit
3.1 of Form S-1 Registration Statement, Registration No. 33-59580).
3.2 -- By-laws of Finlay Jewelry (incorporated by reference to Exhibit 4.1 filed as part of the Current
Report on Form 8-K filed by the Registrant on June 10, 1993).
4.1 -- Article Fourth of the Restated Certificate of Incorporation and Articles II and VI of the Bylaws
(incorporated by reference to Exhibit 4.1 of Form S-1 Registration Statement, Registration No.
33-59380).
4.2 -- 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 the Registrant on June 10,
1993).
4.3(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 2005 issued by Finlay Jewelry (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).
4.3(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).
4.3(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).
4.4 -- Stock Purchase Agreement dated as of May 26, 1993 among Finlay Enterprises, Finlay Jewelry, THL
Equity Holding Corp., Equity-Linked Investors, L.P. and Equity-Linked Investors-II (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).
4.5 -- Amended and Restated Stockholders' Agreement dated as of March 6, 1995 among the Finlay
Enterprises, David B. Cornstein, Arthur E. Reiner, Robert S. Lowenstein,
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- --------- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
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 Finlay Jewelry on April 12, 1995).
4.6 -- Registration Rights Agreement dated as of May 26, 1993 among Finlay Jewelry, 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 4.6 filed as part of the Current Report on Form 8-K filed by
Finlay Jewelry on June 10, 1993).
4.7 -- Omnibus Amendment to Registration Rights and Stockholders' Agreement (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 Finlay Jewelry on December 16, 1997).
4.8
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.
5.1 -- Opinion of Paul, Weiss, Rifkind, Wharton & Garrison.
10.1 -- Underwriting Agreement relating to the Offering dated April 6, 1995 by and among Finlay
Enterprises, Finlay Jewelry, the Selling Stockholders and Goldman, Sachs & Co. on behalf of each of
the Underwriters (incorporated by reference to Exhibit 10.1 filed as part of the Annual Report on
Form 10-K for the period ended January 28, 1995 filed by Finlay Jewelry on April 12, 1995).
10.2 -- Form of Agreement and Certificate of Option Pursuant to the Long Term Incentive Plan of Finlay
Enterprises (incorporated by reference to Exhibit 10.1 filed as part of the Quarterly Report on
Form 10-Q for the period ended July 31, 1993 filed by Finlay Jewelry on September 14, 1993).
10.3 -- Finlay Enterprises' Restated Retirement Income Plan (401(k)) (incorporated by reference to Exhibit
10.6 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).
10.3(a) -- Amendment No. 1 to Finlay Enterprises' Restated Retirement Income Plan (401(k)) (incorporated by
reference to Exhibit 10.7 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).
10.3(b) -- Amendment No. 2 to Finlay Enterprises' Retirement Income Plan (incorporated by reference to Exhibit
10.1 filed as part of the Quarterly Report on Form 10-Q for the period ended May 4, 1996 filed by
Finlay Jewelry on June 14, 1996).
10.3(c) -- Amendment No. 3 to Finlay Enterprises' Retirement Income Plan (401(K)) (incorporated by reference
to Exhibit 10.11 filed as part of the Quarterly Report on Form 10-Q for the period ended November
1, 1997 filed by Finlay Jewelry on December 16, 1997).
10.4 -- Executive Medical Benefits Plan of Finlay Jewelry and Finlay Enterprises (incorporated by reference
to Exhibit 10.3 of Form S-1 Registration Statement, Registration No. 33-59380).
10.5(a) -- Employment Agreement dated as of May 26, 1993 between David B. Cornstein and Finlay Jewelry
(incorporated by reference to Exhibit 19.2 filed as part of the Quarterly Report on Form 10-Q for
the period ended May 1, 1993 filed by Finlay Jewelry on June 30, 1993).
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- --------- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
10.5(b) -- Amendment to Employment Agreement dated as of December 20, 1995 between David B. Cornstein and
Finlay Jewelry (incorporated by reference to Exhibit 10.1 filed as part of the Quarterly Report on
Form 10-Q for the period ended April 29, 1995 filed by Finlay Jewelry on June 3, 1995).
10.5(c) -- Amendment to Employment Agreement between David B. Cornstein and Finlay Jewelry (incorporated by
reference to Exhibit 10.9 filed as part of the Quarterly Report on Form 10-Q for the period ended
November 1, 1997 filed by Finlay Jewelry on December 16, 1997).
10.6(a) -- Employment Agreement dated as of January 3, 1995 among Finlay Enterprises, Finlay Jewelry and
Arthur E. Reiner (incorporated by reference to Exhibit 10.7(a) of Form S-1 Registration Statement,
Registration No. 33-88938).
10.6(b) -- Executive Securities Purchase Agreement dated as of January 3, 1995 between Finlay Enterprises and
Arthur E. Reiner (incorporated by reference to Exhibit 10.7(b) of Form S-1 Registration Statement,
Registration No. 33-88938).
10.6(c) -- Limited Recourse Secured Promissory Note dated as of January 3, 1995 by Arthur E. Reiner in favor
of Finlay Enterprises (incorporated by reference to Exhibit 10.7(c) of Form S-1 Registration
Statement, Registration No. 33-88938).
10.6(d) -- Stock Pledge Agreement dated as of January 3, 1995 between Finlay Enterprises and Arthur E. Reiner
(incorporated by reference to Exhibit 10.7(d) of Form S-1 Registration Statement, Registration No.
33-88938).
10.6(e) -- Amendment Employment Agreement dated as of May 17, 1995 among Finlay Enterprises, Finlay Jewelry
and Arthur E. Reiner (incorporated by reference to Exhibit 10.8(e) filed as part of the Annual
Report on Form 10-K for the period ended February 1, 1997 filed by Finlay Jewelry on May 1, 1997).
10.6(f) -- Amendment No. 2 to Employment Agreement dated as of March 5, 1997 among Finlay Enterprises, Finlay
Jewelry and Arthur E. Reiner (incorporated by reference to Exhibit 10 filed as part of the
Quarterly Report on Form 10-Q for the period ended May 3, 1997 filed by Finlay Jewelry on June 17,
1997).
10.6(g) -- Amendment No. 3 to Employment Agreement dated July 1, 1997 among Finlay Enterprises, Finlay Jewelry
and Arthur E. Reiner (incorporated by reference to Exhibit 10.6(g) filed as part of the Annual
Report on Form 10-K for the period ended January 31, 1998 filed by Finlay Jewelry on March 24,
1998).
10.7(a) -- Consulting and Option Agreement dated as of July 7, 1993 by and between Finlay Jewelry and Norman
S. Matthews (incorporated by reference to Exhibit 10.K for the period ended January 29, 1994 filed
by Finlay Jewelry on April 27, 1994).
10.7(b) -- Amendment to Consulting and Option Agreement dated as of March 6, 1995 between Norman S. Matthews
and Finlay Jewelry (incorporated by reference to Exhibit 10.2 filed as part of the Quarterly Report
on Form 10-Q for the period ended April 29, 1995 filed by Finlay Jewelry on June 3, 1995).
10.8 -- Employment Agreement dated as of April 18, 1997 between Joseph M. Melvin and Finlay Jewelry
(incorporated by reference to Exhibit 10.8 filed as part of the Annual Report on Form 10-K for the
period ended January 31, 1998 filed by Finlay Jewelry on March 24, 1998).
10.9 -- Tax Allocation Agreement dated as of November 1, 1992 between Finlay Enterprises and Finlay Jewelry
(incorporated by reference to Exhibit 19.5 filed as part of the Quarterly Report on Form 10-Q for
the period ended May 1, 1993 filed by Finlay Jewelry on June 30, 1993).
10.10 -- Management Agreement dated as of May 26, 1993 among Finlay Enterprises, Finlay Jewelry and Thomas
H. Lee Company (incorporated by reference to Exhibit 28.2 filed as part of the Current Report on
Form 8-K filed by Finlay Jewelry on June 10, 1993).
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- --------- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
10.11 -- Management Agreement dated as of May 26, 1993 among Finlay Enterprises, Finlay Jewelry and Desai
Capital Management Incorporated (incorporated by reference to Exhibit 28.1 filed as part of the
Current Report on Form 8-K filed by Finlay Jewelry on June 10, 1993).
10.12(a) -- Long Term Incentive Plan of Finlay Jewelry (incorporated by reference to Exhibit 19.5 filed as part
of the Quarterly Report on Form 10-Q for the period ended May 1, 1993 filed by Finlay Jewelry on
June 30, 1993).
10.12(b) -- Amendment No. 1 to Finlay Enterprises' Long Term Incentive Plan (incorporated by reference to
Exhibit 10.14(b) of the Form S-1 Registration Statement, Registration No. 33-88938).
10.13 -- 1997 Long Term Incentive Plan (incorporated by reference to Exhibit 10.13 as part of the Annual
Report on Form 10-K for the period ended January 31, 1998 filed by Finlay Jewelry on March 24,
1998).
10.14(a) -- Amended and Restated Credit Agreement dated as of March 28, 1995 among G.E. Capital, individually
and its capacity as agent, certain other lenders and financial institutions, Finlay Enterprises and
Finlay Jewelry (the 'Amended and Restated Credit Agreement') (incorporated by reference to Exhibit
10.15 filed as part of the Annual Report on Form 10-K for the period ended January 28, 1995 filed
by Finlay Jewelry on April 12, 1995).
10.14(b) -- Amendment No. 1, dated as of June 15, 1995, to the Amended and Restated Credit Agreement
(incorporated by reference to Exhibit 10.4 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).
10.14(c) -- Amendment No. 2 to the Amended and Restated Credit Agreement dated as of February 1, 1996
(incorporated by reference to Exhibit 10.15(c) filed as part of the Annual Report on Form 10-K for
the period ended February 3, 1996 filed by Finlay Jewelry on May 3, 1996).
10.14(d) -- Amendment No. 3 to the Amended and Restated Credit Agreement dated as of January 31, 1997
(incorporated by reference to Exhibit 10.1 filed as part of the Quarterly Report on Form 10-Q for
the period ended August 2, 1997 filed by Finlay Jewelry on September 16, 1997).
10.15(a) -- Amended and Restated Revolving Note dated as of March 28, 1995 by Finlay Enterprises and Finlay
Jewelry to the order of G.E. Capital in the principal amount of $98,000,000 (incorporated by
reference to Exhibit 10.16(a) filed as part of the Annual Report on Form 10-K for the period ended
January 28, 1995 filed by Finlay Jewelry on April 12, 1995).
