AMENDMENT NO. 11
AND LIMITED CONSENT
THIS AMENDMENT NO. 11 AND LIMITED CONSENT (this "Amendment") is made as of
September 29, 2000, by and between FINLAY FINE JEWELRY CORPORATION, a Delaware
corporation with its principal office at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000 (the "Consignee"), and SOVEREIGN BANK, as successor to Fleet National
Bank, formerly known as BankBoston, N.A., as successor to Rhode Island Hospital
Trust National Bank (the "Consignor"), amending certain provisions of the Gold
Consignment Agreement dated as of June 15, 1995 (as amended, modified or
supplemented and in effect, the "Consignment Agreement"), by and between the
Consignee and the Consignor. Capitalized terms used herein which are defined in
the Consignment Agreement and not defined herein shall have the same meanings
herein as therein.
WHEREAS, the Consignee wishes to create eFinlay, Inc., a Delaware
corporation ("eFinlay"), as a wholly owned subsidiary in order to sell inventory
from time to time to pursuant to the Marketing Agreement dated as of July 6,
2000 (the "eFinlay Marketing Agreement") between the Consignee and
000-Xxxxxxx.xxx, Inc., a New York corporation ("800-Flowers") in connection with
800-Flowers' sale of flowers, jewelry and other items over the internet;
WHEREAS, the Consignee proposes to sell certain inventory and provide
certain services (directly or through its wholly owned subsidiary Finlay
Merchandising & Buying, Inc.) to eFinlay in connection with eFinlay's business
endeavors with 800-Flowers under the eFinlay Marketing Agreement;
WHEREAS, in connection therewith, the Consignee has requested that the
Consignor agree to amend the terms of the Consignment Agreement in certain
respects as hereinafter more fully set forth so as, among other things, to
permit the transfer of such inventory and certain other assets and the provision
of such services;
WHEREAS, the Consignor is willing to amend the terms of the Consignment
Agreement in such respects upon the terms and subject to the conditions
contained herein;
NOW, THEREFORE, in consideration of the mutual agreements contained in the
Consignment Agreement, herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
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ss.1. Amendment of ss.1 of the Consignment Agreement. Section 1 of the
Consignment Agreement is hereby amended by:
(a) amending the definition of "Consignment Limit" by deleting the text
"100,000 fine xxxx ounces" and inserting in lieu thereof the text
"105,000 fine xxxx ounces".
(b) amending the definition of "Consignment Limit Report" to insert
immediately after the text "(including, without limitation," and
immediately before the text "information as to what portion", the
following text: "deductions for any amounts consisting of Specified
Gold Jewelry sold or transferred to eFinlay and".
(c) amending the definition of "Obligations" by deleting the text "the
Consignee" and substituting in lieu thereof the text "any of the
Consignee and its Subsidiaries".
(d) amending the definition of "Security Documents" by inserting,
immediately after the text "the Security Agreement," and immediately
before the text "the Cash Collateral Agreement", the text "the eFinlay
Guaranty, the eFinlay Security Agreement,".
(e) inserting the following new definitions in the order required by
alphabetical order:
eFinlay. eFinlay, Inc., a Delaware corporation.
eFinlay Contribution Agreement. The Contribution Agreement dated as of
September 29, 2000 between the Consignee and eFinlay, as in effect on the
Eleventh Amendment Effective Date.
eFinlay FM Services Agreement. The Services Agreement dated as of September
29, 2000 between Finlay Merchandising and eFinlay, as in effect on the Eleventh
Amendment Effective Date.
eFinlay Guaranty. The Guaranty, dated or to be dated on or prior to the
Eleventh Amendment Effective Date, made by eFinlay in favor of the Consignor,
pursuant to which eFinlay guaranties to the Consignor the payment and
performance of the Obligations and in form and substance satisfactory to the
Consignor.
eFinlay Lease Agreement. The Lease Agreement dated as of September 29, 2000
between the Consignee and eFinlay, as in effect on the Eleventh Amendment
Effective Date.
