EXHIBIT 10.2

 

AMENDMENT NO. 1 TO THE CREDIT AGREEMENT

This Amendment No. 1 to the Credit Agreement, dated as of November 18, 2008
(this “Amendment”), is entered into by and among Finlay Fine Jewelry
Corporation, a Delaware corporation (“Finlay”); Carlyle & Co. Jewelers LLC, a
Delaware limited liability company (“Carlyle”), L. Congress, Inc., a Florida
corporation (“Congress”) (Finlay, Carlyle and Congress are sometimes
collectively referred to herein as the “Borrowers” and individually as a
“Borrower”); the other Credit Parties signatory hereto, the Lenders signatory
hereto and General Electric Capital Corporation, as a Lender and as Agent for
Lenders (in such capacity, “Agent”).

RECITALS

A.    Borrowers, the Credit Parties, Agent and Lenders are parties to that
certain Fourth Amended and Restated Credit Agreement, dated as of November 9,
2007 (as amended, restated, supplemented or otherwise modified and in effect,
the “Credit Agreement”), pursuant to which Lenders have made and will hereafter
make loans and advances and other extensions of credit to Borrowers.

B.        Borrowers, Agent and Lenders wish to amend the Credit Agreement on the
terms and subject to the conditions set forth herein.

C.        This Amendment shall constitute a Loan Document and these Recitals
shall be construed as part of this Amendment. Capitalized terms used herein
without definition are so used as defined in the Credit Agreement and Annex A
thereto.

NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

1.

Amendments to Credit Agreement.

1.1.      Annex A (Definitions) to the Credit Agreement is amended by inserting
the following definitions in the appropriate alphabetical order:

(a)       “First Amendment” means Amendment No. 1 to the Credit Agreement, dated
as of November 18, 2008.

(b)       “Intercreditor Agreement” means an intercreditor agreement among
Agent, the holders of the Second Lien Notes (or an agent or trustee on their
behalf) and the holders of the Third Lien Notes (or an agent or trustee on their
behalf) consistent with the terms of the First Amendment, and otherwise on terms
and conditions satisfactory to Agent.

(c)        “Second Lien Notes” means Finlay’s Second Lien Notes due 2012 and any
notes that may be subsequently issued in exchange therefore that are
substantially identical in all material respects (other than with respect to any
transfer restrictions).

(d)        “Third Lien Notes” means Finlay’s Third Lien Notes due 2012 issued in
exchange for all or a portion of the Senior Notes and any notes that may be
subsequently issued in exchange therefore that are substantially identical in
all material respects (other than with respect to any transfer restrictions).

 

 

 

 

 

 

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1.2.      Annex A (Definitions) to the Credit Agreement is amended by inserting
in clause (b) of the definition of “Commitment Termination Date” immediately
after the words “the Senior Notes” in both places where such words appear in
such clause, the words “, the Second Lien Notes and the Third Lien Notes”.

1.3.      Annex A (Definitions) to the Credit Agreement is amended by amending
and restating the definition of “Index Rate” in its entirety as follows:

“Index Rate” means, for any day, a floating rate equal to the highest of (i) the
rate publicly quoted from time to time by The Wall Street Journal as the “prime
rate” (or, if The Wall Street Journal ceases quoting a prime rate, the highest
per annum rate of interest published by the Federal Reserve Board in Federal
Reserve statistical release H.15 (519) entitled “Selected Interest Rates” as the
Bank prime loan rate or its equivalent), (ii) the Federal Funds Rate plus 50
basis points per annum, and (iii) the sum of (x) the LIBOR Rate, for a LIBOR
Period of three (3) months as it appears on Reuters Screen LIBOR01 Page as of
11:00 a.m (London, England time) two (2) Business Days prior to such day, plus
(y) with respect to Tranche A Revolving Credit Advances and Swing Line Loans,
the excess of the Applicable Tranche A Revolver LIBOR Margin over the Applicable
Tranche A Revolver Index Margin, and, with respect to Tranche B Revolving Credit
Advances, the excess of the Applicable Tranche B Revolver LIBOR Margin over the
Applicable Tranche B Revolver Index Margin, in each instance, as of such day.
Each change in any interest rate provided for in the Agreement based upon the
Index Rate shall take effect at the time of such change in the Index Rate.

1.4.      Annex A (Definitions) to the Credit Agreement is amended by inserting
in the definition of “Loan Documents”, after the words “the Collateral
Documents,” and before the words “the Master Standby Agreement”, the words “the
Intercreditor Agreement,”.

