MAYORS JEWELERS INC/DE
3RD AMENDMENT TO REVOLVING AGREEMENT
<DOCUMENT>
<TYPE>EX-10.5
<SEQUENCE>8
<FILENAME>g87599exv10w5.txt
<DESCRIPTION>3RD AMENDMENT TO REVOLVING AGREEMENT
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                                                                    EXHIBIT 10.5


               THIRD AMENDMENT TO REVOLVING CREDIT, TRANCHE B LOAN
               AND SECURITY AGREEMENT, LIMITED WAIVER AND CONSENT


             THIRD AMENDMENT TO REVOLVING CREDIT, TRANCHE B LOAN AND SECURITY
AGREEMENT, LIMITED WAIVER AND CONSENT, dated as of February __, 2004
("AMENDMENT"), by and among MAYOR'S JEWELERS, INC., a Delaware corporation,
MAYOR'S JEWELERS OF FLORIDA, INC., a Florida corporation, and each of the other
Domestic Subsidiaries parties thereto (collectively, the "BORROWERS"), FLEET
RETAIL GROUP INC. (f/k/a Fleet Retail Finance Inc.)("FRGI"), GMAC COMMERCIAL
FINANCE, LLC (successor in interest to GMAC Business Credit, LLC) ("GMACCF"), as
syndication agent (the "SYNDICATION AGENT"), BACK BAY CAPITAL FUNDING LLC (the
"TRANCHE B LENDER" and collectively with FRGI and GMACCF, the "LENDERS"), and
FLEET RETAIL GROUP INC. (f/k/a Fleet Retail Finance Inc.), as administrative
agent for itself and the Lenders (the "ADMINISTRATIVE AGENT").

             WHEREAS, the Borrowers, the Lenders, and the Administrative Agent
are parties to a Revolving Credit, Tranche B Loan and Security Agreement, dated
as of August 20, 2002 (as amended and in effect from time to time, the "CREDIT
AGREEMENT"), pursuant to which the Lenders have extended credit to the Borrowers
on the terms and subject to the conditions set forth therein;

         WHEREAS, the Borrowers, the Lenders, and the Administrative Agent have
agreed, on the terms and conditions set forth herein, to amend certain
provisions of the Credit Agreement; and

         WHEREAS, capitalized terms which are used herein without definition and
which are defined in the Credit Agreement shall have the same meanings herein as
in the Credit Agreement.

         NOW, THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:

         SS.1. AMENDMENT TO SECTION 1.1 OF THE CREDIT AGREEMENT. Section 1.1 of
the Credit Agreement is hereby amended by:

                  (a) deleting the definition of "Appraised A/R Liquidation
         Value" in its entirety and substituting the following new definition in
         lieu thereof:

         "APPRAISED A/R LIQUIDATION VALUE. The product of (a) the net book value
                  of Eligible Private Label Accounts multiplied by (b) the
                  percentage determined from the then most recent appraisal of
                  Eligible Private Label Accounts undertaken at the request of
                  the Administrative Agent, to reflect the appraised estimate of
                  the net recovery on the Eligible Private Label Accounts on a
                  forced liquidation basis.";

                  (b) deleting the definition of "Appraised A/R Percentage" in
         its entirety and substituting the following new definition in lieu
         thereof:


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         "APPRAISED A/R PERCENTAGE. 65%.";

                  (c) deleting the definition of "Appraised A/R Tranche B
         Percentage" in its entirety and substituting the following new
         definition in lieu thereof:

         "APPRAISED A/R TRANCHE B PERCENTAGE. 65%.";

                  (d) deleting the definition of "Appraised Inventory Tranche B
         Percentage" in its entirety and substituting the following new
         definition in lieu thereof:

         "APPRAISED INVENTORY TRANCHE B PERCENTAGE. For each Eligible Inventory
                  Category, the Appraised Inventory Tranche B Percentage shall
                  be equal to one hundred and two and one-half percent (102.5%).
                  With respect to additional Eligible Inventory Categories, the
                  Appraised Inventory Tranche B Percentage shall be the
                  percentage determined by the Administrative Agent and the
                  Tranche B Lender."

                  (e) deleting the definition of "Borrowing Base" in its
         entirety and substituting the following new definition in lieu thereof:

         "BORROWING BASE. The result of the following:

                  (a)      Eighty-five percent (85%) multiplied by the Appraised
                           Inventory Liquidation Value of each Eligible
                           Inventory Category.

