AMENDED AND RESTATED INTERCREDITOR AGREEMENT
This Amended and Restated Intercreditor Agreement (this "Agreement"), dated
as of March 30, 2001, is by and between SOVEREIGN BANK ("Sovereign Bank"), a
national banking association, as successor to Fleet National Bank, f/k/a
BankBoston, N.A., f/k/a The First National Bank of Boston, as successor to Rhode
Island Hospital Trust National Bank, with an office at 1 West Mezzanine, 00
Xxxxxxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxx Xxxxxx 00000, in its capacity as agent
under the Bank Agreement and the other Bank Documents referred to below for the
Institutions (as defined in the Bank Agreement) and GENERAL ELECTRIC CAPITAL
CORPORATION, a corporation organized under the banking laws of the State of New
York, in its capacity as agent under the GE Capital Agreement and GE Capital
Security Documents referred to below with the acknowledgment and consent of
FINLAY FINE JEWELRY CORPORATION, a Delaware corporation, ("Finlay") and EFINLAY,
INC., a Delaware corporation ("eFinlay" and, together with Finlay, the
"Obligors"). The Agent (as hereinafter defined) and GE Capital (as hereinafter
defined) shall be referred to individually as a "Lender" and collectively the
"Lenders".
WHEREAS, Finlay, Finlay Enterprises, Inc., a Delaware corporation (the
"Parent"), GE Capital and the financial institutions party thereto entered into
a Credit Agreement, dated as of May 26, 1993 as amended and restated on March
28, 1995 and as further amended and restated as of September 11, 1997 (as
further amended, restated, replaced, renewed or refinanced from time to time,
the "GE Capital Agreement"), pursuant to which GE Capital has agreed to advance
funds to Finlay and the Parent (collectively, the "Borrowers") for the purposes
stated therein (the credit facility established under the GE Capital Agreement,
the "Dollar Facility");
WHEREAS, to secure all present and future obligations of the Borrowers
under or in connection with the GE Capital Agreement and the other Loan
Documents (as defined therein), including, without limitation, the "Lender Debt"
(as defined therein), pursuant to the Security Documents (as defined in the GE
Capital Agreement) the Borrowers, eFinlay, Finlay Jewelry, FMBI and certain
other subsidiaries of Finlay from time to time party to such Security Documents
(collectively, the "Grantors") granted to GE Capital a security interest in the
property described in such Security Documents as in effect on the date hereof
and all proceeds thereof (the "GE Capital Collateral");
WHEREAS, Rhode Island Hospital Trust National Bank ("Rhode Island Bank")
and Finlay entered into a Gold Consignment Agreement, dated as of June 15, 1995
(as amended, restated, supplemented or modified from time to time immediately
prior to the effectiveness of this Agreement, the "Original Bank Agreement"),
pursuant to which Rhode Island Bank agreed to purchase from and consign back to
Finlay certain amounts of Precious Metal (as defined therein) content of
Specified Gold Jewelry (as defined therein);
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WHEREAS, to secure all present and future obligations of Finlay to Rhode
Island Bank under or in connection with the Original Bank Agreement and the
other Consignment Documents (as defined in the Original Bank Agreement), Finlay
granted to Rhode Island Bank a security interest in the collateral described in
the Security Documents (as defined in the Original Bank Agreement) and all
proceeds thereof;
WHEREAS, Sovereign Bank succeeded to the rights and obligations of Rhode
Island Bank in respect of the Original Bank Agreement, the other Consignment
Documents (as defined in the Original Bank Agreement) and the Original
Intercreditor Agreement (as defined below);
WHEREAS, eFinlay entered into the eFinlay Guaranty, dated as of September
29, 2000 (as amended, restated, supplemented or modified from time to time
immediately prior to the effectiveness of this Agreement, the "eFinlay
Guaranty") with Sovereign Bank, pursuant to which eFinlay guaranteed all of the
Obligations (as defined in the Original Bank Agreement);
WHEREAS, to secure all present and future obligations of eFinlay to
Sovereign Bank under or in connection with the eFinlay Guaranty and the other
Consignment Documents (as defined in the Original Bank Agreement), eFinlay
granted to Sovereign Bank a security interest in the collateral described in the
Security Documents (as defined in the Original Bank Agreement) and all proceeds
thereof;
WHEREAS, Finlay and eFinlay have entered into the Amended and Restated
Consignment Agreement (as amended, restated, replaced, renewed or refinanced
from time to time, the "Bank Agreement"), of even date herewith, pursuant to
which Finlay, eFinlay, the Agent and the Institutions (as defined in the Bank
Agreement, the "Institutions") have amended and restated the Original Bank
Agreement in its entirety, and pursuant to which the Agent and the Institutions
have agreed, subject to the terms and conditions contained therein, that the
Agent will make Purchases and Consignments (as defined therein) to Finlay and
eFinlay on behalf of the Institutions (the facility created under the Bank
Agreement, the "Gold Facility");
WHEREAS, Finlay and eFinlay have, pursuant to the Security Documents (as
defined in the Bank Agreement, the "Bank Security Documents"), confirmed and
continued the provision of collateral security described in the Bank Security
Documents as in effect on the date hereof and all proceeds thereof (the "Bank
Collateral") to the Agent for the benefit of the Agent and the Institutions to
secure all present and future obligations of Finlay and eFinlay to the Agent and
the Institutions under or in connection with the Bank Agreement and the other
Consignment Documents (as defined in the Bank Agreement);
WHEREAS, GE Capital and Rhode Island Bank entered into an Intercreditor
Agreement, dated as of June 15, 1995 (as amended, restated, supplemented or
modified from time to time immediately prior to the effectiveness of
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this Agreement, the "Original Intercreditor Agreement"), pursuant to which GE
Capital and Rhode Island Bank set forth the relative priorities of their
respective security interests in and liens on the GE Capital Collateral and the
Bank Collateral and to establish certain other matters relating thereto;
WHEREAS, it is a condition precedent to the Agent's making any Purchases
and Consignments to Finlay and eFinlay under the Bank Agreement on behalf of the
Institutions that GE Capital and the Agent amend and restate the Original
Intercreditor Agreement (and that Finlay and eFinlay acknowledge and consent to
such amendment and restatement) in order to confirm and continue the Agent's and
GE Capital's relative priorities of their respective security interests in and
liens on the GE Capital Collateral and the Bank Collateral and to establish
certain other matters relating thereto; and
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, terms and covenants hereinafter set forth and for other good and
valuable consideration, receipt of which is hereby acknowledged, the parties
agree as follows:
SECTION 1. DEFINITIONS.