10.15(b) -- Amended and Restated Revolving Note dated as of March 28, 1995 by Finlay Enterprises and Finlay
Jewelry to the order of Shawmut Bank in the principal amount of $37,000,000 (incorporated by
reference to Exhibit 10.16(b) filed as part of the Annual Report on Form 10-K for the period ended
January 28, 1995 filed by Finlay Jewelry on April 12, 1995).
10.16 -- Security Agreement dated as of May 26, 1993 by Finlay Jewelry in favor of G.E. Capital, as agent
(incorporated by reference to Exhibit 19.9 filed as part of the Quarterly Report on Form 10-Q for
the period ended May 1, 1993 filed by Finlay Jewelry on June 30, 1993).
10.17 -- Security Agreement and Mortgage--Trademarks, Patents and Copyrights, dated as of May 26, 1993 by
Finlay Jewelry in favor of G.E. Capital, as agent (incorporated by reference to Exhibit 19.10 filed
as part of the Quarterly Report on Form 10-Q for the period ended May 1, 1993 filed by Finlay
Jewelry on June 30, 1993).
10.18 -- Assignment of Life Insurance Policy as Collateral dated May 26, 1993 by Finlay Enterprises G.E.
Capital, as agent (upon the life of each David B. Cornstein, Ronald B.
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- --------- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Grudberg and Robert S. Lowenstein) (incorporated by reference to Exhibit 19.11 filed as part of the
Quarterly Report on Form 10-Q for the period ended May 1, 1993 filed by Finlay Jewelry on June 30,
1993).
10.19 -- Assignment of Business Interruption Insurance Policy as Collateral dated February 28, 1994 by
Finlay Jewelry to G.E. Capital, as agent (incorporated by reference to Exhibit 10.M filed as part
of the Annual Report on Form 10-K for the period ended January 29, 1994 filed by Finlay Jewelry on
April 27, 1994).
10.20(a) -- Guarantee dated as of May 26, 1993 by Finlay Jewelry, Inc. to G.E. Capital, as agent (incorporated
by reference to Exhibit 19.13 filed as part of the Quarterly Report on Form 10-Q for the period
ended May 1, 1993 filed by Finlay Jewelry on June 30, 1993).
10.20(b) -- Guarantee dated as of October 28, 1994 by Sonab Holdings in favor of G.E. Capital (incorporated by
reference to Exhibit 10.5 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).
10.20(c) -- Guarantee dated as of October 28, 1994 by Sonab International in favor of G.E. Capital
(incorporated by reference to Exhibit 10.6 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).
10.20(d) -- Guarantee dated as of October 28, 1994 by Sonab in favor of G.E. Capital (incorporated by reference
to Exhibit 10.7 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).
10.21(a) -- Pledge Agreement dated as of May 26, 1993 by Finlay Jewelry to G.E. Capital, as agent (incorporated
by reference to Exhibit 19.14 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).
10.21(b) -- Amendment Agreement dated October 28, 1994 to the Pledge Agreement by Finlay Jewelry in favor of
G.E. Capital (incorporated by reference to Exhibit 10.8 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).
10.22(a) -- Share Pledge Agreement (Translation) dated October 28, 1994 by Sonab Holdings in favor of G.E.
Capital (incorporated by reference to Exhibit 10.9 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).
10.22(b) -- Share Pledge Agreement (Translation) dated October 28, 1994 by Sonab International in favor of G.E.
Capital (incorporated by reference to Exhibit 10.10 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).
10.23 -- Master Agreement for the Assignment of Accounts Receivable as Security (Translation) dated October
28, 1994 by Sonab in favor of G.E. Capital (incorporated by reference to Exhibit 10.11 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).
10.24 -- Note Pledge Agreement dated as of October 28, 1994 by Finlay Jewelry in favor of G.E. Capital
(incorporated by reference to Exhibit 10.12 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).
10.25(a) -- Amended and Restated Credit Agreement dated as of September 11, 1997 among G. E. Capital,
individually and in its capacity as agent, certain other lenders and financial institutions, Finlay
Enterprises and Finlay Jewelry (incorporated by reference to
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- --------- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Exhibit 10.2 filed as part of the Quarterly Report on Form 10-Q for the period ended August 2, 1997
filed by Finlay Jewelry on September 16, 1997).
10.25(b) -- Amendment No. 1 dated as of September 11, 1997 to the Revolving Credit Agreement (incorporated by
reference to Exhibit 10.3 filed as part of the Quarterly Report on Form 10-Q for the period ended
August 2, 1997 filed by Finlay Jewelry September 16, 1997).
10.25(c) -- Amendment No. 2 dated October 6, 1997 to the Revolving Credit Agreement (incorporated by reference
to Exhibit 10.2 as part of the Currrent Report on Form 8-K filed by Finlay Jewelry on October 17,
1997).
10.26 -- Share Purchase Agreement dated as of October 28, 1994 among Societe Des Grands Magasins Galeries
Lafayette, Union Pour Les Investissements Commerciaux, Societe Anonyme Des Galeries Lafayette,
Sonab Holdings and Sonab International (incorporated by reference to Exhibit 10.1 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).
10.27 -- Form of Officer's and Director's Indemnification Agreement (incorporated by reference to Exhibit
10.4 filed as part of the Quarterly Report on Form 10-Q for the period ended April 29, 1995 filed
by Finlay Jewelry on June 3, 1995).
10.28(a) -- Gold Consignment Agreement dated as of June 15, 1995 (the 'Gold Consignment Agreement') between
Finlay Jewelry and Rhode Island Hospital Trust National Bank ('RIHT') (incorporated by reference to
Exhibit 10.1 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).
10.28(b) -- Amendment No. 1 and Limited Consent to the Gold Consignment Agreement (incorporated by reference to
Exhibit 10.31(b) filed as part of the Annual Report on Form 10-K for the period ended February 3,
1996 filed by Finlay Jewelry on May 3, 1996).
10.28(c) -- Amendment No. 2 and Limited Consent dated as of September 10, 1997 to the Gold Consignment
Agreement dated as of June 15, 1995, as amended, by and between Finlay Jewelry and Rhode Island
Hospital Trust Bank (incorporated by reference to Exhibit 10.4 filed as part of the Quarterly
Report on Form 10-Q for the period ended August 2, 1997 filed by Finlay Jewelry on September 16,
1997).
10.28(d) -- Amendment No. 3 and Limited Consent dated as of September 11, 1997 to the Gold Consignment
Agreement dated as of June 15, 1995, as amended, by and between Finlay Jewelry and Rhode Island
Hospital Trust Bank (incorporated by reference to Exhibit 10.5 filed as part of the Quarterly
Report on Form 10-Q for the period ended August 2, 1997 filed by Finlay Jewelry on September 16,
1997).
10.28(e) -- Amendment No. 4 and Limited Consent dated as of October 6, 1997 to the Gold Consignment Agreement
dated as of June 15, 1995, as amended, by and between Finlay Jewelry and Rhode Island Hospital
Trust Bank (incorporated by reference to Exhibit 10.3 as part of the Current Report on Form 8-K
filed by Finlay Jewelry on October 17, 1997).
10.29 -- Security Agreement dated as of June 15, 1995 between Finlay Jewelry and RIHT (incorporated by
reference to Exhibit 10.2 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).
10.30 -- Cash Collateral Agreement dated as of June 15, 1995 between Finlay Jewelry and RIHT (incorporated
by reference to Exhibit 10.3 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).
</TABLE>
II-7
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- --------- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
10.31 -- Intercreditor Agreement dated as of June 15, 1995 between G.E. Capital and RIHT and acknowledged by
Finlay Jewelry (incorporated by reference to Exhibit 10.5 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).
10.32 -- Asset Purchase Agreement dated September 3, 1997 by and among Finlay Enterprises, Finlay Jewelry,
Zale Corporation and Zale Delaware, Inc. (incorporated by reference to Exhibit 10.6 filed as part
of the Quarterly Report on Form 10-Q for the period ended August 2, 1997 filed by Finlay Jewelry on
September 16, 1997).
12.1 -- Statement Regarding Computation of Ratios.
21.1 -- Subsidiaries of Finlay Jewelry (incorporated by reference to Exhibit 21.1 filed as part of the
Annual Report on Form 10-K for the period ended January 28, 1995 filed by Finlay Jewelry on April
12, 1995).
23.1 -- Consent of Arthur Andersen LLP.
23.2 -- Consent of Paul, Weiss, Rifkind, Wharton & Garrison (included in Exhibit 5.1).
24.1* -- Power of Attorney.
25.1 -- Statement of Eligibility of Trustee on Form T-1.
27 * -- 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
Finlay Jewelry pursuant to its Certificate of Incorporation, By-Laws, the
Underwriting Agreement or otherwise, Finlay Jewelry 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 Finlay Jewelry of expenses incurred or paid by a director,
officer or controlling person of Finlay Jewelry 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, Finlay Jewelry 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.
Finlay Jewelry 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-8
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933 THE COMPANY
CERTIFIES THAT IT 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 FINE JEWELRY CORPORATION
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
*By: /s/ Barry D. Scheckner
Barry D. Scheckner
Attorney-in-fact
</TABLE>
II-9
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- --------- -------------------------------------------------------------------------------------------
<S> <C> <C>
1.1 -- Form of Underwriting Agreement--Senior Notes.
3.1 -- Certificate of Incorporation, as amended, of Finlay Jewelry (incorporated by reference to
Exhibit 3.1 of Form S-1 Registration Statement, Registration No. 33-59580).
3.2 -- By-laws of Finlay Jewelry (incorporated by reference to Exhibit 4.1 filed as part of the
Current Report on Form 8-K filed by the Registrant on June 10, 1993).
4.1 -- Article Fourth of the Restated Certificate of Incorporation and Articles II and VI of the
Bylaws (incorporated by reference to Exhibit 4.1 of Form S-1 Registration Statement,
Registration No. 33-59380).
4.2 -- 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 the Registrant on
June 10, 1993).
4.3(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 2005 issued by Finlay Jewelry
(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).
4.3(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).
4.3(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).
4.4 -- Stock Purchase Agreement dated as of May 26, 1993 among Finlay Enterprises, Finlay Jewelry,
THL Equity Holding Corp., Equity-Linked Investors, L.P. and Equity-Linked Investors-II
(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).
4.5 -- Amended and Restated Stockholders' Agreement dated as of March 6, 1995 among the Finlay
Enterprises, 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 Finlay Jewelry on April
12, 1995).
4.6 -- Registration Rights Agreement dated as of May 26, 1993 among Finlay Jewelry, 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-
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- --------- -------------------------------------------------------------------------------------------
<S> <C> <C>
Linked Investors-II (incorporated by reference to Exhibit 4.6 filed as part of the Current
Report on Form 8-K filed by Finlay Jewelry on June 10, 1993).
