Exhibit 1.1
Finlay Enterprises, Inc.
Common Stock, par value $.01 per share
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Underwriting Agreement
April __, 1998
▇▇▇▇▇▇▇, ▇▇▇▇▇ & 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 567,310 shares of the Company's Common Stock, par value $.01 per
share (the "Stock"), and the stockholders of the Company named in Schedule II
hereto (the "Selling Stockholders") propose, subject to the terms and
conditions stated herein, to sell to the Underwriters an aggregate of
1,032,690 shares of Stock. The Company and certain of the Selling Stockholders
as indicated on Schedule II hereto are granting an option to the Underwriters
to purchase up to an additional 92,792 and 147,208 shares, respectively, of
Stock. The aggregate of 1,600,000 shares of Stock to be sold by the Company
and the Selling Stockholders is herein called the "Firm Shares" and the
aggregate of up to 240,000 additional shares to be sold by the Company and
certain of the 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 and the Selling Stockholders that:
(i) A registration statement on Form S-3 (File No.
333-48567), as amended by Amendments Nos. 1 and 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 but including all documents incorporated by
reference in the prospectus contained therein, to you for each of the
other Underwriters, have been declared effective by the Commission in
such form; other than a registration statement, if any, increasing
the size of the offering (a "Rule 462(b) Registration Statement"),
filed pursuant to Rule 462(b) under the Securities Act of 1933, as
amended (the "Act"), which became effective upon filing, no other
document with respect to such Initial Registration Statement or any
such document incorporated by reference therein has heretofore been
filed with the Commission; and no stop order suspending the
effectiveness of the Initial Registration Statement, any
post-effective amendment thereto or the Rule 462(b) Registration
Statement, if any, has been issued and no
proceeding for that purpose has been initiated or threatened by the
Commission to the Company or its counsel (any preliminary prospectus
included in the Initial Registration Statement or filed with the
Commission pursuant to Rule 424(a) of the rules and regulations of
the Commission under the Act is hereinafter called a "Preliminary
Prospectus"; the various parts of the Initial Registration Statement
and the Rule 462(b) Registration Statement, if any, including all
exhibits thereto but excluding Form T-1 and including (i) the
information contained in the form of final prospectus filed with the
Commission pursuant to Rule 424(b) under the Act in accordance with
Section 5(a) hereof and deemed by virtue of Rule 430A under the Act
to be part of the Initial Registration Statement at the time it was
declared effective or such part of the Rule 462(b) Registration
Statement, if any, that became or hereafter becomes effective and
(ii) the documents incorporated by reference in the prospectus
contained in the registration statement at the time such part of the
registration statement became effective, each as amended at the time
such part of the registration statement became effective, are
hereinafter collectively called the "Registration Statement"; such
final prospectus, in the form first filed pursuant to Rule 424(b)
under the Act, is hereinafter called the "Prospectus"; any reference
herein to any Preliminary Prospectus or the Prospectus shall be
deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the Act, as
of the date of such Preliminary Prospectus or Prospectus, as the case
may be; any reference to any amendment or supplement to any
Preliminary Prospectus or the Prospectus shall be deemed to refer to
and include any documents filed after the date of such Preliminary
Prospectus or Prospectus, as the case may be, under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and
incorporated by reference in such Preliminary Prospectus or
Prospectus, as the case may be; and any reference to any amendment to
the Registration Statement shall be deemed to refer to and include
any annual report of the Company filed pursuant to Section 13(a) or
15(d) of the Exchange Act after the effective date of the
Registration Statement that is incorporated by reference in the
Registration Statement);
(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; and the statements made therein within the
coverage of Rule 175(b) under the Act were made by the Company with a
reasonable basis and in good faith; provided, however, that this
representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information
furnished in writing to the Company by an Underwriter through
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. expressly for use therein or by the Selling
Stockholders expressly for use in the preparation of the answers
therein to Item 7 of Form S-3;
(iii) The documents incorporated by reference in the
Prospectus, when they became effective or were filed with the
Commission, as the case may be, conformed in all material respects to
the requirements of the Act or the Exchange Act, as applicable, and
the rules and regulations of the Commission thereunder, and none of
such documents 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; and any
further documents so filed or incorporated by reference in the
Prospectus or any further amendment or supplement thereto, when such
documents 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 or the Exchange Act, as applicable, and the
rules and regulations of the Commission thereunder and will 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 not misleading; and the statements made therein
within the coverage of Rule 175(b) under the Act were made by the
Company with a reasonable basis and in good faith; provided, however,
that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by an Underwriter
through ▇▇▇▇▇▇▇, Sachs & Co. expressly for use therein or by the
Selling Stockholders expressly for use in the preparation of the
answers therein to item 7 of Form S-3;
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(iv) 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; and the statements made therein within the coverage of
Rule 175(b) under the Act were made by the Company with a reasonable
basis and in good faith; provided, however, that this representation
and warranty shall not apply to any statements or omissions made in
reliance upon and in conformity with information furnished in writing
to the Company by an Underwriter through ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.