Section 1.1 Certain Defined Terms. As used herein, the following terms
shall have the following meanings:
"Agent" shall mean, at any time, the Agent under the Bank Agreement
and the Bank Security Documents at such time.
"Applicable Percentage" shall mean 85%.
"Approved Vendor" shall mean an "Approved Vendor", (as such term is
defined in the Bank Agreement as in effect on the date hereof) listed on
Schedule 1 hereto or of which GE Capital shall have been supplied written
notice.
"Bank Agreement" shall have the meaning assigned to that term in the
preamble to this Agreement.
"Bank Collateral" shall have the meaning assigned to that term in the
preamble to this Agreement.
"Bank Documents" shall mean the "Consignment Documents" as such term
is defined in the Bank Agreement, as in effect on the date hereof.
"Bank Obligations" shall mean the "Obligations" as such term is
defined in the Bank Agreement as in effect on the date hereof.
"Bank Priority Collateral" shall mean the following property which
constitutes Bank Collateral: (i) Specified Gold Jewelry, (ii) Bank Sale
Proceeds, (iii) Post Default Bank Proceeds, and (iv) Cash Deposits.
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"Bank Sale Proceeds" shall have the meaning assigned to that term in
Section 2.1.4 hereof.
"Bank Security Documents" shall have the meaning assigned to that term
in the preamble to this Agreement.
"Borrowers" shall have the meaning assigned to that term in the
preamble to this Agreement.
"Cash Deposits" shall have the meaning assigned to that term in the
Bank Agreement as in effect on the date hereof.
"Consignment Memo" shall mean a memorandum, substantially in the form
of Exhibit A hereto, prepared by the Obligors and pertaining to sales of
consignment inventory supplied by an Approved Vendor for any calendar
month.
"Default Notice" shall mean a written notice given by the Agent to GE
Capital and the Borrowers in accordance with Section 2.1.4 hereof.
"Default Period" shall have the meaning assigned thereto in Section
2.1.4 hereof.
"Dollar Facility" shall have the meaning assigned to that term in the
preamble to this Agreement.
"Dollar Value" shall mean, as to any Precious Metal content of
Specified Gold Jewelry at any time, the average (mean) of the Agent's "bid"
and "ask" spot quotations for Precious Metal at such time.
"eFinlay" shall have the meaning assigned to that term in the preamble
to this Agreement.
"eFinlay GE Capital Guaranty" shall mean the Guaranty dated as of
September 29, 2000, issued by eFinlay in favor of GE Capital, as amended,
restated, supplemented or modified from time to time.
"eFinlay GE Capital Security Agreement" shall mean the Security
Agreement dated as of September 29, 2000, between GE Capital and eFinlay,
as amended, restated, supplemented or modified from time to time.
"Finlay" shall have the meaning assigned to that term in the preamble
to this Agreement.
"Finlay Jewelry" shall mean Finlay Jewelry, Inc.
"FMBI" shall mean Finlay Merchandising & Buying, Inc.
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"GE Capital" shall mean, at any time, the agent under the GE Capital
Agreement and the GE Capital Security Documents at such time.
"GE Capital Agreement" shall have the meaning assigned to that term in
the preamble to this Agreement.
"GE Capital Collateral" shall have the meaning assigned to that term
in the preamble to this Agreement.
"GE Capital Loan Documents" shall mean the "Loan Documents" as such
term is defined in the GE Capital Agreement as in effect on the date
hereof, as such Loan Documents may be amended, restated, replaced, renewed
or refinanced from time to time.
"GE Capital Obligations" shall mean the "Lender Debt" as such term is
defined in the GE Capital Agreement as in effect on the date hereof.
"GE Capital Security Documents" shall mean the "Security Documents" as
such term is defined in the GE Capital Agreement as in effect on the date
hereof and, as to all provisions thereof pursuant to which a security
interest or lien is granted therein, the GE Capital Agreement, in each
case, as such Security Documents and GE Capital Agreement are amended,
restated, replaced, renewed or refinanced from time to time and shall
include without limitation the eFinlay GE Capital Guaranty and the eFinlay
GE Capital Security Agreement, and the guaranties and security agreements
entered into by FMBI and Finlay Jewelry in favor of GE Capital.
"GE Capital Priority Collateral" shall mean all property constituting
GE Capital Collateral, other than Bank Priority Collateral.
"Grantor" shall have the meaning assigned to that term in the preamble
to this Agreement.
"Lien" shall mean a security interest or lien granted by any Grantor.
"Obligors" shall have the meaning assigned to that term in the
preamble to this Agreement.
"Payment Amount" shall mean, for any host store for any calendar
month, the amount paid by such host store in respect of such calendar month
to an Obligor under such host store's licensed department agreement or
arrangement with such Obligor.
"Post Default Bank Proceeds" shall have the meaning assigned to that
term in Section 2.1.4(c) hereof.
"Post Default Ratio" shall mean, as to any calendar month, a fraction,
the numerator of which is the number of days in such calendar month which
occurred on or following the issuance of a Default Notice (whether or not
such
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Default Notice was issued in such calendar month) under Section 2.1.4
hereof and the denominator of which is the total number of days in such
calendar month; provided, however, that, notwithstanding the foregoing, in
the event that a Default Notice is issued on or after November 15 in any
year, then, and in such event, the Post Default Ratio for that November
shall be .5.
