Finlay Enterprises, Inc.
Common Stock, par value $.01 per share
-----------------
Underwriting Agreement
October , 1997
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.,
▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇
Securities Corporation,
SBC Warburg Dillon Read Inc.
As representatives of the several Underwriters
named in Schedule I hereto,
c/o Goldman, ▇▇▇▇▇ & Co.,
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Finlay Enterprises, Inc., a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to the Underwriters named in Schedule I hereto (the "Underwriters") an aggregate
of 2,046,971 shares and, at the election of the Underwriters, up to 150,000
additional shares of the Company's Common Stock, par value $.01 per share (the
"Stock"), and the stockholder of the Company named in Schedule II hereto (the
"Selling Stockholder") proposes, subject to the terms and conditions stated
herein, to sell to the Underwriters an aggregate of 953,029 shares of Stock and,
at the election of the Underwriters, the other stockholders of the Company named
in Schedule II hereto (the "Over-allotment Selling Stockholders") propose,
subject to the terms and conditions stated herein, to sell to the Underwriters
an aggregate of up to 300,000 shares of Stock. The aggregate of 3,000,000 shares
to be sold by the Company and the Selling Stockholder is herein called the "Firm
Shares" and the aggregate of up to 450,000 additional shares to be sold by the
Company and the Over-allotment Selling Stockholders is herein called the
"Optional Shares". The Firm Shares and the Optional Shares that the Underwriters
elect to purchase pursuant to Section 2 hereof are herein collectively called
the "Shares".
1. (a) Each of the Company and Finlay Fine Jewelry Corporation, a
Delaware corporation and a wholly owned subsidiary of the Company ("Finlay
Jewelry"), jointly and severally represents and warrants to, and agrees with,
each of the Underwriters, the Selling Stockholder and each of the Over-allotment
Selling Stockholders that:
(i) A registration statement on Form S-1 (File No. 333-34949),
as amended by Amendments No. 1 and No. 2 thereto (the "Initial
Registration Statement"), in respect of the Shares has been filed with
the Securities and Exchange Commission (the "Commission"); such Initial
Registration Statement and any post-effective amendment thereto, each
in the form heretofore delivered to you, and, excluding exhibits
thereto, to you for each of the other Underwriters, have been declared
effective by the Commission in such form; other than a registration
statement, if any, increasing the size of the offering (a "Rule 462(b)
Registration Statement"), filed pursuant to Rule 462(b) under the
Securities Act of 1933, as amended (the "Act"), which became effective
upon filing,
no other document with respect to the Initial Registration Statement
has heretofore been filed with the Commission; and no stop order
suspending the effectiveness of the Initial Registration Statement, any
post-effective amendment thereto or the Rule 462(b) Registration
Statement, if any, has been issued and no proceeding for that purpose
has been initiated or threatened by the Commission to the Company or
its counsel (any preliminary prospectus included in the Initial
Registration Statement or filed with the Commission pursuant to Rule
424(a) of the rules and regulations of the Commission under the Act is
hereinafter called a "Preliminary Prospectus"; the various parts of the
Initial Registration Statement and the Rule 462(b) Registration
Statement, if any, including all exhibits thereto and including the
information contained in the form of final prospectus filed with the
Commission pursuant to Rule 424(b) under the Act in accordance with
Section 5(a) hereof and deemed by virtue of Rule 430A under the Act to
be part of the Initial Registration Statement at the time it was
declared effective or such part of the Rule 462(b) Registration
Statement, if any, became or hereafter becomes effective, each as
amended at the time such part of the registration statement became
effective, is hereinafter collectively called the "Registration
Statement"; and such final prospectus, in the form first filed pursuant
to Rule 424(b) under the Act, is hereinafter called the "Prospectus");
(ii) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission, and each
Preliminary Prospectus, at the time of filing thereof, conformed in all
material respects to the requirements of the Act and the rules and
regulations of the Commission thereunder, and did not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon
and in conformity with information furnished in writing to the Company
by an Underwriter through ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. expressly for use
therein or by the Selling Stockholder or Over-allotment Selling
Stockholders expressly for use in the preparation of the answers
therein to Items 7 and 11(l) of Form S-1;
(iii) The Registration Statement conforms, and the Prospectus
and any further amendments or supplements to the Registration Statement
or the Prospectus will conform, in all material respects to the
requirements of the Act and the rules and regulations of the Commission
thereunder and do not and will not, as of the applicable effective date
as to the Registration Statement and any amendment thereto, and as of
the applicable filing date as to the Prospectus and any amendment or
supplement thereto, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by an Underwriter
through ▇▇▇▇▇▇▇, Sachs & Co. expressly for use therein or by the
Selling Stockholder or Over-allotment Selling Stockholders expressly
for use in the preparation of the answers therein to Items 7 and 11(l)
of Form S-1;
(iv) Neither the Company nor any of its subsidiaries has
sustained since the date of the latest audited financial statements
included in the Prospectus any material loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus; and, since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, there has not been any change in the capital stock or
long-term debt of the Company or any of its subsidiaries, except for
borrowings and repayments under Finlay Jewelry's revolving credit
facility, or any material adverse change, or any development involving
a prospective material adverse change, in or affecting the business,
operations, management, financial position or condition, current
assets, merchandise inventories, stockholders' equity or results of
operations of the Company and its subsidiaries taken as a whole,
otherwise than as set forth or contemplated in the Prospectus;
(v) The Company and its subsidiaries have good and marketable
title in fee simple to all real property and good and marketable title
to all material personal property owned by them
2
(including, without limitation, such property acquired by the Company
and its subsidiaries in connection with the consummation of the
transactions contemplated by the Asset Purchase Agreement (the "Diamond
Park Acquisition Agreement"), dated September 3, 1997, by and among the
Company, Finlay Jewelry, ▇▇▇▇ Corporation and Zale Delaware, Inc. (the
"Diamond Park Acquisition"), in each case free and clear of all liens,
encumbrances and defects except such as are described in the Prospectus
or such as do not materially affect the value of such property and do
not interfere with the use made and proposed to be made of such
property by the Company and its subsidiaries; and any material real
property and buildings held under lease by the Company and its
subsidiaries are held by them under valid, subsisting and enforceable
leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and
buildings by the Company and its subsidiaries;
(vi) Each of the Company and Finlay Jewelry has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the State of Delaware, with corporate power and
authority to own its properties and conduct its business (including,
without limitation, the properties and business acquired in connection
with the Diamond Park Acquisition) as described in the Prospectus, and
has been duly qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties or conducts any
business so as to require such qualification, or is subject to no
material liability or disability by reason of the failure to be so
qualified in any such jurisdiction; the Company's indirect subsidiary,
Societe Nouvelle d'Achat de Bijouterie - S.O.N.A.B. ("Sonab") is duly
organized and validly existing as a societe en nom collectif in France;
each other direct or indirect subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation, and has been duly
qualified as a foreign corporation for the transaction of business and
is in good standing under the laws of each other jurisdiction in which
it owns or leases properties or conducts any business so as to require
such qualification, or is subject to no material liability or
disability by reason of the failure to be so qualified in any such
jurisdiction;
(vii) The Company has an authorized capitalization as set
forth in the Prospectus, and all of the issued shares of capital stock
of the Company have been duly authorized and validly issued, are fully
paid and non-assessable and conform to the description of the Stock
contained in the Prospectus; and all of the issued shares of capital
stock of each subsidiary of the Company have been duly authorized and
validly issued, are fully paid and non-assessable and (except for
directors' qualifying shares, if any, and except as set forth in the
Prospectus) are owned directly or indirectly by the Company, free and
clear of all liens, encumbrances and defects;
(viii) The Shares to be issued and sold by the Company to the
Underwriters hereunder were previously unissued, have been duly
authorized and, when issued and delivered against payment therefor as
provided herein, will be duly and validly issued and fully paid and
non-assessable and will conform to the description of the Stock
contained in the Prospectus and the issuance of such shares will not be
subject to any preemptive or similar rights which have not been waived
in a valid and binding writing duly executed and delivered to the
Company by or on behalf of the party granting such waiver;
(ix) The issue and sale of the Shares to be sold by the
Company and the compliance by each of the Company and Finlay Jewelry
with all of the provisions of this Agreement applicable to it and the
consummation of the transactions herein contemplated (i) will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, loan agreement, lease, license or other agreement or
instrument to which the Company or any of its subsidiaries is a party
or by which the Company or any of its subsidiaries is bound or to which
any of the property or assets of the Company or any of its subsidiaries
is subject, except any such conflict, breach, violation or default
which has been consented to or waived in a valid and binding writing
duly executed and delivered to the Company by or on behalf of the party
granting such consent or waiver; (ii) will not result in any violation
of the provisions of the Company's or any of its subsidiaries'
respective Certificate or Restated Certificate of Incorporation or
By-laws or Restated By-laws or comparable documents and (iii) will not
result in any violation of any
3
statute or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company or any of its
subsidiaries or any of their properties; and no consent, approval,
authorization, order, registration or qualification of or with any such
court or governmental agency or body is required for the issue and sale
of the Shares or the consummation by the Company of the transactions
contemplated by this Agreement, except the registration under the Act
of the Shares and such consents, approvals, authorizations,
registrations or qualifications as may be required under foreign or
state securities or Blue Sky laws in connection with the purchase and
distribution of the Shares by the Underwriters;
(x) Neither the Company nor any of its subsidiaries is
(including, without limitation, by reason of the Diamond Park
Acquisition) in violation of its respective Certificate or Restated
Certificate of Incorporation or By-laws or Restated By-laws or
comparable documents, or in default in the performance or observance of
any obligation, agreement, covenant or condition contained in any
indenture, mortgage, deed of trust, loan agreement, lease, license or
other agreement or instrument to which it is a party or by which it or
any of its properties may be bound which default could reasonably be
expected to result in, individually or in the aggregate, a material
adverse change or a prospective material adverse change in or affecting
the business, operations, management, financial position or condition,
current assets, merchandise inventories, stockholders' equity or
results of operations of the Company and its subsidiaries taken as a
whole (a "Material Adverse Effect");
(xi) The statements set forth in the Prospectus under the