expressly for use therein or by the Selling Stockholders expressly
for use in the preparation of the answers therein to Item 7 of Form
S-3;
(v) Neither the Company nor any of its subsidiaries has
sustained since the date of the latest audited financial statements
included or incorporated by reference 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 the
Revolving Credit Agreement and the Gold Consignment Agreement (each
as defined in the Prospectus and as amended as described in the
Prospectus) or any material adverse change, or any development
involving a prospective material adverse change, in or affecting the
business, operations, management, financial position or condition,
current assets, merchandise inventories, stockholders' equity or
results of operations of the Company and its subsidiaries taken as a
whole (a "Material Adverse Effect"), otherwise than as set forth or
contemplated in the Prospectus;
(vi) The Company and its subsidiaries have good and
marketable title in fee simple to all real property and good and
marketable title to all material personal property owned by them, in
each case free and clear of all liens, encumbrances and defects
except such as are described in the Prospectus or such as do not
materially affect the value of such property and do not interfere
with the use made and proposed to be made of such property by 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;
(vii) 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, 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;
(viii) 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
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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,
equities or claims;
(ix) 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;
(x) 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 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;
(xi) Neither the Company nor any of its subsidiaries is in
violation of its respective certificate or restated certificate of
incorporation or by-laws or restated by-laws or comparable documents,
or in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement, lease, license or other
agreement or instrument to which it is a party or by which it or any
of its properties may be bound which default could reasonably be
expected to result in, individually or in the aggregate, a Material
Adverse Effect;
(xii) The statements set forth in the Prospectus under the
caption "Description of Certain Indebtedness", insofar as they
purport to describe the provisions of the documents referred to
therein, under the caption "Description of 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;
(xiii) 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;
(xiv) 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
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"investment company", as such terms are defined in the Investment
Company Act of 1940, as amended (the "Investment Company Act");
(xv) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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;
(xvi) The Company and its subsidiaries directly or through
host store groups are subject to consent decrees, injunctions or
comparable governmental orders or decrees regarding the discount
pricing and advertising of jewelry from "regular" or "original"
prices only in the states of California, Colorado, Georgia, Oregon
and Wisconsin, and 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;
(xvii) 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 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 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, fraudulent
conveyance or transfer, moratorium and similar laws affecting
creditors' rights generally and to general principles of equity
(regardless of whether enforcement is sought in a proceeding in
equity or at law); and neither the Company nor any of its
subsidiaries has received any notice (whether actual or constructive)
that the licensor thereunder is considering limiting, suspending,
revoking or non-renewing any such license; except that no
representation is made with respect to the Company's license
agreement with Liberty House as to the effect on such license
agreement of the filing of a voluntary petition by Liberty House
under the Bankruptcy Code (as defined in the Prospectus);
(xviii) Each of the Company and Finlay Jewelry has duly
authorized the amendment to the Revolving Credit Agreement that is
described in the Prospectus. Substantially contemporaneously with the
First Time of Delivery (as defined in Section 4 hereof), the Company
and Finlay Jewelry will duly execute and deliver such amendment to
the Revolving Credit Agreement. Finlay Jewelry has duly authorized
the amendment to the Gold Consignment Agreement that is described in
the Prospectus. Substantially contemporaneously with the First Time
of Delivery, Finlay Jewelry will duly execute and deliver such
amendment to the Gold Consignment Agreement. Assuming the due
authorization, execution and delivery thereof by the other parties
thereto, (a) the Revolving Credit Agreement, as amended as described
above, will constitute the legal, valid and binding agreement of the
Company and Finlay Jewelry and (b) the Gold Consignment Agreement, as
amended as described above, will constitute the legal, valid and
binding agreement of Finlay Jewelry, in each case, enforceable
against the Company and/or Finlay Jewelry, as the case may be,
subject to the effect of any applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium and
similar laws affecting creditors' rights generally and to general
principles of equity (regardless of whether enforcement is sought in
a proceeding in equity or at law); and
(xix) Neither the Company nor Finlay Jewelry nor any of
their respective affiliates does business with the government of Cuba
or with any person or affiliate located in Cuba within the meaning of
Section 517.075, Florida Statutes.