1.5.      Annex A (Definitions) to the Credit Agreement is amended by amending
and restating the definition of “Senior Notes” in its entirety as follows:

“Senior Notes” means Finlay’s 8.375% Senior Notes due 2012 and any notes that
may be subsequently issued in exchange therefor (other than the Third Lien
Notes) that are substantially identical in all material respects (other than
with respect to any transfer restrictions).

1.6.      Annex B (Letters of Credit) to the Credit Agreement is amended by
deleting from paragraph (c)(v) thereof the words “1.50% per annum” and replacing
them with the words “2.25% per annum”.

1.7.      Annex F (Collateral Reports) to the Credit Agreement is amended by
amending paragraph (c) thereof as follows:

(a)       The words “one (1) Inventory Appraisal” in the fourth line thereof are
replaced with the words “two (2) Inventory Appraisals”.

(b)       The words “a second appraisal” in the fifth line thereof are replaced
with the words “a third appraisal”.

1.8.      Annex F (Collateral Reports) to the Credit Agreement is amended by
amending paragraph (d) thereof as follows:

 

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(a)       The words “one (1) field examination” in the fourth and fifth lines
thereof are replaced with the words “two (2) field examinations”.

(b)       The words “a second field examination” in the sixth line thereof are
replaced with the words “a third field examination”.

1.9.      Section 1.5(a) of the Credit Agreement is amended by inserting,
immediately prior to the sentence beginning with the words “Commencing with the
calendar quarter beginning January 1, 2009,”, the following sentence:

As of the date of the First Amendment, the Applicable Margins are as follows:

Applicable Tranche A Revolver Index Margin

1.00%

Applicable Tranche A Revolver LIBOR Margin

2.75%

Applicable Tranche B Revolver Index Margin

3.50%

Applicable Tranche B Revolver LIBOR Margin

5.25%

1.10.    Section 1.5(a) of the Credit Agreement is further amended by deleting
the grids used to determine the Applicable Tranche A Revolver Index Margin and
the Applicable Tranche A Revolver LIBOR Margin set forth therein and replacing
them with the grids set forth below:

 

If Average Adjusted Excess Availability is:

Level of

Applicable Margins:

< $75,000,000

Level I

> $75,000,000

Level II

 

 

Applicable Margins

 

Level I

Level II

Applicable Tranche A Revolver

Index Margin

1.25%

1.00%

Applicable Tranche A Revolver LIBOR Margin

3.00%

2.75%

 

1.11.    Section 1.9(b) of the Credit Agreement is amended by replacing the
words “one quarter of one percent (0.25%) per annum” with the words “one half of
one percent (0.50%) per annum”.

1.12.    Section 1.9(c) of the Credit Agreement is amended by replacing the
words “four and one half percent (4.50%) per annum” with the words “five and one
quarter percent (5.25%) per annum”.

1.13.    Section 6.2 of the Credit Agreement is amended by (x) deleting the word
“and” at the end of clause (s) thereof, (y) deleting the period at the end of
clause (t) thereof and replacing it with a semicolon and inserting the word
“and” immediately thereafter, and (z) inserting the following new clause at the
end of such section:

 

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“(u)     guaranties of the Second Lien Notes and Third Lien Notes, which
guaranties shall be substantially identical to the existing guaranties of the
Senior Notes and shall be subject to the terms of the Intercreditor Agreement.”

1.14.    Section 6.3(a)(ix) of the Credit Agreement is amended and restated in
its entirety as follows:

“(ix)    Indebtedness of Finlay evidenced by the Senior Notes in an aggregate
principal amount not to exceed $200,000,000 minus the original principal amount
of any Third Lien Notes issued in exchange therefor,”.

1.15.    Section 6.3(a) of the Credit Agreement is further amended by (x)
deleting the period at the end of clause (xix) thereof and replacing it with a
comma, and (y) inserting the following new clauses at the end of such section:

“(xx)   Indebtedness under the Second Lien Notes (and refinancings thereof
permitted by the Intercreditor Agreement, including reasonable fees incurred in
connection therewith) in an aggregate principal amount not to exceed $28,700,000
plus any increases in the principal amount thereof as a result of interest paid
in kind (i.e., PIK interest); provided, that, (A) no interest on the Second Lien
Notes shall be paid in cash prior to January 1, 2011, and (B) the terms and
conditions of the Second Lien Notes, and all documentation executed in
connection therewith, shall be (i) consistent with the proposed terms attached
to the First Amendment as Exhibit A and (ii) satisfactory to Agent, and