caption "Description of Capital Stock", insofar as they purport to
constitute a summary of the terms of the Stock and under the caption
"Underwriting", insofar as they purport to describe the provisions of
the laws and documents referred to therein, are accurate and fair in
all material respects;
(xii) Other than as set forth in the Prospectus, there are no
legal or governmental proceedings pending to which the Company or any
of its subsidiaries is a party or of which any property of the Company
or any of its subsidiaries is the subject which, if determined
adversely to the Company or any of its subsidiaries, could individually
or in the aggregate reasonably be expected to have a Material Adverse
Effect; and, to the Company's and Finlay Jewelry's knowledge, no such
proceedings are threatened or contemplated by governmental authorities
or threatened by others;
(xiii) Each of the Company and Finlay Jewelry is not and,
after giving effect to the offering and sale of the Shares, will not be
an "investment company" or an entity "controlled" by an "investment
company", as such terms are defined in the Investment Company Act of
1940, as amended (the "Investment Company Act");
(xiv) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, who have certified certain
consolidated financial statements of the Company, are independent
public accountants as required by the Act and the rules and regulations
of the Commission thereunder;
(xv) The Company and its subsidiaries directly or through host
store groups (including, without limitation, those host store groups
acquired in connection with the Diamond Park Acquisition) are subject
to consent decrees, injunctions or comparable governmental orders or
decrees regarding the discount pricing and advertising of jewelry from
"regular" or "original" prices only in the states of California,
Colorado, Georgia, Oregon and Wisconsin, and the Company and its
subsidiaries are in compliance therewith and with applicable federal
and state laws with respect to such pricing and advertising practices,
except for such noncompliance previously identified in writing by the
Company to the Representatives which could not individually or in the
aggregate reasonably be expected to have a Material Adverse Effect;
(xvi) Neither the Company nor any of its subsidiaries has
received any notice that any default by the Company or any of its
subsidiaries has occurred and is continuing under any of the license
agreements with host store groups described or identified in the
Prospectus (including, without limitation, those acquired in connection
with the Diamond Park Acquisition) to which the Company or any of its
subsidiaries are a party and no condition exists which could
individually or in the aggregate reasonably be expected to result in
the termination or nonrenewal of any such license
4
agreement; each such license agreement has been duly authorized (and,
in the case of written license agreements, duly and validly executed
and delivered) by and on behalf of the Company and its subsidiaries, as
the case may be, and, assuming the due authorization (and, in the case
of written license agreements, the due and valid execution and
delivery) thereof by the other party or parties thereto, is the valid
and binding obligation of the Company, its subsidiaries and such other
party or parties, as the case may be, enforceable in accordance with
its respective terms against the respective parties thereto subject to
the effect of any applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights generally and
to general principles of equity (regardless of whether enforcement is
sought in a proceeding in equity or at law); and neither the Company
nor any of its subsidiaries has received any notice (whether actual or
constructive) that the licensor thereunder is considering limiting,
suspending, revoking or non-renewing any such license;
(xviii) The Diamond Park Acquisition Agreement was duly
authorized, executed and delivered by the Company and Finlay Jewelry;
and
(xix) The Diamond Park Acquisition (i) did not conflict with
or result in a breach or violation of any of the terms or provisions
of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement, lease, license or other agreement or instrument
to which the Company or any of its subsidiaries is a party or by which
the Company or any of its subsidiaries is bound or to which any of the
property or assets of the Company or any of its subsidiaries is
subject, except any such conflict, breach, violation or default which
has been consented to or waived in a valid and binding writing duly
executed and delivered to the Company by or on behalf of the party
granting such consent or waiver; (ii) did not result in any violation
of the provisions of the Company's or any of its subsidiaries'
respective Certificate or Restated Certificate of Incorporation or
By-laws or Restated By-laws or comparable documents; and (iii) did not
result in any violation of any statute or any order, rule or regulation
of any court or governmental agency or body having jurisdiction over
the Company or any of its subsidiaries or any of their properties; and
no consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body
was or is required for the consummation by the Company of the Diamond
Park Acquisition.
(b) The Selling Stockholder and each of the Over-allotment
Selling Stockholders severally, and not jointly, represents and warrants to, and
agrees with, each of the Underwriters and the Company that, as to itself:
(i) All consents, approvals, authorizations and orders
necessary for the execution and delivery by such holder of this
Agreement and the Power of Attorney and the Custody Agreement
hereinafter referred to, and for the sale and delivery of the Shares to
be sold by such holder hereunder, have been obtained; and such holder
has full right, power and authority to enter into this Agreement, the
Power of Attorney and the Custody Agreement and to sell, assign,
transfer and deliver the Shares to be sold by such holder hereunder,
except for any such consents, approvals, authorizations and orders as
may be required under the Act and state securities or Blue Sky laws in
connection with the sale and delivery of such Shares;
(ii) The sale of the Shares to be sold by such holder
hereunder and the compliance by such holder with all of the provisions
of this Agreement, the Power of Attorney and the Custody Agreement and
the consummation of the transactions herein and therein contemplated
will not conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any statute,
indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which such holder is a party or by which such holder
is bound or to which any of the property or assets of such holder is
subject, nor will such action result in any violation of the provisions
of any partnership agreement (or other comparable organic document) of
such holder or any statute or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over such
holder or the property of such holder; provided, however, that such
holder makes no representation or warranty hereunder with respect to
the federal securities laws of the United States or securities or Blue
Sky laws of any state or other jurisdiction;
5
(iii) Such holder has, and immediately prior to the First Time
of Delivery (as defined in Section 4 hereof), or the applicable Time of
Delivery in the case of an Over-allotment Selling Stockholder, such
holder will have, good and valid title to the Shares to be sold by such
holder hereunder, free and clear of all liens, encumbrances, equities
or claims; and, upon delivery of such Shares and payment therefor
pursuant hereto, such holder will convey good and valid title to such
Shares, free and clear of all liens, encumbrances, equities or claims
to the several Underwriters;
(iv) During the period beginning from the date hereof and
continuing to and including the date 180 days after the date of the
Prospectus, not to offer, sell, contract to sell or otherwise dispose
of, except as provided hereunder, any shares of Stock or any securities
of the Company that are substantially similar to the Shares, including
but not limited to any securities that are convertible into or
exchangeable for, or that represent the right to receive, Stock or any
such substantially similar securities (other than the Shares to be sold
by such holder to the Underwriters hereunder), without the prior
written consent of ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.; provided, however, that such
holders may, without your consent, transfer stock in a private
transaction to an "affiliate" (as such term is defined in the Act)
provided that such affiliate agrees in writing to be bound by the
provisions hereof to the same extent as the holders are bound
hereunder;
(v) Such holder has not taken and will not take, directly or
indirectly, any action which is designed to or which has constituted or
which might reasonably be expected to cause or result in stabilization
or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares;
(vi) To the extent that any statements or omissions made in
the Registration Statement, any Preliminary Prospectus, the Prospectus
or any amendment or supplement thereto are made in reliance upon and in
conformity with written information furnished to the Company by such
holder expressly for use therein, such Preliminary Prospectus and the
Registration Statement did, and the Prospectus and any further
amendments or supplements to the Registration Statement and the
Prospectus, when they become effective or are filed with the
Commission, as the case may be, will conform in all material respects
to the requirements of the Act and the rules and regulations of the
Commission thereunder and will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading;
(vii) In order to document the Underwriters' compliance with
the reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 with respect to the transactions herein
contemplated, such holder will deliver to you prior to or at the First
Time of Delivery (as hereinafter defined) a properly completed and
executed United States Treasury Department Form W-9 (or other
applicable form or statement specified by Treasury Department
regulations in lieu thereof);
(viii) Certificates in negotiable form representing all of the
Shares to be sold by such holder hereunder have been placed in custody
under a Custody Agreement, in the form heretofore furnished to you (the
"Custody Agreement"), duly executed and delivered by Selling
Stockholder to Marine Midland Bank, as custodian (the Custodian"), and
such holder has duly executed and delivered a Power of Attorney, in the
form heretofore furnished to you (the "Power of Attorney"), appointing
the persons indicated in Schedule II hereto, and each of them, as such
holder's attorneys-in-fact (the "Attorneys-in-Fact") with authority to
execute and deliver this Agreement on behalf of such holder, to
determine the purchase price to be paid by the Underwriters to such
holder as provided in Section 2 hereof, to authorize the delivery of
the Shares to be sold by such holder hereunder and otherwise to act on
behalf of such holder in connection with the transactions contemplated
by this Agreement and the Custody Agreement; and
(ix) The Shares represented by the certificates held in
custody for such holder under the Custody Agreement are subject to the
interests of the Underwriters hereunder; the arrangements made by such
holder for such custody, and the appointment by such holder of the
Attorneys-in-Fact by the Power of Attorney, are to that extent
irrevocable; the obligations of such holder hereunder
6
shall not be terminated, except as provided in this Agreement or in the
Power of Attorney, by operation of law, whether by the death or
incapacity of any individual Selling Stockholder or, in the case of an
estate or trust, by the death or incapacity of any executor or trustee
or the termination of such estate or trust, or in the case of a
partnership or corporation, by the dissolution of such partnership or
corporation, or by the occurrence of any other event; if any individual
Selling Stockholder or any such executor or trustee should die or
become incapacitated, or if any such estate or trust should be
terminated, or if any such partnership or corporation should be
dissolved, or if any other such event should occur, before the delivery
of the Shares hereunder, certificates representing the Shares shall be
delivered by or on behalf of such holder in accordance with the terms
and conditions of this Agreement and of the Custody Agreements; and
actions taken by the Attorneys-in-Fact pursuant to the Powers of
Attorney shall be as valid as if such death, incapacity, termination,
dissolution or other event had not occurred, regardless of whether or
not the Custodian, the Attorneys-in-Fact, or any of them, shall have
received notice of such death, incapacity, termination, dissolution or
other event.