4.7 -- Omnibus Amendment to Registration Rights and Stockholders' Agreement (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 Finlay Jewelry on December 16, 1997).
4.8 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.
5.1 -- Opinion of Paul, Weiss, Rifkind, Wharton & Garrison.
10.1 -- Underwriting Agreement relating to the Offering dated April 6, 1995 by and among Finlay
Enterprises, Finlay Jewelry, the Selling Stockholders and Goldman, Sachs & Co. on behalf of
each of the Underwriters (incorporated by reference to Exhibit 10.1 filed as part of the
Annual Report on Form 10-K for the period ended January 28, 1995 filed by Finlay Jewelry on
April 12, 1995).
10.2 -- Form of Agreement and Certificate of Option Pursuant to the Long Term Incentive Plan of
Finlay Enterprises (incorporated by reference to Exhibit 10.1 filed as part of the
Quarterly Report on Form 10-Q for the period ended July 31, 1993 filed by Finlay Jewelry on
September 14, 1993).
10.3 -- Finlay Enterprises' Restated Retirement Income Plan (401(k)) (incorporated by reference to
Exhibit 10.6 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).
10.3(a) -- Amendment No. 1 to Finlay Enterprises' Restated Retirement Income Plan (401(k))
(incorporated by reference to Exhibit 10.7 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).
10.3(b) -- Amendment No. 2 to Finlay Enterprises' Retirement Income Plan (incorporated by reference to
Exhibit 10.1 filed as part of the Quarterly Report on Form 10-Q for the period ended May 4,
1996 filed by Finlay Jewelry on June 14, 1996).
10.3(c) -- Amendment No. 3 to Finlay Enterprises' Retirement Income Plan (401(K)) (incorporated by
reference to Exhibit 10.11 filed as part of the Quarterly Report on Form 10-Q for the
period ended November 1, 1997 filed by Finlay Jewelry on December 16, 1997).
10.4 -- Executive Medical Benefits Plan of Finlay Jewelry and Finlay Enterprises (incorporated by
reference to Exhibit 10.3 of Form S-1 Registration Statement, Registration No. 33-59380).
10.5(a) -- Employment Agreement dated as of May 26, 1993 between David B. Cornstein and Finlay Jewelry
(incorporated by reference to Exhibit 19.2 filed as part of the Quarterly Report on Form
10-Q for the period ended May 1, 1993 filed by Finlay Jewelry on June 30, 1993).
10.5(b) -- Amendment to Employment Agreement dated as of December 20, 1995 between David B. Cornstein
and Finlay Jewelry (incorporated by reference to Exhibit 10.1 filed as part of the
Quarterly Report on Form 10-Q for the period ended April 29, 1995 filed by Finlay Jewelry
on June 3, 1995).
10.5(c) -- Amendment to Employment Agreement between David B. Cornstein and Finlay Jewelry
(incorporated by reference to Exhibit 10.9 filed as part of the Quarterly Report on Form
10-Q for the period ended November 1, 1997 filed by Finlay Jewelry on December 16, 1997).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- --------- -------------------------------------------------------------------------------------------
<S> <C> <C>
10.6(a) -- Employment Agreement dated as of January 3, 1995 among Finlay Enterprises, Finlay Jewelry
and Arthur E. Reiner (incorporated by reference to Exhibit 10.7(a) of Form S-1 Registration
Statement, Registration No. 33-88938).
10.6(b) -- Executive Securities Purchase Agreement dated as of January 3, 1995 between Finlay
Enterprises and Arthur E. Reiner (incorporated by reference to Exhibit 10.7(b) of Form S-1
Registration Statement, Registration No. 33-88938).
10.6(c) -- Limited Recourse Secured Promissory Note dated as of January 3, 1995 by Arthur E. Reiner in
favor of Finlay Enterprises (incorporated by reference to Exhibit 10.7(c) of Form S-1
Registration Statement, Registration No. 33-88938).
10.6(d) -- Stock Pledge Agreement dated as of January 3, 1995 between Finlay Enterprises and Arthur E.
Reiner (incorporated by reference to Exhibit 10.7(d) of Form S-1 Registration Statement,
Registration No. 33-88938).
10.6(e) -- Amendment Employment Agreement dated as of May 17, 1995 among Finlay Enterprises, Finlay
Jewelry and Arthur E. Reiner (incorporated by reference to Exhibit 10.8(e) filed as part of
the Annual Report on Form 10-K for the period ended February 1, 1997 filed by Finlay
Jewelry on May 1, 1997).
10.6(f) -- Amendment No. 2 to Employment Agreement dated as of March 5, 1997 among Finlay Enterprises,
Finlay Jewelry and Arthur E. Reiner (incorporated by reference to Exhibit 10 filed as part
of the Quarterly Report on Form 10-Q for the period ended May 3, 1997 filed by Finlay
Jewelry on June 17, 1997).
10.6(g) -- Amendment No. 3 to Employment Agreement dated July 1, 1997 among Finlay Enterprises, Finlay
Jewelry and Arthur E. Reiner (incorporated by reference to Exhibit 10.6(g), filed as part
of the Annual Report on Form 10-K for the period ended January 31, 1998 filed by Finlay
Jewelry on March 24, 1998).
10.7(a) -- Consulting and Option Agreement dated as of July 7, 1993 by and between Finlay Jewelry and
Norman S. Matthews (incorporated by reference to Exhibit 10.OO filed as part of the Annual
Report on Form 10-K for the period ended January 29, 1994 filed by Finlay Jewelry on April
27, 1994).
10.7(b) -- Amendment to Consulting and Option Agreement dated as of March 6, 1995 between Norman S.
Matthews and Finlay Jewelry (incorporated by reference to Exhibit 10.2 filed as part of the
Quarterly Report on Form 10-Q for the period ended April 29, 1995 filed by Finlay Jewelry
on June 3, 1995).
10.8 -- Employment Agreement dated as of April 18, 1997 between Joseph M. Melvin and Finlay Jewelry
(incorporated by reference to Exhibit 10.8 filed as part of the Annual Report on Form 10-K
for the period ended January 31, 1998 filed by Finlay Jewelry on March 24, 1998).
10.9 -- Tax Allocation Agreement dated as of November 1, 1992 between Finlay Enterprises and Finlay
Jewelry (incorporated by reference to Exhibit 19.5 filed as part of the Quarterly Report on
Form 10-Q for the period ended May 1, 1993 filed by Finlay Jewelry on June 30, 1993).
10.10 -- Management Agreement dated as of May 26, 1993 among Finlay Enterprises, Finlay Jewelry and
Thomas H. Lee Company (incorporated by reference to Exhibit 28.2 filed as part of the
Current Report on Form 8-K filed by Finlay Jewelry on June 10, 1993).
10.11 -- Management Agreement dated as of May 26, 1993 among Finlay Enterprises, Finlay Jewelry and
Desai Capital Management Incorporated (incorporated by reference to Exhibit 28.1 filed as
part of the Current Report on Form 8-K filed by Finlay Jewelry on June 10, 1993).
10.12(a) -- Long Term Incentive Plan of Finlay Jewelry (incorporated by reference to Exhibit 19.5 filed
as part of the Quarterly Report on Form 10-Q for the period ended May 1, 1993 filed by
Finlay Jewelry on June 30, 1993).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- --------- -------------------------------------------------------------------------------------------
<S> <C> <C>
10.12(b) -- Amendment No. 1 to Finlay Enterprises' Long Term Incentive Plan (incorporated by reference
to Exhibit 10.14(b) of the Form S-1 Registration Statement, Registration No. 33-88938).
10.13 -- 1997 Long Term Incentive Plan (incorporated by reference to Exhibit 10.13 filed as part of
the Annual Report on Form 10-K for the period ended January 31, 1998 filed by Finlay
Jewelry on March 24, 1998).
10.14(a) -- Amended and Restated Credit Agreement dated as of March 28, 1995 among G.E. Capital,
individually and its capacity as agent, certain other lenders and financial institutions,
Finlay Enterprises and Finlay Jewelry (the 'Amended and Restated Credit Agreement')
(incorporated by reference to Exhibit 10.15 filed as part of the Annual Report on Form 10-K
for the period ended January 28, 1995 filed by Finlay Jewelry on April 12, 1995).
10.14(b) -- Amendment No. 1, dated as of June 15, 1995, to the Amended and Restated Credit Agreement
(incorporated by reference to Exhibit 10.4 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).
10.14(c) -- Amendment No. 2 to the Amended and Restated Credit Agreement dated as of February 1, 1996
(incorporated by reference to Exhibit 10.15(c) filed as part of the Annual Report on Form
10-K for the period ended February 3, 1996 filed by Finlay Jewelry on May 3, 1996).
10.14(d) -- Amendment No. 3 to the Amended and Restated Credit Agreement dated as of January 31, 1997
(incorporated by reference to Exhibit 10.1 filed as part of the Quarterly Report on Form
10-Q for the period ended August 2, 1997 filed by Finlay Jewelry on September 16, 1997).
10.15(a) -- Amended and Restated Revolving Note dated as of March 28, 1995 by Finlay Enterprises and
Finlay Jewelry to the order of G.E. Capital in the principal amount of $98,000,000
(incorporated by reference to Exhibit 10.16(a) filed as part of the Annual Report on Form
10-K for the period ended January 28, 1995 filed by Finlay Jewelry on April 12, 1995).
10.15(b) -- Amended and Restated Revolving Note dated as of March 28, 1995 by Finlay Enterprises and
Finlay Jewelry to the order of Shawmut Bank in the principal amount of $37,000,000
(incorporated by reference to Exhibit 10.16(b) filed as part of the Annual Report on Form
10-K for the period ended January 28, 1995 filed by Finlay Jewelry on April 12, 1995).
10.16 -- Security Agreement dated as of May 26, 1993 by Finlay Jewelry in favor of G.E. Capital, as
agent (incorporated by reference to Exhibit 19.9 filed as part of the Quarterly Report on
Form 10-Q for the period ended May 1, 1993 filed by Finlay Jewelry on June 30, 1993).
10.17 -- Security Agreement and Mortgage--Trademarks, Patents and Copyrights, dated as of May 26,
1993 by Finlay Jewelry in favor of G.E. Capital, as agent (incorporated by reference to
Exhibit 19.10 filed as part of the Quarterly Report on Form 10-Q for the period ended May
1, 1993 filed by Finlay Jewelry on June 30, 1993).
