As filed with the Securities and Exchange Commission on October 29, 1999.
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------
THE LESLIE FAY COMPANY, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 2335 13-3197085
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
1412 BROADWAY
NEW YORK, NY 10018
(212) 221-4000
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
JOHN J. POMERANTZ, CHAIRMAN OF THE BOARD
THE LESLIE FAY COMPANY, INC.
1412 BROADWAY
NEW YORK, NY 10018
(212) 221-4000
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
COPIES OF COMMUNICATIONS TO:
MICHAEL J. SHEF, ESQ.
PARKER CHAPIN FLATTAU & KLIMPL, LLP
1211 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
TELEPHONE NO.: (212) 704-6000
FACSIMILE NO.: (212) 704-6288
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered are being offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |X|
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_| __________________
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. |_| __________________
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. |_|
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
====================================================================================================
Proposed Proposed
Amount Maximum Maximum
Title Of Shares To Be Aggregate Price Aggregate Amount Of
To Be Registered Registered Per Share(1) Offering Price Registration Fee(2)
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par
value $.01 per share..... 193,822 $5.19 $1,005,451.63 $279.52
===================================================================================================
</TABLE>
<PAGE>
(1) Represents the shares of Common Stock being registered for resale by
the selling stockholders. Estimated solely for the purpose of
calculating the registration fee under to Rule 457(c) under the
Securities Act of 1933, based on the average of the bid and asked price
on The Nasdaq Stock Market's SmallCap Market on October 28, 1999.
(2) Pursuant to Rule 429 under the Securities Act of 1933, the Prospectus
that forms a part of this Registration Statement also relates to the
shares of Common Stock registered under the registrant's Registration
Statement on Form S-1 (Registration No. 333-68569), which includes the
registration of 253,367 shares of Common Stock not disposed of to date
by the Selling Stockholders named herein. The registrant paid a fee of
$488.83 with respect to the registration of such securities.
Pursuant to Rule 429 under the Securities Act of 1933, this
registration statement, which is a new registration statement, also constitutes
Post-Effective Amendment No. 2 to the Registration Statement on Form S-1
(Registration No. 333-68565), and such Post-Effective Amendment No. 2 shall
hereafter become effective concurrently with the effectiveness of this
registration statement and in accordance with Section 8(c) of the Securities Act
of 1933. This registration statement and the registration statement being
amended are collectively referred to as the "Registration Statement."
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE>
The information in this prospectus is not complete and may be changed. The
selling stockholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
PROSPECTUS (SUBJECT TO COMPLETION, DATED OCTOBER 29, 1999)
447,189 SHARES OF COMMON STOCK
THE LESLIE FAY COMPANY, INC.
1412 BROADWAY
NEW YORK, NEW YORK 10018
(212) 221-4000
The selling stockholders named in this prospectus are offering to sell
an aggregate of 447,189 shares of common stock. Leslie Fay will not receive any
of the proceeds from the offering.
The common stock is traded on The Nasdaq Stock Market's SmallCap Market
under the symbol LFAY.
--------------------------
CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 8 OF THIS PROSPECTUS.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED
THESE SECURITIES, OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
--------------------------
Prospectus dated , 1999
<PAGE>
TABLE OF CONTENTS
PAGE
PROSPECTUS SUMMARY....................................................... 1
RISK FACTORS............................................................. 2
DIVIDEND POLICY.......................................................... 6
USE OF PROCEEDS.......................................................... 6
SELLING STOCKHOLDERS AND PLAN OF DISTRIBUTION............................ 7
DESCRIPTION OF CAPITAL STOCK............................................. 9
SHARES ELIGIBLE FOR FUTURE SALE.......................................... 11
LEGAL MATTERS............................................................ 11
EXPERTS.................................................................. 11
ABOUT THIS PROSPECTUS.................................................... 12
WHERE YOU CAN FIND MORE INFORMATION...................................... 13
-------------------------------
<PAGE>
PROSPECTUS SUMMARY
THIS IS ONLY A SUMMARY AND DOES NOT CONTAIN ALL OF THE INFORMATION THAT
YOU SHOULD CONSIDER BEFORE INVESTING IN OUR COMMON STOCK. YOU SHOULD READ THE
ENTIRE PROSPECTUS CAREFULLY, INCLUDING THE "RISK FACTORS" SECTION AND OUR
CONSOLIDATED FINANCIAL STATEMENTS AND THE NOTES TO THOSE FINANCIAL STATEMENTS
INCLUDED ELSEWHERE IN THIS PROSPECTUS. IN GENERAL, THE TERMS "WE" OR "COMPANY"
REFERS TO THE LESLIE FAY COMPANY, INC. (FORMERLY THE LESLIE FAY COMPANIES, INC.)
AND ITS SUBSIDIARIES.
THE COMPANY
We are engaged principally in designing and arranging for the
manufacture and sale of diversified lines of women's dresses and sportswear. Our
products focus on career, social occasion and evening clothing that cover a
broad retail price range and offer the consumer a wide selection of styles,
fabrics and colors suitable for different ages, sizes and fashion preferences.
We believe that we are among the major producers of moderate price dresses and
that we are considered one of the major resources to retailers of such products.
The Leslie Fay business has been in continuous operation as an apparel company
since 1947.
We reorganized on June 4, 1997 following a voluntary petition under
Chapter 11 of the Bankruptcy Code.
THE OFFERING
Common Stock offered by the
Selling Stockholders....................... 447,189 shares of common stock,
par value $.01 per share
Number of Shares of Common Stock outstanding
before and after the offering............ 5,053,138 shares of common stock
Trading Symbol.............................. LFAY
Risk Factors................................ You should note that an investment
in the securities offered in this
prospectus involves a high degree
of risk. See "Risk Factors".
-1-
<PAGE>
RISK FACTORS
AN INVESTMENT IN THE COMMON STOCK OFFERED IN THIS PROSPECTUS INVOLVES A
HIGH DEGREE OF RISK. PROSPECTIVE INVESTORS SHOULD CONSIDER THE SPECIFIC RISK
FACTORS SET FORTH BELOW AS WELL AS THE OTHER INFORMATION CONTAINED IN THIS
PROSPECTUS.
IF WE DO NOT COMPLY WITH THE COVENANTS UNDER OUR CREDIT AGREEMENT, OUR LENDER
COULD REQUIRE THE SALE OR LIQUIDATION OF OUR ASSETS.
We are a party to a credit agreement with The CIT Group/Commercial
Services, Inc. that contains a number of restrictive covenants and events of
default, which limit our capital expenditures, incurrence of debt and sales of
assets. In addition, the credit agreement also requires us to achieve certain
financial ratios (including ratios of consolidated current assets to
consolidated current liabilities, consolidated EBITDA to consolidated interest
expense, minimum consolidated tangible net worth and minimum consolidated
working capital). CIT has a security interest in substantially all of our assets
as collateral for borrowings under the credit agreement. If we cannot achieve
the financial results necessary to maintain compliance with the covenants, CIT
could declare us in default and demand that our assets be sold or liquidated to
repay our outstanding debt to it.
WE DO NOT ANTICIPATE PAYING DIVIDENDS IN THE FORESEEABLE FUTURE.
Since emerging from bankruptcy, we have not paid any dividends on our
common stock and do not anticipate doing so in the foreseeable future. Moreover,
our credit agreement with CIT limits the amount of dividends we may pay on our
common stock. There can be no assurance that we will pay out any return on the
investment in our common stock.
WE MAY REQUIRE ADDITIONAL FINANCING TO FUND OUR OPERATIONS.
We may require additional equity or debt financing for our future
operations. However, our credit agreement with CIT prohibits us from incurring
additional debt. There can be no assurance that we will be able to obtain
additional financing on terms acceptable to us or at all. The unavailability of
additional financing or our inability to amend our existing credit agreement to
permit additional financing could have a material adverse effect on us.
WE RELY ON OUR KEY VENDORS.
During the fiscal year ended January 2, 1999, we purchased
approximately 59% of our finished goods from two suppliers. Although we believe
that alternate sources of our finished goods are available, the abrupt loss of
any of these suppliers could have a material adverse effect on our business,
financial condition, results of operations and prospects.
WE RELY ON KEY RETAIL CUSTOMERS.
During the fiscal year ended January 2, 1999, approximately 41% of the
revenues of the Company resulted from two retailers. Approximately 30% of such
sales were to Dillards Department Stores, Inc. and approximately 11% to JC
Penney. No other customer accounted for more than 10% of our dress and
sportswear sales during fiscal 1998. A decision by either of these retailers to
decrease the
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<PAGE>
amount of apparel purchased from us or to cease carrying our products could have
a material adverse affect on our business, financial condition, results of
operations and prospects.
WE RELY ON KEY EMPLOYEES.
Our success is largely dependent on the talents, efforts and experience
of the members of our senior management team. In June 1998 we entered into
employment agreements expiring on January 3, 2001 with each member of the senior
management team. We do not maintain a key person life insurance policy on the
lives of these key executives. The loss of these key executives could create a
loss of continuity in the management of the business and have a material adverse
effect on our business, financial condition, results of operations and
prospects.
OUR BUSINESS IS SEASONAL.
Our business is seasonal, with a significant proportion of sales and
operating income being generated in the first and third quarters of each year.
Our working capital requirements fluctuate during the year, increasing
substantially during the second and fourth quarters as a result of higher
planned seasonal inventory levels and higher receivables. If we fall
significantly short of our anticipated earnings in either the first or third
quarters, it will significantly decrease the working capital available to us in
the second and fourth quarters. Due to limitations on borrowing levels, a
decrease in working capital may adversely affect our purchasing abilities.
OUR CONTINUED SUCCESS DEPENDS ON OUR ABILITY TO GAUGE FASHION TRENDS.
We believe that our success depends in substantial part on our ability
to anticipate, gauge and respond to changing consumer demands and fashion trends
in a timely manner. There can be no assurance that we will be successful in this
regard. If we misjudge the market for our products, we may have a significant
amount of unsold finished goods inventory, which could have a material adverse
effect on our business, financial condition, results of operations and
prospects.
THE FASHION INDUSTRY IS HIGHLY COMPETITIVE.
The sectors of the apparel industry for which we design, manufacture
and market products are highly competitive. We compete with many other
manufacturers, including manufacturers of one or more apparel items. In
addition, department stores, including some of our major customers, have from
time to time varied the amount of goods manufactured specifically for them and
sold under their own labels. Many such stores have also changed their manner of
presentation of merchandise and in recent years have become increasingly
promotional. Some of our competitors are larger and have greater resources than
we do. Based upon our knowledge of the industry, we believe that we are a
leading producer of moderately priced dresses in the United States, among the
more significant producers of moderately priced sportswear and one of the major
resources of department store retailers of such products. Our business is
dependent on our ability to evaluate and respond to changing consumer demand and
tastes and to remain competitive in the areas of style, quality and price, while
operating within the significant domestic and foreign production and delivery
constraints of the industry.
-3-
<PAGE>
WE ARE SUBJECT TO IMPORT RESTRICTIONS.
During fiscal 1998, approximately 88% of our finished goods and
approximately 76% of raw materials directly purchased by us were produced in
foreign countries, including Taiwan, South Korea, the Peoples' Republic of China
(including Hong Kong), Guatemala and El Salvador. Political instability that
results in the disruption of trade, the imposition of additional regulations
relating to imports, the imposition of additional duties, taxes and other
charges on imports or restrictions on the transfer of funds may adversely affect
our operations. In addition, because of the location of our suppliers and
contractors, we may have difficulty ensuring quality control. The inability of a
supplier or contractor to fill orders for our products in a timely manner could
cause us to miss the delivery date requirements of our customers for those
items. This could result in the cancellation of orders, refusal to accept
deliveries or a reduction in sales prices.
Our import operations are subject to constraints imposed by bilateral
textile agreements between the United States and each of the foreign countries
named above. These agreements impose quotas on the amounts and types of
merchandise which may be imported into the United States from these countries.
These agreements also allow the United States to impose restraints at any time
on the importation of categories of merchandise that, under the terms of the
agreements, are not currently subject to specified limits. Our imported products
are also subject to United States customs duties which comprise a material
portion of the cost of the merchandise. A substantial increase in customs duties
could have an adverse effect on our operating results. The United States and the
countries in which our products are produced or sold may, from time to time,
impose new quotas, duties, tariffs or other restrictions, or adversely adjust
prevailing quota, duty or tariff levels, any of which could have a material
adverse effect on our business, financial condition, results of operations and
prospects.
WE MAY NOT BE ABLE TO USE OUR TAX-LOSS CARRY FORWARDS.
We have reported federal consolidated tax net operating loss
carryforwards that are available to offset future taxable income, if any,
through 2011. Use of the carryforwards, however, is subject to limitations,
including the annual limitation of approximately $1,500,000 imposed by Section
382 of the Internal Revenue Code. As of January 2, 1999, the remaining available
tax net operating loss carryforwards expiring through 2011, after taking into
account the limitations discussed above, was approximately $19.5 million. If we
fail to achieve sufficient profits, we will be unable to fully use the NOLs
available to us over the next 13 years and will lose the carryforward benefit.
WE ARE CONTROLLED BY AFFILIATES OF THREE CITIES RESEARCH, INC.
Based on information contained in an amendment to a Schedule 13D filed
with the SEC on August 30, 1999, we believe that Three Cities Fund II, L.P.
("Fund II") and Three Cities Offshore II C.V. ("TCR Offshore") have or share the
power to vote an aggregate of 3,512,664 shares (approximately 67% ) of our
common stock and have or share the power to dispose of an aggregate of 3,269,966
shares (approximately 65%) of our common stock. As a result, Fund II and TCR
Offshore will be able to determine the outcome any corporate action requiring
stockholder approval, other than provisions regarding certain business
combinations that are set forth in our charter. See "Description of Capital
Stock."