2. Subject to the terms and conditions herein set forth, (a) the
Company and the Selling Stockholder agree, severally and not jointly, to sell to
each of the Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase from the Company and the Selling Stockholder, at a purchase
price per share of $______, the number of Firm Shares (to be adjusted by you so
as to eliminate fractional shares) determined by multiplying the aggregate
number of Firm Shares to be sold by the Company and the Selling Stockholder as
set forth opposite their respective names in Schedule II hereto by a fraction,
the numerator of which is the aggregate number of Firm Shares to be purchased by
such Underwriter as set forth opposite the name of such Underwriter in Schedule
I hereto and the denominator of which is the aggregate number of Firm Shares to
be purchased by all of the Underwriters from the Company and the Selling
Stockholder hereunder and (b) in the event and to the extent that the
Underwriters shall exercise the election to purchase Optional Shares as provided
below, the Company and the Over-allotment Selling Stockholders agree, severally
and not jointly, to sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Company and
the Over-allotment Selling Stockholders, at the purchase price per share set
forth in clause (a) of this Section 2, that portion of the number of Optional
Shares as to which such election shall have been exercised (to be adjusted by
you so as to eliminate fractional shares) determined by multiplying such number
of Optional Shares by a fraction the numerator of which is the maximum number of
Optional Shares which such Underwriter is entitled to purchase as set forth
opposite the name of such Underwriter in Schedule I hereto and the denominator
of which is the maximum number of Optional Shares that all of the Underwriters
are entitled to purchase hereunder.
The Company and the Over-allotment Selling Stockholders, as and to the
extent indicated in Schedule II hereto, hereby grant, severally and not jointly,
to the Underwriters the right to purchase at their election up to an aggregate
of 450,000 Optional Shares, at the purchase price per share set forth in the
paragraph above, for the sole purpose of covering overallotments in the sale of
the Firm Shares. The Company and the Over-Allotment Selling Stockholders agree
that the first 300,000 shares as to which the Underwriters' over-allotment
option is exercised will be sold by such Over-Allotment Selling Stockholders on
a pro rata basis based on the relative amounts subject to sale by such persons
as set forth on Schedule II hereto and any of the remaining 150,000 shares as to
which the Underwriters' over-allotment option is exercised will be sold by the
Company. Any such election to purchase Optional Shares may be exercised only by
written notice from you to the Company and the Attorneys-in-Fact, given within a
period of 30 calendar days after the date of this Agreement, setting forth the
aggregate number of Optional Shares to be purchased and the date on which such
Optional Shares are to be delivered, as determined by you but in no event
earlier than the First Time of Delivery (as defined in Section 4 hereof) or,
unless you and the Company and the Attorneys-in-Fact otherwise agree in writing,
earlier than two or later than ten business days after the date of such notice.
3. Upon the authorization by you of the release of the Firm Shares, the
several Underwriters propose to offer the Firm Shares for sale upon the terms
and conditions set forth in the Prospectus.
4. (a) The Shares to be purchased by each Underwriter hereunder, in
definitive form, and in such authorized denominations and registered in such
names as ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. may request upon at least forty-eight hours' prior
written notice to the Company and the Selling Stockholder, or the Over-allotment
Selling Stockholders in the case of the Optional Shares, shall be delivered by
or on behalf of the Company and the Selling Stockholder, or the Over-allotment
Selling Stockholders in the case of the
7
Optional Shares, to ▇▇▇▇▇▇▇, Sachs & Co., for the account of such Underwriter,
against payment by or on behalf of such Underwriter of the purchase price
therefor by wire transfer of immediately available (same day) funds to a bank
account designated by the Company or the Selling Stockholder, or the
Over-allotment Selling Stockholders in the case of the Optional Shares, as the
case may be. The Company and the Selling Stockholder, or the Over-allotment
Selling Stockholders in the case of the Optional Shares, severally will cause
the certificates representing the Shares to be made available for checking and
packaging at least twenty-four hours prior to the respective Time of Delivery
(as defined below) with respect thereto at the office of ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.,
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "Designated Office"). The time
and date of such delivery and payment shall be, with respect to the Firm Shares,
9:30 a.m., New York City time, on October ___, 1997 or such other time and date
as ▇▇▇▇▇▇▇, Sachs & Co. and the Company and the Selling Stockholder may agree
upon in writing, and, with respect to the Optional Shares, 9:30 a.m., New York
time, on the date specified by ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. in the written notice given
by ▇▇▇▇▇▇▇, Sachs & Co. of the Underwriters' election to purchase such Optional
Shares, or such other time and date as ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. and the
Over-allotment Selling Stockholders may agree upon in writing. Such time and
date for delivery of the Firm Shares is herein called the "First Time of
Delivery", such time and date for delivery of the Optional Shares, if not the
First Time of Delivery, is herein called the "Second Time of Delivery", and each
such time and date for delivery is herein called a "Time of Delivery".
(b) The documents to be delivered at each Time of Delivery by
or on behalf of the parties hereto pursuant to Section 7 hereof, including the
cross receipt for the Shares and any additional documents requested by the
Underwriters pursuant to Section 7(n) hereof, will be delivered at the offices
of ▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇ (the "Closing Location"), and the Shares will be delivered at the
Designated Office, all at such Time of Delivery. A meeting will be held at the
Closing Location at 2:00 p.m., New York City time, on the New York Business Day
next preceding such Time of Delivery, at which meeting the final drafts of the
documents to be delivered pursuant to the preceding sentence will be available
for review by the parties hereto. For the purposes of this Section 4, "New York
Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in New York are generally
authorized or obligated by law or executive order to close.
5. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you and to
file such Prospectus pursuant to Rule 424(b) under the Act not later
than the Commission's close of business on the second business day
following the execution and delivery of this Agreement, or, if
applicable, such earlier time as may be required by Rule 430A(a)(3)
under the Act; to make no further amendment or any supplement to the
Registration Statement or Prospectus which shall be disapproved by you
promptly after reasonable notice thereof; to advise you, promptly after
it receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective or any
supplement to the Prospectus or any amended Prospectus has been filed
and to furnish you with copies thereof; to advise you, promptly after
it receives notice thereof, of the issuance by the Commission of any
stop order or of any order preventing or suspending the use of any
Preliminary Prospectus or prospectus, of the suspension of the
qualification of the Shares for offering or sale in any jurisdiction,
of the initiation or threatening of any proceeding for any such
purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or Prospectus or for
additional information; and, in the event of the issuance of any stop
order or of any order preventing or suspending the use of any
Preliminary Prospectus or prospectus or suspending any such
qualification, promptly to use its best efforts to obtain the
withdrawal of such order;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Shares for offering and sale under
the securities laws of such jurisdictions as you may reasonably request
and to comply with such laws so as to permit the continuance of sales
and dealings therein in such jurisdictions for as long as may be
necessary to complete the distribution of the Shares, provided that in
connection therewith the Company shall not be required to qualify as a
foreign corporation or to file a general consent to service of process
in any jurisdiction or to take any other action which would subject it
to the service of process in suits or to taxation, other than as to
matters and transactions relating to the offer and sale of the Shares
in each jurisdiction in which the
8
Shares have been qualified as provided above;
(c) Prior to 12:00 noon, New York City time, on the New York
Business Day next succeeding the date of this Agreement and from time
to time, to furnish the Underwriters with copies of the Prospectus in
New York City in such quantities as you may reasonably request, and, if
the delivery of a prospectus is required at any time prior to the
expiration of nine months after the time of issue of the Prospectus in
connection with the offering or sale of the Shares and if at such time
any event shall have occurred as a result of which the Prospectus as
then amended or supplemented would include an untrue statement of a
material fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made when such Prospectus is delivered, not misleading,
or, if for any other reason it shall be necessary during such period to
amend or supplement the Prospectus in order to comply with the Act, to
notify you and upon your request to prepare and furnish without charge
to each Underwriter and to any dealer in securities as many copies as
you may from time to time reasonably request of an amended Prospectus
or a supplement to the Prospectus which will correct such statement or
omission or effect such compliance, and in case any Underwriter is
required to deliver a prospectus in connection with sales of any of the
Shares at any time nine months or more after the time of issue of the
Prospectus, upon your request but at the expense of such Underwriter,
to prepare and deliver to such Underwriter as many copies as you may
request of an amended or supplemented Prospectus complying with Section
10(a)(3) of the Act;
(d) To make generally available to its securityholders as soon
as practicable, but in any event not later than eighteen months after
the effective date of the Registration Statement (as defined in Rule
158(c) under the Act), an earnings statement of the Company and its
subsidiaries (which need not be audited) complying with Section 11(a)
of the Act and the rules and regulations thereunder (including, at the
option of the Company, Rule 158);
(e) During the period beginning from the date hereof and
continuing to and including the date 180 days after the date of the
Prospectus, not to offer, sell, contract to sell or otherwise dispose
of, except as provided hereunder, any shares of Stock or any securities
that are substantially similar to the Shares, including but not limited
to any securities that are convertible into or exchangeable for, or
that represent the right to receive, Stock or any such substantially
similar securities (other than pursuant to employee or director stock
option plans, arrangements or agreements existing on the date of this
Agreement and the Shares to be sold by the Company to the Underwriters
hereunder), without the prior written consent of ▇▇▇▇▇▇▇, Sachs & Co.;
(f) For each of the first five fiscal years ending after the
effective date of the Registration Statement or such longer period as
may be required by law or by the rule of any stock exchange on which
the Stock is listed or any quotation system in which the Stock is
included, to furnish to its stockholders as soon as practicable after
the end of each fiscal year an annual report (including a balance sheet
and statements of operations, changes in stockholders' equity and cash
flows of the Company and its consolidated subsidiaries certified by
independent public accountants) and, as soon as practicable after the
end of each of the first three quarters of each fiscal year (beginning
with the fiscal quarter ending after the effective date of the
Registration Statement), consolidated summary financial information of
the Company and its subsidiaries for such quarter in reasonable detail;
(g) During a period of five years from the effective date of
the Registration Statement, to furnish to you copies of all reports or
other communications (financial or other) furnished to stockholders,
and to deliver to you (i) as soon as they are available, copies of any
reports and financial statements furnished to or filed with the
Commission or any national securities exchange on which any class of
securities of the Company or Finlay Jewelry is listed or quoted (such
financial statements to be on a consolidated basis to the extent the
accounts of the Company and its subsidiaries are consolidated in
reports furnished to its stockholders generally or to the Commission);
and (ii) such additional information concerning the business and
financial condition of the Company or Finlay Jewelry as you may from
time to time reasonably request;
9
(h) To use the net proceeds received by it from the sale of
the Shares pursuant to this Agreement in the manner specified in the
Prospectus under the caption "Use of Proceeds";
(i) To use its best efforts to list for quotation the Shares
on the Nasdaq National Market ("NASDAQ"); and
(j) If the Company elects to rely upon Rule 462(b), the
Company shall file a Rule 462(b) Registration Statement with the
Commission in compliance with Rule 462(b) by 10:00 p.m., Washington,
D.C. time, on the date of this Agreement, and the Company shall at the
time of filing either pay to the Commission the filing fee for the Rule
462(b) Registration Statement or give irrevocable instructions for the
payment of such fee pursuant to Rule 111(b) under the Act.