"Precious Metal" shall have the meaning specified in the Bank
Agreement as in effect on the date hereof.
"Specified Gold Jewelry" shall have the meaning assigned to that term
in the Bank Agreement as in effect on the date hereof, and in any event
shall not include any proceeds of Specified Gold Jewelry other than
proceeds of casualty insurance in respect of any loss or destruction of or
damage to Specified Gold Jewelry, which proceeds of casualty insurance
shall be included.
"Specified Jewelry Purchase Price" shall mean, with respect to each
item of Specified Gold Jewelry, the price paid by an Obligor to the
Approved Vendor for such item of Specified Gold Jewelry, such price being
currently evidenced by the amount shown in the Consignment Memo for such
Approved Vendor as the "memo billing price" of such item of Specified Gold
Jewelry supplied by such Approved Vendor.
"Specified Jewelry Sale Amount" shall mean twice the sum of the
Specified Jewelry Purchase Price for all Specified Gold Jewelry sold during
the month covered by the Payment Amount.
"Store Settlement Amount" shall mean, for any host store for any
calendar month, the gross sales amount (prior to rent, commissions,
expenses and other deductions) that such store has reported to an Obligor
for such calendar month under such host store's licensed department,
agreement or arrangement with such Obligor.
"Store Statement" shall mean a settlement statement, substantially in
the form of Exhibit B hereto, prepared by a host store in which an Obligor
operates a licensed department.
"Subject Proceeds" shall have the meaning assigned to that term in
Section 2.1.4 hereof.
Section 1.2 Other Definitional Provisions. The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement, and section and subsection references are to this Agreement unless
otherwise specified.
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SECTION 2. TERMS, CONDITIONS AND PRIORITY OP SECURITY INTERESTS.
Section 2.1 Security Interests of GE Capital.
Section 2.1.1 The GE Capital Collateral. (a) The Agent acknowledges
the grant to GE Capital of the GE Capital Collateral and agrees that such
grant does not conflict with or cause a default under any of the Bank
Documents. The Agent agrees not to contest the validity, perfection, or
enforceability of any security interest of GE Capital in the GE Capital
Collateral. The Agent consents to the execution, delivery and performance
by the Grantors of the GE Loan Documents, subject to any contrary terms of
this Agreement.
(b) Notwithstanding the order or time of attachment, or the order,
time or manner of perfection, or the order or time of filing or recordation
of any documents or instruments, or other method of perfecting a security
interest in favor of GE Capital in any of the GE Capital Collateral, and
notwithstanding any conflicting terms or conditions which may be contained
in any of the Bank Documents or GE Capital Loan Documents, the Liens in
favor of GE Capital upon the GE Capital Priority Collateral have and shall
have priority over the Liens held by the Agent upon the GE Capital Priority
Collateral and the Liens of the Agent upon the GE Capital Priority
Collateral are and shall be, in all respects, subject and subordinate to
the Liens held by GE Capital in the GE Capital Priority Collateral to the
full extent of the GE Capital Obligations. It is understood and agreed that
it is the intent of this Agreement that the Agent have no Lien upon any GE
Capital Priority Collateral, except to the extent of any Lien which the
Agent may have on proceeds of Specified Gold Jewelry arising from sales
thereof during a Default Period, and that the relative interests of the
Agent and GE Capital in such proceeds are addressed in Section 2.1.4
hereof.
(c) The priorities established or confirmed in paragraph (b) of
Section 2.1.1 shall not be altered or otherwise affected by any amendment,
modification, supplement, extension, renewal, restatement, replacement or
refinancing of the GE Capital Agreement, any of the other GE Capital Loan
Documents or the Dollar Facility, nor by any action or inaction which GE
Capital or any holder of any GE Capital Obligation may take in connection
therewith, other than any action taken in contravention of the terms of
this Agreement.
(d) As between the Agent and GE Capital, GE Capital shall have the
exclusive right to manage, perform and enforce the terms of the GE Capital
Agreement and the other GE Capital Loan Documents with respect to the GE
Capital Priority Collateral, to exercise and enforce all privileges and
rights thereunder according to its business judgment, including, without
limitation, the exclusive right to take or retake control or possession of
such GE Capital Priority Collateral and to hold, prepare for sale, process,
sell, lease, dispose of, or liquidate any or all of such GE Capital
Priority Collateral, in each case, subject to Section 2.1.4 hereof.
(e) Notwithstanding anything to the contrary contained in the Bank
Agreement or the other Bank Documents, in the event of any sale, transfer
or disposition of any GE Capital Priority Collateral by or at the direction
of GE
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Capital while any event of default under the GE Capital Agreement is
continuing and in furtherance by GE Capital of its rights to realize upon
the GE Capital Priority Collateral in any case, not in contravention of the
terms hereof, the Agent will, at the request of GE Capital, immediately
deliver such release documents with respect to the Lien of the Agent on
such GE Capital Priority Collateral as GE Capital may reasonably request.
(f) Notwithstanding any rights or remedies available to the Agent
under any of the Bank Agreement, any other Bank Document, applicable law or
otherwise, so long as any GE Capital Obligations are outstanding or the GE
Capital Agreement is in effect, the Agent will not, directly or indirectly
seek to foreclose or realize upon (judicially or non-judicially) its Lien
on any GE Capital Priority Collateral, take any other action against the GE
Capital Priority Collateral or seek to assert any claim, interest or Lien
in the GE Capital Priority Collateral, without, in each instance, the prior
written consent of GE Capital. Nothing contained in this paragraph (f)
shall prevent the Agent from enforcing any or all of its rights and
remedies against the Obligors under the Bank Documents or against the Bank
Priority Collateral, so long as the Agent takes no action with respect to
or against the GE Capital Priority Collateral in contravention of the
immediately preceding sentence.