Furthermore, Fund II, TCR Offshore and John J. Pomerantz, our Chairman
of the Board and Chief Executive Officer, have agreed not to take any actions to
change the size or composition of our board of directors before our annual
meeting of stockholders in 2000, if at all. Fund II, TCR Offshore and
-4-
<PAGE>
Mr. Pomerantz have also agreed, under certain circumstances, to vote for each
other's nominees for director for so long as Mr. Pomerantz has the right to
designate at least one member to our board of directors.
As a result of the foregoing voting arrangement among Mr. Pomerantz,
Fund II and TCR Offshore and as a result of the beneficial ownership of Fund II
and TCR Offshore in our common stock, Fund II and TCR Offshore will control
decisions with respect to:
o the direction and policies of our company, including the election and
removal of directors;
o future issuances of our common stock or other securities;
o our incurrence of debt;
o the payment of dividends, if any, on our common stock; and
o amendments to our certificate of incorporation and bylaws.
Any of these decisions could be made by Fund II and TCR Offshore for
their own advantage to the detriment of our other stockholders and our company.
This, in turn, may have an adverse effect on our business, financial condition,
results of operations and prospects.
FUTURE SALES OF OUR COMMON STOCK COULD ADVERSELY AFFECT THE MARKET FOR OUR
COMMON STOCK.
There are now and will be outstanding immediately following this
offering 5,053,138 shares of common stock. All of such shares, other than shares
owned by "affiliates," as that term is defined in Rule 144 under the Securities
Act, will be tradeable without restriction. We believe that 3,279,966 of our
shares are presently owned by "affiliates." Future sales of substantial amounts
of shares of common stock in the public market, or the perception that such
sales could occur, could adversely affect the price of the shares of common
stock in any market that may develop for the trading of such shares.
PROVISIONS OF DELAWARE LAW AND OUR CHARTER AND BYLAWS MAY MAKE A TAKEOVER MORE
DIFFICULT.
Provisions in our charter and bylaws, as amended and restated, and in
the Delaware corporate law may make it difficult and expensive for a third party
to pursue a tender offer or other takeover attempt that is opposed by our board
of directors. Stockholders who may desire to participate in such a transaction
may not have an opportunity to do so, and these antitakeover provisions could
substantially impair the ability of our stockholders to change the membership of
our board of directors. See "Description of Capital Stock -- Section 203 of the
Delaware General Corporation Law."
WE ARE SUBJECT TO RISKS ASSOCIATED WITH YEAR 2000 COMPLIANCE.
We are dependent on a number of automated systems to:
o communicate with our customers and suppliers;
o efficiently design, manufacture, import and distribute our products;
and
o plan and manage our overall business.
-5-
<PAGE>
We have identified numerous changes required in our systems (both
hardware and software) as well as sensitive operating equipment to make them
year 2000 compliant. Our customers and suppliers are also required to implement
projects to make their systems and communications year 2000 compliant. Failure
to complete their efforts in a timely way could disrupt our operations including
the ability to receive and ship our products as well as to invoice our
customers. There is no guarantee that these new systems (both ours and our
customers and suppliers) will be compliant under all the circumstances and
volume stresses that may actually be required by our operations on December 31,
1999.
DIVIDEND POLICY
We have not paid any cash dividends on our common stock and do not
anticipate paying cash dividends in the foreseeable future. We currently intend
to retain earnings, if any, to finance our operations. In addition, our credit
agreement with The CIT Group/Commercial Services, Inc. limits the amount of
dividends we may pay.
USE OF PROCEEDS
The shares of common stock that are being offered hereby are being
registered for the account of the Selling Stockholders, and, accordingly, we
will not receive any of the proceeds from the sale of such shares.
-6-
<PAGE>
SELLING STOCKHOLDERS AND PLAN OF DISTRIBUTION
We have issued and outstanding an aggregate of 5,053,138 shares of
common stock. The selling stockholders hold 447,189 shares of common stock that
are being offered pursuant to this prospectus. The selling stockholders may sell
shares of common stock from time to time by themselves, their pledgees and/or
their donees, in transactions (which may include block transactions) on the
over-the-counter market, in negotiated transactions, through the writing of
options on the common stock or a combination of such methods of sale, at fixed
prices that may be changed, at market prices prevailing at the time of sale, or
at negotiated prices. The selling stockholders, their pledgees and/or their
donees, may sell common stock directly to purchasers or through broker-dealers
that may act as agents or principals. Such broker-dealers may receive
compensation in the form of discounts, concessions or commissions from the
selling stockholders and/or the purchasers of shares of common stock. We will
bear all expenses in connection with the registration of the common stock. The
selling stockholders will pay any underwriting discounts or commissions relating
to the common stock sold by them pursuant to this prospectus.
The selling stockholders, their pledgees and/or their donees and any
broker-dealers that act in connection with the sale of the shares of the common
stock as principals may be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act and any commissions received by them and any
profit on the resale of the shares of the common stock as principals might be
deemed to be underwriting discounts and commissions under the Securities Act.
The selling stockholders, their pledgees and/or their donees may agree to
indemnify any agent, dealer or broker-dealer that participates in transactions
involving sales of the common stock against certain liabilities, including
liabilities arising under the Securities Act.
-7-
<PAGE>
The following table sets forth certain information with respect to the
selling stockholders. Beneficial ownership of the common stock by such selling
stockholder after the offering will depend on the number of shares of common
stock sold by each selling stockholder.
<TABLE>
<CAPTION>
PERCENT OF
NAME AND ADDRESS OF NUMBER OF SHARES CLASS PRIOR MAXIMUM AMOUNT
SELLING STOCKHOLDER(S) (A) PRIOR TO OFFERING TO OFFERING TO BE SOLD
- --------------------------------------- ------------------ ------------ --------------
<S> <C> <C> <C>
Dickstein & Co., L.P...................
660 Madison Avenue 16th Floor
New York, New York 10021 395,098 7.8% 395,098
Dickstein International Limited........
129 Front Street
Hamilton, HM Bermuda 52,091 1.0% 52,091
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</TABLE>
(a) Mark B. Dickstein is the sole shareholder, sole director and president
of Dickstein Partners Inc. ("DPI"). DPI is the general partner of
Dickstein Partners L.P., which is the sole general partner of Dickstein
& Co., L.P. ("Dickstein & Co."). DPI is the adviser for Dickstein
International Limited ("Dickstein International") and makes all
investment and voting decisions for that entity. Mr. Dickstein
disclaims beneficial ownership of the shares owned by Dickstein & Co.
and Dickstein International except to the extent of his actual economic
interest.
On May 12, 1999, we entered into an agreement (the "Company Agreement")
with Dickstein & Co., Dickstein International, Dickstein Focus Fund L.P.
("Dickstein Focus") and Mr. Dickstein (together with Dickstein & Co., Dickstein
International and Dickstein Focus, the "Dickstein Entities") that contains a
number of agreements between us and the Dickstein Entities, including: (1) that
we will maintain the effectiveness and currency of a shelf registration
statement for the resale by the Dickstein Entities of their remaining shares so
long as the Dickstein Entities own at least 5% of the outstanding shares of our
common stock or have a designee on our Board (Mark Kaufman, a member of our
Board, was designated by the Dickstein Entities); (2) that unvested stock
options and any restricted stock of our directors who represented the Dickstein
Entities and who resigned in connection with the transactions contemplated by
the Stock Purchase Agreement dated as of May 12, 1999 among the Dickstein
Entities, Fund II and TCR Offshore, or, in the case of a continuing Dickstein
nominee, who ceases in the future to be a director, will vest upon termination
of their office and, in the case of options, will remain exercisable for the
duration of the option term; (3) that, so long as the Dickstein Entities own at
least 5% of the outstanding shares of our common stock, they will be entitled to
nominate one director reasonably satisfactory to us to serve on our Board; (4)
that neither we nor the Dickstein Entities has any claims against the other; and
(5) that we will reimburse the Dickstein Entities for certain expenses. Before
we entered into the Company Agreement, the Dickstein Entities had designated two
members of our Board in addition to Mr. Kaufman, Mr. Dickstein and Chaim
Edelstein, both of whom resigned on May 12, 1999.
-8-
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The following is a summary description of our capital stock and certain
provisions of our certificate of incorporation and bylaws, copies of which have
been filed as exhibits to the registration statement. The following discussion
is qualified in its entirety by reference to such exhibits.
COMMON STOCK
We are authorized to issue up to 20,000,000 shares of common stock, par
value $.01 per share. Before this offering, there were issued and outstanding
5,053,138 shares of common stock. The number of issued and outstanding shares of
common stock will not change as a result of this offering.
PREFERRED STOCK
We are authorized to issue up to 500,000 shares of preferred stock, par
value $.01 per share. Our Board of Directors may issue preferred stock in one or
more series and may determine the terms of preferred stock at the time of
issuance, without further action by stockholders. Such terms may include voting
rights (including the right to vote as a series on particular matters),
preferences as to dividends and liquidation, conversion and redemption rights
and sinking fund provisions.
No shares of preferred stock are outstanding and we have no present
plans to issue preferred stock. The issuance of any such preferred stock could
adversely affect the rights of the holders of common stock and, therefore,
reduce the value of the common stock. The ability of the Board of Directors to
issue preferred stock could discourage, delay or prevent a takeover of the
Company.
VOTING RIGHTS
Holders of common stock have one vote for each share held on all
matters submitted to a vote of stockholders. A majority of the outstanding
shares of common stock constitutes a quorum required for a meeting of, or action
by, stockholders. The shares of common stock do not have cumulative voting
rights in the election of directors. Thus, the holders of more than 50% of the
common stock have the power to elect all the directors, to the exclusion of the
remaining stockholders.
Our certificate of incorporation provides that a Business Combination
with an Interested Stockholder (as said terms are defined therein) must be
approved by the affirmative vote of the holders of at least 50% of the
outstanding voting stock including the affirmative vote of the holders of at
least 50% of the voting stock not owned by the Interested Stockholder or any
affiliate thereof. Such provisions do not apply if the Business Combination has
been approved by a majority of the "independent directors" or if the
consideration paid in the combination meets certain provisions as more
particularly set forth in our certificate of incorporation.
DIVIDEND AND OTHER RIGHTS
Subject to the prior rights of any series of preferred stock which may
from time to time be outstanding, holders of common stock are entitled to
receive dividends when, as, and if declared by the Board of Directors out of
funds legally available therefor and, upon the liquidation, dissolution or
winding up of the Company, are entitled to share ratably in all assets remaining
after payment of liabilities and payment of accrued dividends and liquidation
preferences on the preferred stock, if any.
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<PAGE>
Our credit agreement with The CIT Group/Commercial Services, Inc., however,
limits the amount of dividends we may declare. Holders of common stock have no
preemptive rights and have no rights to convert their common stock into any
other securities. The old common stock was canceled on June 4, 1997. The
stockholders holding our old common stock did not retain any value for their
equity.
TRANSFER AGENT
The Transfer Agent and Registrar for our common stock is American Stock
Transfer & Trust Company.
SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW
We are subject to the provisions of Section 203 of the Delaware General
Corporation Law ("DGCL"). In general, this statute prohibits a publicly held
Delaware corporation from engaging, under certain circumstances, in a "business
combination" with an "interested stockholder" for a period of three years after
the date of the transaction in which the person became an interested stockholder
unless (1) prior to the date at which the stockholder became an interested
stockholder, the board of directors of such corporation approved either the
business combination or the transaction in which the person became an interested
stockholder; (2) the stockholder acquires more than 85% of the outstanding
voting stock of the corporation (excluding shares held by directors who are
officers or held in certain employee stock plans) upon consummation of the
transaction in which the stockholder became an interested stockholder; or (3)
the business combination is approved by the board of directors of such
corporation and by at least 66-2/3% of the outstanding voting stock of the
corporation (excluding shares held by the interested stockholder) at a meeting
of stockholders (and not by written consent) held on or after the date such
stockholder became an interested stockholder. An "interested stockholder" is a
person who, together with affiliates and associates, owns (or at any time within
the prior three years did own) 15% or more of the corporation's voting stock.
Section 203 defines a "business combination" to include, without limitation,
mergers, consolidations, stock sales and asset-based transactions and other
transactions resulting in a financial benefit to the interested stockholder.
LIMITATION ON DIRECTOR'S LIABILITY
In accordance with the DGCL, our certificate of incorporation provides
that our directors shall not be personally liable to us or our stockholders for
monetary damages for breach of duty as a director except (1) for any breach of
the director's duty of loyalty to us and our stockholders; (2) for acts or
omissions not in good faith or which involve intentional misconduct, or knowing
violation of law; (3) under Section 174 of the DGCL, which relates to unlawful
payments of dividends and unlawful stock repurchases and redemptions; or (4) for
any transaction from which the director derived an improper personal benefit.
This provision does not eliminate a director's fiduciary duties; it merely
eliminates the possibility of damage awards against a director personally which
may be occasioned by certain unintentional breaches (including situations that
may involve grossly negligent business decisions) by the director of those
duties. The provision has no effect on the availability of equitable remedies,
such as injunctive relief or rescission, which might be necessitated by a
director's breach of his or her fiduciary duties. However, equitable remedies
may not be available as a practical matter where transactions (such as merger
transactions) have already been consummated. The inclusion of this provision in
our certificate of incorporation may have the effect of reducing the likelihood
of derivative litigation against directors and may discourage or deter
stockholders or management from bringing a lawsuit against directors for breach
of their duty of care, even though such an action, if successful, might
otherwise have benefited us and our stockholders.