6. The Company covenants and agrees with the several Underwriters that
the Company will pay or cause to be paid the following: (i) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Shares under the Act and all other
expenses in connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of printing or producing
any Agreement among Underwriters, this Agreement, any Blue Sky Memorandum,
closing documents (including any reasonable compilations thereof) and any other
documents in connection with the offering, purchase, sale and delivery of the
Shares; (iii) all expenses in connection with the qualification of the Shares
for offering and sale under state securities laws as provided in Section 5(b)
hereof, including the reasonable fees and disbursements of counsel for the
Underwriters in connection with such qualification and in connection with any
Blue Sky survey; (iv) all fees and expenses in connection with listing the
Shares on the NASDAQ; (v) the filing fees incident to, and the reasonable fees
and disbursements of counsel for the Underwriters in connection with, securing
any required review by the National Association of Securities Dealers, Inc. of
the terms of the sale of the Shares; (vi) the cost of preparing stock
certificates; (vii) the cost and charges of any transfer agent or registrar;
(viii) all costs and expenses incident to the performance of the Selling
Stockholder's and Over-allotment Selling Stockholders' obligations hereunder,
including (A) any fees and expenses of counsel for such holder, (B) such
holder's pro rata share of the fees and expenses of the Attorneys-in-Fact and
the Custodian, if any, and (C) all expenses and taxes incident to the sale and
delivery of the Shares to be sold by such holder to the Underwriters hereunder;
and (ix) all other costs and expenses incident to the performance of the
Company's, the Selling Stockholder's or the Over-allotment Selling Stockholders'
obligations hereunder which are not otherwise specifically provided for in this
Section. In connection with the preceding sentence, ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. agrees
to pay New York State stock transfer tax, and the Company, the Selling
Stockholder and the Over-allotment Selling Stockholders, severally and not
jointly, agree to reimburse ▇▇▇▇▇▇▇, Sachs & Co. for its pro rata share of any
associated carrying costs if such tax payment is not rebated on the day of
payment and for any portion of such tax payment not rebated. It is understood,
however, that the Company shall bear, and the Selling Stockholder and
Over-allotment Selling Stockholders shall not be required to pay or to reimburse
the Company for, the cost of any matters relating to the sale and purchase of
the Shares pursuant to this Agreement, other than the underwriting discount
applicable to the Shares to be sold by it, and that, except as provided in this
Section, and Sections 8 and 11 hereof, the Underwriters will pay all of their
own costs and expenses, including the fees and disbursements of their counsel,
stock transfer taxes on resale of any of the Shares by them, and any advertising
expenses connected with any offers they may make.
7. The obligations of the Underwriters hereunder, as to the Shares to
be delivered at each Time of Delivery, shall be subject, in their discretion, to
the condition that all representations and warranties and other statements of
the Company, Finlay Jewelry, the Selling Stockholder and the Over-allotment
Selling Stockholders herein are, at and as of such Time of Delivery, true and
correct, the condition that the Company, Finlay Jewelry, the Selling Stockholder
and the Over-allotment Selling Stockholders shall have performed all of its and
their obligations hereunder theretofore to be performed, and the following
additional conditions:
(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed for such
filing by the rules and regulations under the Act and in accordance with Section
5(a) hereof; if the Company has elected to rely upon Rule 462(b), the Rule
462(b)
10
Registration Statement shall have become effective by 10:00 p.m., Washington,
D.C. time, on the date of this Agreement; no stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have been
issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission; and all requests for additional information on the
part of the Commission shall have been complied with to your reasonable
satisfaction;
(b) ▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇, counsel for the Underwriters,
shall have furnished to you such opinion or opinions (a draft of each such
opinion is attached as Annex II(a) hereto), dated such Time of Delivery, with
respect to the matters covered in paragraphs (i), (ii), (v), (viii) and (x) of
subsection (c) below as well as such other related matters as you may reasonably
request, and such counsel shall have received such papers and information as
they may reasonably request to enable them to pass upon such matters;
(c) ▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the
Company, shall have furnished to you their written opinion (a draft of such
opinion is attached as Annex II(b) hereto) (which opinion may be limited to the
federal laws of the United States, the laws of the State of New York and the
General Corporation Law of the State of Delaware and in giving such opinion such
counsel may state that, insofar as any opinions involve factual matters, they
have relied, to the extent they deem proper, upon certificates of officers of
the Company or its subsidiaries and certificates of responsible public
officials, copies of which certificates will be provided to you upon delivery of
such counsel's opinion), dated such Time of Delivery, in form and substance as
attached, to the effect that:
(i) Each of the Company and Finlay Jewelry has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the State of Delaware, with corporate power and
authority to own its properties and conduct its business as described
in the Prospectus (including, without limitation, the properties and
business acquired in connection with the Diamond Park Acquisition);
(ii) The Company has an authorized capitalization as set forth
in the Prospectus, and all of the issued shares of capital stock of the
Company (including the Shares being delivered at such Time of Delivery)
have been duly authorized and, upon payment for the Shares in
accordance with the terms of this Agreement, will be validly issued,
fully paid and non-assessable; and the Shares conform in all material
respects as to legal matters to the description of the Stock contained
in the Prospectus;
(iii) Each subsidiary of the Company (other than Sonab and
Finlay Jewelry) has been duly incorporated and is validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation; and all of the issued shares of capital stock of each
subsidiary of the Company (other than Sonab) have been duly authorized
and validly issued, are fully paid and non-assessable, and (except for
directors' qualifying shares, if any, and except as otherwise set forth
in the Prospectus) are owned of record directly or indirectly by the
Company, to the knowledge of such counsel, free and clear of all liens,
encumbrances and defects;
(iv) To such counsel's knowledge and other than as set forth
in the Prospectus, there are no legal or governmental proceedings
pending to which the Company or any of its subsidiaries is a party or
of which any property of the Company or any of its subsidiaries is the
subject which, if determined adversely to the Company or any of its
subsidiaries, could individually or in the aggregate reasonably be
expected to have a Material Adverse Effect; and, to such counsel's
knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;
(v) This Agreement has been duly authorized, executed and
delivered by the Company and Finlay Jewelry;
(vi) (a) The issue and sale of the Shares being delivered at
such Time of Delivery by the Company and the compliance by each of the
Company and Finlay Jewelry with the applicable provisions of this
Agreement and the consummation of the transactions herein contemplated
will not
11
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, loan agreement, real property lease, license or other
material agreement or instrument known to such counsel to which the
Company or any of its subsidiaries is a party or by which the Company
or any of its subsidiaries is bound or to which any of the property or
assets of the Company or any of its subsidiaries is subject, nor (b)
will such action result in any violation of the provisions of (i) the
respective Certificate or Restated Certificate of Incorporation, or
respective By-Laws or Restated By-laws, as the case may be, of the
Company or Finlay Jewelry, (ii) any statute, rule or regulation known
to such counsel of any governmental agency or body having jurisdiction
over the Company or any of its subsidiaries or any of their respective
properties or (iii) any order applicable to the Company, any of its
subsidiaries or any of their respective properties of any court,
governmental agency or body known to such counsel based upon an
officer's certificate listing any such orders (which officer's
certificate shall be delivered with such opinion);
(vii) No consent, approval, authorization, order, registration
or qualification of or with any such court or governmental agency or
body is required for the issue and sale of the Shares or the
consummation by the Company of the transactions contemplated by this
Agreement, except the registration under the Act of the Shares, and
such consents, approvals, authorizations, registrations or
qualifications as may be required under foreign or state securities or
Blue Sky laws in connection with the purchase and distribution of the
Shares by the Underwriters;
(viii) The statements set forth in the Prospectus under the
caption "Description of Capital Stock", insofar as they purport to
constitute a summary of the terms of the Stock and under the caption
"Underwriting", insofar as they purport to describe the provisions of
the laws and documents referred to therein, are accurate and fair in
all material respects;
(ix) Each of the Company and Finlay Jewelry is not an
"investment company" or an entity "controlled" by an "investment
company", as such terms are defined in the Investment Company Act; and
(x) The Registration Statement and the Prospectus and any
further amendments and supplements thereto made by the Company prior to
such Time of Delivery (other than the financial statements and related
schedules and other financial data therein, as to which such counsel
need express no opinion) comply as to form in all material respects
with the requirements of the Act and the rules and regulations
thereunder; although they do not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus, except for those referred to
in the opinion in subsection (viii) of this Section 7(c), such counsel
may state that such counsel has participated in conferences at which
the contents of the Registration Statement and the Prospectus and
related matters were discussed, and, on the basis of such
participation, they have no reason to believe that, as of its effective
date, the Registration Statement or any further amendment thereto made
by the Company prior to such Time of Delivery (other than the financial
statements and related schedules and other financial data therein, as
to which such counsel need express no opinion) contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading or that, as of its date, the Prospectus or any
further amendment or supplement thereto made by the Company prior to
such Time of Delivery (other than the financial statements and related
schedules and other financial data therein, as to which such counsel
need express no opinion) contained an untrue statement of a material
fact or omitted to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading or that, as of such Time of Delivery, either
the Registration Statement or the Prospectus or any further amendment
or supplement thereto made by the Company prior to such Time of
Delivery (other than the financial statements and related schedules and