Section 2.1.2 The Bank Collateral. (a) GE Capital acknowledges the
grant to the Agent of the Bank Collateral and agrees that such grant does
not conflict with or cause a default under any of the GE Capital Loan
Documents. GE Capital agrees not to contest the validity, perfection, or
enforceability of any security interest of the Agent in the Bank
Collateral. GE Capital consents to the execution, delivery and performance
by the Obligors of the Bank Agreement and the other Bank Documents, subject
to any contrary terms of this Agreement.
(b) Notwithstanding the order or time of attachment, or the order,
time or manner of perfection, or the order or time of filing or recordation
of any documents or instruments, or other method of perfecting a security
interest in favor of the Agent in any of the Bank Collateral, and
notwithstanding any conflicting terms or conditions which may be contained
in any of the GE Capital Loan Documents or the Bank Documents, the Liens in
favor the Agent upon the Bank Priority Collateral have and shall have
priority over the Liens held by GE Capital upon the Bank Priority
Collateral and the Liens of GE Capital upon the Bank Priority Collateral
are and shall be, in all respects, subject and subordinate to the Liens
held by the Agent upon the Bank Priority Collateral to the full extent of
the Bank Obligations. The execution and delivery by GE Capital of this
Agreement shall constitute receipt by GE Capital of notice, given by the
Agent to GE Capital pursuant to and in accordance with the requirements of
section 9-114(b) of the Uniform Commercial Code, with respect to all
present and future Specified Gold Jewelry which has been or may be
consigned by the Agent to the Obligors under the Bank Agreement, with GE
Capital acknowledging this Agreement as notice that the Agent expects to
deliver Consigned Precious Metal to the Obligors on consignment.
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(c) The priorities established or confirmed in paragraph (b) of this
Section 2.1.2 shall not be altered or otherwise affected by any amendment,
modification, supplement, extension, renewal, restatement, replacement or
refinancing of the Bank Agreement, any other Bank Document or the Gold
Facility, nor by any action or inaction which the Agent may take in
connection therewith, other than any action taken in contravention of the
terms of this Agreement.
(d) As between GE Capital and the Agent, the Agent shall have the
exclusive right to manage, perform and enforce the terms of the Bank
Agreement and the other Bank Documents with respect to the Bank Priority
Collateral, to exercise and enforce all privileges and rights thereunder
according to its business judgment, including, without limitation, the
exclusive right to take or retake control or possession of such Bank
Priority Collateral and to hold, prepare for sale, process, sell, lease,
dispose of, or liquidate any or all of such Bank Priority Collateral, in
each case, subject to Section 2.1.4 hereof.
(e) Notwithstanding anything to the contrary contained in the GE
Capital Agreement or the other GE Capital Loan Documents, in the event of
any sale, transfer or disposition of any Bank Priority Collateral by or at
the direction of the Agent while any event of default under the Bank
Agreement is continuing and in furtherance by the Agent of its rights to
realize upon the Bank Priority Collateral, in any case, not in
contravention of the terms hereof, GE Capital will, at the request of the
Agent, immediately deliver such release documents with respect to the Lien
of GE Capital on such Bank Priority Collateral as the Agent may reasonably
request.
(f) Notwithstanding any rights or remedies available to GE Capital
under any of the GE Capital Agreement, any other GE Capital Loan Document,
applicable law or otherwise, so long as any Bank Obligations are
outstanding or the Bank Agreement is in effect, GE Capital will not,
directly or indirectly (except as otherwise provided in Section 2.1.4
hereof) seek to foreclose or realize upon (judicially or non-judicially)
its Lien on any Bank Priority Collateral, take any other action against the
Bank Priority Collateral or seek to assert any claim, interest or Lien in
the Bank Priority Collateral, without, in each instance, the prior written
consent of the Agent. Nothing contained in this paragraph (f) shall prevent
GE Capital from enforcing any or all of its rights and remedies against the
Grantors under the GE Capital Agreement or against the GE Capital Priority
Collateral, so long as GE Capital takes no action with respect to or
against the Bank Priority Collateral in contravention of the immediately
preceding sentence.
Section 2.1.3 Default Notices. (a) In the event that an event
constituting an "Event of Default" under and as defined in the Bank
Agreement shall be continuing, and the Agent shall be aware of such event,
the Agent shall give to GE Capital at its address for notices under Section
6.3 hereof, prompt written notice of such event; provided, however, that
the failure of the Agent to give any such written notice shall not result
in any liability of the Agent to GE Capital. In the event that the Agent
shall send to any Obligor any notice of the occurrence of any such Event of
Default or requiring redelivery of all Consigned Precious Metal (as such
term is defined in the Bank Agreement as in effect on the date hereof) or
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the immediate payment of the Spot Value (as such term is defined in the
Bank Agreement as in effect on the date hereof) of such Consigned Precious
Metal, or any similar notice, the Agent shall concurrently send a copy of
such notice to GE Capital; provided, however, that the failure of the Agent
to send any such notice to GE Capital shall not result in any liability of
the Agent to GE Capital. Nothing contained in this paragraph (a) or
elsewhere in this Agreement shall be deemed to be a waiver by GE Capital of
the right to receive any notice to which it is entitled under the Uniform
Commercial Code or other applicable law.
(b) In the event that an event constituting an "Event of Default"
under and as defined in the GE Capital Agreement shall be continuing, and
GE Capital shall be aware of such event, GE Capital shall give to the Agent
at its address for notices under Section 6.3 hereof, prompt written notice
of such event; provided, however, that the failure of GE Capital to give
any such written notice shall not result in any liability of GE Capital to
the Agent. In the event that GE Capital shall send to any Borrower any
notice of the occurrence of any such Event of Default or accelerating or
demanding immediate payment of the GE Capital Obligations, or any similar
notice, GE Capital shall concurrently send a copy of such notice to the
Agent; provided, however, that the failure of GE Capital to send any such
notice to the Agent shall not result in any liability of GE Capital to the
Agent. Nothing contained in this paragraph (b) or elsewhere in this
Agreement shall be deemed to be a waiver by the Agent of the right to
receive any notice to which it is entitled under the Uniform Commercial
Code or other applicable law.