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<PAGE>
INDEMNIFICATION
Our certificate of incorporation provides that we shall indemnify our
officers, directors, employees and agents to the fullest extent permitted by the
DGCL. Section 145 of the DGCL provides that we may indemnify any person who was
or is a party, or is threatened to be made a party, to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than a "derivative" action by or in our right) by reason
of the fact that such person is or was our director, officer, employee or agent,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement in connection with such action, suit or proceeding if such person
acted in good faith and in a manner such person reasonably believed to be in or
not opposed to our best interests, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe was unlawful. A similar standard
of care is applicable in the case of derivative actions, except that no
indemnification shall be made where the person is adjudged to be liable to us,
unless and only to the extent that the Court of Chancery of the State of
Delaware or the court in which such action was brought determines that such
person is fairly and reasonably entitled to such indemnity and such expenses.
SHARES ELIGIBLE FOR FUTURE SALE
There are now and will be outstanding immediately following this
offering 5,053,138 shares of common stock. All of such shares, other than shares
owned by "affiliates," as that term is defined in Rule 144 under the Securities
Act, will be tradeable without restriction. We believe that 3,279,966 of our
shares are presently owned by "affiliates." Future sales of substantial amounts
of shares of common stock in the public market, or the perception that such
sales could occur, could adversely affect the price of the shares of common
stock in the trading market for such shares.
Our shares currently trade on The Nasdaq Stock Market's SmallCap
Market. Following this offering, we cannot predict the effect, if any, that
sales of common stock or the availability of such shares for sale will have on
the market price prevailing from time to time.
LEGAL MATTERS
The validity of the shares of common stock being offered in this
prospectus will be passed upon for the Company by Parker Chapin Flattau &
Klimpl, LLP, New York, New York.
EXPERTS
The financial statements of the Company for the fifty-two weeks ended
January 2, 1999, the thirty-one weeks ended January 3, 1998, the twenty-two
weeks ended June 4, 1997, and the fiscal year ended December 28, 1996
incorporated by reference in this prospectus have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their report with
respect thereto, and are incorporated by reference in this prospectus in
reliance upon the authority of said firm as experts in giving said report.
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<PAGE>
ABOUT THIS PROSPECTUS
This prospectus does not contain all of the information included in the
registration statement of which this prospectus is a part. We have omitted parts
of the registration statement as permitted by the rules and regulations of the
SEC. For further information, we refer you to the registration statement on Form
S-3, including its exhibits. Statements contained in this prospectus about the
provisions or contents of any agreement or other document are not necessarily
complete. If SEC rules and regulations require that any agreement or document be
filed as an exhibit to the registration statement, you should refer to that
agreement or document for a complete description of these matters. You should
not assume that the information in this prospectus or any prospectus supplement
is accurate as of any date other than the date on the front of each document.
You should read this prospectus together with the additional
information described below under the heading "Where You Can Find More
Information."
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<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy materials that we have
filed with the SEC, including the registration statement, at the following SEC
public reference rooms:
450 Fifth Street, N.W. 7 World Trade Center 500 West Madison Street
Room 1024 Suite 1300 Suite 1400
Washington, D.C. 20549 New York, New York 10048 Chicago, Illinois 60661
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms.
Our common stock is quoted on The Nasdaq Stock Market's SmallCap Market
under the symbol "LFAY," and our SEC filings can also be read at the following
Nasdaq address:
Nasdaq Operations
1735 K Street, N.W.
Washington, D.C. 20006
Our SEC filings are also available to the public on the SEC's Web Site at
http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We incorporate
by reference the documents listed below:
o Our Annual Report on Form 10-K for our fiscal year ended January 2,
1999, filed with the SEC on April 2, 1999;
o Our Quarterly Report on Form 10-Q for the quarterly period ended April
3, 1999, filed with the SEC on May 18, 1999;
o Our Quarterly Report on Form 10-Q for the quarterly period ended July
3, 1999 1999, filed with the SEC on August 17, 1999 and amended on
August 24, 1999; and
o Our Current Report on Form 8-K, filed with the SEC on May 21, 1999.
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<PAGE>
- --------------------------------------------------------------------------------
THE LESLIE FAY COMPANY, INC.
447,189
Shares
Common Stock
($.01 par value)
PROSPECTUS
, 1999
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 16. EXHIBITS.
Exhibit Number Description
-------------- -----------
2.1 Amended Joint Plan of Reorganization(1)
3.1 Form of Amended and Restated Certificate of Incorporation of
the registrant
3.2 Amended and Restated Bylaws of the registrant(1)(4)
4.1 Specimen Copy of Stock Certificate for shares of Common
Stock of the registrant
4.2 Revolving Credit Agreement dated June 2, 1997 between Leslie
Fay Marketing, Inc. ("LFM") and the CIT Group/Commercial
Services, Inc. ("CIT")(1)
4.3 First Amendment dated February 23, 1998 to the Revolving
Credit Agreement between LFM and CIT(2)
4.4 Second Amendment dated March 31, 1998 to the Revolving
Credit Agreement between LFM and CIT(2)
4.5 Third Amendment dated October 28, 1998 to the Revolving
Credit Agreement between LFM and CIT(3)
4.5 Fourth Amendment dated as of March 29, 1999 to the Revolving
Credit Agreement between LFM and CIT
4.6 Fifth Amendment dated as of August 25, 1999 to the Revolving
Credit Agreement between LFM and CIT
4.7 Agreement dated as of May 12, 1999 among the registrant,
Dickstein & Co., L.P., Dickstein 4.7 International Limited,
Dickstein Focus Fund L.P. and Mark Dickstein (5)
5.1 Opinion of Parker Chapin Flattau & Klimpl, LLP as to the
legality of securities being registered
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Parker Chapin Flattau & Klimpl, LLP (included in
their opinion filed as Exhibit 5.1)
24.1 Power of Attorney
- -------------------
(1) Incorporated by reference to Current Report on Form 8-K for an event
dated June 4, 1997.
(2) Incorporated by reference to the Annual Report on Form 10-K for the
fiscal year ended January 3, 1998.
(3) Incorporated by reference to the Quarterly Report on Form 10-Q for the
fiscal quarter ended October 3, 1998.
(4) Incorporated by reference to the Annual Report on Form 10-K for the
fiscal year ended January 2, 1999.
(5) Incorporated by reference to the Current Report on Form 8-K for an
event dated May 12, 1999.
II-2
<PAGE>
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement;
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the Registration
Statement;
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in the Registration Statement or any material change to such
information in the Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial BONA FIDE offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial BONA FIDE offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions described under Item 14
above, or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York on October 29, 1999.
THE LESLIE FAY COMPANY, INC.
By: /s/ John Pomerantz
--------------------------------------
John J. Pomerantz
Chief Executive Officer and Chairman of
the Board of Directors
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
POWER OF ATTORNEY
The undersigned directors and officers of The Leslie Fay Company, Inc.
hereby constitute and appoint John J. Pomerantz, John A. Ward and Warren T.
Wishart and each of them, with full power to act without the other and with full
power of substitution and resubstitution, our true and lawful attorneys-in-fact
with full power to execute in our name and behalf in the capacities indicated
below any and all amendments (including post-effective amendments and amendments
thereto) to this Registration Statement (or any other registration statement for
the same offering that is to be effective upon filing pursuant to Rule 462(b)
under the Securities Act of 1933) and to file the same, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission and hereby ratify and confirm each and every act and thing
that such attorneys-in-fact, or any of them, or their substitutes, shall
lawfully do or cause to be done by virtue thereof.
<TABLE>
<CAPTION>
Signatures Title Date
----------- ----- ----
<S> <C> <C>
/s/ John Pomerantz Chief Executive Officer and October 29, 1999
- -------------------------------------- Chairman of the Board of Directors
John J. Pomerantz (principal executive officer)
/s/ Warren T. Wishart Chief Financial and Accounting Officer October 29, 1999
- -------------------------------------- (principal accounting officer)
Warren T. Wishart
/s/ Clifford B. Cohn Director October 29, 1999
- --------------------------------------
Clifford B. Cohn
/s/ Mark Kaufman Director October 29, 1999
- --------------------------------------
Mark Kaufman
/s/ Bernard Olsoff Director October 29, 1999
- --------------------------------------
Bernard Olsoff
/s/ Robert L. Sind Director October 29, 1999
- --------------------------------------
Robert L. Sind
/s/ John A. Ward Director 0ctober 29, 1999
- --------------------------------------
John A. Ward
/s/ H. Whitney Wagner Director October 29, 1999
- --------------------------------------
H. Whitney Wagner
/s/ Thomas G. Weld Director October 29, 1999
- --------------------------------------
Thomas G. Weld O
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
Exhibit Number Description
-------------- -----------
2.1 Amended Joint Plan of Reorganization(1)
3.1 Form of Amended and Restated Certificate of Incorporation of
the registrant
3.2 Amended and Restated Bylaws of the registrant(1)(4)
4.1 Specimen Copy of Stock Certificate for shares of Common
Stock of the registrant
4.2 Revolving Credit Agreement dated June 2, 1997 between Leslie
Fay Marketing, Inc. ("LFM") and the CIT Group/Commercial
Services, Inc. ("CIT")(1)
4.3 First Amendment dated February 23, 1998 to the Revolving
Credit Agreement between LFM and CIT(2)
4.4 Second Amendment dated March 31, 1998 to the Revolving
Credit Agreement between LFM and CIT(2)
4.5 Third Amendment dated October 28, 1998 to the Revolving
Credit Agreement between LFM and CIT(3)
4.5 Fourth Amendment dated as of March 29, 1999 to the Revolving
Credit Agreement between LFM and CIT
4.6 Fifth Amendment dated as of August 25, 1999 to the Revolving
Credit Agreement between LFM and CIT
4.7 Agreement dated as of May 12, 1999 among the registrant,
Dickstein & Co., L.P., Dickstein 4.7 International Limited,
Dickstein Focus Fund L.P. and Mark Dickstein (5)
5.1 Opinion of Parker Chapin Flattau & Klimpl, LLP as to the
legality of securities being registered
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Parker Chapin Flattau & Klimpl, LLP (included in
their opinion filed as Exhibit 5.1)
24.1 Power of Attorney
- -------------------
(1) Incorporated by reference to Current Report on Form 8-K for an event
dated June 4, 1997.
(2) Incorporated by reference to the Annual Report on Form 10-K for the
fiscal year ended January 3, 1998.
(3) Incorporated by reference to the Quarterly Report on Form 10-Q for the
fiscal quarter ended October 3, 1998.
(4) Incorporated by reference to the Annual Report on Form 10-K for the
fiscal year ended January 2, 1999.
(5) Incorporated by reference to the Current Report on Form 8-K for an
event dated May 12, 1999.
EXHIBIT 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
THE LESLIE FAY COMPANY, INC.
ARTICLE I
The name of the Corporation is:
"The Leslie Fay Company, Inc."
ARTICLE II
The address of the registered office of the Corporation in the State
of Delaware is: 15 East North Street, Dover, Kent County, Delaware 19901. The
name of the registered agent of the Corporation in the State of Delaware at such
address is: United Corporate Services, Inc.
ARTICLE III
The purpose of the Corporation shall be to engage in any lawful act or
activity for which corporations may be organized and incorporated under the
General Corporation Law of the State of Delaware.
ARTICLE IV
(A) AUTHORIZED STOCK. THE TOTAL NUMBER OF SHARES OF STOCK WHICH THE
CORPORATION SHALL HAVE AUTHORITY TO ISSUE IS TWENTY MILLION FIVE HUNDRED
THOUSAND (20,500,000), CONSISTING OF TWENTY MILLION (20,000,000) SHARES OF
COMMON STOCK, PAR VALUE $.01 PER SHARE ("COMMON STOCK"), AND FIVE HUNDRED
THOUSAND (500,000) SHARES OF PREFERRED STOCK, PAR VALUE $.01 PER SHARE
("PREFERRED STOCK").
(B) PREFERRED STOCK. THE PREFERRED STOCK MAY BE ISSUED FROM TIME TO
TIME IN ONE OR MORE SERIES. THE BOARD OF DIRECTORS IS HEREBY AUTHORIZED TO
CREATE AND PROVIDE FOR THE ISSUANCE OF SHARES OF PREFERRED STOCK IN SERIES AND,
BY FILING A CERTIFICATE PURSUANT TO THE APPLICABLE LAW OF THE STATE OF DELAWARE
(HEREINAFTER REFERRED TO AS A "PREFERRED STOCK DESIGNATION"), TO ESTABLISH FROM
TIME TO TIME THE NUMBER OF SHARES TO BE INCLUDED IN EACH SUCH SERIES, AND TO FIX
THE DESIGNATION, POWER, PREFERENCES AND RIGHTS OF THE SHARES OF EACH SUCH SERIES
AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS THEREOF.
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<PAGE>
THE AUTHORITY OF THE BOARD OF DIRECTORS WITH RESPECT TO EACH SERIES
SHALL INCLUDE, BUT NOT BE LIMITED TO, DETERMINATION OF THE FOLLOWING:
(I) THE DESIGNATION OF THE SERIES, WHICH MAY BE BY DISTINGUISHING
NUMBER, LETTER OR TITLE.
(II) THE NUMBER OF SHARES OF THE SERIES, WHICH NUMBER THE BOARD
OF DIRECTORS MAY THEREAFTER (EXCEPT WHERE OTHERWISE PROVIDED IN THE
PREFERRED STOCK DESIGNATION) INCREASE OR DECREASE (BUT NOT BELOW THE
NUMBER OF SHARES THEREOF THEN OUTSTANDING).
