EXHIBIT 10.2
CONSENT AND AMENDMENT No. 2
CONSENT AND AMENDMENT No. 2 (this "Consent and Amendment") dated as of May
26, 2004 among FINLAY FINE JEWELRY CORPORATION, a Delaware corporation (the
"Borrower"), FINLAY ENTERPRISES, INC., a Delaware corporation (the "Parent"),
the lenders named herein and signatory hereto (the "Lenders") and GENERAL
ELECTRIC CAPITAL CORPORATION, as agent (the "Agent"), for the Lenders.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Parent, the Borrower, the Lenders and the Agent are parties to
a Second Amended and Restated Credit Agreement dated as of January 22, 2003 (as
heretofore and hereafter amended, modified or supplemented from time to time in
accordance with its terms, the "Credit Agreement");
WHEREAS, the Borrower intends to issue $200,000,000 of certain senior notes
(the "Senior Notes (2012)") and to use the cash proceeds thereof to (i)
repurchase outstanding Senior Notes, (ii) pay dividends to the Parent to allow
Parent to repurchase a portion of the outstanding Senior Debentures, (iii) pay
certain amounts, not to exceed $37,000,000, owing by the Borrower to the Parent
under the Tax Allocation Agreement, which such amounts shall be used by the
Parent solely to repurchase Senior Debentures, and (iv) with respect to the
foregoing clauses (i), (ii) and (iii), to pay, and to fund the payment by the
Parent of, certain call premiums, consent fees and other expenses due with
respect thereto (collectively, the "Financing Transactions"); and
WHEREAS, the parties hereto have agreed to the consents and amendments to
the Credit Agreement set forth herein subject to the terms and conditions
contained herein in order to, among other things, permit the transactions
described above;
NOW THEREFORE, for good and valuable consideration, the receipt of which is
hereby acknowledged, and subject to the fulfillment of the conditions set forth
below, the parties hereto agree as follows:
1. Defined Terms. Unless otherwise specifically defined herein, all
capitalized terms used herein shall have the respective meanings ascribed to
such terms in the Credit Agreement.
2. Consent. Notwithstanding anything else in the Credit Agreement to the
contrary, the undersigned Agent and Lenders hereby consent to (a) the issuance
by the Borrower of the Senior Notes (2012); provided, that the Net Cash Proceeds
of such Senior Notes (2012) are used to fund the Financing Transactions, (b) the
repurchase by the Borrower of outstanding Senior Notes with the Net Cash
Proceeds of the Senior Notes (2012) and/or Revolving Advances (including the
payment of certain call premiums, consent fees and other expenses due in
connection therewith), (c) the payment by the Borrower of (i) dividends to the
Parent to allow the Parent to repurchase a portion of the outstanding Senior
Debentures (including the payment of certain call premiums, consent fees and
other expenses due in connection therewith) and (ii) up to $37,000,000 to Parent
as repayment of certain amounts owing by the Borrower to Parent under the Tax
Allocation Agreement, provided, that the Parent shall use such amounts repaid by
the Borrower solely to repurchase Senior Debentures (including the payment of
certain call premiums, consent fees and other expenses due in connection
therewith), (d) the due execution and delivery by (i) the Borrower (with the
consent of the holders of the Senior Notes) of the Second Supplemental Indenture
to the Senior Note Indenture, dated as of June 3, 2004, between the Borrower and
HSBC Bank USA
(formerly known as Marine Midland Bank), as trustee, substantially in the form
of Exhibit A attached hereto, and (ii) the Parent (with the consent of the
holders of the Senior Debentures) of the Second Supplemental Indenture to the
Senior Debenture Indenture, dated as of June 3, 2004 between the Parent and HSBC
Bank USA (formerly known as Marine Midland Bank), as trustee, substantially in
the form of Exhibit B attached hereto, and (e) the execution and delivery by the
Parent, the Borrower and eFinlay of an amendment to the Gold Consignment
Agreement (and any ancillary documents thereto) in respect of the Financing
Transactions. If the Senior Notes (2012) have not been issued on or prior to
June 25, 2004, this Consent and Amendment shall expire and the provisions of
this Section 2 shall be of no further force and effect.
3. Amendment to Credit Agreement.
(a) Amendments to Section 1.1 of the Credit Agreement.