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eFinlay Marketing Agreement. The Marketing Agreement dated as of July 6,
2000 between the Consignee and 000-Xxxxxxx.xxx, Inc., as in effect on the
Eleventh Amendment Effective Date.
eFinlay Security Agreement. The eFinlay Security Agreement dated as of the
Eleventh Amendment Effective Date, between eFinlay and the Consignor and in form
and substance satisfactory to the Consignor.
eFinlay Services Agreement. The Services Agreement dated as of September
29, 2000 between the Consignee and eFinlay.
Eleventh Amendment. Amendment No. 11 and Limited Consent dated as of
September 29, 2000 between the Consignor and the Consignee.
Eleventh Amendment Effective Date. The "Effective Date", as defined in the
Eleventh Amendment.
ss.2. Amendment of ss.8.1. Section 8.1 of the Consignment Agreement is
hereby amended by:
(a) deleting the word "and" from the end of subsection (l) thereof;
(b) deleting clause (ii) of subsection (m) thereof in its entirety and
substituting in lieu thereof the following text:
"(ii) Finlay Merchandising to declare and distribute to the Consignee
as a dividend, within thirty (30) days following the end of
each fiscal quarter during which payments described in clause
(i) of this subsection (m) or in clause (i) of subsection (n)
are made to Finlay Merchandising, an amount equal to the sum
(net of amounts (which amounts may be paid in cash) equal to
the reasonable, ordinary course operating expenses of Finlay
Merchandising for the then current fiscal month and immediately
succeeding fiscal month, including, without limitation, payroll
expenses for employees of Finlay Merchandising), of such
payments under clause (i) of this subsection (m) plus such
payments to Finlay Merchandising, under subsection (n)(i)".
(c) inserting, immediately after subsection (m) thereof and immediately
before ss.8.2, the following new subsection (n) with the following
text:
"(n) cause (i) all amounts owed to the Consignee or, as the case may
be, Finlay Merchandising under any purchase orders or other
requests for merchandise or inventory issued by eFinlay to the
Consignee, the eFinlay Services Agreement, the eFinlay FM
Services Agreement, the eFinlay Lease Agreement or any other
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agreement between eFinlay and the Consignee or, as the case may
be, Finlay Merchandising to be paid to the Consignee or, as the
case may be, Finlay Merchandising at least quarterly,
commencing with the quarter ending December 31, 2000, either by
means of appropriate intercompany book entries or by payment in
cash, and (ii) eFinlay to declare and distribute to the
Consignee as a dividend, within thirty (30) days following the
end of each fiscal quarter, an amount equal to all amounts
retained by eFinlay following payment to the Consignee or, as
the case may be, Finlay Merchandising of the amounts required
by clause (i) of this subsection (n) (which amounts may be net
of amounts equal to the reasonable, ordinary operating expenses
of eFinlay for the then current fiscal month and the
immediately succeeding fiscal month, including, without
limitation, payroll expenses for employees of eFinlay)."
ss.3. Amendment of ss.8.2(c) of the Consignment Agreement. Section 8.2(c)
of the Consignment Agreement is hereby amended by deleting clause (vi) thereof
in its entirety and substituting in lieu thereof the following clause (vi):
"(vi) in the capital stock of Subsidiaries existing on the Closing
Date, Finlay Merchandising, eFinlay or any other Subsidiary created
with the prior written consent of the Consignor, (B) in the case of
Finlay Merchandising, consisting of those items set forth and
described on Schedule I to the Contribution Agreement and (C) in the
case of eFinlay, consisting of those items set forth and described on
Schedule A to the Eleventh Amendment; provided, however, that for each
of the foregoing clauses (A), (B) and (C), the Consignee shall not
make any additional investments therein other than additional
investments approved in advance in writing by the Consignor and other
than increases in such investments arising solely by reason of
increases in the retained earnings of any such Subsidiary".