10.18 -- Assignment of Life Insurance Policy as Collateral dated May 26, 1993 by Finlay Enterprises
G.E. Capital, as agent (upon the life of each David B. Cornstein, Ronald B. Grudberg and
Robert S. Lowenstein) (incorporated by reference to Exhibit 19.11 filed as part of the
Quarterly Report on Form 10-Q for the period ended May 1, 1993 filed by Finlay Jewelry on
June 30, 1993).
10.19 -- Assignment of Business Interruption Insurance Policy as Collateral dated February 28, 1994
by Finlay Jewelry to G.E. Capital, as agent (incorporated by
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- --------- -------------------------------------------------------------------------------------------
<S> <C> <C>
reference to Exhibit 10.M filed as part of the Annual Report on Form 10-K for the period
ended January 29, 1994 filed by Finlay Jewelry on April 27, 1994).
10.20(a) -- Guarantee dated as of May 26, 1993 by Finlay Jewelry, Inc. to G.E. Capital, as agent
(incorporated by reference to Exhibit 19.13 filed as part of the Quarterly Report on Form
10-Q for the period ended May 1, 1993 filed by Finlay Jewelry on June 30, 1993).
10.20(b) -- Guarantee dated as of October 28, 1994 by Sonab Holdings in favor of G.E. Capital
(incorporated by reference to Exhibit 10.5 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).
10.20(c) -- Guarantee dated as of October 28, 1994 by Sonab International in favor of G.E. Capital
(incorporated by reference to Exhibit 10.6 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).
10.20(d) -- Guarantee dated as of October 28, 1994 by Sonab in favor of G.E. Capital (incorporated by
reference to Exhibit 10.7 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).
10.21(a) -- Pledge Agreement dated as of May 26, 1993 by Finlay Jewelry to G.E. Capital, as agent
(incorporated by reference to Exhibit 19.14 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).
10.21(b) -- Amendment Agreement dated October 28, 1994 to the Pledge Agreement by Finlay Jewelry in
favor of G.E. Capital (incorporated by reference to Exhibit 10.8 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).
10.22(a) -- Share Pledge Agreement (Translation) dated October 28, 1994 by Sonab Holdings in favor of
G.E. Capital (incorporated by reference to Exhibit 10.9 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).
10.22(b) -- Share Pledge Agreement (Translation) dated October 28, 1994 by Sonab International in favor
of G.E. Capital (incorporated by reference to Exhibit 10.10 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).
10.23 -- Master Agreement for the Assignment of Accounts Receivable as Security (Translation) dated
October 28, 1994 by Sonab in favor of G.E. Capital (incorporated by reference to Exhibit
10.11 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).
10.24 -- Note Pledge Agreement dated as of October 28, 1994 by Finlay Jewelry in favor of G.E.
Capital (incorporated by reference to Exhibit 10.12 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).
10.25(a) -- Restated Credit Agreement dated as of September 11, 1997 among G. E. Capital, individually
and in its capacity as agent, certain other lenders and financial institutions, Finlay
Enterprises and Finlay Jewelry ('Amended and Revolving Credit Agreement') (incorporated by
reference to Exhibit 10.2 filed as part of the Quarterly Report on Form 10-Q for the period
ended August 2, 1997 filed by Finlay Jewelry on September 16, 1997).
10.25(b) -- Amendment No. 1 dated as of September 11, 1997 to the Revolving Credit Agreement
(incorporated by reference to Exhibit 10.3 filed as part of the
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- --------- -------------------------------------------------------------------------------------------
<S> <C> <C>
Quarterly Report on Form 10-Q for the period ended August 2, 1997 filed by Finlay Jewelry
September 16, 1997).
10.25(c) -- Amendment No. 2 dated October 6, 1997 to the Revolving Credit Agreement (incorporated by
reference to Exhibit 10.2 as part of the Currrent Report on Form 8-K filed by Finlay
Jewelry on October 17, 1997).
10.26 -- Share Purchase Agreement dated as of October 28, 1994 among Societe Des Grands Magasins
Galeries Lafayette, Union Pour Les Investissements Commerciaux, Societe Anonyme Des
Galeries Lafayette, Sonab Holdings and Sonab International (incorporated by reference to
Exhibit 10.1 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).
10.27 -- Form of Officer's and Director's Indemnification Agreement (incorporated by reference to
Exhibit 10.4 filed as part of the Quarterly Report on Form 10-Q for the period ended April
29, 1995 filed by Finlay Jewelry on June 3, 1995).
10.28(a) -- Gold Consignment Agreement dated as of June 15, 1995 (the 'Gold Consignment Agreement')
between Finlay Jewelry and Rhode Island Hospital Trust National Bank ('RIHT') (incorporated
by reference to Exhibit 10.1 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).
10.28(b) -- Amendment No. 1 and Limited Consent to the Gold Consignment Agreement (incorporated by
reference to Exhibit 10.31(b) filed as part of the Annual Report on Form 10-K for the
period ended February 3, 1996 filed by Finlay Jewelry on May 3, 1996).
10.28(c) -- Amendment No. 2 and Limited Consent dated as of September 10, 1997 to the Gold Consignment
Agreement dated as of June 15, 1995, as amended, by and between Finlay Jewelry and Rhode
Island Hospital Trust Bank (incorporated by reference to Exhibit 10.4 filed as part of the
Quarterly Report on Form 10-Q for the period ended August 2, 1997 filed by Finlay Jewelry
on September 16, 1997).
10.28(d) -- Amendment No. 3 and Limited Consent dated as of September 11, 1997 to the Gold Consignment
Agreement dated as of June 15, 1995, as amended, by and between Finlay Jewelry and Rhode
Island Hospital Trust Bank (incorporated by reference to Exhibit 10.5 filed as part of the
Quarterly Report on Form 10-Q for the period ended August 2, 1997 filed by Finlay Jewelry
on September 16, 1997).
10.28(e) -- Amendment No. 4 and Limited Consent dated as of October 6, 1997 to the Gold Consignment
Agreement dated as of June 15, 1995, as amended, by and between Finlay Jewelry and Rhode
Island Hospital Trust Bank (incorporated by reference to Exhibit 10.3 as part of the
Current Report on Form 8-K filed by Finlay Jewelry on October 17, 1997).
10.29 -- Security Agreement dated as of June 15, 1995 between Finlay Jewelry and RIHT (incorporated
by reference to Exhibit 10.2 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).
10.30 -- Cash Collateral Agreement dated as of June 15, 1995 between Finlay Jewelry and RIHT
(incorporated by reference to Exhibit 10.3 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).
10.31 -- Intercreditor Agreement dated as of June 15, 1995 between G.E.Capital and RIHT and
acknowledged by Finlay Jewelry (incorporated by reference to
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- --------- -------------------------------------------------------------------------------------------
<S> <C> <C>
Exhibit 10.5 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).
10.32 -- Asset Purchase Agreement dated September 3, 1997 by and among Finlay Enterprises, Finlay
Jewelry, Zale Corporation and Zale Delaware, Inc. (incorporated by reference to Exhibit
10.6 filed as part of the Quarterly Report on Form 10-Q for the period ended August 2, 1997
filed by Finlay Jewelry on September 16, 1997).
12.1 -- Statement Regarding Computation of Ratios.
21.1 -- Subsidiaries of Finlay Jewelry (incorporated by reference to Exhibit 21.1 filed as part of
the Annual Report on Form 10-K for the period ended January 28, 1995 filed by Finlay
Jewelry on April 12, 1995).
23.1 -- Consent of Arthur Andersen LLP.
23.2 -- Consent of Paul, Weiss, Rifkind, Wharton & Garrison (included in Exhibit 5.1).
24.1* -- Power of Attorney.
25.1 -- Statement of Eligibility of Trustee.
27* -- Financial Data Schedule.
</TABLE>
- ------------------
* Previously filed.
<PAGE>
Exhibit 1.1
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
2
<PAGE>
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 under
the caption "Description of Capital Stock" 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
3
<PAGE>
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
4
<PAGE>
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".
5
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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
6
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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
7
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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), (x) and (xii) 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
under the caption "Description of Capital Stock" 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);
(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 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;
(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 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;
(xi) 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
(xii) 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
15
<PAGE>
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>
- -------------------------------------------------------------------------------
FINLAY FINE JEWELRY CORPORATION
% SENIOR NOTES DUE , 2008
INDENTURE
------------------------------------
Dated as of April __, 1998
------------------------------------
Marine Midland Bank
Trustee
- -------------------------------------------------------------------------------
<PAGE>
CROSS-REFERENCE TABLE*
Trust Indenture Act Section Indenture Section
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).............................................................11.03
(c).............................................................11.03
313(a)..............................................................7.06
(b)(1)...........................................................N.A.
(b)(2).....................................................7.06; 7.07
(c).......................................................7.06; 11.02
(d)..............................................................7.06
314(a).................................................4.03; 4.04; 11.02
(b)..............................................................N.A.
(c)(1)..........................................................11.04
(c)(2)..........................................................11.04
(c)(3) ..........................................................N.A.
(d)..............................................................N.A.
(e).............................................................11.05
(f)..............................................................N.A.
315(a)..............................................................7.01
(b) ......................................................7.05, 11.02
(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).............................................................11.01
(b)..............................................................N.A.