(i) As of the Effective Date (as defined herein), Section 1.1 of
the Credit Agreement is hereby amended by adding the following definitions in
their appropriate alphabetical order:
"Amendment No. 2" shall mean the Consent and Amendment No. 2 to
the Credit Agreement dated May 26, 2004 entered into among the Parent,
the Borrower, the Agent and the Lenders party thereto.
"Amendment No. 2 Effective Date" shall mean June 3, 2004, the
Effective Date as defined in Amendment No. 2.
"Remaining Senior Debentures" shall mean the Senior Debentures
that have not been repurchased by the Parent as of the Amendment No. 2
Effective Date.
"Remaining Senior Notes (2008)" shall mean the Senior Notes that
have not been repurchased by the Borrower as of the Amendment No. 2
Effective Date.
"Senior Note (2012) Indenture" shall mean the indenture dated as
of June 3, 2004 between the Borrower and HSBC Bank USA, as trustee
under which the Senior Notes (2012) were issued.
"Senior Notes (2012)" shall mean the Borrower's 8.375% Senior
Notes due 2012 in the original principal amount of $200,000,000 and
any notes that may subsequently be issued in exchange therefor that
are substantially identical in all material respects (other than with
respect to any transfer restrictions).
(ii) As of the Effective Date, the definition of "Additional
Repurchase Amount" is hereby amended by deleting the phrase "Senior Debentures
and Senior Notes" in the fourth line thereof and replacing it in its entirety
with the phrase "Senior Notes (2012), Senior Debentures, Senior Notes, Remaining
Senior Debentures and Remaining Senior Notes (2008)".
(iii) As of the Effective Date, the definition of "Change of
Control" is hereby amended and restated in its entirety to read as follows:
"'Change of Control' shall mean a "Change of Control" as such
term is defined in the Senior Note (2012) Indenture (as in effect on
the Amendment No. 2 Effective Date)."
2
(iv) As of the Effective Date, the definition of "EBITDA" is
hereby amended by deleting the existing clause (iv) of such definition in its
entirety and replacing it with the following new clause (iv):
"(iv) any losses or gains resulting from the repurchase, acquisition
or redemption of Senior Notes (2012), Senior Debentures, Senior Notes,
Remaining Senior Debentures or Remaining Senior Notes (2008)."
(b) As of the Effective Date, Section 2.6(f) of the Credit Agreement
is hereby amended by deleting the grid contained therein in its entirety and
replacing it with the following grid:
"IF LEVERAGE APPLICABLE APPLICABLE
RATIO IS INDEX MARGIN EURODOLLAR MARGIN
(greater than or equal to) 3.50 1.00% 2.00%
(less than) 3.50 but (greater than or equal to) 3.00 0.75% 1.75%
(less than) 3.00 but (greater than or equal to) 2.25 0.50% 1.50%
(less than) 2.25 but (greater than or equal to) 1.50 0.25% 1.25%
(less than) 1.50 0.00% 1.00%"
(c) As of the Effective Date, Section 7 of the Credit Agreement is
hereby amended by (i) deleting the term "Senior Notes" in the fourth line of
clause (b) and replacing it in its entirety with the phrase "Senior Notes (2012)
or Remaining Senior Notes (2008)" and (ii) inserting the following new clause
(c) immediately after clause (b) to read in its entirety as follows:
"(c) Solely on the Amendment No. 2 Effective Date, proceeds of
Revolving Advances may be used to repurchase Senior Notes to the extent
such repurchases are permitted hereunder."