(III) WHETHER DIVIDENDS, IF ANY, SHALL BE CUMULATIVE OR
NONCUMULATIVE AND THE DIVIDEND RATE OF THE SERIES.
(IV) THE DATES AT WHICH DIVIDENDS, IF ANY, SHALL BE PAYABLE.
(V) THE REDEMPTION RIGHTS AND PRICE OR PRICES, IF ANY, FOR SHARES
OF THE SERIES.
(VI) THE TERMS AND AMOUNT OF ANY SINKING FUND PROVIDED FOR THE
PURCHASE OR REDEMPTION OF SHARES OF THE SERIES.
(VII) THE AMOUNTS PAYABLE ON, AND THE PREFERENCES, IF ANY, OF
SHARES OF THE SERIES IN THE EVENT OF ANY VOLUNTARY OR INVOLUNTARY
LIQUIDATION, DISSOLUTION OR WINDING UP OF THE AFFAIRS OF THE
CORPORATION.
(VIII) WHETHER THE SHARES OF THE SERIES SHALL BE CONVERTIBLE INTO
OR EXCHANGEABLE FOR SHARES OF ANY OTHER CLASS OR SERIES, OR ANY OTHER
SECURITY, OF THE CORPORATION OR ANY OTHER CORPORATION, AND, IF SO, THE
SPECIFICATION OF SUCH OTHER CLASS OR SERIES OF SUCH OTHER SECURITY,
THE CONVERSION OR EXCHANGE PRICE OR PRICES OR RATE OR RATES, ANY
ADJUSTMENTS THEREOF, THE DATE OR DATES AT WHICH SUCH SHARES SHALL BE
CONVERTIBLE OR EXCHANGEABLE AND ALL OTHER TERMS AND CONDITIONS UPON
WHICH SUCH CONVERSION MAY BE MADE.
(IX) RESTRICTIONS ON THE ISSUANCE OF SHARES OF THE SAME SERIES OR
OF ANY OTHER CLASS OR SERIES.
(X) THE VOTING RIGHTS, IF ANY, OF THE HOLDERS OF SHARES OF THE
SERIES.
(XI) SUCH OTHER POWERS, PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL AND OTHER SPECIAL RIGHTS, AND THE QUALIFICATIONS, LIMITATIONS
AND RESTRICTIONS THEREOF AS THE BOARD OF DIRECTORS SHALL DETERMINE.
(C) COMMON STOCK. THE COMMON STOCK SHALL BE SUBJECT TO THE EXPRESS
TERMS OF THE PREFERRED STOCK AND ANY SERIES THEREOF. EACH SHARE OF COMMON STOCK
SHALL BE EQUAL TO EACH OTHER SHARE OF COMMON STOCK. THE HOLDERS OF SHARES OF
COMMON STOCK SHALL BE ENTITLED TO ONE VOTE FOR EACH SUCH SHARE UPON ALL
QUESTIONS PRESENTED TO THE STOCKHOLDERS.
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<PAGE>
(D) VOTE. EXCEPT AS MAY BE PROVIDED IN THIS CERTIFICATE OF
INCORPORATION OR IN A PREFERRED STOCK DESIGNATION, OR AS MAY BE REQUIRED BY
APPLICABLE LAW, THE COMMON STOCK SHALL HAVE THE EXCLUSIVE RIGHT TO VOTE FOR THE
ELECTION OF DIRECTORS AND FOR ALL OTHER PURPOSES, AND HOLDERS OF SHARES OF
PREFERRED STOCK SHALL NOT BE ENTITLED TO RECEIVE NOTICE OF ANY MEETING OF
STOCKHOLDERS AT WHICH THEY ARE NOT ENTITLED TO VOTE.
(E) RECORD HOLDERS. THE CORPORATION SHALL BE ENTITLED TO TREAT THE
PERSON IN WHOSE NAME ANY SHARE OF ITS STOCK IS REGISTERED AS THE OWNER THEREOF
FOR ALL PURPOSES AND SHALL NOT BE BOUND TO RECOGNIZE ANY EQUITABLE OR OTHER
CLAIM TO, OR INTEREST IN, SUCH SHARE ON THE PART OF ANY OTHER PERSON, WHETHER OR
NOT THE CORPORATION SHALL HAVE NOTICE THEREOF, EXCEPT AS EXPRESSLY PROVIDED BY
APPLICABLE LAW.
ARTICLE V
(A) In furtherance and not in limitation of the powers conferred by
law, the Board of Directors is expressly authorized and empowered:
(i) to adopt, amend or repeal the By-laws of the Corporation,
PROVIDED, HOWEVER, the By-laws may also be altered, amended or
repealed by the affirmative vote of the holders of at least 66-2/3
percent of the voting power of the then outstanding Voting Stock (as
hereinafter defined), voting together as a single class; and
(ii) from time to time to determine whether and to what extent,
and at what times and places, and under what conditions and
regulations, the accounts and books of the Corporation, or any of
them, shall be open to inspection of stockholders; and, except as so
determined, or as expressly provided in this Certificate of
Incorporation or in any Preferred Stock Designation, no stockholder
shall have any right to inspect any account, book or document of the
Corporation other than such rights as may be conferred by applicable
law.
(B) The Corporation may in its By-laws confer powers upon the Board of
Directors in addition to the foregoing and in addition to the powers and
authorities expressly conferred upon the Board of Directors by applicable law.
Notwithstanding anything contained in this Certificate of Incorporation to the
contrary, the affirmative vote of the holders of at least 66-2/3 percent of the
voting power of the then outstanding Voting Stock, voting together as a single
class, shall be required to amend, repeal or adopt any provision inconsistent
with subparagraph (i) of paragraph (A) of this Article V. For the purposes of
this Certificate of Incorporation, "Voting Stock" shall mean the outstanding
shares of capital stock of the Corporation entitled to vote generally in the
election of directors of the Corporation.
ARTICLE VI
(A) Subject to the rights of the holders of any series of
Preferred Stock to elect additional directors under specific circumstances, the
number of directors of the Corporation shall be fixed by the By-laws of the
Corporation and may be increased or decreased from time to time in such a manner
as may be prescribed by the By-laws.
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<PAGE>
(B) Unless and except to the extent that the By-laws of the
Corporation shall so require, the election of directors of the Corporation need
not be by written ballot.
(C) Subject to the rights of the holders of any series of Preferred
Stock to elect additional directors under specified circumstances, and unless
the Board of Directors otherwise determines or the By-laws otherwise provide,
vacancies resulting from death, resignation, retirement, disqualification,
removal from office or other cause, and newly created directorships resulting
from any increase in the authorized number of directors, may be filled only by
the affirmative vote of a majority of the remaining directors, though less than
a quorum of the Board of Directors, and directors so chosen shall hold office
until the next annual meeting of stockholders and until such director's
successor shall have been duly elected and qualified. No decrease in the number
of authorized directors constituting the Whole Board shall shorten the term of
any incumbent director.
(D) Subject to the rights of the holders of any series of Preferred
Stock to elect additional directors under specific circumstances, any director
may be removed from office at any time, but only for cause and only by the
affirmative vote of the holders of at least 66-2/3 percent of the voting power
of the then outstanding Voting Stock, voting together as a single class.
(E) Notwithstanding anything contained in this Certificate of
Incorporation to the contrary, the affirmative vote of the holders of at least
66-2/3 percent of the voting power of the then outstanding Voting Stock, voting
together as a single class, shall be required to amend or repeal, or adopt any
provision inconsistent with, this Article VI.
ARTICLE VII
Section 1. Vote Required for Certain Business Combinations.
(A) Higher Vote for Certain Business Combinations. In addition to any
affirmative vote required by law or this Certificate of Incorporation or by any
Preferred Stock Designation, and except as otherwise expressly provided in
Section 2 of this Article VII:
(i) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with (a) any Interested
Stockholder (as hereinafter defined) or (b) any other person (whether
or not itself an Interested Stockholder) which is, or after such
merger or consolidation would be, an Affiliate (as hereinafter
defined) of an Interested Stockholder; or
(ii) any sale, lease exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of transactions) to
or with any Interested Stockholder, including all Affiliates of the
Interested Stockholder, of any assets of the Corporation or any
Subsidiary having an aggregate Fair Market Value (as hereinafter
defined) of $10,000,000 or more; or
(iii) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of transactions) of any
securities of the Corporation or any Subsidiary to any Interested
Stockholder, including all Affiliates of any Interested Stockholder,
in exchange for cash, securities or other property (or a combination
thereof) having an aggregate Fair Market Value of $10,000,000 or more;
or
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<PAGE>
(iv) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation proposed by or on behalf of an
Interested Stockholder or any Affiliates of an Interested Stockholder;
or
(v) any reclassification of securities (including any reverse
stock split), or recapitalization of the Corporation, or any merger or
consolidation of the Corporation with any of its Subsidiaries or any
other transaction (whether or not an Interested Stockholder is a party
thereto) which has the effect, directly or indirectly, of increasing
the proportionate share of the outstanding shares of any class of
equity or convertible securities of the Corporation or any Subsidiary
which is Beneficially Owned (as hereinafter defined) by any Interested
Stockholder or any Affiliate of any Interested Stockholder;
shall require the affirmative vote of the holders of at least 66 2/3 percent of
the voting power of the then outstanding Voting Stock, voting together as a
single class, and the affirmative vote of the holders of more than 50 percent of
the voting power of the Voting Stock voting on such matter that is not owned
directly or indirectly by an Interested Stockholder or any Affiliate of any
Interested Stockholder. Such affirmative votes shall be required notwithstanding
any other provision of this Certificate of Incorporation, any Preferred Stock
Designation or any provision of law or of any agreement with any national
securities exchange or otherwise which might otherwise permit a lesser vote or
no vote.
(B) Definition of "Business Combination." The term "Business
Combination" as used in this Article VII shall mean any transaction described in
any one or more of clauses (i) through (v) of paragraph (A) of this Section 1.
Section 2. When Higher Vote is Not Required. The provisions of Section
1 of this Article VII shall not be applicable to any particular Business
Combination, and such Business Combination shall require only such affirmative
vote as is required by law or any other provision of this Certificate of
Incorporation and any Preferred Stock Designation, if, in the case of a Business
Combination that does not involve any cash or other consideration being received
by the stockholders of the Corporation, the condition specified in the following
paragraph (A) is met or, in the case of any other Business Combination, the
conditions specified in either of the following paragraph (A) or (B) are met:
(A) Approval by Independent Directors. The Business Combination shall
have been approved by at least 75% of the Independent Directors; PROVIDED,
HOWEVER, that this condition shall not be capable of satisfaction unless there
are at least three Independent Directors.
(B) Price and Procedure Requirements. All of the following conditions
shall have been met:
(i) The consideration to be received by holders of shares of a
particular class (or series) of outstanding capital stock (including
Common Stock and other than Excluded Preferred Stock (as hereinafter
defined)) shall be in cash or in the same form as the Interested
Stockholder or any of its Affiliates has previously paid for shares of
such class (or series) or capital stock. If the Interested Stockholder
or any of its Affiliates have paid for shares of any class (or series)
of capital stock with varying forms of consideration, the form of
consideration to be received per share by holders of shares of such
class (or series) of capital stock shall be either cash
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or the form used to acquire the largest number of shares of such class
(or series) of capital stock previously acquired by the Interested
Stockholder.
(ii) The aggregate amount of (x) the cash and (y) the Fair Market
Value, as of the date (the "Consummation Date") of the consummation of
the Business Combination, of the consideration other than cash to be
received per share by holders of Common Stock in such Business
Combination shall be at least equal to the higher of the following (in
each case appropriately adjusted in the event of any stock dividend,
stock split, combination of shares or similar event):
(a) (if applicable) the highest per share price (including
any brokerage commissions, transfer taxes and soliciting dealers'
fees) paid by the Interested Stockholder or any of its Affiliates
for any shares of Common Stock acquired by them within the
two-year period immediately prior to the date of the first public
announcement of the proposal of the Business Combination (the
"Announcement Date") or in any transaction in which the
Interested Stockholder became an Interested Stockholder,
whichever is higher, PLUS interest compounded annually from the
first date on which the Interested Stockholder became an
Interested Stockholder (the "Determination Date") through the
Consummation Date at the publicly announced base rate of interest
of Citibank, N.A. (or such other major bank headquartered in the
City of New York as may be selected by the Independent Directors)
from time to time in effect in the City of New York, LESS the
aggregate amount of any cash dividends paid, and the Fair Market
Value of any dividends paid in other than cash, on each share of
Common Stock from the Determination Date through the Commission
Date in an amount up to but not exceeding the amount of interest
so payable per share of Common Stock; and
(b) the Fair Market Value per share of Common Stock on the
Announcement Date or the Determination Date, whichever is higher.