(c).............................................................11.0l
- ---------------------------
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
<S> <C> <C>
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 NOTES
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 NOTES.....................................................................21
SECTION 2.08. OUTSTANDING ..........................................................................21
SECTION 2.09. TREASURY NOTES........................................................................22
SECTION 2.10. TEMPORARY NOTES.......................................................................22
SECTION 2.11. CANCELLATION..........................................................................22
SECTION 2.12. DEFAULTED INTEREST....................................................................22
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 NOTES TO BE REDEEMED.....................................................23
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. NOTES REDEEMED IN PART................................................................25
SECTION 3.07. OPTIONAL REDEMPTION...................................................................26
SECTION 3.08. MANDATORY REDEMPTION..................................................................26
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS...................................27
</TABLE>
(i)
<PAGE>
<TABLE>
<CAPTION>
ARTICLE 4
COVENANTS
<S> <C> <C>
SECTION 4.01. PAYMENT OF NOTES......................................................................28
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.......................................................29
SECTION 4.03. REPORTS...............................................................................29
SECTION 4.04. COMPLIANCE CERTIFICATE................................................................30
SECTION 4.05. TAXES.................................................................................30
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..........................................................................44
SECTION 6.03. OTHER REMEDIES........................................................................46
SECTION 6.04. WAIVER OF PAST DEFAULTS...............................................................46
SECTION 6.05. CONTROL BY MAJORITY...................................................................46
SECTION 6.06. LIMITATION ON SUITS...................................................................46
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.........................................47
SECTION 6.08. COLLECTION SUIT BY TRUSTEE............................................................47
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM......................................................47
SECTION 6.10. PRIORITIES............................................................................48
SECTION 6.11. UNDERTAKING FOR COSTS.................................................................48
</TABLE>
(ii)
<PAGE>
<TABLE>
<CAPTION>
ARTICLE 7
TRUSTEE
<S> <C> <C>
SECTION 7.01. DUTIES OF TRUSTEE.....................................................................49
SECTION 7.02. RIGHTS OF TRUSTEE.....................................................................50
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE..........................................................50
SECTION 7.04. TRUSTEE'S DISCLAIMER..................................................................50
SECTION 7.05. NOTICE OF DEFAULTS....................................................................51
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES............................................51
SECTION 7.07. COMPENSATION AND INDEMNITY............................................................51
SECTION 7.08. REPLACEMENT OF TRUSTEE................................................................52
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC......................................................53
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.........................................................53
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.....................................53
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...................................................................54
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..............................................56
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 NOTES...................................................57
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES......................................................58
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT...................................................59
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.....................................................60
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES......................................................60
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.......................................................60
ARTICLE 10
SUBSIDIARY GUARANTEES
SECTION 10.01. APPLICATION...........................................................................60
SECTION 10.02. GUARANTEE.............................................................................61
SECTION 10.03. LIMITATION ON GUARANTOR LIABILITY.....................................................62
SECTION 10.04. EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEE........................................62
SECTION 10.05. GUARANTORS MAY CONSOLIDATE, ETC.,
(iii)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
CERTAIN TERMS.........................................................................63
SECTION 10.06. RELEASES FOLLOWING SALE OF ASSETS.....................................................63
SECTION 10.07. TRANSFERS OF INTANGIBLE ASSETS
ARTICLE 11
SECTION 11.01. TRUST INDENTURE ACT CONTROLS..........................................................63
SECTION 11.02. NOTICES...............................................................................64
SECTION 11.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER
HOLDERS OF NOTES......................................................................65
SECTION 11.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT....................................65
SECTION 11.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.........................................65
SECTION 11.06. RULES BY TRUSTEE AND AGENTS...........................................................66
SECTION 11.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES
AND STOCKHOLDERS......................................................................66
SECTION 11.08. GOVERNING LAW.........................................................................66
SECTION 11.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.........................................66
SECTION 11.10. SUCCESSORS............................................................................66
SECTION 11.11. SEVERABILITY..........................................................................66
SECTION 11.12. COUNTERPART ORIGINALS.................................................................66
SECTION 11.13. TABLE OF CONTENTS, HEADINGS, ETC......................................................67
EXHIBIT A Form of Note
EXHIBIT B Form of License Agreement
EXHIBIT C Form of Subsidiary Guarantee
EXHIBIT D Form of Supplemental Indenture
EXHIBIT E Form of Subsidiary Intercompany Note
</TABLE>
(iv)
<PAGE>
INDENTURE dated as of April __, 1998 between Finlay Fine
Jewelry Corporation, a Delaware corporation (the "Company" or "Finlay Jewelry"),
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 %
Notes due , 2008 (the "Notes").
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 Note, 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
1
<PAGE>
a Wholly Owned Subsidiary of the Company or by a Wholly Owned Subsidiary of the
Company to 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
(vi) 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
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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, 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 Fine Jewelry Corporation, 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 Enterprises 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 Enterprises 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 Enterprises 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.
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"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 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.
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"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 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 Notes
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 Notes 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 Notes 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 Notes 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.
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"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 Common Stock of
Finlay Enterprises on the date of this Indenture.
"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 Enterprises" means Finlay Enterprises, Inc., a Delaware
corporation and the sole stockholder of the Company.
"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
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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 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.
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"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 Note is registered.
"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
8
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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), 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.
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"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 Finlay Enterprises' 12% Senior Discount
Debentures due 2005.
"Old Notes" means the Company's 10 5/8% Senior Notes due 2003.
"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 Senior Debentures or the 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',
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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 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
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subordinated in right of payment to the Notes, 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 Notes on terms at least as
favorable to the Holders of Notes 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 Notes than the terms
of the Liens (if any) securing such refinanced Indebtedness.
"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
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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") 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
Senior Debentures, (ii) the offering by Finlay Jewelry of the 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
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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 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.
"Security and Pledge Agreement" means the Security and Pledge
Agreement, dated the date hereof, by and between Finlay Enterprises and Marine
Midland Bank, as Collateral Agent.
"Senior Debentures" means Finlay Enterprises' __% Senior Debentures due
_____, 2008.
"Senior Debenture Indenture" means the indenture, dated the date
hereof, by and between Finlay Enterprises and Marine Midland Bank, as trustee,
relating to the Senior Debentures.
"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
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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
Subsidiary of the Company to evidence advances by the Company or Subsidiary of
the Company, in each case, in the form attached as Exhibit E to this Indenture.
"Tax Allocation Agreement" means the Tax Allocation Agreement, dated as
of November 1, 1992, between the Company and Finlay Enterprises.
"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.
"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 Note" .........................................................2.01
"Event of Default" ........................................................6.01
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"Excess Proceeds" .........................................................4.10
"Global Note" .............................................................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
</TABLE>
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 Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee; and
"obligor" on the Notes and the Subsidiary Guarantees, if any,
means the Company and the Guarantors, respectively, and any successor obligor
upon the Notes 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;
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(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.
ARTICLE 2
THE NOTES
SECTION 2.01. FORM AND DATING.
(a) General. The Notes and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A hereto. The Notes
may have notations, legends or endorsements required by law, stock exchange rule
or usage. Each Note shall be dated the date of its authentication. The Notes
shall be in denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes 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 Note conflicts with the express
provisions of this Indenture, the provisions of this Indenture shall govern and
be controlling.
(b) Global Notes. Notes issued in global form (each a "Global
Note") shall be substantially in the form of Exhibit A attached hereto
(including the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Notes issued in definitive form (each a "Definitive Note") shall be
substantially in the form, if any, of Exhibit A attached hereto (but without the
"Schedule of Exchanges of Interests in Global Note" attached thereto). Each
Global Note shall represent such of the outstanding Notes as shall be specified
therein and each shall provide that it shall represent the aggregate principal
amount of outstanding Notes from time to time endorsed thereon and that the
aggregate principal amount of outstanding Notes represented thereby may from
time to time be reduced or increased, as appropriate, to reflect exchanges and
redemptions. Any endorsement of a Global Note to reflect the amount of any
increase or decrease in the aggregate principal amount of outstanding Notes
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.
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SECTION 2.02. EXECUTION AND AUTHENTICATION.
An Officer shall sign the Notes for the Company by manual or
facsimile signature. The Company's seal shall be reproduced on the Notes and may
be in facsimile form.
If an Officer whose signature is on a Note no longer holds
that office at the time a Note is authenticated, the Note shall nevertheless be
valid.
A Note shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Note has been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed
by an Officer (an "Authentication Order"), authenticate Notes for original issue
up to the aggregate principal amount stated in paragraph 4 of the Notes. The
aggregate principal amount of Notes 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 Notes. An authenticating agent may authenticate
Notes 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 Notes may
be presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes 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 7.7 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 Notes.
The Company initially appoints the Trustee to act as the
Registrar and Paying Agent and to act as Custodian with respect to the Global
Notes.
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
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held by the Paying Agent for the payment of principal, premium, if any, or
interest on the Notes, 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 Notes.
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
Notes and the Company shall otherwise comply with TIA ss. 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Global Notes. A Global Note 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 Notes
will be exchanged by the Company for Definitive Notes 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 Notes (in whole but not in part) should be exchanged
for Definitive Notes 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 Notes shall be issued in such names as the Depositary
shall instruct the Trustee. Global Notes 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 Note authenticated
and delivered in exchange for, or in lieu of, a Global Note 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 Note. A
Global Note may not be exchanged for another Note other than as provided in this
Section 2.06(a), however, beneficial interests in a Global Note may be
transferred and exchanged as provided in Section 2.06(b) hereof.
(b) Transfer and Exchange of Beneficial Interests in Global
Notes. The transfer and exchange of beneficial interests in Global Notes shall
be effected through the Depositary, in accordance with the provisions of this
Indenture and the Applicable Procedures. No written orders
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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 Notes. Any contrary provision hereof notwithstanding, no Definitive
Notes shall be issued or exchanged for beneficial interests in any Global Note
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 Notes for Definitive
Notes. Upon request by a Holder of Definitive Notes and such Holder's compliance
with the provisions of this Section 2.06(d), the Registrar shall register the
transfer or exchange of Definitive Notes. Prior to such registration of transfer
or exchange, the requesting Holder shall present or surrender to the Registrar
the Definitive Notes 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 Notes pursuant to the
instructions from the Holder thereof.
(e) Cancellation and/or Adjustment of Global Notes. At such
time as all beneficial interests in a particular Global Note have been exchanged
for Definitive Notes or a particular Global Note has been redeemed, repurchased
or cancelled in whole and not in part, each such Global Note 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 Note is exchanged for or transferred to a Person who will take delivery
thereof in the form of a beneficial interest in another Global Note or for
Definitive Notes, the principal amount of Notes represented by such Global Note
shall be reduced accordingly and an endorsement shall be made on such Global
Note 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
Notes and Definitive Notes 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 Note or to a Holder of a Definitive Note 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 Note selected for redemption in whole or in
part, except the unredeemed portion of any Note being redeemed in part.
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(iv) All Global Notes and Definitive Notes issued
upon any registration of transfer or exchange of Global Notes or Definitive
Notes shall be the valid obligations of the Company, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Global Notes or
Definitive Notes 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 Notes during a period beginning
at the opening of business 15 days before the day of any selection of Notes 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 Note so
selected for redemption in whole or in part, except the unredeemed portion of
any Note being redeemed in part or (C) to register the transfer of or to
exchange a Note between a record date and the next succeeding Interest Payment
Date.
(vi) Prior to due presentment for the registration of
a transfer of any Note, the Trustee, any Agent and the Company may deem and
treat the Person in whose name any Note is registered as the absolute owner of
such Note for the purpose of receiving payment of principal of and interest on
such Notes 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 Notes
and Definitive Notes in accordance with the provisions of Section 2.02 hereof.
SECTION 2.07. REPLACEMENT NOTES.