(d) As of the Effective Date, Section 8.17(a) of the Credit Agreement
is hereby amended and restated in its entirety to read as follows:
"(a) Leverage Ratio. The Parent shall maintain, or cause to be
maintained, a Leverage Ratio, as of the end of each period of four
consecutive quarters of the Parent ending on or about the dates set forth
below, of not more than the ratio set forth below opposite such date:
Four Fiscal Quarters
Ending On or About Ratio
----------------- -----
April 30, 2004 4.00
July 31, 2004 4.00
October 31, 2004 4.00
January 31, 2005 3.00
April 30, 2005 3.70
July 31, 2005 3.70
October 31, 2005 3.70
3
January 31, 2006 2.80
April 30, 2006 3.50
July 31, 2006 3.50
October 31, 2006 3.50
January 31, 2007 2.60
April 30, 2007 3.50
July 31, 2007 3.50
October 31, 2007 3.50 "
(e) As of the Effective Date, Section 8.17(c) of the Credit Agreement
is hereby amended and restated in its entirety to read as follows:
"(c) EBITDA. The Parent shall maintain, or cause to be maintained,
EBITDA for each period of four consecutive fiscal quarters of the Parent
ending on or about the dates set forth below of not less than the amount
set forth below opposite such date:
Four Fiscal Quarters
Ending On or About Amount
----------------- ------
April 30, 2004 $71,000,000
July 31, 2004 $68,000,000
October 31, 2004 $67,000,000
January 31, 2005 $67,000,000
April 30, 2005 $68,000,000
July 31, 2005 $68,000,000
October 31, 2005 $68,000,000
January 31, 2006 $72,000,000
April 30, 2006 $73,000,000
July 31, 2006 $73,000,000
October 31, 2006 $74,000,000
January 31, 2007 $77,000,000
April 30, 2007 $78,000,000
July 31, 2007 $78,000,000
October 31, 2007 $78,000,000"
4
(f) As of the Effective Date, sub-clause (e) of Section 9.2 of the
Credit Agreement is hereby amended and restated in its entirety to read as
follows:
"(e) Liens in favor of HSBC Bank USA (formerly known as Marine Midland
Bank) pursuant to the Security and Pledge Agreement solely to the extent
such Liens secure the Remaining Senior Debentures, if any;"
(g) As of the Effective Date, Section 9.3 of the Credit Agreement is
hereby amended as follows:
(i) Sub-clause (b) of such Section 9.3 is hereby amended and restated
in its entirety to read as follows:
"(b) unsecured Current Liabilities incurred in the ordinary
course of business other than unsecured Current Liabilities for
Indebtedness for Borrowed Money;"
(ii) Sub-clause (e) of such Section 9.3 is hereby amended by deleting
in its entirety the phrase "[Intentionally Omitted]" in the existing
sub-clause (e) thereof and replacing it with the following new sub-clause
(e):
"(e) Indebtedness of the Borrower evidenced by the Senior Notes
(2012);"
(iii) Sub-clause (h) of such Section 9.3 is hereby amended and
restated in its entirety to read as follows:
"(h) Indebtedness of the Borrower evidenced by the Remaining Senior
Notes (2008) in an amount not to exceed $10,000,000 in the aggregate;"
(iv) Sub-clause (i) of such Section 9.3 is hereby amended and restated
in its entirety to read as follows:
"(i) Indebtedness of the Parent evidenced by the Remaining Senior
Debentures in an amount not to exceed $20,000,000 in the aggregate;"
(h) As of the Effective Date, Section 9.6(a)(v) of the Credit
Agreement is hereby amended and restated in its entirety to read as follows:
"(v) the Borrower may pay dividends to the Parent to make principal or
interest payments on, or to repurchase, acquire or redeem Remaining Senior
Debentures, in each case as permitted by Section 9.6(b) hereof; provided,
that immediately after giving effect to any such repurchase, acquisition or
redemption of Remaining Senior Debentures, the Borrower shall have the
ability to draw an additional Revolving Advance in the amount of at least
$15,000,000; and"
(i) As of the Effective Date, Section 9.6(a)(vii) of the Credit
Agreement is hereby amended by deleting the phrase "Senior Debentures and Senior
Notes" in the fourth line thereof in its entirety and replacing it with the
phrase "Senior Notes (2012), Senior Debentures, Senior Notes, Remaining Senior
Debentures or Remaining Senior Notes (2008)"
5
(j) As of the Effective Date, Section 9.6(b) of the Credit Agreement
is hereby amended by deleting in the fifth and sixth lines thereof the phrase
"the Senior Notes and the Senior Debentures, respectively" in its entirety and
replacing it with the phrase "the Senior Notes (2012), the Remaining Senior
Notes (2008) and the Remaining Senior Debentures, as the case may be".
(k) As of the Effective Date, Section 9.6(b)(ii) of the Credit
Agreement is hereby amended by deleting subsection (ii) in its entirety and
replacing it with the following new subsection (ii):
"(ii) the Borrower may, from time to time, repurchase, acquire or
redeem Remaining Senior Notes (2008) or Senior Notes (2012); provided, that
such Remaining Senior Notes (2008) or Senior Notes (2012), as the case may
be, are repurchased at prices deemed favorable by the Borrower's board of
directors; provided, further, solely with respect to the Senior Notes
(2012), that the amount of such Senior Notes (2012) repurchased under this
clause (ii) shall not exceed $25,000,000 plus the Additional Repurchase
Amount in the aggregate;"
(l) As of the Effective Date, Section 9.6(b)(iii) of the Credit
Agreement is hereby amended by deleting subsection (iii) in its entirety and
replacing it with the following new subsection (iii):
"(iii) the Parent may, from time to time, repurchase, acquire or
redeem Remaining Senior Debentures; provided, that such Remaining Senior
Debentures are repurchased at prices deemed favorable by the Parent's board
of directors; and"
(m) As of the Effective Date, Section 9.12(a) of the Credit Agreement
is hereby amended by inserting the phrase "the Senior Note (2012) Indenture or
any Senior Note (2012), " immediately after the phrase "any term, provision or
condition of" in the second line thereof.