                                  PLUS

                  (b)      The lesser of (i) the Appraised A/R Percentage
                           multiplied by the Appraised A/R Liquidation Value and
                           (ii) $3,000,000.

                                  MINUS

                  (c)      All applicable Reserves.";

                  (f) deleting the definition of "Tranche B Borrowing Base" in
         its entirety and substituting the following new definition in lieu
         thereof:

         "TRANCHE B BORROWING BASE. The result of the following:

                  (a)      The aggregate amount with respect to all Eligible
                           Inventory Categories of the Appraised Inventory
                           Tranche B Percentage for each such Eligible Inventory
                           Category multiplied by the Appraised Inventory
                           Liquidation Value for such Eligible Inventory
                           Category.

                                  PLUS

                  (b)      The lesser of (i) the Appraised A/R Tranche B
                           Percentage multiplied by the Appraised A/R
                           Liquidation Value and (ii) $3,000,000.


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                                  MINUS

                  (c)      All applicable Reserves."; and

                  (g) deleting the definition of "Tranche B Loan" in its
         entirety and substituting the following new definition in lieu thereof:

                  "TRANCHE B LOAN. Together with the Incremental Tranche B
                           Funding Amount, the aggregate principal amount of
                           $12,500,000, plus accrued and unpaid capitalized
                           Tranche B Loan PIK Interest in the amount of
                           $168,491.25. As of the Third Amendment Effective
                           Date, and after giving effect to the funding of the
                           Incremental Funding Amount, the outstanding principal
                           amount of the Tranche B Loan shall be equal to
                           $12,668,491.25."

                  (h) deleting the definition of "Yield Revenue" in its entirety
         and substituting the following new definition in lieu thereof:

                  "YIELD REVENUE. All amounts which are (or would be) payable on
                           account of the Tranche B Loan, the Tranche B Lender
                           Fees and the Tranche B Loan Interest Rate (as if all
                           interest were paid in cash on the relevant Tranche B
                           Loan Interest Payment Date) with respect to the
                           Tranche B Loan from the Third Amendment Effective
                           Date through the twelve (12) month anniversary of the
                           Third Amendment Effective Date."

                  (i) inserting the following new definitions in proper
         alphabetical order therein:

                  "ELIGIBLE PRIVATE LABEL ACCOUNTS. Accounts Receivable due on
                           the Borrowers' private label credit card programs
                           which are deemed in the reasonable discretion of the
                           Administrative Agent to be eligible. The
                           Administrative Agent shall act in good faith at all
                           times when determining such eligibility."

                  "INCREMENTAL TRANCHE B FUNDING AMOUNT. $2,000,000, which
                           amount shall be funded to the Borrowers by the
                           Tranche B Lender on the Third Amendment Effective
                           Date."

                  "THIRD AMENDMENT. The Third Amendment to Revolving Credit
                           Tranche B Loan and Security Agreement, Limited Waiver
                           and Consent dated as of February __, 2004."

                  "THIRD AMENDMENT EFFECTIVE DATE. The "Effective Date" as such
                           term is defined in the Third Amendment."

         SS.2. AMENDMENT TO SECTION 3 OF THE CREDIT AGREEMENT. Section 3 of the
Credit Agreement is hereby amended by deleting Sections 3.1 and 3.3 in their
entirety and substituting the following new Sections 3.1 and 3.3 in proper
numerical order in lieu thereof:

                  "3.1 COMMITMENT TO LEND. Subject to the terms and conditions
         set forth in this Agreement, the Tranche B Lender agrees to lend to the
         Borrowers on the Closing Date the principal amount of $12,500,000. In
         addition, subject to the terms and conditions of the Third Amendment,
         the Tranche B Lender agrees to lend to the Borrowers on the Third
         Amendment Effective Date the Incremental Tranche B Funding Amount."