(xxi)    Indebtedness under the Third Lien Notes (and refinancings thereof
permitted by the Intercreditor Agreement, including reasonable fees incurred in
connection therewith) in an aggregate principal amount not to exceed
$200,000,000 minus the principal amount of any Senior Notes that are not
exchanged for Third Lien Notes, plus any increases in the principal amount
thereof as a result of interest paid in kind (i.e., PIK interest); provided,
that, (A) no interest on the Third Lien Notes shall be paid in cash prior to
January 1, 2011, and (B) the terms and conditions of the Third Lien Notes, and
all documentation executed in connection therewith, shall be (i) consistent with
the proposed terms attached to the First Amendment as Exhibit A and (ii)
satisfactory to Agent.”

1.16.    Section 6.3(b) of the Credit Agreement is amended and restated in its
entirety as follows:

“(b)     No Credit Party shall, directly or indirectly, voluntarily purchase,
redeem, defease or prepay any principal of, premium, if any, interest or other
amount payable in respect of any Indebtedness prior to its scheduled maturity,
other than (i) the Obligations; (ii) Indebtedness secured by a Permitted
Encumbrance if the asset securing such Indebtedness has been sold or otherwise
disposed of in accordance with Sections 6.8(b) or (c); (iii) Indebtedness
permitted by Section 6.3(a)(iv) upon any refinancing thereof in accordance with
Section 6.3(a)(iv); (iv) any of Borrowers may, from time to time, repay and/or
prepay any intercompany Indebtedness outstanding and permitted under Section
6.3(a)(viii), including payments of principal and/or interest, as they may elect
in their discretion; (v) as otherwise permitted in Section 6.13 and (vi)
payments of interest paid in kind and, beginning January 1, 2011, interest paid
in cash on the Second Lien Notes and Third Lien Notes, which Second Lien Notes
and Third Lien Notes shall at all times be subject to the terms of the
Intercreditor Agreement.”

 

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1.17.    Section 6.7 of the Credit Agreement is amended by (x) deleting the word
“and” at the end of clause (k) thereof, (y) deleting the period at the end of
clause (l) thereof and replacing it with a comma, and (z) inserting the
following new clauses at the end of such section:

“(m)    second priority Liens securing the obligations under the Second Lien
Notes; provided, that, such Liens shall at all times be subordinated to Agent’s
Liens securing the Obligations as and to the extent provided in the
Intercreditor Agreement;

(n)       third priority Liens securing the obligations under the Third Lien
Notes; provided, that, such Liens shall at all times be subordinated to Agent’s
Liens securing the Obligations as and to the extent provided in the
Intercreditor Agreement; and

(o)       other Liens securing Indebtedness of, or amounts payable by, the
Credit Parties, in each instance on terms and conditions reasonably acceptable
to Agent and in any event, not exceeding $25,000,000 in the aggregate at any
time outstanding, provided, that, such Liens shall be pari passu with or junior
to the Liens securing the Third Lien Notes and subordinated to Agent’s Liens
securing the Obligations on terms at least as favorable to Agent and Lenders as
provided in the Intercreditor Agreement and otherwise on terms acceptable to
Agent.”

1.18.    Section 6.16 of the Credit Agreement is amended by inserting the
following as a new clause (d) at the end thereof:

“(d)     No Credit Party shall directly or indirectly, amend, modify,
supplement, waive compliance with, seek a waiver under, or assent to
noncompliance with, any term, provision or condition of the Second Lien Notes,
the Third Lien Notes or any documentation entered into in connection therewith,
except as and to the extent expressly provided in the Intercreditor Agreement.”

1.19.    Section 6.20 of the Credit Agreement is amended by inserting the
following new clause at the beginning of such section: “Except with respect to
restrictions contained in the Second Lien Notes or the Third Lien Notes or any
of the documents related to the Second Lien Notes or Third Lien Notes,”.

2.            Terms of Second Lien Notes, Third Lien Notes and Intercreditor
Agreement. Exhibit A hereto sets forth certain terms of the Second Lien Notes
and Third Lien Notes and Exhibit B hereto sets forth certain subordination and
intercreditor terms with respect to the Second Lien Notes. The Third Lien Notes
shall be subordinated to the Second Lien Notes to the same extent as the Second
Lien Notes are subordinated to the Obligations. Agent is hereby authorized to
enter into an Intercreditor Agreement containing the terms and conditions set
forth on Exhibit B hereto and otherwise in form and substance acceptable to
Agent.