(n) As of the Effective Date, Section 9.15 of the Credit Agreement is
hereby amended by inserting the phrase "and the Senior Note (2012) Indenture"
immediately after the end of the parenthetical in the fifth line thereof and
immediately before the beginning of clause (a) of such Section 9.15.
(o) As of the Effective Date, Section 9.21 of the Credit Agreement is
hereby amended and restated in its entirety to read as follows:
"ss. 9.21. INDENTURE GUARANTEES. Other than as set forth on Schedule
9.21 hereto, engage in any transaction (or series of related transactions)
which would cause any Subsidiary of the Parent to be obligated to guarantee
the obligations of the Borrower under the Senior Notes (2012)."
(p) As of the Effective Date, Section 11.1(c) of the Credit Agreement
is hereby amended by deleting the last sentence thereof in its entirety and
replacing it with the following sentence:
"The capital stock of the Borrower and its Subsidiaries is owned free
and clear of all Liens, except (i) Liens in favor of the Agent for the
benefit of the Lenders and (ii) with respect to the capital stock of the
Borrower, Liens in favor of the trustee under the Senior Debenture
Indenture solely to extent such Liens secure the Remaining Senior
Debentures."
6
(q) As of the Effective Date, Section 11.14 of the Credit Agreement is
hereby amended and restated in its entirety to read as follows:
"ss. 11.14 REMAINING SENIOR DEBENTURE COLLATERAL. The Liens in favor
of the trustee for the holders of the Remaining Senior Debentures if any,
secure only the obligations of the Parent under or with respect to the
Remaining Senior Debentures."
4. Representations and Warranties. Each of the Parent and the Borrower
represents and warrants as follows (which representations and warranties shall
survive the execution and delivery of this Consent and Amendment):
(a) Each of the Parent and the Borrower has taken all necessary action
to authorize the execution, delivery and performance of this Consent and
Amendment.
(b) This Consent and Amendment has been duly executed and delivered by
the Parent and the Borrower and the acknowledgement attached hereto has been
duly executed and delivered by each Subsidiary party hereto. This Consent and
Amendment and the Credit Agreement as amended hereby constitute the legal, valid
and binding obligation of the Parent and the Borrower, enforceable against them
in accordance with their respective terms, subject to applicable bankruptcy,
reorganization, insolvency, moratorium and similar laws affecting the
enforcement of creditors' rights generally and by general equity principles.
(c) No consent or approval of any person, firm, corporation or entity,
and no consent, license, approval or authorization of any governmental authority
is or will be required in connection with the execution, delivery, performance,
validity or enforcement of this Consent and Amendment other than any such
consent, approval, license or authorization which has been obtained and remains
in full force and effect or where the failure to obtain such consent, license,
approval or authorization would not result in a Material Adverse Effect.
(d) After giving effect to this Consent and Amendment, each of the
Borrower and the Parent is in compliance with all of the various covenants and
agreements set forth in the Credit Agreement and each of the other Loan
Documents.
(e) After giving effect to this Consent and Amendment, no event has
occurred and is continuing which constitutes a Default or an Event of Default.
(f) All representations and warranties contained in the Credit
Agreement and each of the other Loan Documents are true and correct in all
material respects as of the date hereof, except to the extent that any
representation or warranty relates to a specified date, in which case such are
true and correct in all material respects as of the specific date to which such
representations and warranties relate.
5. Effective Date. (a) The consents to the Credit Agreement contained in
Section 2 above shall become effective on the date (i) this Consent and
Amendment has been duly executed and delivered by the Borrower, the Parent, the
Agent and the Majority Lenders and (ii) the acknowledgement attached hereto has
been executed and delivered by each of the Subsidiaries party hereto.