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(b) Each of the Selling Stockholders represents and warrants
to, and agrees with, each of the Underwriters and the Company that:
(i) All consents, approvals, authorizations and orders
necessary for the execution and delivery by such Selling Stockholder
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 Selling Stockholder hereunder, have been obtained;
and such Selling Stockholder 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 Selling Stockholder 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 Selling
Stockholder hereunder and the compliance by such Selling Stockholder
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
Selling Stockholder is a party or by which such Selling Stockholder
is bound or to which any of the property or assets of such Selling
Stockholder is subject, nor will such action result in any violation
of the provisions of any partnership agreement (or other comparable
organizational document) of such Selling Stockholder or any statute
or any order, rule or regulation of any court or governmental agency
or body having jurisdiction over such Selling Stockholder or the
property of such Selling Stockholder; provided, however, that such
Selling Stockholder 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;
(iii) Such Selling Stockholder has, and immediately prior to
the First Time of Delivery (as defined in Section 4 hereof), such
Selling Stockholder will have, good and valid title to the Shares to
be sold by such Selling Stockholder hereunder, free and clear of all
liens, encumbrances, equities or claims (except, in the case of ▇▇.
▇▇▇▇▇▇, that the Shares being sold by him hereunder (the "Encumbered
Shares") are held on behalf of the Company as security for his
repayment obligations under a promissory note in favor of the
Company); and, upon delivery of such Shares and payment therefor
pursuant hereto (including, in the case of the Encumbered Shares,
payment to the Company in satisfaction of ▇▇. ▇▇▇▇▇▇'▇ repayment
obligations under such promissory note, which payment will extinguish
the encumbrance on the Encumbered Shares), such Selling Stockholder
will convey to the several Underwriters who have purchased such
Shares in good faith and without notice of any such lien,
encumbrance, equity or claim or any adverse claim within the meaning
of the Uniform Commercial Code (other than the encumbrance on the
Encumbered Shares which will have been extinguished) good and valid
title to such Shares, free and clear of all liens, encumbrances,
equities or claims;
(iv) During the period beginning from the date hereof and
continuing to and including the date 180 days after the date of the
Prospectus, such Selling Stockholder will not 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 Selling
Stockholder to the Underwriters hereunder), without the prior written
consent of ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. on behalf of the Representatives on
behalf of the Underwriters; provided, however, that such Selling
Stockholder 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 such Selling Stockholder is
bound hereunder;
(v) Such Selling Stockholder 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;
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(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 Selling Stockholder 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 Selling Stockholder will deliver to you prior to
or at the First Time of Delivery (as defined in Section 4 hereof) 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 Selling Stockholder 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 such Selling Stockholder to Marine Midland Bank, as
custodian (the "Custodian"), and such Selling Stockholder 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 Selling
Stockholder's attorneys-in-fact (the "Attorneys-in-Fact") with
authority to execute and deliver this Agreement on behalf of such
Selling Stockholder, to determine the purchase price to be paid by
the Underwriters to such Selling Stockholder as provided in Section 2
hereof, to authorize the delivery of the Shares to be sold by such
Selling Stockholder hereunder and otherwise to act on behalf of such
Selling Stockholder 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 Selling Stockholder under the Custody Agreement are
subject to the interests of the Underwriters hereunder; the
arrangements made by such Selling Stockholder for such custody, and
the appointment by such Selling Stockholder of the Attorneys-in-Fact
by the Power of Attorney, are to that extent irrevocable; the
obligations of such Selling Stockholder hereunder 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 Selling Stockholder that is a natural person 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
Selling Stockholder that is a natural person 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 Selling Stockholder
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 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 Selling Stockholders, 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 Stockholders 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
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denominator of which is the aggregate number of Firm Shares to be purchased by
all of the Underwriters from the Company and the Selling Stockholders
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 each of the Selling Stockholders as designated on Schedule II
hereto agrees, 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 each of such 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 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
240,000 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, if any. Any such election to purchase Optional Shares
shall be made in proportion to the maximum number of Optional Shares to be
sold by the Company and each Selling Stockholder as set forth in Schedule II
hereto. Any such election to purchase Optional Shares may be exercised only by
written notice from ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., on behalf of the Representatives on
behalf of the Underwriters, 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 ▇▇▇▇▇▇▇,