(c) In the event that General Electric Capital Corporation (or the
entity most recently identified under this paragraph (c)) shall no longer
be "GE Capital" for the purposes of this Agreement, General Electric
Capital Corporation (or the entity most recently identified under this
paragraph (c)) shall notify the Agent in writing of the identity and
address for notices of the entity so constituting "GE Capital" for the
purposes of this Agreement. Until so notified, the Agent may treat General
Electric Capital Corporation or the entity most recently identified under
this paragraph (c), as the case may be, as "GE Capital" for the purposes of
this Agreement.
(d) In the event that Sovereign Bank (or the entity most recently
identified under this paragraph (d)) shall no longer be the "Agent" for the
purposes of this Agreement, Sovereign Bank (or the entity most recently
identified under this paragraph (d)) shall notify GE Capital in writing of
the identity and address for notices of the entity so constituting the
"Agent" for the purposes of this Agreement. Until so notified, GE Capital
may treat Sovereign Bank or the entity most recently identified under this
paragraph (d), as the case may be, as the "Agent" for the purposes of this
Agreement.
Section 2.1.4 Certain Proceeds. Notwithstanding anything. to the
contrary contained in this Agreement, from and after the time, if any, that
the Agent shall give a notice to GE Capital, substantially in the form of
Exhibit C hereto, under this Section 2.1.4 that an Event of Default under
the Bank Agreement is continuing, and until such notice has been withdrawn
in writing by the Agent (a
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"Default Period"), the following provisions shall apply to all proceeds
(other than proceeds from sales, exchanges or other dispositions made
directly by the Agent or an agent (other than an Obligor) of the Agent of
Specified Gold Jewelry without violation of this Agreement (collectively,
"Bank Sale Proceeds")) of GE Capital Collateral, including, without
limitation, proceeds of Specified Gold Jewelry ("Subject Proceeds"):
(a) All Subject Proceeds, including, without limitation, those
constituting Bank Priority Collateral, shall continue to be collected by GE
Capital in accordance with the terms of the GE Capital Agreement and GE
Capital Security Documents.
(b) (i) GE capital shall allocate proceeds received from the GE
Capital Collateral between proceeds of Specified Gold Jewelry and other GE
Capital Collateral as provided in clause (c) below of this Section 2.1.4.
(ii) The Obligors shall deliver to GE Capital such copies of
checks constituting Payment Amounts, Store Statements, Consignment
Memos, statements regarding the sale of Specified Gold Jewelry and
other materials as may be needed in order for GE Capital to make the
necessary calculations under clause (c) below. Subject to paragraph
(iii) below, GE Capital shall have no obligation to make any
allocation of any Payment Amount or other proceeds of Specified Gold
Jewelry to the extent that it has not received any such information,
and shall not apply any such proceeds to any indebtedness pending
making an allocation under paragraph (i) above or paragraph (iii)
below.
(iii) In the event that GE Capital shall be unable to make an
allocation due to the failure of the Obligors to supply the necessary
information under this clause (b), and such inability shall continue
for fifteen (15) days following the latter of the receipt of any
Payment Amount or other proceeds of Specified Gold Jewelry or the date
that all information relating to such Payment Amount or other proceeds
of Specified Gold Jewelry necessary to make the allocation first
became available to the Obligors, GE Capital shall make such
allocations with respect to such Payment Amount or other proceeds
which GE Capital shall determine in its reasonable judgment and in a
manner which in its reasonable judgment is consistent with the terms
of this Agreement; provided, however, that as to any Specified Gold
Jewelry which the Obligors do not sell or otherwise dispose of in the
ordinary course of business, whether due to the commencement of any
bankruptcy proceeding involving an Obligor as a debtor or otherwise,
GE Capital shall not have a right to allocate the proceeds of any such
sale or disposition, and each of the Agent and GE Capital shall be
entitled to claim their respective interests in such proceeds to the
extent the Agent or GE Capital, as the case may be, is entitled to
priority as to such proceeds under the terms of this Agreement.
(iv) GE Capital shall promptly account to the Agent as to each
allocation made by GE Capital with respect to any Payment Amount or
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other proceeds, and in any event within three (3) business days after
making such allocation, and shall remit proceeds of each Payment
Amount or other proceeds as provided in paragraph (d) below.
(v) The Agent shall have the right, as to any allocation made by
GE Capital under clause (iii) above, to contest such allocation within
fifteen (15) days following receipt of same, and, in the event that GE
Capital and the Agent cannot agree on such allocation within a period
of fifteen (15) days following the date of exercise by the Agent of
such right to contest, then such allocation shall be determined by
binding arbitration pursuant to an arbitration to be conducted in New
York City under the rules and the auspices of the American Arbitration
Association.