If any mutilated Note is surrendered to the Trustee, or the
Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Note, the Company shall issue and the Trustee,
upon receipt of an Authentication Order, shall authenticate a replacement Note
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 Note is replaced. The Company may charge for its expenses in replacing a
Note.
Every replacement Note 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 Notes duly issued hereunder.
SECTION 2.08. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes
authenticated by the Trustee except for those cancelled by it, those delivered
to it for cancellation, those reductions in the interest in a Global Note
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 Note does not cease to be outstanding because the Company or an
Affiliate of the Company holds the Note; however, Notes 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.
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If a Note is replaced pursuant to Section 2.07 hereof, it
ceases to be outstanding unless the Trustee receives proof satisfactory to it
that the replaced Note is held by a bona fide purchaser.
If the principal amount of any Note 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 Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal
amount of Notes have concurred in any direction, waiver or consent, Notes 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 Notes that the Trustee knows are so owned shall be so disregarded.
Notwithstanding the foregoing, Notes 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 Notes passes to the Company or such Subsidiary or Affiliate,
as the case may be.
SECTION 2.10. TEMPORARY NOTES.
Until certificates representing Notes are ready for delivery,
the Company may prepare and the Trustee, upon receipt of an Authentication
Order, shall authenticate temporary Notes. Temporary Notes shall be
substantially in the form of certificated Notes but may have variations that the
Company considers appropriate for temporary Notes and as shall be reasonably
acceptable to the Trustee. Without unreasonable delay, the Company shall prepare
and the Trustee shall authenticate definitive Notes in exchange for temporary
Notes.
Holders of temporary Notes shall be entitled to all of the
benefits of this Indenture.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall destroy
cancelled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all cancelled Notes shall be delivered
to the Company. The Company may not issue new Notes to replace Notes that it has
paid or that have been delivered to the Trustee for cancellation.
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SECTION 2.12. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Notes,
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 Notes 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 Note and
the date of the proposed payment. The Company shall fix or cause to be fixed
each such special record date and 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 Notes 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 Notes 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 Notes and that reliance may be placed
only on the other identification numbers printed on the Notes. 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 Notes 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 Notes 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.
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SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED.
If less than all of the Notes are to be redeemed or purchased
in an offer to purchase at any time, the Trustee shall select the Notes to be
redeemed or purchased among the Holders of the Notes in compliance with the
requirements of the principal national securities exchange, if any, on which the
Notes are listed or, if the Notes 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 Notes 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 Notes not previously called for redemption.
The Trustee shall promptly notify the Company in writing of
the Notes selected for redemption and, in the case of any Note selected for
partial redemption, the principal amount thereof to be redeemed. Notes and
portions of Notes selected shall be in amounts of $1,000 or whole multiples of
$1,000; except that if all of the Notes of a Holder are to be redeemed, the
entire outstanding amount of Notes 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 Notes called for redemption also
apply to portions of Notes 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 Notes are to be redeemed .
The notice shall identify the Notes to be redeemed and shall
state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the redemption date
upon surrender of such Note, a new Note or Notes in principal amount equal to
the unredeemed portion shall be issued upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes 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 Notes called for redemption ceases to accrue on
and after the redemption date;
(g) the paragraph of the Notes and/or Section of this
Indenture pursuant to which the Notes called for redemption are being redeemed;
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(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
Notes; 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.
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,
Notes 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 Notes 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 Notes, on such date and (iii) the principal of the Notes 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 Notes 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
Notes 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 Notes or the portions of Notes called for redemption. If a Note 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 Note was registered at the close of business on such record
date. If any Note 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
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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 Notes and in Section 4.01 hereof.
SECTION 3.06. NOTES REDEEMED IN PART.
Upon surrender of a Note 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 Note equal in
principal amount to the unredeemed portion of the Note surrendered.
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 Notes pursuant to this
Section 3.07 prior to _______, 2003. Thereafter, the Notes 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 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 $50.0 million in aggregate principal
amount of Notes 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 $100.0 million in aggregate principal amount of Notes remains
outstanding immediately after the occurrence of such redemption (excluding Notes
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.
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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 Notes. There are no sinking fund payments with respect to the Notes.
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 Notes
(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 Notes
required to be purchased pursuant to Section 4.10 hereof (the "Offer Amount")
or, if less than the Offer Amount has been tendered, all Notes tendered in
response to the Asset Sale Offer. Payment for any Notes 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 Note is registered at the
close of business on such record date, and no additional interest shall be
payable to Holders who tender Notes 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 Notes 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 Note not tendered or accepted for payment shall
continue to accrue interest;
(d) that, unless the Company defaults in making such payment,
any Note 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 Note purchased pursuant to
an Asset Sale Offer may only elect to have all of such Note purchased and may
not elect to have only a portion of such Note purchased;
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(f) that Holders electing to have a Note purchased pursuant to
any Asset Sale Offer shall be required to surrender the Note, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Note
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;
(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 Note the Holder delivered for purchase and a statement
that such Holder is withdrawing his or her election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes
surrendered by Holders exceeds the Offer Amount, the Trustee shall select the
Notes to be purchased on a pro rata basis (with such adjustments as may be
deemed appropriate by the Company so that only Notes in denominations of $1,000,
or integral multiples thereof, shall be purchased); and
(i) that Holders whose Notes were purchased only in part shall
be issued new Notes equal in principal amount to the unpurchased portion of the
Notes 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 Notes or portions thereof tendered pursuant to the Asset
Sale Offer, or if less than the Offer Amount has been tendered, all Notes
tendered, and shall deliver to the Trustee an Officers' Certificate stating that
such Notes 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 Notes tendered by such Holder and
accepted by the Company for purchase, and the Company shall promptly issue a new
Note, and the Trustee, upon written request from the Company shall authenticate
and mail or deliver such new Note to such Holder, in a principal amount equal to
any unpurchased portion of the Note surrendered. Any Note 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.
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ARTICLE 4
COVENANTS
SECTION 4.01. PAYMENT OF NOTES.
The Company shall pay or cause to be paid the principal of,
premium, if any, and interest on the Notes on the dates and in the manner
provided in the Notes. 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.
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 Notes 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 Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Company in respect of the Notes 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 Notes 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.
(a) Whether or not required by the rules and regulations of
the Securities and Exchange Commission (the "Commission"), so long as any Notes
are outstanding, the Company shall
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furnish to the Trustee and, upon receipt thereof, the Trustee shall mail to the
Holders of Notes, 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 Notes 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 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 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 is not in default in the
performance or observance of any of the terms, provisions and conditions of this
Indenture (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 Notes 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 that (i) 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 any 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.
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(c) The Company shall, so long as any of the Notes 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 Notes.
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 Notes or
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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 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 Sections 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:
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(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 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;
(vi) payments to Finlay Enterprises pursuant to the
Tax Allocation Agreement, as it may be amended from time to time in a
manner that is not materially adverse to the Company;
(vii) payments to Finlay Enterprises in an amount not
to exceed in any fiscal year the greater of $1.0 million and an amount
equal to 0.25% of net sales for the immediately preceding fiscal year
(without cumulation) in order to pay expenses incurred by Finlay
Enterprises in the ordinary course of business;
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(viii) payments to Finlay Enterprises to enable
Finlay Enterprises to pay when due accrued but unpaid interest on the
Senior Debentures, provided no Default or Event of Default then exists
and provided further that such amounts are promptly used by Finlay
Enterprises to pay such interest; and
(ix) 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 (ix) 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
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,
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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 Notes, and the
Senior Debenture Indenture and the Senior Debentures, (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
(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.
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(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 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;
(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 Finlay
Enterprises, the Company and any of
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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 Notes and
(y)(A) any subsequent issuance or transfer of Equity Interests that
results in any such Indebtedness being held by a Person other than
Finlay Enterprises, 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 Finlay Enterprises, 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;
(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;
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(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 (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 Notes 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
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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 Notes (an "Asset Sale Offer") in
accordance with the provisions of Section 3.09 hereof to purchase the maximum
principal amount of Notes 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 Notes tendered pursuant to
an Asset Sale Offer is less than the Excess Proceeds, the Company shall make an
offer to all holders of Senior Debentures in accordance with the provisions of
Section 3.09 hereof and on the same terms and conditions offered to Holders of
Notes to purchase the maximum principal amount of Senior Debentures that may be
purchased out of the remaining Excess Proceeds. To the extent that the aggregate
amount of Senior Debentures tendered pursuant to any such offer is less than the
remaining 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 Notes (or Debentures, as
the case may be) surrendered by Holders (or holders) thereof exceeds the amount
of Excess Proceeds, the Trustee shall select the Notes (or Debentures) to be
purchased on a pro rata basis.
SECTION 4.11. EQUITY INTERESTS OF WHOLLY OWNED SUBSIDIARIES.
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
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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.
SECTION 4.13. LIENS.
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 Notes 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
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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 Notes.
SECTION 4.15. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, each Holder of
Notes 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 Notes
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
Notes 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 Notes 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 Notes 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 Notes or portions thereof so
tendered and (3) deliver or cause to be delivered to the Trustee the Notes so
accepted together with an Officers' Certificate stating the aggregate principal
amount of Notes or portions thereof being purchased by the Company. The Paying
Agent will promptly mail to each Holder of Notes so tendered the Change of
Control Payment for such Notes, and the Trustee will promptly authenticate and
mail (or cause to be transferred by book entry) to each tendering Holder a new
Note equal in principal amount to any unpurchased portion of the Notes
surrendered, if any; provided that each such new Note 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 Notes validly
tendered and not withdrawn under such Change of Control Offer.
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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 Notes for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of this Indenture or the Notes unless such consideration is offered to be paid
or is paid to all Holders of the Notes 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 Notes 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 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),
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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 Notes 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 Notes;
(b) default in payment when due of the principal of or
premium, if any, on the Notes;
(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 Notes;
(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 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);
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(g) 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
(h) 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,
(iv) makes a general assignment for the benefit
of its creditors, or
(v) generally is not paying its debts as they
become due; or
(i) 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
(j) 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(h) or (i)), the Trustee or the Holders of at
least 25% in principal amount of the then outstanding Notes by written notice to
the Trustee and the Company may declare all the Notes to be
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due and payable immediately. Notwithstanding the foregoing, in the case of an
Event of Default arising from Sections 6.01(h) or (i) 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 Notes will become due and payable without further
action or notice. Holders of the Notes may not enforce this Indenture or the
Notes except as provided in this Indenture. Subject to certain limitations,
Holders of a majority in principal amount of the then outstanding Notes may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of the Notes 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
Notes pursuant to Section 3.07 hereof, then, upon acceleration of the Notes, 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 Notes to the
contrary notwithstanding. If an Event of Default occurs prior to , 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 the prohibition on redemption of
the Notes prior to such date, then, upon acceleration of the Notes, 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):
Year......................................... Percentage
1998 ........................................ ________%
1999 ........................................ ________%
2000 ........................................ ________%
2001 ........................................ ________%
2002 ........................................ ________%
2003 ........................................ ________%
(c) In the event of a declaration of acceleration of the Notes
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 Notes 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
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Notes 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 Notes that became due solely
because of the acceleration of the Notes, 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 Notes 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 Notes 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 Notes or to enforce the performance of any provision of
the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Notes or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Holder of a Note 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 Notes then outstanding by notice to the Trustee may on behalf of
the Holders of all of the Notes 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 Notes
(including in connection with an offer to purchase); provided, however, that the
Holders of a majority in aggregate principal amount of the then outstanding
Notes 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 Notes 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 Notes or that may
involve the Trustee in personal liability.