other financial data therein, as to which such counsel need express no
opinion) contains an untrue statement of a material fact or omits to
state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
and they do not know of any amendment to the Registration Statement
required to be filed or of any contracts or other documents of a
character required to be filed as an exhibit to the Registration
Statement or required to be
12
described in the Registration Statement or the Prospectus which are not
filed or described as required;
(d) Zimet, Haines, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, counsel for the Company,
shall have furnished to you their written opinion (a draft of such opinion is
attached as Annex II(c) hereto) (which opinion may be limited to the federal
laws of the United States, the laws of the State of New York and the General
Corporation Law of the State of Delaware and in giving such opinion such counsel
may state that, insofar as any opinions involve factual matters, they have
relied, to the extent they deem proper, upon certificates of officers of the
Company or its subsidiaries and certificates of responsible public officials,
copies of which certificates will be provided to you upon delivery of such
counsel's opinion), dated such Time of Delivery, in form and substance as
attached, to the effect that:
(i) (a) the Diamond Park Acquisition Agreement was duly
authorized, executed and delivered by the Company and Finlay Jewelry;
and (b) the Diamond Park Acquisition (i) did not conflict with or
result in a breach or violation of any of the terms or provisions of,
or constitute a default under, any indenture, mortgage, deed of trust,
loan agreement, lease, license or other material agreement or
instrument known to such counsel to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject, except any such
conflict, breach, violation or default which (A) has been consented to
or waived in a valid and binding writing duly executed and delivered to
the Company by or on behalf of the party granting such consent or
waiver or (B) would not reasonably be expected to have a Material
Adverse Effect; (ii) did not result in any violation of the provisions
of the Company's or any of its subsidiaries' respective Certificate or
Restated Certificate of Incorporation or By-laws or Restated By-laws or
comparable documents and (iii) did not result in any violation of any
statute or any order, rule or regulation known to such counsel of any
court or governmental agency or body having jurisdiction over the
Company or any of its subsidiaries or any of their properties; and no
consent, approval, authorization, order, registration or qualification
of or with any such court or governmental agency or body was or is
required for the consummation by the Company of the Diamond Park
Acquisition, except for any such consent, approval, authorization,
order, registration or qualification which has been obtained or waived
or where the failure to so obtain any such consent, approval,
authorization, order, registration or qualification would not
reasonably be expected to have a Material Adverse Effect; and
(ii) To such counsel's knowledge, neither the Company nor any
of its subsidiaries is (including, without limitation, by reason of the
Diamond Park Acquisition) in violation of its respective Certificate or
Restated Certificate of Incorporation or By-laws or Restated By-laws,
or comparable documents, or in default in the performance or observance
of any obligation, agreement, covenant or condition contained in any
indenture, mortgage, deed of trust, loan agreement, lease or other
agreement or instrument to which it is a party or by which it or any of
its properties may be bound which default, individually or in the
aggregate, could reasonably be expected to have a Material Adverse
Effect;
(e) ▇▇▇▇▇ ▇. ▇▇▇▇▇, Vice President, General Counsel and
Secretary of Finlay Jewelry, shall have furnished to you her written opinion (a
draft of such opinion is attached as Annex II(d) hereto) (which opinion may be
limited to the federal laws of the United States, the laws of the State of New
York and the General Corporation Law of the State of Delaware and in giving such
opinion ▇▇. ▇▇▇▇▇ may state that, insofar as any opinions involve factual
matters, she has relied, to the extent she deems proper, upon certificates of
officers of the Company or its subsidiaries and certificates of responsible
public officials, copies of which certificates will be provided to you upon
delivery of ▇▇. ▇▇▇▇▇'▇ opinion), dated such Time of Delivery, in form and
substance as attached, with respect to the matters covered in paragraphs (iv)
and (vi) of subsection (c) above and paragraphs (i) and (ii) of subsection (d)
above and, in addition, to the effect that:
(i) Each subsidiary of the Company (other than Sonab for which
no opinion need be given) has been duly qualified as a foreign
corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases
properties or conducts any business (including, without limitation,
properties and business acquired in connection with the Diamond Park
Acquisition) so as to require such qualification or is subject to no
material liability or
13
disability by reason of failure to be so qualified in any such
jurisdiction; the Company has been duly qualified as a foreign
corporation for the transaction of business and is in good standing
under the laws of each jurisdiction in which it owns or leases
properties or conducts any business (including, without limitation,
properties and business acquired in connection with the Diamond Park
Acquisition) so as to require such qualification or is subject to no
material liability or disability by reason of its failure to be so
qualified in any such jurisdiction;
(ii) The Company and its subsidiaries have good and marketable
title in fee simple to all real property owned by them (including,
without limitation, real property acquired in connection with the
Diamond Park Acquisition), in each case free and clear of all liens,
encumbrances and defects except such as are described in the Prospectus
or such as do not materially affect the value of such property and do
not interfere with the use made and proposed to be made of such
property by the Company and its subsidiaries; to such counsel's
knowledge neither the Company nor any of its subsidiaries is in default
under any lease for real property or buildings held under lease by the
Company or its subsidiaries (including, without limitation, properties
and buildings acquired in connection with the Diamond Park Acquisition)
except for such defaults that are not material and do not interfere
with the use made and proposed to be made of such property and
buildings by the Company and its subsidiaries; and the leases listed on
Schedule III hereto are the only real property leases to which the
Company and its subsidiaries are a party (including, without
limitation, as a result of the Diamond Park Acquisition) and are valid,
subsisting and enforceable as against the Company or its subsidiaries
(as the case may be) with such exceptions as are not material and do
not interfere with the use made and proposed to be made of such
property and buildings by the Company and its subsidiaries and except
that the enforceability of such leases is subject to the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors' rights generally (in giving the
opinion in this clause, such counsel may state that no examination of
record titles for the purpose of such opinion has been made, and that
they are relying upon a general review of the titles of the Company and
its subsidiaries, upon opinions of local counsel and abstracts, reports
and policies of title companies rendered or issued at or subsequent to
the time of acquisition of such property by the Company or its
subsidiaries, upon opinions of counsel to the lessors of such property
and, in respect of matters of fact, upon certificates of officers of
the Company or its subsidiaries, provided that such counsel shall state
that they believe that both you and they are justified in relying upon
such opinions, abstracts, reports, policies and certificates);
(iii) To such counsel's knowledge (a) neither the Company nor
any of its subsidiaries has received any notice that any default by the
Company or any of its subsidiaries has occurred and is continuing under
any of the license agreements with host store groups described or
identified in the Prospectus (including, without limitation, those
acquired in connection with the Diamond Park Acquisition) to which the
Company or any of its subsidiaries are a party and (b) no condition
exists which could individually or in the aggregate reasonably be
expected to result in the termination or nonrenewal of any such license
agreement; and
(iv) To such counsel's knowledge, no legal proceedings are
pending or have been threatened against the Company or any of its
subsidiaries that are of a nature required to be disclosed in the
Prospectus which are not so disclosed therein;
(f) [French counsel], French counsel to the Company, shall
have furnished to you their written opinion (a draft of such opinion is attached
as Annex II(e) hereto) (which opinion may be limited to the laws of France and
in giving such opinion French counsel may state that, insofar as any opinions
involve factual matters, it has relied, to the extent such counsel deems proper,
upon certificates of officers of the Company or its subsidiaries and
certificates of responsible public officials, copies of which certificates will
be provided to you upon delivery of such counsel's opinion), dated such Time of
Delivery, in form and substance as attached, to the effect that:
(i) Sonab has been duly organized and is validly existing as a
societe en nom collectif in France; and
(ii) all of the issued equity interests of Sonab have been
duly authorized and validly
14
created, are fully paid and non-assessable, and are validly held of
record directly or indirectly by the Company, to the knowledge of such
counsel, free of all liens, encumbrances and defects, other than the
pledge under Finlay Jewelry's revolving credit agreement;
(g) Counsel for the Selling Stockholder and each of the
Over-allotment Selling Stockholders, in each case as indicated in Schedule II
hereto, shall have furnished to you their written opinion (a draft of each such
opinion is attached as Annex II(f) hereto) (in giving such opinion such counsel
may state that, insofar as any opinions involve factual matters, such counsel
has relied, to the extent they deem proper, upon certificates of such holder,
and, if applicable, officers of such holder and certificates of responsible
public officials, copies of which certificates will be provided to you upon
delivery of such opinion, dated the First Time of Delivery, in the case of
counsel for the Selling Stockholder, and the applicable Time of Delivery, in the
case of counsel for any Over-allotment Selling Stockholder, in form and
substance satisfactory to you, to the effect that:
(i) A Power of Attorney and a Custody Agreement have been duly
executed and delivered by such holder and constitute valid and binding
agreements of such holder in accordance with their terms, except as (a)
rights to indemnity and contribution may be limited by applicable law,
(b) enforceability may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights generally and
(c) the remedy of specific performance and injunctive relief may be
subject to equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought;
(ii) This Agreement has been duly executed and delivered by or
on behalf of such holder; and the sale of the Shares to be sold by such
holder hereunder and the compliance by such holder with all of the
provisions of this Agreement, the Power of Attorney and the Custody
Agreement and the consummation of the transactions herein and therein
contemplated will not conflict with or result in a breach or violation
of any terms or provisions of, or constitute a default under, any
statute, or to the knowledge of such counsel, indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument to which such