(iii) The aggregate amount of (x) the cash and (y) the Fair
Market Value, as of the Consummation Date, of the consideration other
than cash to be received per share by holders of shares of any class
(or series), other than Common Stock or Excluded Preferred Stock, of
outstanding capital stock shall be at least equal to the highest of
the following (in each case appropriately adjusted in the event of any
stock dividend, stock split, combination of shares or similar event),
it being intended that the requirements of this paragraph (B)(iii)
shall be required to be met with respect to every such class (or
series) or outstanding capital stock whether or not the Interested
Stockholder or any of its Affiliates has previously acquired any
shares of a particular class (or series) of capital stock:
(a) (if applicable) the highest per share price (including
any brokerage commissions, transfer taxes and soliciting dealers'
fees) paid by the Interested Stockholder or any of its Affiliates
for any shares of such class (or series) of capital stock
acquired by them within the two-year period immediately prior to
the Announcement Date or in any transactions in which it became
an Interested Stockholder, whichever is higher, PLUS interest
compounded annually from the Determination Date through the
Consummation Date at the publicly
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announced base rate of interest of Citibank, N.A. (or such other
major bank headquartered in the City of New York as may be
selected by the Independent Directors) from time to time in
effect in the City of New York, LESS the aggregate amount of any
cash dividends paid, and the Fair Market Value of any dividends
paid in other than cash, on each share of such class (or series)
of capital stock from the Determination Date through the
Consummation Date in an amount up to but not exceeding the amount
of interest so payable per share of such class (or series) of
capital stock;
(b) the Fair Market Value per share of such class (or
series) of capital stock on the Announcement Date or on the
Determination Date, whichever is higher, and
(c) the highest preferential amount per share, if any, to
which the holders of shares of such class (or series) of capital
stock would be entitled in the event of and voluntary or
involuntary liquidation, dissolution or winding up of the
Corporation.
(iv) After such Interested Stockholder has become an Interested
Stockholder and prior to the consummation of such Business
Combination: (a) except as approved by a majority of the Independent
Directors, there shall have been no failure to declare and pay at the
regular date therefor any full quarterly dividends (whether or not
cumulative) on any outstanding Preferred Stock; (b) there shall have
been (I) no reduction in the annual rate of dividends paid on the
Common Stock (except as necessary to reflect any subdivision of the
Common Stock), except as approved by a majority of the Independent
Directors, and (II) an increase in such annual rate of dividends as
necessary to reflect any reclassification (including any reverse stock
split), recapitalization, reorganization or any similar transaction
which has the effect of reducing the number of outstanding shares of
Common Stock, unless the failure so to increase such annual rate is
approved by a majority of the Independent Directors; and (c) neither
such Interested Stockholder nor any of its Affiliates shall have
become the beneficial owner of any additional shares of Voting Stock
except as part of the transaction which results in such Interested
Stockholder becoming an Interested Stockholder; PROVIDED, HOWEVER,
that no approval by Independent Directors shall satisfy the
requirements of this subparagraph (iv) unless at the time of such
approval there are at least three Independent Directors.
(v) After such Interested Stockholder has become an Interested
Stockholder, such Interested Stockholder and any of its Affiliates
shall not have received the benefit, directly or indirectly (except
proportionately, solely in such Interested Stockholder's or
Affiliate's capacity as a stockholder of the Corporation), of any
loans, advances, guarantees, pledges or other financial assistance or
any tax credits or other tax advantages provided by the Corporation,
whether in anticipation of or in connection with such Business
Combination or otherwise.
(vi) A proxy or information statement describing the proposed
Business Combination and complying with the requirements of the
Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder (or any subsequent provisions replacing such
Act, rules or regulations) shall be mailed to all stockholders of the
Corporation at least 30 days prior to the consummation of such
Business Combination (whether or not such proxy or information
statement is required to be mailed pursuant to such Act or subsequent
provisions).
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<PAGE>
(vii) Such Interested Stockholder shall have supplied the
Corporation with such information as shall have been requested
pursuant to Section 4 of this Article VII within the time period set
forth therein.
Section 3. For the purposes of this Article VII:
(1) A "person" means any individual, limited partnership, general
partnership, corporation or other firm or entity.
(2) "Interested Stockholder" means any person (other than the
Corporation or any Subsidiary) who or which:
(i) is the beneficial owner (as hereinafter defined), directly or
indirectly, of ten percent or more of the voting power of the
outstanding Voting Stock; or
(ii) is an Affiliate or an Associate of the Corporation and at
any time within the two-year period immediately prior to the date in
question was the beneficial owner, directly or indirectly, of ten
percent or more of the voting power of the then-outstanding Voting
Stock; or
(iii) is an assignee of or has otherwise succeeded to any shares
of Voting Stock which were at any time within the two-year period
immediately prior to the date in question beneficially owned by any
Interested Stockholder, if such assignment or succession shall have
occurred in the course of a transaction or series of transactions not
involving a public offering within the meaning of the Securities Act
of 1933, as amended, or any successor act thereto.
(3) A person shall be a "beneficial owner" of, or shall "Beneficially
Own", any
Voting Stock:
(i) which such person or any of its Affiliates or Associates (as
hereinafter defined) beneficially owns, directly or indirectly within
the meaning of Rule 13d-3, or any
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<PAGE>
successor rule thereto, under the Securities Exchange Act of 1934, as
amended, or any successor act thereto; or
(ii) which such person or any of its Affiliates or Associates has
(a) the right to acquire (whether such right is exercisable
immediately or only after the passage of time), pursuant to any
agreement, arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options or otherwise
or (b) the right to vote pursuant to any agreement, arrangement or
understanding (but neither such person nor any such Affiliate or
Associate shall be deemed to be the beneficial owner of any shares of
Voting Stock solely by reason of a revocable proxy granted for a
particular meeting of stockholders, pursuant to a public solicitation
of proxies for such meeting, and with respect to which shares neither
such person nor any such Affiliate or Associate is otherwise deemed
the beneficial owner); or
(iii) which are beneficially owned, directly or indirectly,
within the meaning of Rule 13d-3 under the Securities Exchange Act of
1934, as amended, or any successor rule thereto, by any other person
with which such person or any of its Affiliates or Associates has any
agreement, arrangement or understanding for the purpose of acquiring,
holding, voting (other than solely by reason of a revocable proxy as
described in subparagraph (ii) of this paragraph (3)) or disposing of
any shares of Voting Stock;
PROVIDED, HOWEVER, that in the case of any employee stock ownership or similar
plan of the Corporation or of any Subsidiary in which the beneficiaries thereof
possess the right to vote any shares of Voting Stock held by such plan, no such
plan nor any trustee with respect thereto (nor any Affiliate of such trustee),
solely by reason of such capacity of such trustee, shall be deemed, for any
purposes hereof, to beneficially own any shares of Voting Stock held under any
such plan.
(4) For the purposes of determining whether a person is an Interested
Stockholder pursuant to paragraph (2) of this Section 3, the number of shares of
Voting Stock deemed to be outstanding shall include shares deemed owned through
application of paragraph (3) of this Section 3 but shall not include any other
unissued shares of Voting Stock which may be issuable pursuant to any agreement,
arrangement or understanding, or upon exercise of conversion rights, warrants or
options, or otherwise.
(5) "Affiliate" or "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended, or any successor rule thereto.
(6) "Subsidiary" means any person of which a majority of any class of
equity security is owned, directly or indirectly, by the Corporation; PROVIDED,
HOWEVER, that for the purposes of the definition of Interested Stockholder set
forth in paragraph (2) of this Section 3, the term "Subsidiary" shall mean only
a person of which a majority of each class of equity security is owned, directly
or indirectly, by the Corporation.
(7) "Independent Director" means any member of the Board of Directors
of the Corporation who is unaffiliated with the Interested Stockholder and
independent of management and free from any relationship that, in the opinion of
the Whole Board, would interfere with the exercise of independent judgment.
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<PAGE>
(8) "Fair Market Value" means: (i) in the case of stock, the highest
closing sale price during the 30-day period immediately preceding the date in
question of a share of such stock on the Composite Tape for New York Stock
Exchange Listed Stocks, or, if such stock is not listed on such Exchange, on the
principal United States securities exchange registered under the Securities
Exchange Act of 1934, as amended, on which stock is listed, or, if such stock is
not listed on any such exchange, the highest closing bid quotation with respect
to a share of such stock during the 30-day period preceding the date in question
on the National Association of Securities Dealers, Inc. Automated Quotations
System or any system then in use, or if no such quotations are available, the
fair market value on the date in question of a share of such stock as determined
by the Board of Directors in accordance with Section 4 of this Article VII; and
(ii) in the case of property other than cash or stock, the fair market value of
such property on the date in question as determined by the Board of Directors in
accordance with Section 4 of this Article VII.
(9) In the event of any Business Combination in which the Corporation
survives, the phrase "consideration other than cash to be received" as used in
paragraphs (B)(ii) of Section 2 of this Article VII shall include the shares of
Common Stock and/or the shares of any other class (or series) of outstanding
capital stock retained by the holders of such shares.
(10) "Whole Board" means the total number of directors which this
Corporation would have if there were no vacancies.
(11) "Excluded Preferred Stock" means any series of Preferred Stock
with respect to which the Preferred Stock Designation creating such series
expressly provides that the provisions of this Article VII shall not apply.
Section 4. (a) A majority of the Whole Board, but only if a majority
of the Whole Board shall then consist of Independent Directors or, if a majority
of the Whole Board shall not then consist of Independent Directors, a majority
of the Independent Directors, shall have the power and duty to determine, on the
basis of information known to them after reasonable inquiry, all facts necessary
to determine compliance with this Article VII, including, without limitation,
(i) whether a person is an Interested Stockholder, (ii) the number of shares of
Voting Stock beneficially owned by any person, (iii) whether a person is an
Affiliate or Associate of another, (iv) whether the applicable conditions set
forth in paragraph (B) of Section 2 of this Article VII have been met with
respect to any Business Combination, (v) the Fair Market Value of stock or other
property in accordance with paragraph (8) of Section 3 of this Article VII, and
(vi) whether the assets which are the subject of any Business Combination
referred to in paragraph (1)(A)(ii) of Section 1 of this Article VII have, or
the consideration to be received for the issuance or transfer of securities by
the Corporation or any Subsidiary in any Business Combination referred to in
paragraph (1)(A)(iii) of Section 1 of this Article VII has, an aggregate Fair
Market Value of $10,000,000 or more.
(b) A majority of the Whole Board shall have the right to demand, but
only if a majority of the Whole Board shall then consist of Independent
Directors, or, if a majority of the Whole Board shall not then consist of
Independent Directors, a majority of the then Independent Directors shall have
the right to demand, that any person who it is reasonably believed is an
Interested Stockholder (or holds of record shares of Voting Stock Beneficially
Owned by any Interested Stockholder) supply this Corporation with complete
information as to (i) the record owner(s) of all shares Beneficially Owned by
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<PAGE>
such person who it is reasonably believed is an Interested Stockholder, (ii) the
number of, and class or series of, shares Beneficially Owned by such person who
it is reasonably believed is an Interested Stockholder and held of record by
each such record owner and the number(s) of the stock certificate(s) evidencing
such shares, and (iii) any other factual matter relating to the applicability or
effect of this Article VII, as may be reasonably requested of such person, and
such person shall furnish such information within 10 days after receipt of such
demand.
Section 5. No Effect on Fiduciary Obligations of Interested
Stockholders. Nothing contained in this Article VII shall be construed to
relieve any Interested Stockholder from any fiduciary obligation imposed by law.
Section 6. When Stockholder Approval is Required. Notwithstanding any
other provisions of this Certificate of Incorporation (including, without
limitation, Sections 1 and 2 of this Article VII), but in addition to any
affirmative vote required by law or this Certificate of Incorporation or by any
Preferred Stock Designation:
(i) any merger or consolidation of the Corporation with any
person (whether or not an Interested Stockholder); or
(ii) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of transactions) to
or with any person (whether or not an Interested Stockholder or
Affiliate thereof) of all or substantially all of the assets of the
Corporation;
shall require the affirmative vote of the holders of at least 66-2/3 percent of
the voting power of the then outstanding Voting Stock, voting together as a
single class. Such affirmative vote shall be required notwithstanding any other
provision of this Certificate of Incorporation, any Preferred Stock Designation
or any provision of law or of any agreement with any national securities
exchange or otherwise which might otherwise permit a lesser vote or no vote.
Section 7. Amendment, Repeal, etc. (a) Notwithstanding any other
provisions of this Certificate of Incorporation or the By-laws of the
Corporation (and notwithstanding the fact that a lesser percentage may be
permitted by law, this Certificate of Incorporation, any Preferred Stock
Designation or the By-laws of the Corporation), but in addition to any
affirmative vote of the holders of any particular class of Voting Stock required
by law, this Certificate of Incorporation or any Preferred Stock Designation,
the affirmative vote of the holders of at least 66 2/3 percent of the voting
power of the shares of the then outstanding Voting Stock voting together as a
single class, including the affirmative vote of the holders of more than 50
percent of the voting power of the Voting Stock voting on such matter that is
not owned directly or indirectly by any Interested Stockholder or any Affiliate
of any Interested Stockholder, shall be required to amend or repeal, or adopt
any provisions inconsistent with, Sections 1 through 5 and this clause (a) of
Section 7 of this Article VII; and (b) the affirmative vote of the holders of at
least 66-2/3 percent of the voting power of the shares of the then outstanding
Voting Stock voting together as a single class shall be required to amend or
repeal, or adopt any provisions inconsistent with, Section 6 and this clause (b)
of Section 7 of this Article VII.
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<PAGE>
ARTICLE VIII
A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the General Corporation Law of the
State of Delaware, or (iv) for any transaction from which the director derived
an improper personal benefit. Any repeal or modification of this Article VIII
shall not adversely affect any right or protection of a director of the
Corporation existing hereunder in respect of any act or omission occurring to
such repeal or modification.