Sachs & Co. but in no event earlier than the First Time of Delivery (as
defined in Section 4 hereof) or, unless ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., 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 ▇▇▇▇▇▇▇, Sachs & Co., on behalf of the
Representatives on behalf of the Underwriters, 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 Stockholders shall be
delivered by or on behalf of the Company and the Selling Stockholders 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, as the case may be (and,
in the case of ▇▇. ▇▇▇▇▇▇, to a bank account of the Company designated by the
Company). The Company and the Selling Stockholders 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 ▇▇▇▇▇▇▇, Sachs & 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 April __, 1998 or such other time
and date as ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., the Company and the Attorneys-in-Fact may
agree upon in writing, and, with respect to the Optional Shares, 9:30 a.m.,
New York time, on the date specified by ▇▇▇▇▇▇▇, Sachs & Co. in the written
notice given by ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. of the Underwriters' election to purchase
such Optional Shares, or such other time and date as ▇▇▇▇▇▇▇, Sachs & Co., the
Company and the Attorneys-in-Fact 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
8
delivered pursuant to the preceding sentence will be available for review by
the parties hereto. For the purposes of this Section 4, "New York Business
Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday which is
not a day on which banking institutions in New York are generally authorized
or obligated by law or executive order to close.
5. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you and to
file such Prospectus pursuant to Rule 424(b) under the Act not later
than the Commission's close of business on the second business day
following the execution and delivery of this Agreement or, if
applicable, such earlier time as may be required by Rule 430A(a)(3)
under the Act; to make no further amendment or any supplement to the
Registration Statement or Prospectus prior to the last Time of
Delivery 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 file promptly all reports and any
definitive proxy or information statements required to be filed by
the Company with the Commission pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of the Prospectus
and for so long as the delivery of a prospectus is required in
connection with the offering or sale of the Shares; 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 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 or
to file under the Exchange Act any document incorporated by reference
in the Prospectus in order to comply with the Act or the Exchange
Act, to notify you and upon your request to file such document and to
prepare and furnish without charge to each Underwriter and to any
dealer in securities as many copies as you may from time to time
reasonably request of an amended Prospectus or a supplement to the
Prospectus which will correct such statement or omission or effect
such compliance, and in case any Underwriter is required to deliver a
prospectus in connection with sales of any of the 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;
9
(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 register for sale, 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. on behalf of the Representatives on
behalf of the Underwriters;
(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, within the time limits
prescribed under the Exchange Act, 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, within the time limits prescribed under the
Exchange Act, 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;
(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
10
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
Stockholders' obligations hereunder, including (A) any fees and expenses of
counsel for the Selling Stockholders, (B) 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 the Selling
Stockholders to the Underwriters hereunder; and (ix) all other costs and
expenses incident to the performance of the Company's or the 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 each
of the Company and the 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 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 and each of the Selling Stockholders herein
are, at and as of such Time of Delivery, true and correct, the condition that
the Company, Finlay Jewelry and each of the Selling Stockholders shall have
performed all of their respective obligations hereunder theretofore to be
performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed for such
filing by the rules and regulations under the Act and in accordance with
Section 5(a) hereof; if the Company has elected to rely upon Rule 462(b), the
Rule 462(b) Registration Statement shall have become effective by 10:00 p.m.,
Washington, D.C. time, on the date of this Agreement; no stop order suspending
the effectiveness of the Registration Statement or any part thereof shall have
been issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission; and all requests for additional information on
the part of the Commission shall have been complied with to your reasonable
satisfaction;
(b) ▇▇▇▇▇, 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 (xi) of subsection (c) below as well as such other related matters
as you may reasonably request, and such counsel shall have received such
documents and information as they may reasonably request to enable them to
pass upon such matters;
(c) ▇▇▇▇, 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
11
corporate power and authority to own its properties and conduct its
business as described in the Prospectus;
(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 (a) will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan
agreement, real property lease, license or other material agreement
or instrument known to such counsel to which 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 Certain Indebtedness", insofar as they
purport to describe the provisions of the documents referred to