                                       3
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                  "3.3. PAYMENTS OF PRINCIPAL OF TRANCHE B LOAN. Except as
         contemplated by ss.13.4, the Borrowers may not make any principal
         payments on account of the Tranche B Loan until the Borrowers'
         Obligations to the Revolving Credit Lenders have been paid in full and
         the Commitments have been terminated; PROVIDED, HOWEVER, beginning
         April 30, 2003, the Borrowers may prepay the Tranche B Loan in its
         entirety or in $1,000,000 increments if at such time (i) a Default does
         not exist and one would not result from such prepayment, (ii) after
         giving effect to such payment Availability is in excess of $10,000,000
         and (iii) the Borrowers shall have delivered to the Administrative
         Agent pro forma financial statements for the next 12 months
         demonstrating, in form and substance satisfactory to the Administrative
         Agent, that Availability will exceed $10,000,000 at all times during
         the next 12 months after giving effect to the prepayment of the Tranche
         B Loan. The Borrowers jointly and severally promise to pay on the
         Maturity Date, and there shall become absolutely due and payable on the
         Maturity Date, all of the Tranche B Loans outstanding on such date,
         together with any and all accrued and unpaid interest thereon. If the
         Borrowers prepay the Tranche B Loans in whole or in part, then, in view
         of the impracticality and extreme difficulty of ascertaining the actual
         amount of damages to Tranche B Lender or profits lost by the Tranche B
         Lender as a result thereof, and by mutual agreement of the parties as
         to a reasonable estimation and calculation of the lost profits or
         damages of the Tranche B Lender, the Borrowers shall pay a premium with
         respect to each such prepayment (the "TRANCHE B EARLY TERMINATION FEE")
         in an amount equal to the greater of (a) the Yield Revenue calculated
         with respect to such amounts less the aggregate amount of any payments
         made during the period from the Third Amendment Effective Date through
         the twelve (12) month anniversary of the Third Amendment Effective Date
         on account of components of Yield Revenue relating to such amounts and
         (b) one and one-fifth percent (1.20%) of the amount prepaid."

         SS.3. LIMITED WAIVER AND CONSENT. The Borrowers have requested, and the
Lenders hereby consent to the request by Mayor's Jewelers, Inc. to (i) authorize
a new series of preferred stock containing substantially identical terms and
rights to Mayor's Jewelers, Inc.'s currently-outstanding Series A Convertible
Preferred Stock with the exception of certain changes to such rights primarily
regarding the payment of dividends, future dividend rates and the conversion
ratio as more fully set forth in the attached Certificate of Designation of
Series A-1 Convertible Preferred Stock, and (ii) issue all of such shares of
preferred stock to Birks in a one-for-one exchange for its shares of Series A
Convertible Preferred Stock in accordance with that certain Exchange Agreement
(the "EXCHANGE AGREEMENT") by and between Mayor's Jewelers, Inc. and Henry Birks
& Sons Inc. in the form attached hereto. In addition, the Lenders hereby consent
to a preferred share dividend payment (the "BIRKS DIVIDEND PAYMENT") to be made
by Mayor's Jewelers, Inc. to Birks on or after the Third Amendment Effective
Date but prior to March 5, 2004 in an amount not to exceed $2,185,755.00. The
Lenders hereby further consent to any of the Borrowers entering into the
Exchange Agreement and the Amendment to Amended and Restated Registration Rights
Agreement referred to in the Exchange Agreement to effect the authorization and
issuance of the additional class of preferred stock, as well as the Birks
Dividend Payment. Solely in connection with the Birks Dividend Payment, the
Lenders hereby agree to waive the application of ss.9.4 of the Credit Agreement
so long as no Default or Event of Default would result therefrom.

         SS.4. REPRESENTATIONS AND WARRANTIES. Each of the Borrowers hereby
represents and warrants to the Administrative Agent and the Lenders as of the
date hereof, and as of any date on which the conditions set forth in ss.5 below
are met, as follows:

             (a) The execution and delivery by each of the Borrowers of this
Amendment and all other instruments and agreements required to be executed and
delivered by such Borrower in connection with the transactions contemplated
hereby or referred to herein (collectively, the "AMENDMENT DOCUMENTS"), and the
performance by each of the Borrowers of any of its obligations and agreements


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under the Amendment Documents and the Credit Agreement and the other Loan
Documents, as amended hereby, are within the corporate or other authority of
such Borrower, have been authorized by all necessary corporate proceedings on
behalf of such Borrower and do not and will not contravene any provision of law
or such Borrower's charter, other incorporation or organizational papers,
by-laws or any stock provision or any amendment thereof or of any indenture,
agreement, instrument or undertaking binding upon such Borrower.