holder is a party or by which such holder is bound or to which any of
the property or assets of such holder is subject, nor will such action
result in any violation of the provisions of any partnership agreement
(or comparable organic document) of such holder or, to the knowledge of
such counsel, any order, rule or regulation of any court or
governmental agency or body having jurisdiction over such holder or the
property of such holder;
(iii) No consent, approval, authorization or order of any
court or governmental agency or body is required to be obtained by such
holder for the consummation of the transactions contemplated by this
Agreement in connection with the Shares to be sold by such holder
hereunder, except for those which have been duly obtained and are in
full force and effect and such as may be required under the Act, state
securities or Blue Sky laws or under rules and regulations of the
National Association of Securities Dealers, Inc. in connection with the
purchase and distribution of such Shares by the Underwriters;
(iv) To such counsel's knowledge, immediately prior to the
First Time of Delivery, such holder had good and valid title to the
Shares to be sold at the First Time of Delivery by such holder under
this Agreement, free and clear of all liens, encumbrances, equities or
claims, and full right, power and authority to sell, assign, transfer
and deliver the Shares to be sold by such holder hereunder; and
(v) Good and valid title to such Shares, free and clear of all
liens, encumbrances, equities or claims, has been conveyed by such
holder to each of the several Underwriters who have purchased such
Shares in good faith and without notice of any such lien, encumbrance,
equity or claim or any other adverse claim within the meaning of the
Uniform Commercial Code;
(h) On the date of the Prospectus at a time prior to the
execution of this Agreement, at 9:30 a.m., New York City time, on the effective
date of any post-effective amendment to the Registration Statement filed
subsequent to the date of this Agreement and also at each Time of Delivery,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP shall have furnished to you a letter or letters, dated the
respective dates of delivery thereof, in form and
15
substance satisfactory to you, to the effect set forth in Annex I hereto (the
executed copy of the letter delivered prior to the execution of this Agreement
is attached as Annex I(a) hereto and a draft of the form of letter to be
delivered on the effective date of any post-effective amendment to the
Registration Statement and as of each Time of Delivery is attached as Annex I(b)
hereto);
(i)(i) Neither the Company nor any of its subsidiaries shall
have sustained since the date of the latest audited financial statements
included in the Prospectus any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any strike, boycott or similar labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in the Prospectus,
and (ii) since the respective dates as of which information is given in the
Prospectus there shall not have been any change in the capital stock or
long-term debt of the Company or any of its subsidiaries except for borrowings
and repayments under Finlay Jewelry's revolving credit facility or any change,
or any development involving a prospective change, in or affecting the business,
operations, management, financial position or condition, current assets,
merchandise inventories, stockholders' equity or results of operations of the
Company and its subsidiaries taken as a whole, otherwise than as set forth or
contemplated in the Prospectus, the effect of which, in any such case described
in Clause (i) or (ii), is in the judgment of the Representatives so material and
adverse as to make it impracticable or inadvisable to proceed with the public
offering or the delivery of the Shares being delivered at such Time of Delivery
on the terms and in the manner contemplated in the Prospectus;
(j) On or after the date hereof (i) no downgrading shall have
occurred in the rating accorded the Company's or Finlay Jewelry's debt
securities by any "nationally recognized statistical rating organization", as
that term is defined by the Commission for purposes of Rule 436(g)(2) under the
Act, and (ii) no such organization shall have publicly announced that it has
under surveillance or review, with possible negative implications, its rating of
any of the Company's debt securities;
(k) On or after the date hereof there shall not have occurred
any of the following: (i) a suspension or material limitation in trading in
securities generally on the New York Stock Exchange or on NASDAQ; (ii) a
suspension or material limitation in trading in the Company's securities on
NASDAQ; (iii) a general moratorium on commercial banking activities declared by
either Federal or New York State authorities; or (iv) the outbreak or escalation
of hostilities involving the United States or the declaration by the United
States of a national emergency or war, if the effect of any such event specified
in this Clause (iv) in the judgment of the Representatives makes it
impracticable or inadvisable to proceed with the public offering or the delivery
of the Shares being delivered at such Time of Delivery on the terms and in the
manner contemplated in the Prospectus;
(l) The Shares to be sold at such Time of Delivery shall have
been duly listed for quotation on NASDAQ;
(m) The Company has obtained and delivered to the Underwriters
executed copies of an agreement from the persons or firms listed on Schedule IV
hereto, substantially to the effect set forth in Section 5(e) hereof in form and
substance satisfactory to you;
(n) The Company, the Selling Stockholder and the
Over-allotment Selling Stockholders shall have furnished or caused to be
furnished to you at such Time of Delivery certificates of officers of the
Company and Finlay Jewelry and of the Selling Stockholder and the Over-allotment
Selling Stockholders (if applicable), respectively, reasonably satisfactory to
you as to the accuracy of the representations and warranties of the Company and
Finlay Jewelry and of the Selling Stockholder and the Over-allotment Selling
Stockholders (if applicable), respectively, herein at and as of such Time of
Delivery, as to the performance by each of the Company and Finlay Jewelry and
the Selling Stockholder and the Over-allotment Selling Stockholders (if
applicable), respectively, of all of their respective obligations hereunder to
be performed at or prior to such Time of Delivery, and as to such other matters
as you may reasonably request, and the Company and Finlay Jewelry shall have
furnished or caused to be furnished certificates as to the matters set forth in
subsections (a) and (h) of this Section; and
(o) The Company shall have complied with the provisions of
Section 5(c) hereof with respect to the furnishing of prospectuses on the New
York Business Day next succeeding the date of this
16
Agreement;
8. (a) The Company and Finlay Jewelry, jointly and severally, will
indemnify and hold harmless each Underwriter against any losses, claims, damages
or liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse each Underwriter for any legal or other expenses reasonably incurred
by such Underwriter in connection with investigating or defending any such
action or claim as such expenses are incurred; provided, however, that the
Company and Finlay Jewelry shall not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in any Preliminary Prospectus, the Registration Statement or the Prospectus
or any such amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by any Underwriter through ▇▇▇▇▇▇▇,
▇▇▇▇▇ & Co. expressly for use therein.
(b) (i) The Selling Stockholder will indemnify and hold
harmless each Underwriter against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may become
subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in
any Preliminary Prospectus, the Registration Statement or the
Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by the
Selling Stockholder expressly for use therein; and will reimburse each
Underwriter for any legal or other expenses reasonably incurred by such
Underwriter in connection with investigating or defending any such
action or claim as such expenses are incurred; provided, however, that
the Selling Stockholder shall not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or
is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in any Preliminary Prospectus, the
Registration Statement or the Prospectus or any such amendment or
supplement in reliance upon and in conformity with written information
furnished to the Company by any Underwriter through ▇▇▇▇▇▇▇, Sachs &
Co. expressly for use therein; and
(ii) Each of the Over-allotment Selling Stockholders will
indemnify and hold harmless each Underwriter against any losses,
claims, damages or liabilities, joint or several, to which such
Underwriter may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or
alleged omission was made in any Preliminary Prospectus, the
Registration Statement or the Prospectus or any such amendment or
supplement in reliance upon and in conformity with written information
furnished to the Company by any Over-allotment Selling Stockholder
expressly for use therein; and will reimburse each Underwriter for any
legal or other expenses reasonably incurred by such Underwriter in
connection with investigating or defending any such action or claim as
such expenses are incurred; provided, however, that such Over-allotment
Selling Stockholder shall not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission
or alleged omission made in any Preliminary Prospectus, the
Registration Statement or the Prospectus or any such
17
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. expressly for use therein.
(c) Each Underwriter severally will indemnify and hold
harmless the Company, Finlay Jewelry, the Selling Stockholder and the
Over-allotment Selling Stockholders against any losses, claims, damages or
liabilities to which the Company, Finlay Jewelry, the Selling Stockholder or the
Over-allotment Selling Stockholders may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in any Preliminary Prospectus, the Registration
Statement or the Prospectus or any such amendment or supplement in reliance upon
and in conformity with written information furnished to the Company by such
Underwriter through ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. expressly for use therein; and will
reimburse the Company, Finlay Jewelry, the Selling Stockholder and the
Over-allotment Selling Stockholders for any legal or other expenses reasonably
incurred by the Company, Finlay Jewelry, the Selling Stockholder and the
Over-allotment Selling Stockholders in connection with investigating or
defending any such action or claim as such expenses are incurred.
(d) Promptly after receipt by an indemnified party under
subsection (a), (b) or (c) above of notice of the commencement of any action,
such indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under such subsection, notify the indemnifying
party in writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under such subsection for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation. No indemnifying party shall, without the
written consent of the indemnified party, effect the settlement or compromise
of, or consent to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified party is an actual or
potential party to such action or claim) unless such settlement, compromise or
judgment (i) includes an unconditional release of the indemnified party from all
liability arising out of such action or claim and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act, by or
on behalf of any indemnified party. Notwithstanding anything to the contrary
contained herein, an indemnifying party will not be liable to any indemnified
party under subsection (a), (b) or (c) above for the settlement of any claim or
action effected without its prior written consent, which consent shall not be
unreasonably withheld.