therein, 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;
12
(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;
(x) The documents incorporated by reference in 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 therein, as to which such counsel
need express no opinion), when they became effective or were filed
with the Commission, as the case may be, complied as to form in all
material respects with the requirements of the Act or the Exchange
Act, as applicable, and the rules and regulations of the Commission
thereunder; and
(xi) 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 included or incorporated
by reference therein or omitted therefrom, as to which such counsel
need express no opinion) comply as to form in all material respects
with the requirements of the Act and the rules and regulations
thereunder; although they do not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus, except for those referred
to in the opinion in subsection (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 included or incorporated by reference therein or
omitted therefrom, as to which such counsel need express no opinion)
contained or incorporated by reference 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 included or incorporated by
reference therein or omitted therefrom, as to which such counsel need
express no opinion) contained or incorporated by reference 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 included or
incorporated by reference therein or omitted therefrom, as to which
such counsel need express no opinion) contains or incorporates by
reference an untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; and
they do not know of any amendment to the Registration Statement
required to be filed or of any contracts or other documents of a
character required to be filed as an exhibit to the Registration
Statement or required to be described in the Registration Statement
or the Prospectus which are not filed or described as required or of
any filing required to be incorporated by reference into the
Prospectus which is not so incorporated by reference therein;
(d) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP, counsel for the Company, shall
have furnished to you their written opinion (a draft of such opinion is
attached as Annex II(c) hereto) (which opinion may be limited to the federal
laws of the United States, the laws of the State of New York and the General
Corporation Law of the State of Delaware and in giving such opinion such
counsel may state that, insofar as any opinions involve factual matters, they
have relied, to the extent they deem proper, upon certificates of officers of
the Company or its subsidiaries and certificates of responsible public
officials, copies of which certificates will be provided to you upon delivery
of such counsel's opinion), dated such Time of Delivery, in form and substance
as attached, to the effect that:
(i) To such counsel's knowledge, neither the Company nor any
of its subsidiaries is in violation of its respective certificate or
restated certificate of incorporation or by-laws or restated by-laws,
or comparable documents, or in default in the performance or
observance of any obligation, agreement, covenant or condition
contained in any indenture, mortgage, deed of trust, loan agreement,
lease or other agreement or instrument to which it is a party or by
which it or any
13
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 paragraph (i) of
subsection (d) above and, in addition, to the effect that:
(i) Each subsidiary of the Company (other than Sonab for
which no opinion need be given) has been duly qualified as a foreign
corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases
properties or conducts any business so as to require such
qualification or is subject to no material liability or disability by
reason of failure to be so qualified in any such jurisdiction; the
Company has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of
each jurisdiction in which it owns or leases properties or conducts
any business so as to require such qualification or is subject to no
material liability or disability by reason of its failure to be so
qualified in any such jurisdiction;
(ii) The Company and its subsidiaries have good and
marketable title in fee simple to all real property owned by them in
each case free and clear of all liens, encumbrances and defects
except such as are described in the Prospectus or such as do not
materially affect the value of such property and do not interfere
with the use made and proposed to be made of such property by 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 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 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, fraudulent conveyance or transfer, moratorium and
similar laws affecting creditors' rights generally and to general
principles of equity (regardless of whether enforcement is sought in
a proceeding in equity or at law) (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;
(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 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, except that no opinion need be given with respect to the
Company's license agreement with Liberty House as to the effect on
such license agreement of the filing of a voluntary petition by
Liberty House under the Bankruptcy Code (as defined in the
Prospectus); and
(iv) To such counsel's knowledge, no legal proceedings are
pending or have been threatened against 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;
14
(f) Dechert Price & ▇▇▇▇▇▇, 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 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;
With respect to all opinions provided for above in paragraphs
(b) through (f) of this Section 7 as to validity, binding effect and/or
enforceability, any such counsel may state that any such opinion as to
enforceability is subject to the effect of any applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance or transfer, moretorium and
other laws of general applicability relating to or affecting creditors' rights
and to general equity principles (regardless of whether enforcement is sought in
a proceeding in equity or at law).