             (b) Each of the Amendment Documents, the Credit Agreement and the
other Loan Documents, as amended hereby, to which any Borrower is a party
constitute legal, valid and binding obligations of such Person, enforceable in
accordance with their terms, except as limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting generally
the enforcement of creditors' rights.

             (c) No approval or consent of, or filing with, any governmental
agency or authority is required to make valid and legally binding the execution,
delivery or performance by the Borrowers of the Amendment Documents, the Credit
Agreement or any other Loan Documents, as amended hereby, or the consummation by
the Borrowers of the transactions among the parties contemplated hereby and
thereby or referred to herein.

             (d) The representations and warranties contained in ss.7 of the
Credit Agreement and in the other Loan Documents were true and correct as of the
date made. Except to the extent of changes resulting from transactions
contemplated or permitted by the Credit Agreement and the other Loan Documents,
changes occurring in the ordinary course of business (which changes, either
singly or in the aggregate, have not been materially adverse) and to the extent
that such representations and warranties relate expressly to an earlier date and
after giving effect to the provisions hereof, such representations and
warranties, after giving effect to this Amendment, also are correct as of the
date hereof.

             (e) Each of the Borrowers has performed and complied in all
material respects with all terms and conditions herein required to be performed
or complied with by it prior to or at the time hereof, and as of the date
hereof, after giving effect to the provisions of this Amendment and the other
Amendment Documents, there exists no Default or Event of Default.

             (f) Each of the Borrowers hereby acknowledges and agrees that the
representations and warranties contained in this Amendment shall constitute
representations and warranties as referred to in ss.13.1(e) of the Credit
Agreement, a breach of which shall constitute an Event of Default.

         SS.5. EFFECTIVENESS. This Amendment shall become effective as of the
date first written above (the "EFFECTIVE DATE) upon the satisfaction of each of
the following conditions, in each case in a manner satisfactory in form and
substance to the Administrative Agent and the Lenders:

             (a) This Amendment shall have been duly executed and delivered by
each of the Borrowers and each of the Lenders and shall be in full force and
effect;

             (b) The Administrative Agent shall have received all financial
statements and related financial information required to be delivered by the
Borrowers in accordance with Section 8.4(a) of the Credit Agreement, which
financial statements shall be in form and substance satisfactory to the
Administrative Agent and the Lenders;

             (c) The Administrative Agent shall have received from Birks the
most recently completed independent audited financial statements and interim
financial statements, together with the projections and business plan for the
following twelve month period, in each case in form and substance satisfactory
to the Administrative Agent and the Lenders;



                                       5
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             (d) The Administrative Agent shall have received evidence, in form
and substance satisfactory to the Administrative Agent, that the Borrowers have
obtained all consents and approvals necessary to effect the transactions
contemplated by the Amendment Documents;

             (e) The Administrative Agent shall have received from the Secretary
of each of the Borrowers a copy, certified by such Secretary to be true and
complete as of such date, of (i) the resolutions of each such Person's Board of
Directors or other management authorizing, to the extent it is a party thereto,
the execution, delivery and performance of the Amendment Documents, and (ii) the
names, titles, incumbency and signatures of the officers of each such Person who
are authorized to execute and deliver this Amendment and the other Amendment
Documents;

              (f) The Administrative Agent shall have received favorable legal
opinions addressed to the Administrative Agent and the Lenders, each dated as of
the date hereof and in form and substance satisfactory to the Administrative
Agent, from counsel to the Borrowers, concerning corporate authority matters and
the enforceability of the Amendment Documents and the transactions contemplated
thereby and concerning such other matters as the Administrative Agent may
request;

              (g) The Administrative Agent shall have received a favorable
fairness opinion addressed to the Independent Committee of the Board of
Directors of Mayor's Jewelers, Inc. from Capitalink L.C., which opinion shall be
in form and substance satisfactory to the Administrative Agent;

              (h) The Administrative Agent shall have received an officer's
certificate, in form and substance satisfactory to the Lenders, relating to the
deliberations of the Independent Committee of the Board of Directors of Mayor's
Jewelers, Inc. regarding the authority of the Borrowers to, among other things,
consummate the transactions contemplated by this Amendment;

              (i) Each of the Administrative Agent and the Tranche B Lender
shall have received from the Borrowers payment in full of all required amendment
fees as set forth in their respective fee letters of even date herewith; and

              (j) The Administrative Agent shall have received such other items,
documents, agreements, items or actions as the Administrative Agent may
reasonably request in order to effectuate the transactions contemplated hereby.