(e) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a), (b) or (c) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company, Finlay Jewelry, the Selling
Stockholder or the Over-allotment Selling Stockholders on the one hand and the
Underwriters on the other from the offering of the Shares. If, however, the
allocation provided by the immediately preceding sentence is not permitted by
applicable law or if the indemnified party failed to give the notice required
under subsection (d) above, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company, Finlay Jewelry, the Selling Stockholder or the
Over-allotment Selling Stockholders on the one hand and the Underwriters on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages or
18
liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company, Finlay
Jewelry, the Selling Stockholder or the Over-allotment Selling Stockholders on
the one hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company and the Selling Stockholder and, if
applicable, the Over-allotment Selling Stockholders bear to the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover page of the Prospectus. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company, Finlay Jewelry, the Selling Stockholder or the Over-allotment Selling
Stockholders on the one hand or the Underwriters on the other and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company, Finlay Jewelry, the Selling
Stockholder, each of the Over-allotment Selling Stockholders and the
Underwriters agree that it would not be just and equitable if contributions
pursuant to this subsection (e) were determined by pro rata allocation (even if
the Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable considerations
referred to above in this subsection (e). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in this subsection (e) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this subsection (e), no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the Shares underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations in this subsection
(e) to contribute are several in proportion to their respective underwriting
obligations and not joint. Notwithstanding the foregoing, the liability of the
Selling Stockholder and each of the Over-allotment Selling Stockholders under
the indemnity and contribution provisions of this Section 8 shall be limited to
the aggregate offering price of the Shares sold by such holder to the
Underwriters.
(f) The obligations of the Company, Finlay Jewelry, the
Selling Stockholder and each of the Over-allotment Selling Stockholders under
this Section 8 shall be in addition to any liability which the Company, Finlay
Jewelry, the Selling Stockholder or the Over-allotment Selling Stockholders may
otherwise have and shall extend, upon the same terms and conditions, to each
person, if any, who controls any Underwriter within the meaning of the Act; and
the obligations of the Underwriters under this Section 8 shall be in addition to
any liability which the respective Underwriters may otherwise have and shall
extend, upon the same terms and conditions, to each officer and director of the
Company and Finlay Jewelry and to each person, if any, who controls the Company,
Finlay Jewelry, the Selling Stockholder or any Over-allotment Selling
Stockholder within the meaning of the Act.
9. (a) If any Underwriter shall default in its obligation to purchase
the Shares which it has agreed to purchase hereunder at a Time of Delivery, you
may in your discretion arrange for you or another party or other parties to
purchase such Shares on the terms contained herein. If within thirty-six hours
after such default by any Underwriter you do not arrange for the purchase of
such Shares, then the Company and the Selling Stockholder or, if applicable, the
Over-allotment Selling Stockholders shall be entitled to a further period of
thirty-six hours within which to procure another party or other parties
satisfactory to you to purchase such Shares on such terms. In the event that,
within the respective prescribed periods, you notify the Company and the Selling
Stockholder or, if applicable, the Over-allotment Selling Stockholders that you
have so arranged for the purchase of such Shares, or the Company and the Selling
Stockholder or, if applicable, the Over-allotment Selling Stockholders notify
you that they have so arranged for the purchase of such Shares, you or the
Company and the Selling Stockholder or, if applicable, the Over-allotment
Selling Stockholders shall have the right to postpone such Time of Delivery for
a period of not more than seven days, in order to effect whatever changes may
thereby be made necessary in the Registration Statement or the Prospectus, or in
any other documents or arrangements, and the Company agrees to file promptly any
amendments to the Registration Statement or the Prospectus which in your opinion
may thereby be made necessary. The term "Underwriter" as used in this Agreement
shall include any person substituted under this
19
Section with like effect as if such person had originally been a party to this
Agreement with respect to such Shares.
(b) If, after giving effect to any arrangements for the
purchase of the Shares of a defaulting Underwriter or Underwriters by you and
the Company and the Selling Stockholder or, if applicable, the Over-allotment
Selling Stockholders as provided in subsection (a) above, the aggregate number
of such Shares which remains unpurchased does not exceed one-eleventh of the
aggregate number of all the Shares to be purchased at such Time of Delivery,
then the Company and the Selling Stockholder or, if applicable, the
Over-allotment Selling Stockholders shall have the right to require each
non-defaulting Underwriter to purchase the number of shares which such
Underwriter agreed to purchase hereunder at such Time of Delivery and, in
addition, to require each non-defaulting Underwriter to purchase its pro rata
share (based on the number of Shares which such Underwriter agreed to purchase
hereunder) of the Shares of such defaulting Underwriter or Underwriters for
which such arrangements have not been made; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the
purchase of the Shares of a defaulting Underwriter or Underwriters by you and
the Company and the Selling Stockholder or, if applicable, the Over-allotment
Selling Stockholders as provided in subsection (a) above, the aggregate number
of such Shares which remains unpurchased exceeds one-eleventh of the aggregate
number of all the Shares to be purchased at such Time of Delivery, or if the
Company and the Selling Stockholder or, if applicable, the Over-allotment
Selling Stockholders shall not exercise the right described in subsection (b)
above to require non-defaulting Underwriters to purchase Shares of a defaulting
Underwriter or Underwriters, then this Agreement (or, with respect to the Second
Time of Delivery, the obligations of the Underwriters to purchase and of the
Company to sell the Optional Shares) shall thereupon terminate, without
liability on the part of any non-defaulting Underwriter or the Company or the
Selling Stockholder or, if applicable, the Over-allotment Selling Stockholders,
except for the expenses to be borne by the Company, the Selling Stockholder, the
Over-allotment Selling Stockholders and the Underwriters as provided in Section
6 hereof and the indemnity and contribution agreements in Section 8 hereof; but
nothing herein shall relieve a defaulting Underwriter from liability for its
default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company, Finlay Jewelry, the Selling Stockholder,
the Over-allotment Selling Stockholders and the several Underwriters, as set
forth in this Agreement or made by or on behalf of them, respectively, pursuant
to this Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Underwriter or any controlling person of any Underwriter, or the Company,
Finlay Jewelry, the Selling Stockholder or the Over-allotment Selling
Stockholders or any officer or director or controlling person of the Company,
Finlay Jewelry, the Selling Stockholder or the Over-allotment Selling
Stockholders, and shall survive delivery of and payment for the Shares.
11. If this Agreement shall be terminated pursuant to Section 9 hereof,
neither the Company nor the Selling Stockholder or the Over-allotment Selling
Stockholders shall then be under any liability to any Underwriter except as
provided in Sections 6 and 8 hereof and Finlay Jewelry shall not then be under
any liability to any Underwriter except as provided in Section 8 hereof; but, if
for any other reason, any Shares are not delivered by or on behalf of the
Company, the Selling Stockholder or the Over-allotment Selling Stockholders as
provided herein, the Company will reimburse the Underwriters through you for all
out-of-pocket expenses approved in writing by you, including fees and
disbursements of counsel, reasonably incurred by the Underwriters in making
preparations for the purchase, sale and delivery of the Shares not so delivered,
but the Company, the Selling Stockholder and the Over-allotment Selling
Stockholders shall then be under no further liability to any Underwriter except
as provided in Sections 6 and 8 hereof and Finlay Jewelry shall then be under no
further liability to any Underwriter except as provided in Section 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. on behalf of you as the
representatives; and in all dealings with the Selling Stockholder or the
Over-allotment Selling Stockholders hereunder, you and the Company shall be
entitled to act and rely upon any statement, request, notice or agreement on
behalf of the Selling Stockholder or the Over-allotment Selling Stockholders (in
accordance
20
with the applicable Power of Attorney and Custody Agreement) made or given by
any or all of the Attorneys-in-Fact for the Selling Stockholder or the
Over-allotment Selling Stockholders.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to you as the representatives in care of ▇▇▇▇▇▇▇, Sachs &
Co., ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Registration
Department; and if to the Company or to Finlay Jewelry shall be delivered or
sent by mail to the address of the Company set forth in the Registration
Statement, Attention: Secretary; and if to the Selling Stockholder or the
Over-allotment Selling Stockholders, shall be delivered or sent by mail to the
respective address set forth in Schedule II hereto; provided, however, that any
notice to an Underwriter pursuant to Section 8(d) hereof shall be delivered or
sent by mail, telex or facsimile transmission to such Underwriter at its address
set forth in its Underwriters' Questionnaire, or telex constituting such
Questionnaire, which address will be supplied to the Company and the Selling
Stockholder by you upon request. Any such statements, requests, notices or
agreements shall take effect upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters, the Company, Finlay Jewelry, the Selling
Stockholder and the Over-allotment Selling Stockholders and, to the extent
provided in Sections 8 and 10 hereof, the officers, directors and controlling
persons of the Company, Finlay Jewelry, the Selling Stockholder, the
Over-allotment Selling Stockholders, and each person who controls any
Underwriter, and their respective heirs, executors, administrators, successors
and assigns, and no other person shall acquire or have any right under or by
virtue of this Agreement. No purchaser of any of the Shares from any Underwriter
shall be deemed a successor or assign by reason merely of such purchase.
14. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
15. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
21
If the foregoing is in accordance with your understanding, please sign
and return to us ten counterparts hereof, and upon the acceptance hereof by you,
on behalf of each of the Underwriters, this letter and such acceptance hereof
shall constitute a binding agreement among each of the Underwriters and the
Company, Finlay Jewelry, the Selling Stockholder and the Over-allotment Selling
Stockholders. It is understood that your acceptance of this letter on behalf of
each of the Underwriters is pursuant to the authority set forth in a form of
Agreement among Underwriters, the form of which shall be submitted to the
Company, the Selling Stockholder and the Over-allotment Selling Stockholders for
examination upon request, but without warranty on your part as to the authority
of the signers thereof.
Very truly yours,
Finlay Enterprises, Inc.
By:
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Senior Vice President and
Chief Financial Officer
Finlay Fine Jewelry Corporation
By:
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Senior Vice President and
Chief Financial Officer
Equity-Linked Investors, L.P.
By:
--------------------------------------
Name:
Title:
▇▇▇▇▇▇ ▇. ▇▇▇ Equity Partners, L.P.
▇▇▇▇▇▇ ▇. ▇▇▇ Nominee Trust
Other Over-allotment Selling Stockholders
(as set forth on Schedule II)
By:
--------------------------------------
Name:
Title:
Accepted as of the date hereof:
▇▇▇▇▇▇▇, Sachs & Co.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Securities Corporation
SBC Warburg Dillon Read Inc.
By:
----------------------------
(▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.)