(g) Counsel for each of the Selling Stockholders, as
indicated in Schedule II hereto, shall have furnished to you their written
opinion (drafts of such opinions are 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 the Selling Stockholder for whom they serve as
counsel, and, if applicable, officers of such Selling Stockholder and
certificates of responsible public officials, copies of which certificates
will be provided to you upon delivery of such opinion), dated such Time of
Delivery, 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 each Selling Stockholder and
constitute valid and binding agreements of such Selling Stockholder
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 or transfer, 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 Selling Stockholder; and the sale of the Shares
to be sold by such Selling Stockholder hereunder and the compliance
by such Selling Stockholder 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 Selling
Stockholder is a party or by which such Selling Stockholder is bound
or to which any of the property or assets of such Selling Stockholder
is subject, nor will such action result in any violation of the
provisions of any partnership agreement (or comparable organizational
document) of such Selling Stockholder or, to the knowledge of such
counsel, any order, rule or regulation of any court or governmental
agency or body having jurisdiction over such Selling Stockholder 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 Selling Stockholder for the consummation of the transactions
contemplated by this Agreement in connection with the Shares to be
sold by such Selling Stockholder 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 Selling Stockholder had good and valid
title to the Shares to be sold at the First Time of Delivery by such
Selling Stockholder under this Agreement, free and clear of all
liens,
15
encumbrances, equities or claims, and full right, power and authority
to sell, assign, transfer and deliver the Shares to be sold by such
Selling Stockholder 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 Selling Stockholder 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 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 or incorporated by reference 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 the Revolving
Credit Agreement and the Gold Consignment Agreement (each as defined in the
Prospectus and as amended as described in the Prospectus), or any change, or
any development involving a prospective change, in or affecting the business,
operations, management, financial position or condition, current assets,
merchandise inventories, stockholders' equity or results of operations of 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 or Finlay Jewelry'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;
16
(n) The Company and the 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
Stockholders, respectively, reasonably satisfactory to you as to the accuracy
of the representations and warranties of the Company and Finlay Jewelry and of
the Selling Stockholders, 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 Stockholders, 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 (i) 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 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
or incorporated by reference 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 or incorporated by reference 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) Each 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 such 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 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.
(c) Each Underwriter severally will indemnify and hold
harmless the Company, Finlay Jewelry and each of the Selling Stockholders
against any losses, claims, damages or liabilities to which the Company,
Finlay Jewelry or any Selling Stockholder 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,
17
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 and each Selling
Stockholder for any legal or other expenses reasonably incurred by the
Company, Finlay Jewelry and such Selling Stockholder 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, which consent shall not be unreasonably withheld, effect
the settlement or compromise of, or consent to the entry of any judgment with
respect to, any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified party is an actual or potential party to such action or claim)
unless such settlement, compromise or judgment (i) includes an unconditional
release of the indemnified party from all liability arising out of such action
or claim and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of any indemnified party.
(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 and the
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 and the 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 liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Company, Finlay Jewelry and the 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 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 or the 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 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
18
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 each Selling Stockholder under the indemnity and
contribution provisions of this Section 8 shall be limited to the aggregate
offering price of the Shares sold by each such Selling Stockholder to the
Underwriters.
(f) The obligations of the Company, Finlay Jewelry and the
Selling Stockholders under this Section 8 shall be in addition to any
liability which the Company, Finlay Jewelry and the 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 or any 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 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 Stockholders that you have so arranged for
the purchase of such Shares, or the Company and the Selling Stockholders
notify you that they have so arranged for the purchase of such Shares, you or
the Company and the 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 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 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 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 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 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 and the Selling
Stockholders to sell the Optional Shares) shall thereupon terminate, without
liability on the part of any non-defaulting Underwriter, the Company, Finlay
Jewelry or the Selling Stockholders, except for the expenses to be borne by
the Company and the Selling Stockholders
19
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
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
or any Selling Stockholder or any officer or director or controlling person of
the Company, Finlay Jewelry or any Selling Stockholder, 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 any Selling Stockholder 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 and the 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 and the 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 any Selling Stockholder hereunder,
you and the Company shall be entitled to act and rely upon any statement,
request, notice or agreement on behalf of such Selling Stockholder (in
accordance with the Power of Attorney and Custody Agreement) made or given by
any or all of the Attorneys-in-Fact for such Selling Stockholder.
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 a Selling Stockholder,
shall be delivered or sent by mail to its counsel at such counsel's 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
Stockholders 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 and the Selling
Stockholders and, to the extent provided in Sections 8 and 10 hereof, the
officers, directors and controlling persons of the Company, Finlay Jewelry and
each Selling Stockholder 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.