ARTICLE IX
Each person who is or was or had agreed to become a director or
officer of the Corporation, or each such person who is or was serving or who had
agreed to serve at the request of the Board of Directors or an officer of the
Corporation as an employee or agent of the Corporation or as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise (including the heirs, executor, administrators or
estate of such person), shall be indemnified by the Corporation, in accordance
with the By-laws of the Corporation, to the fullest extent permitted from time
to time by the General Corporation Law of the State of Delaware as the same
exists or may hereafter be amended (but, in the case of any such amendment, only
to the extent that such amendment permits the Corporation to provide broader
indemnification rights than said law permitted the Corporation to provide prior
to such amendment) or any other applicable laws as presently or hereafter in
effect. The Corporation may, by action of the Board of Directors, provide
indemnification to employees and agents of the Corporation, and to persons
serving as employees or agents of another corporation, partnership, joint
venture, trust or other enterprise, at the request of the Corporation, with the
same scope and effect as the foregoing indemnification of directors and
officers. The Corporation shall be required to indemnify any person seeking
indemnification of directors and officers. The Corporation shall be required to
indemnify any person seeking indemnification in connection with a proceeding (or
part thereof) initiated by such person only if such proceeding (or part thereof)
was authorized by the Board of Directors or is a proceeding to enforce such
person's claim to indemnification pursuant to the rights granted by this
Certificate of Incorporation or otherwise by the Corporation. Without limiting
the generality or the effect of the foregoing, the Corporation may enter into
one or more agreements with any person which provide for indemnification greater
or different than that provided in this Article IX. Any amendment or repeal of
this Article IX shall not adversely affect any right or protection existing
hereunder in respect of any act or omission occurring prior to such amendment or
repeal.
ARTICLE X
In furtherance and not in limitation of the powers conferred
by law or in this Certificate of Incorporation, the Board of Directors (and any
committee of the Board of Directors) is expressly authorized, to the extent
permitted by law, to take such action or actions as the Board of Directors or
such committee may determine to be reasonably necessary or desirable to (A)
encourage any person (as defined in Article VII of this Certification of
Incorporation) to enter into negotiations with the Board of Directors and
management of the Corporation with respect to any transaction which may result
in a change in control of the Corporation which is proposed or initiated by such
person or (B) contest or oppose any such transaction which the Board of
Directors or such committee determines to be unfair, abusive or otherwise
undesirable with respect to the Corporation and its business, assets or
properties or the stockholders of the
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<PAGE>
Corporation, including, without limitation, the adoption of such plans or the
issuance of such rights, options, capital stock, notes, debentures or other
evidences of indebtedness or other securities of the Corporation, which rights,
options, capital stock, notes, evidences of indebtedness and other securities
(i) may be exchangeable for or convertible into cash or other securities on such
terms and conditions as may be determined by the Board of Directors or such
committee and (ii) may provide for the treatment of any holder or class of
holders thereof designated by the Board of Directors or any such committee in
respect of the terms, conditions, provisions and rights of such securities which
is different from, and unequal to, the terms, conditions, provisions and rights
applicable to all other holders thereof.
ARTICLE XI
Except as may be expressly provided in this Certification of
Incorporation, the Corporation reserves the right at any time and from time to
time to amend, alter, change or repeal any provision contained in this
Certificate of Incorporation, or any Preferred Stock Designation, and any other
provisions authorized by the laws of the State of Delaware at the time in force
may be added or inserted, in the manner now or hereafter prescribed herein or by
law; and all rights, preferences and privileges of whatsoever nature conferred
upon stockholders, directors or any other persons whomsoever by and pursuant to
this Certificate of Incorporation in its present form or as hereafter amended as
granted subject to the right reserved in this Article XI; PROVIDED, HOWEVER,
that any amendment or repeal of Article VIII or Article IX of this Certificate
of Incorporation shall not adversely affect any right or protection existing
hereunder in respect of any act or omission occurring prior to such amendment or
repeal; and PROVIDED, FURTHER, that no Preferred Stock Designation shall be
amended after the issuance of any shares of the series of Preferred Stock
created thereby, except in accordance with the terms of such Preferred Stock
Designation and the requirements of applicable law.
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EXHIBIT 4.5
EXECUTION
COPY
FOURTH AMENDMENT dated as of March 31, 1999 (the "Amendment") to REVOLVING
CREDIT AGREEMENT dated as of June 2, 1997 (the "Credit Agreement") between
LESLIE FAY MARKETING, INC. (the "Borrower") and THE CIT GROUP/COMMERCIAL
SERVICES, INC. ("CIT"). Terms which are capitalized in this Amendment and not
otherwise defined shall have the meanings ascribed to them in the Credit
Agreement.
WHEREAS, the Borrower has requested CIT's consent to the modification of certain
of the financial covenants contained in the Credit Agreement; and
WHEREAS, CIT has agreed to such modification of the Credit Agreement, on the
terms and subject to the fulfillment of the conditions contained in this
Amendment;
NOW, THEREFORE, in consideration of the mutual promises contained herein, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto hereby agree as follows:
SECTION ONE - AMENDMENT. Upon the fulfillment of the conditions contained in
Section Two hereof, effective as of December 1, 1998, the Credit Agreement is
hereby amended to provide as follows:
(A) SECTION 10.17. MINIMUM RATIO OF CONSOLIDATED CURRENT ASSETS TO
CONSOLIDATED CURRENT LIABILITIES. Section 10.17 is deleted in its entirety and
the following is substituted in lieu thereof:
"10.17 Minimum Ratio of Consolidated Current Assets to Consolidated
Current Liabilities. The Borrower will not permit the ratio of the
Parent's Consolidated Current Assets to the Parent's Consolidated
Current Liabilities to be less than (a) 2.60 to 1.00 as of the end of
the second fiscal quarter of 1997, (b) 2.60 to 1.00 as of the end of
the third fiscal quarter of 1997, (c) 2.60 to 1.00 as of the end of the
fourth fiscal quarter of 1997, (d) 3.00 to 1.00 as of the end of the
first fiscal quarter of 1998, (e) 3.10 to 1.00 as of the end of the
second and third fiscal quarters of 1998, (f) 2.60 to 1.00 as of the
end of the fourth fiscal quarter of 1998 and (g) 2.80 to 1.00 as of the
end of each fiscal quarter thereafter, provided, however, that solely
for purposes of determining the Borrower's compliance with this
covenant, the calculation of the Parent's Consolidated Current
Liabilities, as of any date of determination, shall exclude the
aggregate principal amount of any Loans and Letter of Credit Exposure
outstanding as of such date, and provided further, that in the event
that (i) the ratio of the Parent's Consolidated Current Assets to its
Consolidated Current Liabilities for any referenced period is less than
the minimum ratio prescribed for such period, (ii) the Parent's failure
to maintain such ratio shall have been caused solely by the Parent's
payment of dividends on its capital stock or its repurchase of
<PAGE>
outstanding shares of such stock, (iii) the proceeds of a dividend on
the Borrower's capital stock, paid by it to the Parent, shall have
funded the payment or repurchase described in clause (ii) hereof and
(iv) the payment made by the Borrower described in clause (iii) hereof
shall have been made strictly in accordance with the terms of Section
10.06 of this Agreement, then, in such event, such failure to maintain
such ratio shall not be an Event of Default under this Agreement."
(B) SECTION 10.20. CAPITAL EXPENDITURES. Section 10.20 is deleted in
its entirety, and the following is substituted in lieu thereof:
"10.20 Capital Expenditures. The Borrower shall not make Capital
Expenditures in an amount greater than (a) $1.5 million in the
aggregate for the period from the Closing Date through January 3, 1998,
(b) $3,642,000 in the aggregate for the 1998 fiscal year and (c) $2.5
million in the aggregate for the 1999 fiscal year, and for each fiscal
year thereafter, provided, however, that if the aggregate amount of
Capital Expenditures actually made during any such fiscal year (or
lesser period, if applicable) shall be less than the limit with respect
thereto set forth above (such limit, without giving effort to any
increase therein pursuant to this proviso, the "base amount"), then the
amount of such short fall (the "rollover amount") may be added to the
amount of Capital Expenditures permitted to be made for the immediately
succeeding fiscal year, provided further that any Capital Expenditures
made during any fiscal year for which any rollover amount shall have
been so added shall be applied first, to the base amount for such year
and second, to the rollover amount added to such fiscal year."
SECTION TWO- CONDITIONS PRECEDENT. This Amendment shall become effective on the
date when all of the following conditions, the fulfillment of each of which is a
condition precedent to the effectiveness of this Amendment, shall have occurred:
(A) CIT shall have received a fully executed counterpart or original of
this Amendment;
(B) CIT shall have received a Certificate of the Secretary of the
Borrower relating to the adoption of the resolutions of the Board of Directors
of the Borrower, approving this Amendment;
(C) Upon the effectiveness of this Amendment, all representations and
warranties set forth in the Credit Agreement (except for such inducing
representations and warranties that were only required to be true and correct as
of a prior date) shall be true and correct in all material respects on and as of
the effective date hereof, and no Event of Default shall have occurred and be
continuing;
(D) No event or development shall have occurred since the date of
delivery to CIT of the most recent financial statements of the Parent and its
Subsidiaries which event or development has had or is reasonably likely to have
a Material Adverse Effect;
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<PAGE>
(E) All corporate and legal proceedings and all documents and
instruments executed or delivered in connection with this Amendment shall be
satisfactory in form and substance to CIT and its counsel; and
(F) CIT shall have received such further agreements, consents,
instruments and documents as may be necessary or proper in the reasonable
opinion of CIT and its counsel to carry out the provisions and purposes of this
Amendment.
SECTION THREE-REPRESENTATIONS AND WARRANTIES. The Borrower represents
and warrants (which representations and warranties shall survive the execution
and delivery hereof) to CIT that:
(A) The Borrower has the corporate power, authority and legal right to
execute, deliver and perform this Amendment, and the instruments, agreements,
documents and transactions contemplated hereby, and has taken all actions
necessary to authorize the execution, delivery and performance of this
Amendment, and the instruments, agreements, documents and transactions
contemplated hereby;
(B) No consent of any Person (including, without limitation,
stockholders or creditors of the Borrower or creditors of the Parent, as the
case may be) other than CIT, and no consent, permit, approval or authorization
of, exemption by, notice or report to, or registration, filing or declaration
with (collectively a "Consent") any governmental authority, is required in
connection with the execution, delivery, performance, validity or enforceability
of this Amendment, and the instruments, agreements, documents and transactions
contemplated hereby;
(C) This Amendment has been duly executed and delivered on behalf of
the Borrower by its duly authorized officer, and constitutes the legal, valid
and binding obligation of the Borrower, enforceable in accordance with its
terms;
(D) The Borrower is not in default under any indenture, mortgage, deed
of trust, or other material agreement or material instrument to which it is a
party or by which it may be bound. Neither the execution and delivery of this
Amendment, nor the consummation of the transactions herein contemplated, nor
compliance with the provisions hereof will (i) violate any law or regulation
applicable to it, or (ii) cause a violation by the Borrower, of any order or
decree of any court or government instrumentality applicable to it, or (iii)
conflict with, or result in the breach of, or constitute a default under, any
indenture, mortgage, deed of trust, or other material agreement or material
instrument to which the Borrower is a party or by which it may be bound, or (iv)
result in the creation or imposition of any lien, charge, or encumbrance upon
any of the property of the Borrower, except in favor of CIT, to secure the
Obligations, or (v) violate any provision of the Certificate of Incorporation,
By-Laws or any capital stock provisions of the Borrower;
(E) No Event of Default has occurred and is continuing; and
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(F) Since the date of CIT's receipt of the financial statements of the
Parent and Subsidiaries on a consolidated and consolidating basis for the period
ending on November 28, 1998,
no change or event has occurred which has had or is reasonably likely to have a
Material Adverse Effect.
SECTION FOUR-GENERAL PROVISIONS.
(A) Except as herein expressly amended, the Credit Agreement and all
other agreements, documents, instruments and certificates executed in connection
therewith, are ratified and confirmed in all respects and shall remain in full
force and effect in accordance with their respective terms.
(B) All references in the Related Documents and Loan Documents to the
Credit Agreement shall mean the Credit Agreement as amended as of the effective
date hereof, and as amended hereby and as hereafter amended, supplemented or
modified from time to time. From and after the date hereof, all references in
the Credit Agreement to "this Agreement," "hereof," "herein," or similar terms,
shall mean and refer to the Credit Agreement as amended by this Amendment.
(C) This Amendment may be executed by the parties hereto individually
or in combination, in one or more counterparts, each of which shall be an
original and all of which shall constitute one and the same agreement.
(D) This Amendment shall be governed and controlled by the laws of the
State of New York without reference to its choice of law principles.
IN WITNESS WHEREOF, the parties have caused this Amendment to be duly
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
LESLIE FAY MARKETING, INC.
/s/
By: _______________________________________
Name:
Title:
THE CIT GROUP/COMMERCIAL
SERVICES, INC.
/s/
By: _______________________________________
Name:
Title:
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EXECUTION
COPY
FIFTH AMENDMENT dated as of August 25, 1999 (the "Amendment") to REVOLVING
CREDIT AGREEMENT dated as of June 2, 1997 (the "Credit Agreement") between
LESLIE FAY MARKETING, INC. (the "Borrower") and THE CIT GROUP/COMMERCIAL
SERVICES, INC. ("CIT"). Terms which are capitalized in this Amendment and not
otherwise defined shall have the meanings ascribed to them in the Credit
Agreement.