3.            Conditions to Effectiveness. The effectiveness of this Amendment
is expressly conditioned upon the satisfaction of each of the following
conditions precedent in a manner acceptable to Agent:

3.1.      Agent’s receipt of counterparts of this Amendment, duly executed by
Borrowers, Credit Parties, Agent and Requisite Lenders.

3.2.      Borrowers shall have paid to Agent a nonrefundable amendment fee equal
to 12.5 basis points (0.125%) of the Commitments of those Lenders who consent to
this Amendment, evidenced by their timely delivery to Agent of an executed
counterpart signature page hereto.

 

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3.3.      Agent shall have received: (i) copies of the resolutions of the board
of directors (or other governing body) of each of the Borrowers and other Credit
Parties approving the execution, delivery and performance of this Amendment and
each of the documents, instruments and agreements in connection with the Second
Lien Notes and Third Lien Notes and (ii) a legal opinion of Weil, Gotshal &
Manges LLP covering such matters as Agent may reasonably request with respect to
the Second Lien Notes and Third Lien Notes, each to be in form and substance
satisfactory to Agent.

3.4.      As of the date hereof, each representation and warranty by any Credit
Party contained in the Credit Agreement or in any other Loan Document is true
and correct in all material respects, except to the extent that such
representation or warranty expressly relates to an earlier date and except for
changes therein expressly permitted or expressly contemplated by the Credit
Agreement.

3.5.      As of the date hereof, no Default or Event of Default has occurred and
is continuing or would result after giving effect to issuance of the Second Lien
Notes or Third Lien Notes.

3.6.      Agent shall have received such other documents, instruments or
certificates as it shall have reasonably requested with respect to the
transactions described herein.

4.

Reference to and Effect Upon the Credit Agreement and other Loan Documents.

4.1.      Except as expressly modified hereby, the Credit Agreement, the Notes
and each other Loan Document shall remain in full force and effect and each is
hereby ratified and confirmed by each of Borrowers and the other Credit Parties.
Without limiting the foregoing, the Liens granted pursuant to the Collateral
Documents shall continue in full force and effect and the guaranty of the Credit
Parties shall continue in full force and effect.

4.2.      On or after the date hereof, each reference in the Credit Agreement to
“this Agreement”, “hereunder”, “hereof”, “herein” or any other word or words of
similar import shall mean and be a reference to the Credit Agreement as amended
hereby, and each reference in any other Loan Document to the Credit Agreement or
any word or words of similar import shall be and mean a reference to the Credit
Agreement as amended hereby.

5.            Counterparts. This Amendment may be executed in any number of
counterparts, each of which when so executed shall be deemed an original but all
such counterparts shall constitute one and the same instrument. A counterpart
signature page delivered by fax transmission shall be as effective as delivery
of an originally executed counterpart.

6.            Costs and Expenses. As provided in Section 11.3 of the Credit
Agreement, Borrower shall pay the fees, costs and expenses incurred by Agent in
connection with the preparation, execution and delivery of this Amendment
(including, without limitation, reasonable attorneys’ fees).

7.            GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF
LAW PROVISIONS) OF THE STATE OF NEW YORK.

8.            Headings. Section headings in this Amendment are included herein
for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose.

 

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[SIGNATURE PAGES FOLLOW]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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IN WITNESS WHEREOF, this Amendment has been duly executed as of the date first
written above.

BORROWERS:

 

FINLAY FINE JEWELRY CORPORATION

 

By:

/s/ Bruce E. Zurlnick

Name:

Bruce E. Zurlnick

Title:

Senior Vice President, Treasurer and Chief Financial Officer

 
 

CARLYLE & CO. JEWELERS LLC

 

By:

/s/ Bruce E. Zurlnick

Name:

Bruce E. Zurlnick

Title:

Senior Vice President, Treasurer and Chief Financial Officer

 
 

L. CONGRESS, INC.

 

By:

/s/ Bruce E. Zurlnick

Name:

Bruce E. Zurlnick

Title:

Senior Vice President, Treasurer and Chief Financial Officer

 
 
 
 
 

AMENDMENT NO. 1 TO CREDIT AGREEMENT

 

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The following Persons are signatories to this Amendment in their capacity as
Credit Parties and not as Borrowers.

 

FINLAY ENTERPRISES, INC.

 

By:

/s/ Bruce E. Zurlnick

Name:

Bruce E. Zurlnick

Title:

Senior Vice President, Treasurer and Chief Financial Officer

 
 

FINLAY JEWELRY, INC.