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SECTION 6.06. LIMITATION ON SUITS.
A Holder of a Note may pursue a remedy with respect to this
Indenture or the Notes only if:
(a) the Holder of a Note 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 Notes make a written request to the Trustee to pursue the
remedy;
(c) such Holder of a Note or Holders of Notes 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 Notes do not give the Trustee a
direction inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the
rights of another Holder of a Note or to obtain a preference or priority over
another Holder of a Note.
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the
right of any Holder of a Note to receive payment of principal, premium, if any,
and interest on the Note, on or after the respective due dates expressed in the
Note (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
Notes 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.
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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 Notes allowed in any judicial proceedings relative to the
Company (or any other obligor upon the Notes), 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 Notes 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.
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 Notes for amounts due and unpaid on the
Notes for principal, premium, if any, and interest, ratably, without preference
or priority of any kind, according to the amounts due and payable on the Notes
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 Notes pursuant to this Section 6.10.
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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 Note pursuant to Section 6.07 hereof, or a suit by Holders of more
than 10% in principal amount of the then outstanding Notes.
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 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
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(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.
(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.
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SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Notes 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 Notes, it
shall not be accountable for the Company's use of the proceeds from the Notes 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 Notes or any other document in connection with the sale of the
Notes 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 Notes 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 Note, the
Trustee may withhold the notice if it determines that withholding the notice is
in the interests of the Holders of the Notes.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
Within 60 days after each _____________ beginning with the
_____________ following the date of this Indenture, and for so long as Notes
remain outstanding, the Trustee shall mail to the Holders of the Notes 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 Notes shall be mailed to the Company and filed with the Commission
and each stock exchange on which the Notes are listed in accordance with TIA ss.
313(d). The Company shall promptly notify the Trustee when the Notes 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
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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 Notes on all money or property held
or collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. 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(h) or (i) 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.
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 Notes of a majority in principal amount of the then outstanding Notes
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;
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(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 Notes 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 Notes of at least 10% in principal amount of the then
outstanding Notes 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 Note
who has been a Holder of a Note for at least six months, fails to comply with
Section 7.10, such Holder of a Note 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 Notes. 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 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.
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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
Notes 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 Notes 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 Notes,
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 Notes
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 Notes 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 Notes when such payments are due, (b) the Company's
obligations with respect to such Notes 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.
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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 Notes on
and after the date the conditions set forth in Section 8.04 are satisfied
(hereinafter, "Covenant Defeasance"), and the Notes 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 Notes shall not
be deemed outstanding for accounting purposes). For this purpose, Covenant
Defeasance means that, with respect to the outstanding Notes, 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 Notes 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.
The following shall be the conditions to the application of
either Section 8.02 or 8.03 hereof to the outstanding Notes:
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 Notes, 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 Notes on the Stated Maturity or on the applicable
redemption date, as the case may be, and the Company must specify whether the
Notes 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
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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 Notes 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 Notes 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(h) or 6.01(i) 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 Notes 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 Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions
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of such Notes 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 Notes 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 Notes.
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 Note 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 Note 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 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 Notes 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 Note following the reinstatement of its
obligations, the Company shall be subrogated
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to the rights of the Holders of such Notes 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 NOTES.
Notwithstanding Section 9.02 of this Indenture, the Company
and the Trustee may amend or supplement this Indenture or the Notes without the
consent of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in
place of certificated Notes 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 Notes 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 10 hereof;
(d) to make any change that would provide any additional
rights or benefits to the Holders of the Notes or that does not adversely affect
the legal rights hereunder of any Holder of the Note; and
(e) to comply with requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the TIA;
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 NOTES.
Except as provided below in this Section 9.02, the Company and
the Trustee may amend or supplement this Indenture and the Notes 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 Notes then outstanding
(including consents obtained in connection with a purchase of, or tender offer
or exchange offer for, Notes), 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,
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premium, if any, or interest on the Notes, except a payment default resulting
from an acceleration that has been rescinded) or compliance with any provision
of this Indenture or the Notes may be waived with the consent of the Holders of
a majority in principal amount of the then outstanding Notes (including consents
obtained in connection with a purchase of, tender offer or exchange offer for,
Notes). The determination as to which Notes 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 Notes 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
Notes 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 Notes 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 Notes then
outstanding may waive compliance in a particular instance by the Company with
any provision of this Indenture or the Notes. However, without the consent of
each Holder affected, an amendment or waiver under this Section 9.02 may not
(with respect to any Notes held by a non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must
consent to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of
any Note or alter the provisions with respect to the redemption of the Notes;
(c) reduce the rate of or change the time for payment of
interest on any Note;
(d) waive a Default or Event of Default in the payment of
principal of or premium, if any, or interest on the Notes (except a rescission
of acceleration of the Notes by the Holders of at least a majority in aggregate
principal amount of the Notes and a waiver of the payment default that resulted
from such acceleration);
(e) make any Note payable in money other than that stated in
the Notes;
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(f) make any change in the provisions of this Indenture
relating to waivers of past Defaults or the rights of Holders of Notes to
receive payments of principal of or premium, if any, or interest on the Notes;
(g) waive a redemption payment with respect to any Note 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 Notes
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 Note is a continuing consent by the Holder of a
Note and every subsequent Holder of a Note or portion of a Note that evidences
the same debt as the consenting Holder's Note, even if notation of the consent
is not made on any Note. Any such Holder of a Note or subsequent Holder of a
Note, however, may revoke the consent as to its Note 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 Note.
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an
amendment, supplement or waiver on any Note thereafter authenticated. The
Company in exchange for all Notes may issue and the Trustee shall, upon receipt
of an Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.
Failure to make the appropriate notation or issue a new Note
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 11.04 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.
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ARTICLE 10
SUBSIDIARY GUARANTEES
SECTION 10.01. APPLICATION.
The provisions of Sections 10.02 through 10.06 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 10, 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 10.02. GUARANTEE.
Subject to this Article 10, the Company shall cause each of
the Guarantors, jointly and severally, unconditionally to guarantee to each
Holder of a Note 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 Notes or the obligations of the Company hereunder or
thereunder, that: (a) the principal of and interest on the Notes 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
Notes, 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 Notes 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 Notes or this
Indenture, the absence of any action to enforce the same, any waiver or consent
by any Holder of the Notes 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
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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 covenant that its Subsidiary Guarantee shall
not be discharged except by complete performance of the obligations contained in
the Notes 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 10.03. LIMITATION ON GUARANTOR LIABILITY.
By its execution of its Subsidiary Guarantee, each Guarantor,
and by its acceptance of Notes, 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 10 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 10, result
in the obligations of such Guarantor under its Subsidiary Guarantee not
constituting a fraudulent transfer or conveyance.
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SECTION 10.04. EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEE.
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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 Note authenticated and delivered by the
Trustee on or after the date of such Guarantee. Further, the Company shall 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 Note 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 Note on
which such Subsidiary Guarantee is endorsed, such Subsidiary Guarantee shall be
valid nevertheless.
The delivery of any Note 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 10.
SECTION 10.05. 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 10.06 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 Notes 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 10.06. 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
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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.
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 Notes and for the other obligations of such Guarantor under this
Indenture as provided in this Article 10.
SECTION 10.07. 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 B (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.
ARTICLE 11
MISCELLANEOUS
SECTION 11.01. 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 11.02. 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 Fine Jewelry Corporation
529 Fifth Avenue, New York, New York 10175
Telecopier No.: (212) 808-2800
Attention: Secretary and Corporate Counsel
With a copy to:
Tenzer Greenblatt LLP
405 Lexington Avenue
New York, New York 10174
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
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<PAGE>
The Company, any Guarantor or the Trustee, by notice to the
others, may designate additional or different addresses for subsequent notices
or communications.
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 11.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER
HOLDERS OF NOTES.
Holders may communicate pursuant to TIA ss. 312(b) with other
Holders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and anyone else shall have the protection of
TIA ss. 312(c).
SECTION 11.04. 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 11.05 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 11.05 hereof) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been satisfied.
SECTION 11.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
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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:
(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 11.06. 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 11.07. 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 Notes or this Indenture or for any
claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for issuance of
the Notes.
SECTION 11.08. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE
USED TO CONSTRUE THIS INDENTURE, THE NOTES 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 11.09. 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 11.10. SUCCESSORS.
All agreements of the Company in this Indenture and the Notes
shall bind its successors. All agreements of the Trustee in this Indenture shall
bind its successors.
SECTION 11.11. SEVERABILITY.
In case any provision in this Indenture or in the Notes 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 11.12. 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 11.13. 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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<PAGE>
SIGNATURES
Dated as of April , 1998 FINLAY FINE JEWELRY CORPORATION
-----
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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<PAGE>
EXHIBIT A
(Face of Note)
- --------------------------------------------------------------------------------
CUSIP/CINS_____________
% Senior Note due ________, 2008
No.: $____________
Finlay Fine Jewelry Corporation 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 Note 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 FINE JEWELRY CORPORATION
By:
-------------------------------
Name:
Title:
(SEAL)
This is one of the [Global]
Notes referred to in the
within-mentioned Indenture:
MARINE MIDLAND BANK,
as Trustee
By: -----------------------
Name:
Title:
Dated: , 1998
-----------
- --------------------------------------------------------------------------------
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<PAGE>
(Back of Note)
____% Senior Notes 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 Fine Jewelry Corporation, a Delaware
corporation (the "Company"), promises to pay interest on the principal amount
of this Note 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 Notes 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 Note 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
Notes (except defaulted interest) to the Persons who are registered Holders of
Notes at the close of business on the ______________ or ____________ next
preceding the Interest Payment Date, even if such Notes 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 Notes 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 Notes at their respective
addresses set forth in the register of Holders of Notes; provided that all
payments of principal, premium and interest with respect to Notes 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 Notes under an
Indenture dated as of April __, 1998 ("Indenture") between the Company and the
Trustee. The terms of the Notes 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 Notes 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 Note conflicts
with the express provisions of the Indenture, the provisions of the Indenture
shall govern and be controlling. The Notes are obligations of the Company
limited to $150.0 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 Notes are not redeemable at the
Company's option prior to , 2003. Thereafter, the Notes 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 $50.0 million in aggregate principal amount of Notes 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
$100.0 million in aggregate principal amount of Notes remains outstanding
immediately after the occurrence of each such redemption (excluding Notes 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 Notes.