              SS.6. MISCELLANEOUS PROVISIONS.

              (a) Each of the Borrowers hereby ratifies and confirms all of its
Obligations to the Administrative Agent and the Lenders under the Credit
Agreement, as amended hereby, and the other Loan Documents, including, without
limitation, the Loans, and each of the Borrowers hereby affirms its absolute and
unconditional promise to pay to the Lenders and the Administrative Agent the
Loans, reimbursement obligations and all other amounts due or to become due and
payable to the Lenders and the Administrative Agent under the Credit Agreement
and the other Loan Documents, as amended hereby. Except as expressly amended
hereby, each of the Credit Agreement and the other Loan Documents shall continue
in full force and effect. This Amendment and the Credit Agreement shall
hereafter be read and construed together as a single document, and all
references in the Credit Agreement, any other Loan Document or any agreement or
instrument related to the Credit Agreement shall hereafter refer to the Credit
Agreement as amended by this Amendment.



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              (b) Without limiting the expense reimbursement requirements set
forth in ss.16.2 of the Credit Agreement, the Borrower agrees to pay on demand
all costs and expenses, including reasonable attorneys' fees, of the
Administrative Agent incurred in connection with this Amendment.

              (c) THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS (WITHOUT REFERENCE
TO CONFLICT OF LAWS) AND SHALL TAKE EFFECT AS A SEALED INSTRUMENT IN ACCORDANCE
WITH SUCH LAWS.

              (d) This Amendment may be executed in any number of counterparts,
and all such counterparts shall together constitute but one instrument. In
making proof of this Amendment it shall not be necessary to produce or account
for more than one counterpart signed by each party hereto by and against which
enforcement hereof is sought.


                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]



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            IN WITNESS WHEREOF, the undersigned have duly executed this
Amendment as a sealed instrument as of the date first set forth above.

                                     MAYOR'S JEWELERS, INC.



                                     By: /s/ JOHN BALL
                                        ---------------------------------------
                                        Name:  John Ball
                                        Title: Sr. VP, Chief Financial Officer


                                     MAYOR'S JEWELERS OF FLORIDA, INC.



                                     By: /s/ JOHN BALL
                                        ---------------------------------------
                                        Name:  John Ball
                                        Title: Sr. VP, Chief Financial Officer

                                     JBM RETAIL COMPANY, INC.



                                     By: /s/ MARC WEINSTEIN
                                        ---------------------------------------
                                        Name:  Marc Weinstein
                                        Title: President


                                     JBM VENTURE CO., INC.



                                     By: /s/ MARC WEINSTEIN
                                        ---------------------------------------
                                        Name:  Marc Weinstein
                                        Title: President


                                     MAYOR'S JEWELERS INTELLECTUAL PROPERTY
                                     HOLDING COMPANY



                                     By: /s/ MARC WEINSTEIN
                                        ---------------------------------------
                                        Name:  Marc Weinstein
                                        Title: President




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                                     "ADMINISTRATIVE AGENT"

                                     FLEET RETAIL GROUP INC.
                                     (f/k/a Fleet Retail Finance Inc.)



                                     By: /s/ KEITH VERRAUTEREN
                                        ---------------------------------------
                                        Name:  Keith Verrauteren
                                        Title: Vice President


                                     "SYNDICATION AGENT"

                                     GMAC COMMERCIAL FINANCE, LLC



                                     By: /s/ EDWARD HILL
                                        ---------------------------------------
                                        Name:  Edward Hill
                                        Title: Senior Vice President


                                     "REVOLVING CREDIT LENDERS"

                                     FLEET RETAIL GROUP INC.
                                     (f/k/a Fleet Retail Finance Inc.)



                                     By: /s/ KEITH VERRAUTEREN
                                        ---------------------------------------
                                        Name:  Keith Verrauteren
                                        Title: Vice President


                                     GMAC COMMERCIAL FINANCE, LLC



                                     By: /s/ EDWARD HILL
                                        ---------------------------------------
                                        Name:  Edward Hill
                                        Title: Senior Vice President

                                     "TRANCHE B LENDER"

                                     BACK BAY CAPITAL FUNDING LLC



                                     By: /s/ KRISTEN M. O'CONNOR
                                        ---------------------------------------
                                        Name:  Kristen M. O'Connor
                                        Title: Director


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