ss.4. Amendment of ss.8.2(d) of the Consignment Agreement. Section 8.2(d)
of the Consignment Agreement is hereby amended by:
(a) deleting clause (i) thereof in its entirety and substituting in lieu
thereof the text "[Reserved]";
(b) deleting the word "and" between clauses (1) and (2) of clause (ii)(C)
thereof;
(c) inserting, immediately before the semicolon (";") at the end of clause
(ii)(C) thereof, the following text:
"and (3) the Consignee may declare or pay dividends to the Parent in
an aggregate amount not to exceed $20,000,000 in order to enable the
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Parent to repurchase up to $20,000,000 of its own Equity Interests in
open market transactions"; and
(d) deleting clause (H) thereof in its entirety and substituting in lieu
thereof the following text:
"(H) The Consignee may purchase all, but not less than all of the
capital stock of each of Finlay Merchandising and eFinlay in
connection with the creation thereof by the Consignee."
ss.5. Amendment of ss.8.2(e)(iii) of the Consignment Agreement. Section
8.2(e)(iii) of the Consignment Agreement is hereby amended by deleting clauses
(H) and (I) (but not the proviso at the end of ss.8.2(e)(iii)) and substituting
in lieu thereof the following text: "(H) the Sonab Transfer pursuant to the
Sonab Transfer Agreement, (I) in connection with the transactions contemplated
by the eFinlay Contribution Agreement and eFinlay's sale from time to time to
000-Xxxxxxx.xxx, Inc., a New York corporation, of inventory pursuant to the
eFinlay Marketing Agreement, the transfer from the Consignee to eFinlay of the
assets described on Exhibit A to the Eleventh Amendment and inventory pursuant
to purchase orders issued from time to time by eFinlay to the Consignee for the
purchase of inventory for a purchase price at least equal to the cost thereof to
the Consignee, or (J) sales or other transfers of assets other than the
foregoing, having a value, together with the value of all other such property of
the Consignee and its Subsidiaries so sold since June 15, 1995, of not greater
than $5,000,000;".
ss.6. Amendment of ss.9(d) to the Consignment Agreement. Section 9(d) of
the Consignment Agreement is hereby amended by inserting, immediately after the
text "Security Agreement" in each of the two places in which it appears, the
text "or in ss.4 of the eFinlay Security Agreement".
ss.7. Amendment of Schedule XI to the Consignment Agreement. Schedule XI to
the Consignment Agreement is hereby amended by inserting, at the end thereof,
the following items:
"Transfer of inventory from the Consignee to eFinlay pursuant to
purchase orders issued by eFinlay from time to time for a purchase
price not less than the cost thereof to the Consignee."
"Lease by the Consignee to eFinlay of approximately 6,000 square feet
of space in the Consignee's Connecticut distribution center pursuant
to and on the terms and conditions set forth in the eFinlay Lease
Agreement."
ss.8. Amendment of the Security Agreement. The Security Agreement is hereby
amended by deleting all references contained therein to the Uniform Commercial
Code of the State of Rhode Island and substituting in lieu thereof
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references to the Uniform Commercial Code of or as in effect in the Commonwealth
of Massachusetts.
ss.9. Limited Consent. Subject to the satisfaction of the conditions set
forth in ss.10 hereof, the Consignor hereby consents to the execution and
delivery by the Consignee of Amendment No. 10 and Consent, amending the Amended
and Restated Credit Agreement dated as of September 11, 1997 among the
Consignee, the Parent, the Dollar Agent and the Lenders party thereto, such
Amendment being in substantially the form attached hereto as Exhibit B.
ss.10. Representations and Warranties. The Consignee hereby represents and
warrants to the Consignor as follows:
(a) Representations and Warranties. The representations and warranties of
the Consignee and eFinlay contained in the Consignment Agreement and
the other Consignment Documents were true and correct in all material
respects when made and continue to be true and correct in all material
respects on the date hereof, except to the extent of changes resulting
from transactions contemplated or permitted by the Consignment
Documents and this Amendment and changes occurring in the ordinary
course of business that do not result in a Materially Adverse Effect,
and to the extent that such representations and warranties relate
expressly to an earlier date.