(b) The amendments to the Credit Agreement contained herein shall
become effective as of June 3, 2004 (the "Effective Date") only if at such time
(i) the conditions set forth in the preceding clause (a) have been satisfied,
(ii) all of the conditions set forth in (x) the Offer to
7
Purchase and Consent Solicitation Statement, dated as of May 7, 2004, relating
to the Senior Debentures (other than the Bank Consent Condition as defined
therein) and (y) the Offer to Purchase and Consent Solicitation Statement, dated
as of May 7, 2004, relating to the Senior Notes (other than the Bank Consent
Condition as defined therein) shall have been satisfied, and (iii) the Agent
shall have received (x) a copy of that certain opinion of Blank Rome LLP,
counsel to the Credit Parties, dated as of the date hereof and addressed to
Credit Suisse First Boston (the "Blank Rome Opinion"), and (y) a reliance letter
from Blank Rome LLP addressed to the Agent and the Lenders consenting to the
reliance by the Agent and the Lenders on the opinions set forth in the Blank
Rome Opinion.
6. Tax Allocation Agreement. The Majority Lenders hereby consent to the
termination by the Parent and the Borrower of the Tax Allocation Agreement
pursuant to the terms contained therein upon the satisfaction of all liabilities
thereunder.
7. Expenses. The Borrower agrees to pay on demand all costs and expenses,
including reasonable attorneys' fees, of the Agent incurred in connection with
this Consent and Amendment.
8. Continued Effectiveness. The term "Agreement", "hereof", "herein" and
similar terms as used in the Credit Agreement, and references in the other Loan
Documents to the Credit Agreement, shall mean and refer to, from and after the
Effective Date, the Credit Agreement as amended by this Consent and Amendment.
Each of the Borrower and the Parent hereby agrees that all of the covenants and
agreements contained in the Credit Agreement and the Loan Documents are hereby
ratified and confirmed in all respects.
9. Counterparts. This Consent and Amendment may be executed in
counterparts, each of which shall be an original, and all of which, taken
together, shall constitute a single instrument. Delivery of an executed
counterpart of a signature page to this Consent and Amendment by telecopier
shall be effective as delivery of a manually executed counterpart of this
Consent and Amendment.
10. Governing Law. This Consent and Amendment shall be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to the conflict of laws provisions thereof.
* * *
8
IN WITNESS WHEREOF the parties hereto have caused this Consent and
Amendment to be duly executed by their respective officers as of the date first
written above.
FINLAY FINE JEWELRY CORPORATION
By: /s/ Xxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Senior Vice President,
Treasurer and CFO
FINLAY ENTERPRISES, INC.
By: /s/ Xxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Senior Vice President,
Treasurer and CFO
GENERAL ELECTRIC CAPITAL CORPORATION,
Individually and as Agent
By: /s/ Xxxxxxx Xxxxxx
-------------------------------------
Name: Xxxxxxx Xxxxxx
Title: Duly Authorized Signatory
FLEET PRECIOUS METALS INC.
By: /s/ Xxxxxxxxx X. Xxxxxxxxx
-------------------------------------
Name: Xxxxxxxx X. Xxxxxxxxx
Title: Senior Vice President
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President
Signature Pages to Consent and Amendment No. 2
ABN AMRO BANK N.V.
By:
-------------------------------------
Name:
Title:
BANK LEUMI USA
By: /s/ Xxxxx Xxxxxx
-------------------------------------
Name: Xxxxx Xxxxxx
Title: Vice President
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President
JPMORGAN CHASE BANK
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President
XXXXX FARGO FOOTHILL, LLC
By: /s/ Xxx Xxxx
-------------------------------------
Name: Xxx Xxxx
Title: Vice President
Signature Pages to Consent and Amendment No. 2
Each of the Guarantors, by signing
below, confirms in favor of the Agent
and the Lenders that it consents to the
terms and conditions of the foregoing
Consent and Amendment No. 2 to the
Second Amended and Restated Credit
Agreement and agrees that it has no
defense, offset, claim, counterclaim or
recoupment with respect to any of its
obligations or liabilities under its
respective Guaranty and that all terms
of such Guaranty shall continue in full
force and effect, subject to the terms
thereof.
FINLAY JEWELRY, INC.
By: /s/ Xxxxx X. Xxxxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Senior Vice President,
Treasurer and CFO
FINLAY MERCHANDISING & BUYING, INC.
By: /s/ Xxxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Senior Vice President,
Treasurer and CFO
eFINLAY, INC.
By: /s/ Xxxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Senior Vice President,
Treasurer and CFO
Signature Pages to Consent and Amendment No. 2