20
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 and the 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 and the 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
On behalf of the Selling Stockholders (other than
Messrs. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇) named on
Schedule II hereto
By:
Name:
Title: Attorney-in-Fact
On behalf of Messrs. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ as
Selling Stockholders
By:
Name:
Title: Attorney-in-Fact
Accepted as of the date hereof:
▇▇▇▇▇▇▇, Sachs & Co.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Securities Corporation
SBC Warburg Dillon Read Inc.
By:
(▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.)
On behalf of each of the Underwriters
21
SCHEDULE I
Number of Optional
Total Number of Shares to be
Firm Shares Purchased if Maximum
Underwriter to be Purchased Option Exercised
----------- --------------------------- ------------------------------
▇▇▇▇▇▇▇, Sachs & Co.....................................
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Securities Corporation................................
SBC Warburg Dillon Read Inc.............................
Total.......................................... 1,600,000 240,000
=========== ========
22
SCHEDULE II
Number of Optional
Shares to be Sold if
Total Number of Firm Maximum Option
Shares to be Sold Exercised
---------------------------- ----------------------------
The Company............................................................. 567,310 92,792
The Selling Stockholders:
▇▇▇▇▇▇ ▇. ▇▇▇ Equity Partners, L.P................................. 752,188 121,348
1989 ▇▇▇▇▇▇ ▇. ▇▇▇ Nominee Trust................................... 84,116 13,570
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇................................................... 100,000 --
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇................................................. 20,200 --
▇▇▇▇ ▇. Childs..................................................... 16,075 2,593
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇................................................... 10,713 1,728
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇................................................ 10,709 1,728
▇. ▇▇▇▇▇▇ ▇▇▇▇..................................................... 8,033 1,296
▇▇▇▇▇ ▇. ▇▇▇▇▇▇.................................................... 5,323 859
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.................................................. 4,818 777
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇.................................................. 4,818 777
▇▇▇▇▇▇ ▇. ▇▇▇▇▇.................................................... 3,607 582
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇................................................. 3,214 518
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇................................................ 1,760 284
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇................................................... 1,603 259
SGS Family Limited Partnership..................................... 1,211 ▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇.................................................. 755 122
▇▇▇▇▇ ▇▇▇▇▇▇....................................................... 755 122
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇................................................. 723 117
▇▇▇▇ ▇. ▇▇▇▇▇▇..................................................... 605 97
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.................................................. 376 61
▇▇▇▇▇ ▇. ▇▇▇▇▇▇.................................................... 351 57
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇.................................................. 351 56
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇................................................... 290 47
▇▇▇▇ ▇. ▇▇▇▇▇▇..................................................... 96 15
---------- ------------
Total................................................................... 1,600,000 240,000
========= =======
Each of the Selling Stockholders listed above is represented by ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, a Professional Corporation, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇ and has appointed ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, and each of
them, as Attorneys-in-Fact for such Selling Stockholder, except for Messrs.
▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇, who are represented by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP and who
have appointed ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, and each of them, as
their Attorneys-in-Fact.
23
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, as amended
3. Lease Agreement dated as of August 19, 1993 between ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Associates and Finlay Jewelry, as amended
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, as amended
7. Lease Agreement dated May 2, 1996 between Horizon/▇▇▇▇ Outlet Centers
Limited Partnership and Finlay Jewelry
24
SCHEDULE IV
Persons or entities required to
execute Lock-Up Agreements
Pursuant to Section 7(m)
------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
25
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 Exchange Act and the related
published rules and regulations, nothing came to their attention that
cause them to believe that the unaudited condensed consolidated
financial statements do not comply as to form in all material
respects with the applicable accounting requirements of the Act and
the Exchange Act and the related published rules and regulations;
(iv) The unaudited selected financial information with
respect to the consolidated results of operations and financial
position of the Company for the five most recent fiscal years
included in the Prospectus agrees with the corresponding amounts
(after restatements where applicable) in the audited consolidated
financial statements for such five fiscal years which were included
or incorporated by reference in the Company's Annual Reports on Form
10-K for such fiscal years;
(v) They have compared the information in the
Prospectus under selected captions with the disclosure requirements
of Regulation S-K and on the basis of limited procedures specified in
such letter nothing came to their attention as a result of the
foregoing procedures that caused them to believe that this
information does not conform in all material respects with the
disclosure requirements of Items 301, 302 (if applicable), 402 and
503(d) (if applicable), respectively, of Regulation S-K;
(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 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
I-2
(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