(b) Authority, No Conflicts, Etc. The execution, delivery and performance
by the Consignee of this Amendment and by eFinlay of the eFinlay
Guaranty and the eFinlay Security Agreement (each as hereinafter
defined and collectively with this Amendment, the "Amendment
Documents"), and the consummation of the transactions contemplated
hereby and thereby (i) are within the corporate power of the Consignee
and eFinlay and have been duly authorized by all necessary corporate
action on the part of the Consignee and eFinlay, (ii) do not require
any approval or consent of, or filing with, any governmental agency or
authority, or any other person, association or entity (except for the
consent of the Dollar Agent and the lenders under the Dollar Facility,
which consent is being obtained concurrently herewith as required by
ss.11 hereof), which bears on the validity of this Amendment, the
other Amendment Documents or the Consignment Documents and which is
required by law or the regulation or rule of any agency or authority,
or other person, association or entity, (iii) do not violate any
provisions of any law, rule or regulation or any provision of any
order, writ, judgment, injunction, decree, determination or award
presently in effect in which the Consignee is named in a manner which
has or could reasonably be expected to have a Materially Adverse
Effect, (iv) do not violate any provision of the Charter Documents of
the Consignee or eFinlay, (v) do not result in any breach of or
constitute a default under any agreement or
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instrument to which the Consignee or eFinlay is a party or by which it
or any of its properties is bound, including without limitation any
indenture, loan or credit agreement, lease, debt instrument or
mortgage, in a manner which has or could reasonably be expected to
have a Materially Adverse Effect, and (vi) do not result in or require
the creation or imposition of any mortgage, deed of trust, pledge,
lien, security interest or other charge or encumbrance of any nature
upon any of the assets or properties of the Consignee or eFinlay
except in favor of the Consignor pursuant to the Security Documents.
(c) Enforceability of Obligations. Each of the Amendment Documents has
been duly executed and delivered by the Consignee and eFinlay and
constitutes the legal, valid and binding obligation of the Consignee
and eFinlay, enforceable against the Consignee and eFinlay in
accordance with its terms, provided that (a) enforcement may be
limited by applicable bankruptcy, insolvency, reorganization,
fraudulent conveyance or transfer, moratorium or similar laws of
general application affecting the rights and remedies of creditors,
and (b) enforcement may be subject to general principles of equity,
and the availability of the remedies of specific performance and
injunctive relief may be subject to the discretion of the court before
which any proceedings for such remedies may be brought.
ss.11. Conditions to Effectiveness. This Amendment shall be effective as of
the date first above written (the "Effective Date") upon the Consignor's receipt
of each of the following, in each case in form and substance satisfactory to the
Consignor:
(a) this Amendment duly executed by each of the Consignee and the
Consignor;
(b) a Guaranty in the form of Exhibit C hereto (the "eFinlay Guaranty"),
duly executed by eFinlay, and a Security Agreement in the form of
Exhibit D hereto (the "eFinlay Security Agreement") and a Perfection
Certificate in the form of Exhibit E hereto (the "Perfection
Certificate"), each duly executed by each of the Consignor and
eFinlay;
(c) a copy, certified by the Secretary of eFinlay as being true and
complete as of the Effective Date of (i) its charter documents as in
effect on such date of certification, (ii) its by-laws as in effect on
such date, and (iii) resolutions of its Board of Directors authorizing
the execution and delivery by eFinlay of, and the performance of its
obligations under, each of the Guaranty and the Security Agreement;
(d) an incumbency certificate, dated as of the Effective Date, signed by a
duly authorized officer of eFinlay, and giving the name of and bearing
a specimen signature of each individual who shall be authorized to
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sign, in the name and on behalf of eFinlay, the eFinlay Guaranty, the
eFinlay Security Agreement, the Perfection Certificate and this
Amendment;
(e) good standing certificates for eFinlay, issued by the Secretary of
State of its jurisdiction of incorporation and each jurisdiction in
which it has qualified to do business;
(f) UCC-1 consignment and non-consignment financing statements identifying
the Consignor as the secured party and eFinlay as the debtor, to be
filed in each jurisdiction in which the Consignor requests filing
thereof;
(g) the legal opinion of Blank Rome Xxxxxx Xxxxxxxxxx LLP as to certain
matters regarding eFinlay and the Guaranty and Security Agreement;
(h) an amendment to the Intercreditor Agreement, in the form attached
hereto as Exhibit F, duly executed by the Dollar Agent and the
Consignor;
(i) copies of the eFinlay Marketing Agreement, the eFinlay Contribution
Agreement, the eFinlay FM Services Agreement, the eFinlay Inventory
Sale Agreement, the eFinlay Lease Agreement and the eFinlay Services
Agreement (as each such term is defined in the amendments contained in
ss.1 hereof), each duly executed by each of the parties thereto and
duly certified by the Secretary or Assistant Secretary of the
Consignee as being true, correct, complete and in full force and
effect, without further amendment or modification;
(j) evidence of the Consignee's receipt of all necessary or appropriate
third party consents or approvals to the amendments contemplated
hereby (including consents or approvals of the execution, delivery and
performance by eFinlay of the eFinlay Guaranty and the eFinlay
Security Agreement), including, without limitation, consents or
approvals from the Dollar Agent and each of the applicable lenders
under the Dollar Facility; and
(k) such other documents or items as the Consignor may request.