(c) With respect to sales, exchanges or other dispositions by the
Obligors during any calendar month of Specified Gold Jewelry supplied by
each Approved Vendor, the Agent shall be entitled to receive, subject to
paragraph (b) of this Section 2.1.4, as Post Default Bank Proceeds, from
each Payment Amount or other proceeds of Specified Gold Jewelry received by
GE Capital from each host store or otherwise (including from purchasers of
Specified Gold Jewelry) in respect of such calendar month, an amount ("Post
Default Bank Proceeds") equal to:
(I) in the case of any Payment Amount, and assuming that the
calculation in this clause (I) can be made, the greater of (A) the
product of (1) the quotient obtained by dividing (x) the product of
the Specified Jewelry Sale Amount times the Applicable Percentage by
(y) the Store Settlement Amount times (2) the Payment Amount times (3)
the Post Default Ratio [an example of this calculation is provided on
Exhibit D hereto], and (B) the product of (1) the number of ounces of
gold included in the Specified Gold Jewelry sold, exchanged or
otherwise disposed of during the month covered by the applicable
Payment Amount and listed as sold, exchanged or otherwise disposed of
in the applicable Consignment Memo times (2) the average "Spot Value"
of "Precious Metal" (each, as defined in the Bank Agreement as in
effect on the date hereof) during the applicable calendar month times
(3) the Post Default Ratios times (4) the ratio of (a) the Payment
Amount to (b) the Store Settlement Amount, or
(II) in the case of proceeds of Specified Gold Jewelry other than
any Payment Amount or, subject to paragraph (b) of this Section 2.1.4,
in the event that due to a change in the method of payment for any
sale, exchange or other disposition of Specified Gold Jewelry or other
circumstance, including, without limitation, the bankruptcy or
insolvency of one or more host stores, the calculation in (I) above
cannot be made, then, and in any such event (Post Default Bank
Proceeds shall be) the greater of (1) the Dollar Value of the Precious
Metal content of the Specified Gold Jewelry so sold, exchanged or
disposed of on the date of such sale, exchange or other disposition
and (2) eighty-five percent (85%) of that portion of such
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proceeds, in each case under clauses (1) and (2), after deducting the
cost of such sale, exchange or other disposition, including the pro
rata share of amounts, if any, due the host store, allocable to such
sale, exchange or other disposition.
(d) GE Capital shall turn over to the Agent by wire transfer in
immediately available funds at its Principal Office (as such term is
defined in the Bank Agreement as in effect on the date hereof) or such
other office as the Agent may specify to GE Capital in writing from time to
time, all amounts collected by GE Capital in good funds and which GE
Capital has determined, pursuant to the allocation provisions completed by
GE Capital under paragraphs (b) and (c) above, constitute Post Default Bank
Proceeds. For each day that GE Capital has not turned over to the Agent any
Post Default Bank Proceeds which day occurs after the business day
immediately following the business day on which GE Capital received same in
immediately available funds whether or not an allocation with respect
thereto has been completed, GE Capital shall pay (on the date that GE
Capital makes payment of such Post Default Bank Proceeds to the Agent) to
the Agent interest on such Post Default Bank Proceeds at the Federal Funds
Effective Rate, as such term is defined in the Bank Agreement as in effect
on the date hereof.
(e) So long as any GE Capital Obligations remain outstanding or the GE
Capital Agreement remains in effect, the Agent will not, directly or
indirectly seek to foreclose or realize upon (judicially or non-judicially)
its Lien on any Subject Proceeds, take any other action against any Subject
Proceeds or seek to assert any claim, interest or Lien in any Subject
Proceeds, other than by enforcement of its rights under this Section 2.1.4,
without, in each instance, the prior written consent of GE Capital.
(f) The Agent, at the request of GE Capital shall furnish to GE
Capital such information concerning the Agent's "bid" and "ask" spot
quotations for Precious Metal as GE Capital determines it requires to
allocate proceeds under this Agreement.
(g) For the purposes of this Section 2.1.4, the term business day
means a "Business Day" as such term is defined in each of the GE Capital
Agreement and the Bank Agreement.
Section 2.2 Payments Received by the Lenders. Subject to Section 2.1.4: (1)
should any payments or distribution or security, or the proceeds of any thereof,
be collected or received by the Agent in respect of the Bank Obligations at any
time, and the property constituting such payment, distribution, security or
proceeds constitutes GE Capital Priority Collateral, the Agent will forthwith
turn over the same to GE Capital in the form received (except for endorsement or
the assignment by the Agent when necessary and without recourse, representation
or
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warranty) and, until so turned over, the same shall be held in trust by the
Agent as the property of GE Capital; and
(2) should any payments or distribution or security, or the proceeds of any
thereof, be collected or received by GE Capital in respect of the GE Capital
Obligations at any time, and the property constituting such payment,
distribution, security or proceeds constitutes Bank Priority Collateral, GE
Capital will forthwith turn over the same to the Agent in the form received
(except for endorsement or the assignment by GE Capital when necessary and
without recourse, representation or warranty) and, until so turned over, the
same shall be held in trust by GE Capital as the property of the Agent.
Section 2.3 Right to Xxx. Nothing herein shall restrict GE Capital or the
Agent from commencing or maintaining any judicial proceeding against the
Grantors to obtain a judgment against the Grantors for all or part of the GE
Capital Obligations or the Bank Obligations, respectively, or to enforce any
such judgment as a judgment creditor; provided, however, that any monies or
other property or the proceeds thereof received by a Lender which constitutes
proceeds of the GE Capital Priority Collateral or the Bank Collateral or is
subject to the provisions of Section 2.1.4 hereof, shall be subject to all
provisions hereof applicable thereto.
SECTION 3. REPRESENTATIONS.
Each of GE Capital and the Agent, as to itself, represents and warrants, to
the other, as follows.
Section 3.1. Power and Authority; Authorization; No Violation. It has full
power, authority and legal right to execute, deliver and perform this Agreement
and the execution, delivery and performance of this Agreement have been duly
authorized by all necessary action on its part. This Agreement does not require
any approval or consent of any trustee or holders of any indebtedness or
obligations and will not violate any provision of law, governmental regulation,
order or decree or any provision of any indenture, mortgage, contract or other
agreement entered into by it or by which it is bound.
Section 3.2 Consents. No consent, license, approval or authorization of, or
registration or declaration with, any governmental instrumentality, domestic or
foreign, is required in connection with the execution, delivery and performance
of this Agreement.
Section 3.3 Binding Obligation. This Agreement constitutes its legal, valid
and binding obligation, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other similar laws
affecting creditors' rights generally and to the availability of equitable
remedies.
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SECTION 4. MODIFICATIONS OF LENDER OBLIGATIONS; RELIANCE.