WHEREAS, the Borrower has requested CIT's consent to a series of transactions
pursuant to which, among other things, the Parent will purchase or redeem
approximately one million shares of its capital stock; and
WHEREAS, the Borrower has requested CIT to consider making a term loan to the
Borrower in the original principal amount of $5 million, the proceeds of which
would be distributed by the Borrower to the Parent and used by the Parent to
partially fund such purchase or redemption; and
WHEREAS, the Borrower has further requested CIT to consider extending the
Original Term and modifying certain financial covenants and other covenants
contained in the Credit Agreement; and
WHEREAS, CIT has agreed to make such term loan to the Borrower, to extend the
Original Term and to modify such covenants, on the terms and subject to the
fulfillment of the conditions contained in this Amendment;
NOW, THEREFORE, in consideration of the mutual promises contained herein, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto hereby agree as follows:
SECTION ONE - AMENDMENT OF CREDIT AGREEMENT. Upon the fulfillment of the
conditions contained in Section Three hereof, effective as of August 25, 1999,
the Credit Agreement is hereby amended to provide as follows:
(A) SECTION 10.1. CERTAIN DEFINITIONS. The definitions of the terms
Borrowing Base, Credit Extension, Loan, Obligations and Related Documents or
Loan Documents are deleted in their entirety, the following are substituted in
lieu thereof, and the terms "Fifth Amendment Closing Date", "Inventory Subline",
"Redemption", "Term Loan", and "Term Note", and the definition thereof, are
added to Section 1.01 in the appropriate alphabetical order, as follows:
"Borrowing Base" shall mean, as of the Relevant Date, an
amount equal to the difference between:
(i) the sum of (A) 85% of the Net Amount of Eligible Accounts
Receivable, plus (B) the lesser of (1) the sum of (x) 50% of
the Book Value of Eligible Inventory and (y) 50% of the amount
of L/C Inventory, provided that the Inventory with respect
thereto is not otherwise included in the Borrowing Base and
(2) the amount
<PAGE>
of the Inventory Subline then in effect, plus (C) 100% of
the excess, if any, of the balance in the Funds-in-Use
Account over the debit balance in the Loan Account, as of
the opening of business on such date; and
(ii) such reserves as CIT, in its sole discretion exercised
reasonably, may deem appropriate.
"Credit Extension" shall mean (a) the making of any Loan by
CIT , (b) the making of the Term Loan by CIT or (c) the
issuance, or extension of the expiration date of, any Letter
of Credit which CIT assists the Borrower in opening or
establishing.
"Fifth Amendment Closing Date" shall mean the first date on
which each of the conditions set forth in Section Three of the
Fifth Amendment to the Revolving Credit Agreement, dated as of
August 25, 1999, shall have been satisfied.
"Inventory Subline" shall mean the sum of $20,000,000, which
amount shall increase automatically by $1,000,000 each fiscal
year, effective on the last day of each such year, commencing
with the fiscal year ending on January 1, 2000.
"Loan" or "Loans" shall mean any and all loan or loans made by
CIT to the Borrower under Section 2.01(a) of this Agreement.
"Obligations" shall mean all obligations, liabilities and
indebtedness of the Obligors to CIT incurred under or related
to this Agreement, the Note, the Term Note, the Factoring
Agreement or any other Related Document, the letter agreement
dated on or about the Closing Date among Bank Boston, N.A.,
Bank America Business Credit, Inc., Heller Financial, Inc.,
The Leslie Fay Companies, Inc. and CIT and all Ledger Debt,
whether such obligations, liabilities or indebtedness are
direct or indirect, secured or unsecured, joint or several,
absolute or contingent, due or to become due, whether for
payment or performance, now existing or hereafter arising,
including, without limitation, those which are described in
either of the following clauses (i) or (ii):
(i) All indebtedness, obligations (including Reimbursement
Obligations) and liabilities of any nature whatsoever, from
time to time arising under or in connection with or evidenced
or secured by this Agreement, the Note, the Term Note, the
Letters of Credit or any other Related Document, including but
not limited to the principal amount of the Term Loan and the
Loans outstanding, together with interest thereon, the amount
of the Letter of Credit Exposure, together with interest
thereon and all expenses, fees and indemnities hereunder or
under any other Related Document. Without limitation, such
amounts include the Term Loan and interest thereon, all Loans
and
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interest thereon and the amount of all Letter of Credit
Exposure whether or not the Term Loan or such Loans were made
or any Letters of Credit to which such Letter of Credit
Exposure relates were issued in compliance with the terms and
conditions hereof or in excess of CIT's obligation to lend and
arrange for the issuance of Letters of Credit hereunder.
Except as otherwise provided in the Factoring Agreement with
respect to Factor Risk Accounts (as defined in the Factoring
Agreement), if and to the extent any amounts in any account
(including the Loan Account, the Depository Accounts or
otherwise) constituting Collateral are applied to Obligations
hereunder, and CIT is subsequently obligated to return or
repay any such amounts to any Person for any reason, other
than as a direct result of CIT's gross negligence or willful
misconduct as determined by a final judgment of a court of
competent jurisdiction, the amount so returned or repaid shall
be deemed a Loan hereunder and shall constitute an Obligation.
(ii) All indebtedness, obligations and liabilities from time
to time arising under or in connection with any account from
time to time maintained by the Borrower with CIT, including
but not limited to all Reimbursement Obligations, service
charges and interest in connection with any overdrafts or
returned items from time to time arising in connection with
any such account, or arising under or in connection with any
investment services, cash management services or other
services from time to time performed by CIT pursuant to or in
connection with this Agreement or any other Related Document.
"Redemption" shall mean the election of certain shareholders
of the Parent to receive cash for some or all of the shares of
stock of the Parent held by such shareholders, pursuant to the
Agreement and Plan of Merger dated May 12, 1999 among Three
Cities Offshore II C.V., Three Cities Fund II, L.P., TCR
Acquisition Sub Co. and The Leslie Fay Company, Inc.
"Related Documents" or "Loan Documents" means this Agreement,
the Customer Terms Agreement, the Note, the Term Note, the
Security Agreement, the Trademark Agreement, each Guaranty,
the Stock Pledge Agreement, the Letters of Credit, each Letter
of Credit Application, the Confirmation Order, the Factoring
Agreement, the Factoring Documents, the other documents,
instruments and agreements referred to in Section 7.01 hereof,
and all other instruments, agreements and documents now
existing or hereafter entered into or in effect by the
Obligors or any other Person from time to time creating,
evidencing, directly or indirectly guaranteeing, or granting
CIT a Lien to secure, any obligations under or in connection
with this Agreement, the Note, the Term Note, the Security
Agreement, the Trademark Agreement, each
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<PAGE>
Guaranty, the Stock Pledge Agreement, the Letters of Credit,
each Letter of Credit Application, the Confirmation Order, the
Factoring Agreement, the Factoring Documents or any other
Related Document, and all other instruments, agreements and
documents from time to time delivered in connection with or
otherwise relating to any Related Document.
"Term Loan" shall mean the term loan in the original principal
amount of $5,000,000 made by CIT to the Borrower on the Fifth
Amendment Closing Date.
"Term Note" shall mean the promissory note of the Borrower,
substantially in the form attached hereto as Exhibit A-1,
executed and delivered under this Agreement, as modified,
amended, supplemented or restated from time to time and any
promissory note or notes issued in exchange or replacement
thereof, including all extensions, renewals, refinancings or
refundings thereof in whole or part.
(B) SECTION 2.01. REVOLVING CREDIT LOANS. Section 2.01 is re-captioned
"Revolving Credit Loans and Term Loan", and a new subsection (c) of Section 2.01
is added as follows:
"(c) Term Loan. Subject to the terms and conditions and
relying upon the representations and warranties herein set
forth, on the Fifth Amendment Closing Date, CIT agrees to make
the Term Loan to the Borrower."
(C) SECTION 2.02. NOTE. Section 2.02 is re-captioned "Note and Term
Note", and the following sentences are added to the end of Section 2.02:
"The obligation of the Borrower to repay the unpaid principal
amount of the Term Loan made to it by CIT and to pay interest
thereon shall be evidenced in part by the Term Note, dated as
of the Fifth Amendment Closing Date with the blanks
appropriately filled in. The executed Term Note shall be
delivered by the Borrower to CIT on the Fifth Amendment
Closing Date."
(D) SECTION 2.03. MAKING OF LOANS. Section 2.03 is re-captioned "Making
of Loans and Term Loan", and the following sentence is added to the end of
subsection (a) of Section 2.03:
"On the Fifth Amendment Closing Date, CIT shall make the full
amount of the Term Loan available to the Borrower by
depositing the proceeds thereof in the Disbursement Account,
or at the Borrower's request, by wire transfer of same to the
bank accounts and in the amounts set forth in a duly executed
Notice of Borrowing."
(E) SECTION 2.04. MANDATORY PREPAYMENT; OPTIONAL PREPAYMENT; COMMITMENT
REDUCTION. Section 2.04 is amended by (i) deleting clause (ii) of subsection (a)
of Section 2.04
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<PAGE>
in its entirety, (ii) deleting subsection (b) of Section 2.04 in its entirety,
(iii) substituting the following clause (ii) and subsection (b), respectively,
in lieu thereof, and (iv) adding a new subsection (e) to Section 2.04, as
follows:
"(ii) Disposition of Assets, etc. Without limiting any other
provision of this Agreement or any other Related Document
permitting or requiring prepayment of the Term Loan or the
Loans in whole or part, the Borrower shall prepay the Term
Loan in whole or in part, until paid in full, and then the
Loans in whole or in part, in each case without premium or
penalty, except as otherwise set forth in Section 5.03 (a)
(v), in an amount equal to 100% of the Net Sale Proceeds
constituting cash received by any Obligor from any sale,
lease, transfer or other disposition of any asset outside of
the ordinary course of the business of the Obligors, the
proceeds of any claim made under any insurance policy covering
any assets of any Obligor and the proceeds of any condemnation
or similar proceeding with respect to any real property of any
Obligor. Any prepayment required under this clause (ii) shall
be made on the first Business Day after the consummation of
such transfer, sale, disposition, settlement, issuance or
other event triggering a prepayment."
"(b) Optional Prepayment. Except as otherwise set forth in
Section 5.03 (a) (v), the Borrower may without penalty or
premium at any time or from time to time prepay, in whole or
in part, the Term Loan and any or all Loans then outstanding."
"(e) Application of Prepayments of Term Loan. All prepayments
of the Term Loan shall be applied against the scheduled
installments of principal thereof, in inverse order of
maturity."
(F) SECTION 2.05. INTEREST RATE. Section 2.05 is deleted in its
entirety and the following is substituted in lieu thereof:
"2.05. Interest Rate. The Term Loan, and each Loan, shall bear
interest on the principal amount thereof from time to time
outstanding for each day during each calendar month, until
paid, at a rate per annum for each such day equal to the Prime
Rate in effect on the last day of the previous month (the
"then applicable Prime Rate") (i) in the case of the Term
Loan, plus an interest rate margin of two percent (2%), and
(ii) in the case of the Loans, minus an interest rate margin
of one-quarter of one-percent (1/4 of 1%). "Prime Rate", as
used herein, shall mean the interest rate per annum publicly
announced from time to time by the Bank in New York, New York
as its Prime Rate. In the event of any change in the Prime
Rate, the rates of interest hereunder shall change, as of the
first day of the month following any change, so as to remain
(i) in the case of the Term Loan, two per cent (2%) above the
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then applicable Prime Rate, and (ii) in the case of the Loans,
one-quarter of one percent (1/4 of 1%) below the then
applicable Prime Rate. The Prime Rate is not intended to be
the lowest rate of interest charged by the Bank to its
borrowers."
(G) SECTION 2.06. INTEREST PAYMENT DATES. Section 2.06 is deleted
deleted in its entirety and the following is substituted in lieu thereof:
"2.06. Interest Payment Dates. The Borrower shall pay interest
on the unpaid principal amount of the Term Loan, from the date
the Term Loan is made until such principal amount shall be
paid in full, and on the unpaid principal amount of each Loan,
from the date of such Loan until such principal amount shall
be paid in full, which interest shall be payable monthly in
arrears on the first day of each month, commencing on the
first day of the month following the month in which the
Closing Date occurs, in the case of the Loans, and in the case
of the Term Loan, commencing on the first day of month
following the Fifth Amendment Closing Date. After maturity of
any principal amount of the Term Loan or any Loan (by
acceleration, at scheduled maturity or otherwise), interest on
such amount shall be due and payable on demand."
(H) SECTION 2.07. AMORTIZATION. Section 2.07 is deleted in its
entirety and the following is substituted in lieu thereof:
"2.07 Amortization. To the extent not due and payable earlier
pursuant to the terms of this Agreement, (a) the entire unpaid
principal amount of each of the Loans shall be due and payable
in full on the Maturity Date and (b) the principal balance of
the Term Loan shall be paid in equal and successive monthly
installments, based on an amortization schedule consisting of
sixty (60) months, each of which installments shall be due and
payable on the first day of the month, commencing on the
earlier to occur of (i) January 1, 2000 and (ii) the first day
of the sixth month after the month during which the Fifth
Amendment Closing Date shall occur, provided, however, that
the outstanding and unpaid principal balance of the Term Loan,
and all accrued and unpaid interest thereon, shall be due and
payable in full on the Maturity Date."
(I) SECTION 2.08. PAYMENTS. Section 2.08 is amended by deleting
subsections (a) and (b) thereof in their entirety, substituting the following in
lieu thereof, re-lettering subsection (e) thereof as subsection (f), and by
adding a new subsection (e) thereof as follows:
"2.08. Payments.