ss.12. Ratifications, etc. Except as expressly provided in this Amendment,
all of the terms and conditions of the Consignment Agreement and the other
Consignment Documents shall remain in full force and effect. All references in
the Consignment Agreement or any related agreement or instrument to the
Consignment Agreement shall hereafter refer to the Consignment Agreement, as
amended hereby. The Consignee confirms and agrees that the Obligations of the
Consignee to the Consignor under the Consignment Documents, as amended and
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supplemented hereby, are secured by and are entitled to the benefits of the
Security Documents.
ss.13. Expenses. Without limiting the expense reimbursement requirements
set forth in ss.11 of the Consignment Agreement, the Consignee agrees to pay on
demand all costs and expenses, including reasonable attorneys' fees, of the
Consignor incurred in connection with this Amendment.
ss.14. No Implied Waiver. Except as expressly provided herein, nothing
contained herein shall constitute a waiver of, impair or otherwise affect any
Obligations, any other obligations of the Consignee or any right of the
Consignor consequent thereon.
ss.15. Governing Law. This Amendment is intended to take effect as an
instrument under seal and shall be construed according to and governed by the
internal laws of the Commonwealth of Massachusetts.
ss.16. Execution in Counterparts. This Amendment may be executed in any
number of counterparts and by each party on a separate counterpart, each of
which when so executed and delivered shall be an original, but all of which
together shall constitute one instrument. In proving this Amendment, it shall
not be necessary to produce or account for more than one such counterpart signed
by the party against whom enforcement is sought.
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IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first above written.
FINLAY FINE JEWELRY
CORPORATION
By: /s/ Xxxxx Xxxxxxxx
----------------------------------
Name: Xxxxx Xxxxxxxx
Title: Senior Vice President, Chief
Financial Officer and Treasurer
SOVEREIGN BANK, as successor to
FLEET NATIONAL BANK, formerly known
as BANKBOSTON, N.A., as successor
in interest to RHODE ISLAND HOSPITAL
TRUST NATIONAL BANK
By: /s/ Xxxxxxxx Xxxxxxx
----------------------------------
Name: Xxxxxxxx Xxxxxxx
Title: Vice President
The undersigned hereby acknowledges the foregoing Amendment No. 11 and
Limited Consent as of the Effective Date and agrees that its obligations under
the eFinlay Guaranty will extend to the Consignment Agreement, as so amended and
the other Consignment Documents.
eFINLAY, INC.
By: /s/ Xxxxx Xxxxx
----------------------------------
Name: Xxxxx Xxxxx
Title: Secretary
By: /s/ Xxxxx Xxxxxxxx
----------------------------------
Name: Xxxxx Xxxxxxxx
Title: Senior Vice President, Chief
Financial Officer and Treasurer
Exhibit A
Assets contributed to eFinlay:
Item Net Book Value
---- --------------
Cash $ 1,000
3 new Conveying Solutions Packing Tables 3,015
4 new Industrial 24x36 Carts 429
3 new Filing Cabinets 748
1 new 2 ton Xxxx Xxxxxxx 312
100 linear feet of used shelving 4,500
2 used desks 750
2 used credenzas 550
2 Used PCs/Printers/Screens 1,535
-------
Total $12,839