 

By:

/s/ Bruce E. Zurlnick

Name:

Bruce E. Zurlnick

Title:

Senior Vice President, Treasurer and Chief Financial Officer

 
 

FINLAY MERCHANDISING & BUYING LLC

 

By:

/s/ Bruce E. Zurlnick

Name:

Bruce E. Zurlnick

Title:

Senior Vice President, Treasurer and Chief Financial Officer

 
 

EFINLAY, INC.

 

By:

/s/ Bruce E. Zurlnick

Name:

Bruce E. Zurlnick

Title:

Senior Vice President, Treasurer and Chief Financial Officer

 
 

PARK PROMENADE LLC

 

By:

/s/ Bruce E. Zurlnick

Name:

Bruce E. Zurlnick

Title:

Senior Vice President, Treasurer and Chief Financial Officer

 
 

AMENDMENT NO. 1 TO CREDIT AGREEMENT

 

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GENERAL ELECTRIC CAPITAL CORPORATION,

as Agent and Lender

 

By:

 

Name:

 

Title:

Duly Authorized Signatory

 
 
 
 
 
 
 
 
 
 
 
 
 

 

AMENDMENT NO. 1 TO CREDIT AGREEMENT

 

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JPMORGAN CHASE BANK, N.A.

 

By:

 

Name:

 

Title:

 

 
 
 
 
 
 
 
 
 
 
 
 
 

 

AMENDMENT NO. 1 TO CREDIT AGREEMENT

 

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WACHOVIA BANK, NATIONAL ASSOCIATION

 

 

By:

 

Name:

 

Title:

 

 
 
 
 
 
 
 
 
 
 
 
 
 

 

AMENDMENT NO. 1 TO CREDIT AGREEMENT

 

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WELLS FARGO RETAIL FINANCE, LLC

 

 

By:

 

Name:

 

Title:

 

 
 
 
 
 
 
 
 
 
 
 
 
 

 

AMENDMENT NO. 1 TO CREDIT AGREEMENT

 

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BURDALE FINANCIAL LIMITED

 

By:

 

Name:

 

Title:

 

 
 
 
 
 
 
 
 
 
 
 
 
 

 

AMENDMENT NO. 1 TO CREDIT AGREEMENT

 

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CAPITAL ONE LEVERAGE FINANCE CORP.

(f/k/a NORTH FORK BUSINESS CAPITAL CORPORATION)

 

By:

 

Name:

 

Title:

 

 
 
 
 
 
 
 
 
 
 
 
 
 

 

AMENDMENT NO. 1 TO CREDIT AGREEMENT

 

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ISRAEL DISCOUNT BANK OF NEW YORK

 

By:

 

Name:

 

Title:

 

 
 
 
 
 
 
 
 
 
 
 
 
 

 

AMENDMENT NO. 1 TO CREDIT AGREEMENT

 

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PNC BANK, NATIONAL ASSOCIATION

 

By:

 

Name:

 

Title:

 

 
 
 
 
 
 
 
 
 
 
 
 
 

 

AMENDMENT NO. 1 TO CREDIT AGREEMENT

 

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CRYSTAL CAPITAL ONSHORE WAREHOUSE LLC

As duly authorized:

Crystal Capital Fund Management, L.P. as designated manager

 

by: Crystal Capital Fund Management GP, LLC

its: General Partner

 

By:

 

Name:

 

Title:

 

 
 
 
 
 
 
 
 
 
 
 
 
 

 

AMENDMENT NO. 1 TO CREDIT AGREEMENT

 

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CRYSTAL CAPITAL OFFSHORE WAREHOUSE LTD.

As duly authorized:

Crystal Capital Fund Management, L.P. as designated manager

 

by: Crystal Capital Fund Management GP, LLC

its: General Partner

 

By:

 

Name:

 

Title:

 

 
 
 
 
 
 
 
 
 
 
 
 
 

 

AMENDMENT NO. 1 TO CREDIT AGREEMENT

 

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EXHIBIT A TO FIRST AMENDMENT

 

Terms of Second Lien Notes

 

Interest: 12.125% per annum, payable in kind semiannually through December 2010;
thereafter 11.375% per annum payable in cash semiannually (PIK spread of 75
basis points).

 

Maturity: June 2012

 

Terms of Third Lien Notes

 

Issued in exchange for existing Senior Notes

 

Interest: 8.945% per annum, payable in kind semiannually through December 2010;
thereafter 8.375% payable in cash semiannually (PIK spread of 57 basis points).

 

Maturity: June 2012