7. REPURCHASE AT OPTION OF HOLDER. (a) If there is a Change
of Control, each Holder of Notes 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 Notes 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
Notes 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 Notes 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 Notes (an "Asset Sale Offer") to purchase the maximum principal
amount of Notes 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
the aggregate amount of Notes tendered pursuant to an Asset Sale Offer is less
than the Excess Proceeds, the Company shall make an offer to all holders of
Senior Debentures in accordance with the provisions of Section 3.09 of the
Indenture and on the same terms and conditions offered to Holders of Notes to
purchase the maximum principal amount of Senior Debentures that may be
purchased out of the remaining Excess Proceeds. To the extent that the
aggregate amount of Senior Debentures tendered pursuant to any such offer is
less than the remaining 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 the Indenture. If the aggregate principal
amount of Notes tendered in connection with such Asset Sale Offer and
surrendered by Holders thereof exceeds the amount of Excess Proceeds, the
Trustee shall select the Notes 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.
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 Notes 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. Notes in denominations larger than $1,000
may be redeemed in part. If any Note is to be redeemed in part only, the
notice of redemption that relates to such Note shall state the portion of the
principal amount thereof to be redeemed. A new Note
A-4
<PAGE>
in principal amount equal to the unredeemed portion thereof will be issued in
the name of the Holder thereof upon cancellation of the original Note. On and
after the redemption date interest, ceases to accrue on Notes or portions
thereof called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Notes may be registered and Notes 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 Notes
during a period beginning at the opening of business 15 days before the day of
any selection of Notes for redemption and ending at the close of business on
the day of selection, (b) to register the transfer of or to exchange any Note
so selected for redemption in whole or in part, except the unredeemed portion
of any Note being redeemed in part or (c) to register the transfer of or to
exchange a Note between a record date and the next succeeding Interest Payment
Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note
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 Notes may be amended or supplemented with the
consent of the Holders of at least a majority in principal amount of the Notes
then outstanding (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for, Notes)
and any existing default or compliance with any provision of the Indenture or
the Notes may be waived with the consent of the Holders of a majority in
principal amount of the Notes then outstanding (including, without limitation,
consents obtained in connection with a purchase of, or tender offer or
exchange offer for, Notes). Without the consent of any Holder of Notes, the
Company and the Trustee may amend or supplement the Indenture or the Notes to
cure any ambiguity, defect or inconsistency, to provide for uncertificated
Notes in addition to or in place of certificated Notes, to provide for the
assumption of the Company's obligations to Holders of the Notes 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 Notes 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 Notes; (ii)
default in payment when due of the principal of or premium, if any, on the
Notes; (iii) failure by the Company to comply 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 Notes; (v) default under any mortgage, indenture or
instrument under which there may be issued or by
A-5
<PAGE>
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); and (vii) 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 Notes
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 Notes
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 Notes 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 Notes that became due solely because of the acceleration of the Notes,
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 Notes 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 Notes 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 Notes may declare all the Notes to be due
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<PAGE>
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 Notes will become due and payable without further action or
notice. Holders of the Notes may not enforce the Indenture or the Notes except
as provided in the Indenture. Subject to certain limitations, Holders of a
majority in principal amount of the then outstanding Notes may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of the Notes 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 Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of
the Notes 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 Notes. 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
Notes 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 Note waives
and releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes. 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.
15. AUTHENTICATION. This Note 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 Notes 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
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<PAGE>
numbers either as printed on the Notes 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 Fine Jewelry Corporation
529 Fifth Avenue
New York, New York 10017
Attention: Secretary and Corporate Counsel
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<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note 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 Note 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 Note)
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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<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note 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 Note 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 Note)
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).
A-10
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL Note(1)
The following exchanges of a part of this Global Note for an
interest in another Global Note or for a Definitive Note, or exchanges of a
part of another Global Note or Definitive Note for an interest in this Global
Note, have been made:
<TABLE>
<CAPTION>
Principal
Amount
Amount of Amount of of this Signature of
decrease in increase in Global Note authorized
Principal Principal following such officer
Date of Amount of Amount of decrease (or of Trustee or
Exchange this Global Note this Global Note increase) Custodian
-------- ---------------- ---------------- -------------- -------------
<S> <C> <C> <C> <C>
</TABLE>
- --------
1/ This should be included only if the Note is issued in global form.
A-11
<PAGE>
EXHIBIT B
[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 the 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 the Licensor; and
Whereas, pursuant to the Indenture dated as of April __, 1998 between
Finlay Fine Jewelry Corporation and Marine Midland Bank, as trustee (the
"Indenture"), relating to Finlay Fine Jewelry Corporation's __% Senior Notes due
2008 (the "Senior Notes"), in connection with such sale, transfer, conveyance
and assignment, the 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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<PAGE>
(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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<PAGE>
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.
-4-
<PAGE>
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 Notes
is outstanding and all obligations of Finlay Fine Jewelry Corporation 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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<PAGE>
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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<PAGE>
(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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<PAGE>
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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<PAGE>
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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<PAGE>
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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<PAGE>
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.
-12-
<PAGE>
(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:
-13-
<PAGE>
SCHEDULE A
Licensed Trade Names
-14-
<PAGE>
EXHIBIT C
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 Fine Jewelry
Corporation and Marine Midland Bank, as trustee (the "Trustee"), but
irrespective of the validity and enforceability of the Indenture, the Notes
and the obligations of the Company thereunder, (a) the due and punctual
payment of the principal of, premium, if any, and interest on the Notes (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 Notes 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 Notes and to the Trustee pursuant to the
Subsidiary Guarantee and the Indenture are expressly set forth in Article 10
of the Indenture and reference is hereby made to the Indenture for the precise
terms of the Subsidiary Guarantee. Each Holder of a Note, by accepting the
same, agrees to and shall be bound by such provisions.
[Name of Guarantor]
By:
-------------------------------
Name:
Title:
C-1
<PAGE>
EXHIBIT D
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 Fine Jewelry Corporation (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 $150.0
million of __% Notes due ________, 2008 (the "Notes");
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
Notes 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 Notes 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 10 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
INDENTURE BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF
D-1
<PAGE>
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 Fine Jewelry Corporation
By:
--------------------------------
Name:
Title:
MARINE MIDLAND BANK, as Trustee
By:
-------------------------------
Name:
Title:
D-2
<PAGE>
EXHIBIT E
[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 NOTES.
[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 to which interest has
been paid or, if no interest has been paid, from the date of issuance;
E-1
<PAGE>
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.
E-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 Fine Jewelry Corporation 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:
E-3
<PAGE>
April 17, 1998
Finlay Fine Jewelry Corporation
529 Fifth Avenue
New York, New York 10017
Finlay Fine Jewelry Corporation
Registration Statement on Form S-1
Registration No. 333-48563
----------------------------------
Ladies and Gentlemen:
In connection with the referenced Registration Statement on
Form S-1, 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 Fine Jewelry Corporation, a Delaware corporation (the
"Company"), to furnish our opinion as to the legality of $150,000,000 aggregate
principal amount of the Company's Senior Notes due 2008 (the "Securities") being
registered under the Registration Statement.
<PAGE>
Finlay Fine Jewelry Corporation 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
<PAGE>
Finlay Fine Jewelry Corporation 3
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, 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
<PAGE>
Finlay Fine Jewelry Corporation 4
transfer, reorganization, moratorium and other similar laws affecting creditors'
rights 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,
<PAGE>
Finlay Fine Jewelry Corporation 5
/s/ PAUL, WEISS, RIFKIND, WHARTON & GARRISON
<PAGE>
EXHIBIT 12.1
FINLAY FINE JEWELRY CORPORATION
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............ $ 34,310 $ 37,492 $49,110 $54,989 $ 60,862 $60,862
-------- -------- ------- ------- -------- ---------
-------- -------- ------- ------- -------- ---------
FIXED CHARGES:
Interest expense, net (including debt
issuance costs amortization)........... $ 20,753 $ 20,927 $21,844 $22,526 $ 24,413 $23,262
Interest income.......................... 36 23 141 83 35 35
-------- -------- ------- ------- -------- ---------
Total interest expense................. 20,789 20,950 21,985 22,609 24,448 23,297
Capitalized interest..................... -- -- -- -- 660 660
-------- -------- ------- ------- -------- ---------
Total fixed charges.................... $ 20,789 $ 20,950 $21,985 $22,609 $ 25,108 $23,957
-------- -------- ------- ------- -------- ---------
-------- -------- ------- ------- -------- ---------
Earnings divided by fixed charges........ 1.7x 1.8x 2.2x 2.4x 2.4x 2.5x
-------- -------- ------- ------- -------- ---------
-------- -------- ------- ------- -------- ---------
</TABLE>
<PAGE>
Exhibit 23.1
[ARTHUR ANDERSEN LLP]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
report and to all references to our Firm included in or made a part of this
Registration Statement.
/s/ Arthur Andersen LLP
-----------------------
Arthur Andersen LLP
New York, New York
April 15, 1998
<PAGE>
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. national bank) IDENTIFICATION No.)
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 FINE JEWELRY CORPORATION
(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 Notes 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
- -------------------------------------------------------------------------------
/1/
Please refer to page i,
Table of Contents,
for the required
disclosure of
estimated burden.
- -------------------------------------------------------------------------------
Consolidated Reports of Condition and Income for
A Bank With Domestic and Foreign Offices--FFIEC 031
Report at the close of business December 31, 1997
This report is required by law; 12 U.S.C. ss.324 (State member banks); 12 U.S.C.
ss. 1817 (State nonmember banks); and 12 U.S.C. ss.161 (National banks).
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
(971231)
---------
(RCRI 9999)
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, consolidated foreign subsidiaries, or
International Banking Facilities.
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 formand 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:
<TABLE>
<S> <C> <C>
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
</TABLE>
<PAGE>
LIABILITIES
<TABLE>
<S> <C> <C>
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
</TABLE>