Section 4.1 Regarding the GE Capital Obligations. (1) The Agent consents
that, without the necessity of any reservation of rights against it, and without
notice to or further assent by it, (a) any demand for payment of any GE Capital
Obligation may be rescinded, in whole or in part, and any GE Capital Obligation
may be continued, and the GE Capital Obligations, or the liability of the
Grantors or any other party upon or for any part thereof, or any collateral
security or guaranty therefor, or right of offset with respect thereto, may,
from time to time, in whole or in part, be renewed, extended, modified,
accelerated, compromised, waived, surrendered, or released and (b) any one or
more of the GE Capital Loan Documents may be amended, modified, supplemented or
terminated, in whole or in part, as GE Capital may deem advisable from time to
time, and any GE Capital Priority Collateral may be sold, exchanged, waived,
surrendered or released, in each case all without notice to or further assent by
the Agent, which will remain bound under this Agreement, and all without
impairing, abridging, releasing or affecting the priority of interests provided
for herein, notwithstanding any such renewal, extension modification,
acceleration, compromise, amendment, supplement, termination, sale, exchange,
waiver, surrender or release; provided, however, that nothing contained in this
paragraph (1) shall be deemed to constitute a waiver by the Agent of any
"Default" or "Event of Default" under and as defined in the Bank Agreement
arising from any such action. The Agent waives any and all notice of the
creation, modification, renewal, extension or accrual of any of the GE Capital
Obligations and notice of or proof of reliance by GE Capital upon this
Agreement, and the GE Capital Obligations, and any of them, shall conclusively
be deemed to have been created, contracted or incurred in reliance upon this
Agreement, and all dealings between the Grantors and GE Capital shall be deemed
to have been consummated in reliance upon this Agreement. The Agent acknowledges
and agrees that GE Capital has relied upon the stated priority of interests
provided for herein in making funds available to Borrowers under the GE Capital
Agreement.
(2) The Agent further acknowledges that part of the GE Capital Obligations
is indebtedness which is revolving in nature and that the amount thereof which
may be outstanding at any time or from time to time may be increased or reduced
and subsequently reborrowed, and that the terms of the GE Capital Obligations
may be modified, extended or amended from time to time, and the aggregate amount
of the GE Capital Obligations may be increased or reduced, all without notice to
or consent by the Agent and without affecting the provisions hereof. The Agent
agrees that GE Capital shall have no obligation to xxxxxxxx any GE Capital
Priority Collateral. Nothing contained in this paragraph (2) shall constitute a
waiver by the Agent of any "Default" or "Event of Default" under and as defined
in the Bank Agreement arising from any action described in this paragraph (2)
taken by the Grantors or GE Capital.
Section 4.2 Regarding the Bank Obligations. (1) GE Capital consents that,
without the necessity of any reservation of rights against it, and without
notice to or further assent by it, (a) any demand for payment of any Bank
Obligations may be rescinded, in whole or in part, and any Bank Obligations may
be continued, and the Bank Obligations, or the liability of the Obligors or any
other party upon or for any part thereof, or any collateral security or guaranty
therefor, or right of offset
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with respect thereto, may, from time to time, in whole or in part, be renewed,
extended, modified, accelerated, compromised, waived, surrendered, or released
and (b) any one or more of the Bank Documents may be amended, modified,
supplemented or terminated, in whole or in part, as the Agent may deem advisable
from time to time, and any Bank Priority Collateral may be sold, exchanged,
waived, surrendered or released, in each case all without notice to or further
assent by GE Capital, which will remain bound under this Agreement, and all
without impairing, abridging, releasing or affecting the priority of interests
provided for herein, notwithstanding any such renewal, extension modification,
acceleration, compromise, amendment, supplement, termination, sale, exchange,
waiver, surrender or release; provided, however, that nothing contained in this
paragraph (1) shall be deemed to constitute a waiver by GE Capital of any
"Default" or "Event of Default" under and as defined in the GE Capital Agreement
arising from any such action. GE Capital waives any and all notice of the
creation, modification, renewal, extension or accrual of any of the Bank
Obligations and notice of or proof of reliance by the Agent upon this Agreement,
and the Bank Obligations, and any of them, shall conclusively be deemed to have
been created, contracted or incurred in reliance upon this Agreement, and all
dealings between the Obligors and the Agent shall be deemed to have been
consummated in reliance upon this Agreement. GE Capital acknowledges and agrees
that the Agent has relied upon the stated priority of interests provided for
herein in making gold or credit therefor available to the Obligors under the
Bank Agreement.
(2) GE Capital further acknowledges that part of the Bank Obligations are
obligations which are revolving in nature and that the amount thereof which may
be outstanding at any time or from time to time may be increased or reduced and
subsequently reincurred, and that the terms of the Bank Obligations may be
modified, extended or amended from time to time, and the aggregate amount of the
Bank Obligations may be increased or reduced, all without notice to or consent
by GE Capital and without affecting the provisions hereof. GE Capital agrees
that the Agent shall have no obligation to xxxxxxxx any Bank Priority
Collateral. Nothing contained in this paragraph (2) shall constitute a waiver by
GE Capital of any "Default" or "Event of Default" under and as defined in the GE
Capital Agreement arising from any action described in this paragraph (2) taken
by the Obligors or the Agent.
SECTION 5. TRANSFER OF LENDER OBLIGATIONS.
Neither GE Capital nor the Agent will sell, assign or otherwise transfer,
in whole or in part, any Lien on the GE Capital Collateral or any Lien on the
Bank Collateral, respectively, to any other person or entity (a "Transferee")
unless, in any such case, such Transferee expressly acknowledges in writing to
GE Capital or the Agent, as the case may be, the priority and subordination of
interests provided for herein and agrees to be bound by all of the terms hereof.
The foregoing shall not apply to any subsequent holder of GE Capital Obligations
or Bank Obligations which is not an agent, unless such subsequent holder is the
sole holder of all Obligations under the GE Capital Agreement or the Bank
Agreement.
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SECTION 6. MISCELLANEOUS.