On behalf of each of the Underwriters
22
SCHEDULE I
Number of Optional
Total Number of Shares to be
Firm Shares Purchased if Maximum
to be Purchased Option Exercised
Underwriter --------------------------- ------------------------------
-----------
▇▇▇▇▇▇▇, Sachs & Co.....................................
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Securities Corporation................................
SBC Warburg Dillon Read Inc.............................
----------- --------
Total................................. 3,000,000 450,000
=========== ========
23
SCHEDULE II
Number of Optional
Shares to be Sold if
Total Number of Firm Maximum Option
Shares to be Sold Exercised
-------------------- --------------------
The Company ............................................................... 2,046,971 150,000
The Selling Stockholder (a): .............................................. 953,029 --
The Over-allotment Selling Stockholders
▇▇▇▇▇▇ ▇. ▇▇▇ Equity Partners, L.P. (b): ............................ 247,298
▇▇▇▇▇▇ ▇. ▇▇▇ Nominee Trust (b): .................................... 27,655
▇▇▇▇ ▇. Childs (b): ................................................. -- 5,285
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (b): ............................................... -- 3,522
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ..................................................... -- 3,521
▇. ▇▇▇▇▇▇ ▇▇▇▇ (b): ................................................. -- 2,641
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (b): ................................................ -- 1,750
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (b): .............................................. -- 1,584
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (b): .............................................. -- 1,584
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (b): ................................................ -- 1,186
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (b): .............................................. -- 1,057
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ (b): ............................................ -- 579
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (b): ............................................... -- 527
SGS Family Limited Partnership (b): ................................. -- ▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (b): .............................................. -- 248
▇▇▇▇▇ ▇▇▇▇▇▇ (b): ................................................... -- 248
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (b): ............................................. -- 238
▇▇▇▇ ▇. ▇▇▇▇▇▇ (b): ................................................. -- 198
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (b): .............................................. -- 123
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (b): ................................................ -- 115
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (b): ........................................... -- 115
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (b): ............................................... -- 96
▇▇▇▇ ▇. ▇▇▇▇▇▇ (b): ................................................. -- 32
--------- ---------
Total ..................................................................... 3,000,000 450,000
========= =========
(a) This Selling Stockholder's address is c/o Desai Capital Management
Incorporated, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ and is represented by
▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ and has appointed ▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇, and each
of them, as the Attorneys-in-Fact for such Selling Stockholder.
(b) Each Over-allotment Selling Stockholder's address is c/o ▇▇▇▇▇▇ ▇. ▇▇▇
Company, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and is
represented by ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ and has appointed ▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
▇▇. and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, and each of them, as the Attorneys-in-Fact for such
Over-allotment Selling Stockholder.
24
SCHEDULE III
New York Leases
Section 7(e)(ii)
----------------
1. Lease Agreement dated as of August 27, 1993 between F.H.E.A. Associates
and Finlay Jewelry
2. Lease Agreement dated as of August 19, 1993 between 529 Fifth Company
and Finlay Jewelry
3. Lease Agreement dated as of August 19, 1993 between ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Associates and Finlay Jewelry
4. Lease Agreement dated as of June 17, 1986 between ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Associates and S&L Acquisition Company L.P., as amended
5. Lease Agreement dated as of May 1, 1995 between ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Realty
and Finlay Jewelry
6. Lease Agreement dated as of October 4, 1994 between Tanger Properties
Limited Partnership and Finlay Jewelry
7. Lease Agreement dated May 2, 1996 between Horizon/▇▇▇▇ Outlet Centers
Limited Partnership and Finlay Jewelry
25
SCHEDULE IV
Persons or entities required to
execute Lock-Up Agreements
Pursuant to Section 7(m)
---------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇
Equity Linked Investors-II
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇ Equity Partners, L.P.
1989 ▇▇▇▇▇▇ ▇. ▇▇▇ Nominee Trust
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
26
ANNEX I
DESCRIPTION OF COMFORT LETTER
Pursuant to Section 7(h) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with
respect to the Company and its subsidiaries within the meaning of the
Act and the applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules examined by them
(and, if applicable, financial forecasts and/or pro forma financial
information, on which they have performed more limited procedures as
specified in such letter, not constituting an examination in accordance
with generally accepted auditing standards) and included in the
Prospectus or the Registration Statement comply as to form in all
material respects (or, in the case of financial forecasts and/or pro
forma financial information, on the basis of such limited procedures,
nothing came to their attention that cause them to believe that such
financial forecasts and/or pro forma financial information do not
comply as to form in all material respects) with the applicable
accounting requirements of the Act and the related published rules and
regulations thereunder; and, if applicable, they have made a review in
accordance with standards established by the American Institute of
Certified Public Accountants of the unaudited consolidated interim
financial statements, selected financial data, pro forma financial
information, financial forecasts and/or condensed financial statements
derived from audited financial statements of the Company for the
periods specified in such letter, as indicated in their reports
thereon, copies of which have been separately furnished to the
representatives of the Underwriters (the "Representatives") and are
attached hereto;
(iii) If applicable, they have made a review in accordance
with standards established by the American Institute of Certified
Public Accountants of the unaudited condensed consolidated statements
of income, consolidated balance sheets and consolidated statements of
cash flows included in the Prospectus as indicated in their reports
thereon copies of which have been separately furnished to the
Representatives and are attached hereto and on the basis of specified
procedures including inquiries of officials of the Company who have
responsibility for financial and accounting matters regarding whether
the unaudited condensed consolidated financial statements referred to
in paragraph (vi)(A)(i) below comply as to form in all material
respects with the applicable accounting requirements of the Act and the
related published rules and regulations, nothing came to their
attention that cause them to believe that the unaudited condensed
consolidated financial statements do not comply as to form in all
material respects with the applicable accounting requirements of the
Act and the related published rules and regulations;
(iv) The unaudited selected financial information with respect
to the consolidated results of operations and financial position of the
Company for the five most recent fiscal years included in the
Prospectus agrees with the corresponding amounts (after restatements
where applicable) in the audited consolidated financial statements for
such five fiscal years which were included or incorporated by reference
in the Company's Annual Reports on Form 10-K for such fiscal years;
(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K
and on the basis of limited procedures specified in such letter nothing
came to their attention as a result of the foregoing procedures that
caused them to believe that this information does not conform in all
material respects with the disclosure requirements of Items 301, 302
(if applicable), 402 and 503(d) (if applicable), respectively, of
Regulation S-K;
(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available
interim financial statements of the Company and its subsidiaries,
inspection of the minute books of the Company and its subsidiaries
since the date of the latest audited financial statements included in
the Prospectus, inquiries of officials of the Company and its
subsidiaries responsible for financial and accounting matters and such
other inquiries and procedures as may be specified in such letter,
nothing came to their attention that caused them to believe that:
(A)(i) the unaudited consolidated statements of
operations, consolidated balance sheets and consolidated
statements of cash flows included in the Prospectus do not
comply as to form in all material respects with the applicable
accounting requirements of the Act and the related published
rules and regulations, or (ii) any material modifications
should be made to the unaudited condensed consolidated
statements of operations, consolidated balance sheets and
consolidated statements of cash flows included in the
Prospectus for them to be in conformity with generally
accepted accounting principles;
(B) any other unaudited statement of operations data
and balance sheet items included in the Prospectus do not
agree with the corresponding items in the unaudited
consolidated financial statements from which such data and
items were derived, and any such unaudited data and items were
not determined on a basis substantially consistent with the
basis for the corresponding amounts in the audited
consolidated financial statements included in the Prospectus;
(C) the unaudited financial statements which were not
included in the Prospectus but from which were derived any
unaudited condensed financial statements referred to in Clause
(A) and any unaudited statement of operations data and balance
sheet items included in the Prospectus and referred to in
Clause (B) were not determined on a basis substantially
consistent with the basis for the audited consolidated
financial statements included in the Prospectus;
(D) any unaudited pro forma consolidated condensed
financial information included in the Prospectus do not comply
as to form in all material respects with the applicable
accounting requirements of the Act and the published rules and
regulations thereunder or the pro forma adjustments have not
been properly applied to the historical amounts in the
compilation of that information;
(E) as of a specified date not more than five days
prior to the date of such letter, there have been any changes
in the consolidated capital stock (other than issuances of
capital stock upon exercise of options and stock appreciation
rights, upon earn-outs of performance shares and upon
conversions of convertible securities, in each case which were
outstanding on the date of the latest financial statements
I-2
included in the Prospectus) or any increase in the
consolidated long-term debt of the Company and its
subsidiaries, or any decreases in consolidated net current
assets or stockholders' equity or other items specified by the
Representatives, or any increases in any items specified by
the Representatives, in each case as compared with amounts
shown in the latest balance sheet included in the Prospectus,
except in each case for changes, increases or decreases which
the Prospectus discloses have occurred or may occur or which
are described in such letter; and
(F) for the period from the date of the latest
financial statements included in the Prospectus to the
specified date referred to in Clause (E) there were any
decreases in consolidated net revenues or operating profit or
the total or per share amounts of consolidated net income or
other items specified by the Representatives, or any increases
in any items specified by the Representatives, in each case as
compared with the comparable period of the preceding year and
with any other period of corresponding length specified by the
Representatives, except in each case for decreases or
increases which the Prospectus discloses have occurred or may
occur or which are described in such letter; and
(vii) In addition to the examination referred to in their
report(s) included in the Prospectus and the limited procedures,
inspection of minute books, inquiries and other procedures referred to
in paragraphs (iii) and (vi) above, they have carried out certain
specified procedures, not constituting an examination in accordance
with generally accepted auditing standards, with respect to certain
amounts, percentages and financial information specified by the
Representatives, which are derived from the general accounting records
of the Company and its subsidiaries, which appear in the Prospectus, or
in Part II of, or in exhibits and schedules to, the Registration
Statement specified by the Representatives, and have compared certain
of such amounts, percentages and financial information with the
accounting records of the Company and its subsidiaries and have found
them to be in agreement.
I-3