Section 6.1 No Waiver; Cumulative Remedies. No failure by either Lender to
exercise, and no delay by such Lender in exercising from time to time any
rights, power and privileges under its respective Obligations, or any right,
power or privilege under this Agreement shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or privilege under this
Agreement preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies provided in this
Agreement and in any agreement relating to any of the GE Capital Obligations or
Bank Obligations and all other agreements, instruments and documents referred to
in any of the foregoing are cumulative and shall not be exclusive of any rights
or remedies provided by law.
Section 6.2 Further Assurances. Each Lender agrees to execute and deliver
such further documents and to do such other acts and things as the other may
reasonably request in order fully to effect the purposes of this Agreement.
Section 6.3 Notices. All notices, requests and other communications to any
party hereunder shall be in writing and shall be personally delivered or sent by
registered mail, postage prepaid, return receipt requested, or by a reputable
courier delivery service or, alternatively by telecopy, and shall be given,
if to the Agent: Sovereign Bank
Precious Metals
1 West Mezzanine
00 Xxxxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxx,
Senior Vice President
Telecopier: (000) 000-0000
with a copy to: Xxxxxxx Xxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx X.X. Xxxxx, Esq., or
Xxxxxxxx Xxxxxx Xxxxxx, Esq.
Telecopier: (000) 000-0000
If to GE Capital: General Electric Capital Corporation
000 Xxxxxxxxxxx Xxxxxx
Xxx Xxxxx
Xxxxxxx, Xxxxxxxxxxx 00000
Attention: Finlay Account Manager
Telecopier: (000) 000-0000 and
Attention: Xxxx Xxxxxx, Esq.
Telecopier: (000) 000-0000
with a copy to: Weil, Gotshal & Xxxxxx LLP
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000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Telecopier: (000) 000-0000
if to the Obligors, : Finlay Fine Jewelry Corporation
the Borrowers or the 000 Xxxxx Xxxxxx
Xxxxxxxx Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxx Xxxxxxxx
Telecopier: (000) 000-0000
with a copy to: Blank Rome Xxxxxx Xxxxxxxxxx LLP
The Chrysler Building
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Telecopier: (000) 000-0000
or such other address or telecopy number as such party may hereafter specify by
notice to GE Capital, the Agent and the Obligors. Each such notice, request or
other communication shall be effective (i) if given by telecopy, when such
telecopy is transmitted to the telecopy number specified in this Section and the
appropriate confirmation by the recipient thereof is received, (ii) if given by
registered mail, 72 hours after such communication is deposited with the post
office, addressed as aforesaid or (iii) if given by any other means, when
delivered at the address specified in this Section.
Section 6.4. GOVERNING LAW; SUCCESSORS AND ASSIGNS. THIS AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK (WITHOUT REGARD TO ITS CONFLICTS OF LAWS PRINCIPLES) APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED IN SUCH STATE, SHALL BE BINDING UPON AND
INURE TO THE BENEFIT OF GE CAPITAL, THE AGENT, AND THEIR RESPECTIVE SUCCESSORS,
TRANSFEREES AND ASSIGNS.
Section 6.5 Counterparts. This Agreement may be executed by the parties
hereto in any number of separate counterparts all of which taken together shall
constitute one and the same instrument.
Section 6.6 Third-Party Beneficiaries. The terms and provisions of this
Agreement shall be for the sole benefit of GE Capital and the Agent and their
respective successors and assigns. No other person shall have any right,
benefit, or priority by reason of this Agreement.
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Section 6.7 Severability. In the event that any one or more provisions
contained in this Agreement should for any reason be held to be invalid, illegal
or unenforceable in any respect under the laws of any government or by any
governmental agency, such unenforceability shall not affect any other provisions
of this Agreement. In the event that any provision hereof shall be held invalid,
illegal or unenforceable the parties shall use all reasonable efforts to
substitute a valid, legal and enforceable provision which, insofar as practical,
implements the purposes and intents hereof.
Section 6.8 Submission to Jurisdiction. Any legal action or proceeding with
respect to this Agreement may be brought in the courts of the State of New York
or of the United States of America for the Southern District of New York or any
New York State court located in the Borough of Manhattan, and, by execution and
delivery of this Agreement each of the Obligors and each of the Lenders hereby
respectively accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. Each of the Lenders
hereby irrevocably waives, in connection with any such action or proceeding, (i)
any objection, including, without limitation, any objection to the laying of
venue or based on the grounds of forum non conveniens, which it may now or
hereafter have to the bringing of any such action or proceeding in such
respective jurisdictions, (ii) the right to impose any setoff, non-compulsory
counterclaim or cross-claim and (iii) trial by jury.
Section 6.9 Termination; Amendments, Etc. This Agreement may not be
rescinded or canceled or modified in any way unless consented to in writing by
the Lenders.
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IN WITNESS WHEREOF, the parties hereto caused this Agreement to be duly
executed and delivered an of the day and year first above written.
SOVEREIGN BANK (as successor to
Fleet National Bank, f/k/a BankBoston,
N.A., f/k/a The First National Bank of
Boston, as successor to Rhode Island
Hospital Trust National Bank), as Agent
By: /s/ Xxxxxxxx Xxxxxxx
----------------------------------
Name: Xxxxxxx Xxxxxxx
Title: V.P.
GENERAL ELECTRIC CAPITAL
CORPORATION, as Agent
By: /s/ Xxxxxxx Xxxxxx
----------------------------------
Name: Xxxxxxx Xxxxxx
Title: Authorized Signatory
Acknowledged and Agreed:
FINLAY FINE JEWELRY
CORPORATION
By: /s/ Xxxxx Xxxxxxxx
------------------------
Name: Xxxxx Xxxxxxxx
Title: Senior Vice President, Treasurer
and Chief Financial Officer
EFINLAY, INC.
By: /s/ Xxxxx Xxxxxxxx
------------------------
Name: Xxxxx Xxxxxxxx
Title: Senior Vice President, Treasurer
and Chief Financial Officer