(a) Time, Place and Manner. Except with respect to optional
prepayments as provided in Section 2.04(b) hereof, all
payments and prepayments to be made in respect of principal,
interest, fees or other amounts due from the Borrower
hereunder, under the Note,
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the Term Note or any other Related Document shall be payable
at or before 12:00 Noon, New York City time, on the day when
due without presentment, demand, protest or notice of any
kind, all of which are hereby expressly waived. Such payments
shall be made to CIT in Dollars in funds immediately available
at its Office without setoff, counterclaim or other deduction
of any nature. The Borrower hereby authorizes CIT to, and CIT
may, from time to time, when due and payable, charge the Loan
Account with any interest, fees or expenses that are due and
payable under this Agreement or any Related Document. The
Borrower confirms that any charges which CIT may so make to
the Loan Account as herein provided will be made as an
accommodation to the Borrower and solely at CIT's discretion
and shall constitute a Loan to the Borrower. On the last day
of each month, CIT shall transfer and credit to the Loan
Account the amount reflected in the Funds-in-Use Account on
such day. Credit balances in the Loan Account may be
transferred to the Borrower at any time and from time to time.
CIT shall use reasonable efforts to provide the Borrower with
copies or other evidence of all charges to the Loan Account
promptly and within five Business Days of the date such
charges are made, provided that the failure to provide such
copies or such other evidence to the Borrower shall not
relieve the Borrower of any of its obligations under this
Agreement. Interest on the Term Loan, and on all Loans and all
fees that accrue on a per annum basis, shall be computed on
the basis of the actual number of days elapsed in the period
during which interest or such fee accrues and a year
consisting of 360 days. In computing interest on the Term Loan
and on any Loan, the date of the making of the Term Loan and
such Loan shall be included and the date of payment shall be
excluded."
(b) Interest Upon Events of Default. To the extent permitted
by law, after there shall have occurred and so long as there
is continuing an Event of Default pursuant to Section 11.01 of
this Agreement, all principal, interest, fees, indemnities or
any other obligations for the payment of money under this
Agreement, the Note, the Term Note or any other Related
Document (and including interest accrued under this Section
2.08(b)) shall bear interest for each day until paid (before
and after judgment), payable on demand, at two percent (2%) in
excess of the rate of interest otherwise in effect under this
Agreement and, if no interest rate is otherwise in effect, at
a rate per annum of three percent (3%), or five percent (5%),
in the case of the Term Note, above the Prime Rate for such
day (collectively, the "Default Rate"). CIT shall use
reasonable efforts to promptly provide the Borrower with
notice that interest is accruing at the Default Rate and of
the Event of Default giving rise thereto, provided that the
failure of CIT to provide such notice to the Borrower shall
not limit the rights of
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CIT under this Section 2.08(b) or relieve the Borrower of its
obligations under this Section 2.08(b) or the Agreement."
"(e) Unused Line Fee. The Borrower shall pay to CIT in
arrears, on the first day of each month, commencing on the
first day of the month following the Fifth Amendment Closing
Date, and on the Maturity Date, a fee (the "unused line fee")
of .25% per annum on the average daily unused amount of the
Revolving Credit Commitment. For purposes of calculating such
average daily unused amount on any date of determination, each
Loan made on such date, and each Letter of Credit outstanding
on such date, shall be considered a use of the Revolving
Credit Commitment."
(J) SECTION 2.09. USE OF PROCEEDS. Section 2.09 is deleted in its
entirety, and the following is substituted in lieu thereof:
"2.09 Use of Proceeds. The Borrower hereby covenants,
represents and warrants that (a) except as otherwise set forth
in clause (b) hereof, the proceeds of the Loans made to it
will be used solely to fund working capital in the ordinary
course of the Borrower's business and for other general
corporate purposes of the Borrower and (b) the proceeds of the
Term Loan and of the Loans made to it on the Fifth Amendment
Closing Date will be used to fund the declaration and payment
of a distribution to the Parent, the proceeds of which will be
used to fund the Redemption."
(K) SECTION 2.10. INCREASED COSTS AND REDUCED RETURN. Subsections (a)
and (b) of Section 2.10 are deleted in their entirety, and the following are
substituted in lieu thereof:
"2.10. Increased Costs and Reduced Return.
(a) If CIT or the Letter of Credit Issuer shall have
determined that the adoption or implementation of, or any
change in, any law, rule, treaty or regulation, or any policy,
guideline or directive of, or any change in the interpretation
or administration thereof by, any court, central bank or other
administrative or Governmental Authority, or compliance by the
Letter of Credit Issuer or CIT or any Person controlling CIT
or the Letter of Credit Issuer with any directive of or
guideline from any central bank or other Governmental
Authority or the introduction of or change in any accounting
principles applicable to the Letter of Credit Issuer, CIT or
any Person controlling CIT or the Letter of Credit Issuer (in
each case, whether or not having the force of law), shall (i)
change the basis of taxation of payments to the Letter of
Credit Issuer, CIT or any Person controlling CIT or the Letter
of Credit Issuer of any amounts payable hereunder (except for
taxes on the overall net income of the Letter of Credit
Issuer, CIT or any Person controlling CIT or the Letter of
Credit Issuer), (ii) impose, modify or deem
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applicable any reserve, special deposit or similar requirement
against the Term Loan, any Loan, Letter of Credit or against
assets of or held by, or deposits with or for the account of,
or credit extended by, the Letter of Credit Issuer, CIT, or
any Person controlling CIT or the Letter of Credit Issuer or
(iii) impose on the Letter of Credit Issuer, CIT or any Person
controlling CIT or the Letter of Credit Issuer any other
condition regarding this Agreement, the Term Loan, any Loan or
Letter of Credit, and the result of any event referred to in
clauses (i), (ii) or (iii) above shall be to increase the cost
to the Letter of Credit Issuer or CIT of making the Term Loan,
any Loan, issuing or guaranteeing any Letter of Credit, or
agreeing to make the Term Loan, any Loan or issue or guaranty
any Letter of Credit, or to reduce any amount received or
receivable by the Letter of Credit Issuer or CIT hereunder,
then, upon demand by the Letter of Credit Issuer or CIT, the
Borrower shall pay to the Letter of Credit Issuer or CIT such
additional amounts as will compensate the Letter of Credit
Issuer or CIT for such increased costs or reductions in
amount.
(b) If CIT or the Letter of Credit Issuer shall have
determined that any Capital Guideline or adoption or
implementation of, or any change in, any Capital Guideline by
the Governmental Authority charged with the interpretation or
administration thereof, or compliance by the Letter of Credit
Issuer, CIT or any Person controlling such Letter of Credit
Issuer or CIT with any Capital Guideline or with any request
or directive of any such Governmental Authority with respect
to any Capital Guideline, or the implementation of, or any
change in, any applicable accounting principles (in each case,
whether or not having the force of law), either (i) affects or
would affect the amount of capital required or expected to be
maintained by the Letter of Credit Issuer, CIT or any Person
controlling the Letter of Credit Issuer or CIT, and the Letter
of Credit Issuer or CIT determines that the amount of such
capital is increased as a direct or indirect consequence of
the Term Loan or any Loans made or maintained, Letters of
Credit issued or any guaranty with respect thereto, or the
Letter of Credit Issuer's or CIT's other obligations
hereunder, or (ii) has or would have the effect of reducing
the rate of return on the Letter of Credit Issuer's, CIT's or
any such other controlling Person's capital to a level below
that which the Letter of Credit Issuer, CIT or such
controlling Person could have achieved but for such
circumstances as a consequence of the Term Loan or any Loans
made or maintained, Letters of Credit issued, or any guaranty
with respect thereto or any agreement to make the Term Loan or
Loans, to issue Letters of Credit or the Letter of Credit
Issuer's or CIT's other obligations hereunder (in each case,
taking into consideration the Letter of Credit Issuer's, CIT's
or such other controlling Person's policies with respect to
capital adequacy), then, upon demand by the Letter of Credit
Issuer or CIT, the Borrower shall pay to the Letter of
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Credit Issuer or CIT from time to time such additional amounts
as will compensate the Letter of Credit Issuer or CIT for such
cost of maintaining such increased capital or such reduction
in the rate of return on the Letter of Credit Issuer's, CIT's
or such other controlling Person's capital."
(L) SECTION 5.01. TERMINATION. Section 5.01 is deleted in its
entirety, and the following is substituted in lieu thereof:
"5.01. Term of Agreement. Subject to CIT=s rights under
Article XI hereof, this Agreement shall be in effect during
the period commencing on the Closing Date and ending on June
2, 2004 (the "Original Term"), and thereafter shall
automatically renew itself for successive one-year periods
(each a "Renewal Term"), unless sooner terminated as provided
in Section 5.02 hereof."
(M) SECTION 5.03. EFFECT OF TERMINATION. Clause (v) of subsection
(a) of Section 5.03 is deleted in its entirety, and the following is substituted
in lieu thereof:
"(v) if such Notice of Termination is given by the Borrower to
CIT, and the Termination Date specified therein is a date
which is (x) prior to June 2, 2000, the Borrower shall pay to
CIT on such Termination Date an early termination fee in an
amount equal to one per cent (1%) of the "average outstanding
amount", as hereinafter defined, (y) on or after June 2, 2000
but prior to June 2, 2001, the Borrower shall pay to CIT on
such Termination Date an early termination fee in an amount
equal to three-quarters of one per cent (3/4 of 1%) of the
average outstanding amount, or (z) on or after June 2, 2001
but prior to June 2, 2004, the Borrower shall pay to CIT on
such Termination Date an early termination fee in an amount
equal to one-half of one per cent (1/2 of 1%) of the average
outstanding amount. As used in this Section, the term "average
outstanding amount" means, for the twelve month period ending
with the month preceding the Termination Date specified by the
Borrower in its Notice of Termination, the sum of (A) the
average amount of the Loans outstanding at the end of each day
during such period plus (B) the average amount of Letter of
Credit Exposure outstanding at the end of each day during such
period."
(N) SECTION 10.05. LOANS, ADVANCES AND INVESTMENTS. Section 10.05
is deleted in its entirety, and the following is substituted in lieu thereof:
"10.05. Loans, Advances and Investments. Except as otherwise
expressly permitted by this Section 10.05, the Borrower shall
not at any time make or suffer to remain outstanding any loan
or advance to, or purchase, acquire or own any stock, bonds,
notes or securities of, or any partnership interest (whether
general or limited) in, or any other interest in, or make any
capital contribution to, any other Person. By way of
illustration, and without limitation
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of the foregoing, it is understood that the Borrower will be
deemed to have made an advance to a Person: (x) to the extent
that the Borrower performs any service for such Person
(including but not limited to management services), or
transfers any property to such Person, and is not reimbursed
for such service or property and (y) to the extent that the
Borrower pays any obligation on behalf of such Person. The
amount of such advance shall be deemed to be the fair value of
the services so performed or property so transferred (in the
case of clause (x)) or the amount so paid by the Borrower (in
the case of clause (y)).
The following are excepted from the operation of this Section 10.05:
(a) loans or advances to Dominick Felicetti or any of the
Designated Officers (each, including Dominick Felicetti, a
"senior manager"), provided that (i) the proceeds of such
loans or advances are used to fund the acquisition of shares
of capital stock of the Parent, (ii) such shares shall be
owned or controlled, beneficially and of record, by the senior
manager to whom such loan or advance shall be made, (iii) the
principal amount of such loan or advance, together with the
unpaid principal amount of all previous loans and advances
made to such senior manager for such purpose, shall not
exceed, in the aggregate, the amount of the annual base salary
of such senior manager, as in effect on the date of such loan
or advance, and (iv) such senior manager shall pledge and
collaterally assign to CIT, or cause to be pledged and
collaterally assigned to CIT, pursuant to a duly executed
Stock Pledge Agreement, and shall deliver to CIT, or cause to
be delivered to CIT, all of the shares of capital stock of the
Parent so acquired, as collateral security for all
Obligations;
(b) in addition to loans and advances to employees permitted
under clause (a) above, (i) advances to employees to meet
expenses incurred or to be incurred by such employees, salary
advances and other similar advances to employees and (ii)
advances to Persons performing contracting services for the
Borrower, so long as such advances are made against the
amounts to be paid by the Borrower for such services, in each
case to non-Affiliates and in the ordinary course of the
Borrower's business, provided that all advances in the case of
clause (i) may not exceed $200,000 in the aggregate at any one
time outstanding, and in the case of clause (ii) may not
exceed $300,000 in the aggregate at any one time outstanding
(exclusive of that certain loan in the original principal
amount of $220,000 made, or which may be made, by the Borrower
to Metrix Computer Cutting, Inc.);
(c) ownership of any capital stock, bonds, notes, securities,
partnership or joint venture interests on the Closing Date;
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(d) the Cash Collateral Account and the other accounts
permitted or required to be maintained pursuant hereto, any
investment of funds on deposit in the foregoing to the extent
expressly permitted hereunder; and
(e) (i) direct obligations of the United States of America, or
any agency or instrumentality thereof, or obligations
guaranteed by the United States of America; (ii) certificates
of deposit maturing within one year from the date of
acquisition, bankers acceptances, or overnight bank deposits,
in each case issued by, created by, or with, a United States
bank whose long-term certificates of deposit have an
investment grade rating by S&P or Moody's; (iii) commercial
paper given a rating of A-1 or higher by S&P or P-1 or higher
by Moody's and maturing not more than 270 days from the date
of creation thereof; (iv) tender bonds, with a maturity day or
tender option of not in excess of one year, with ratings of
A-1 or AA or higher by S&P or P-1 or Aa or higher by Moody's
or the payment of the principal of and interest on which is
fully supported by a letter of credit issued by a United
States bank whose long-term certificates of deposit are rated
at least AA or the equivalent thereof by S&P and Aa or the
equivalent thereof by Moody's; and (v) repurchase agreements
pertaining to investments of the types described in clauses
(i) (ii), (iii) and (iv) hereof."
(O) SECTION 10.06. DIVIDENDS AND RELATED DISTRIBUTIONS.
Section 10.06 is deleted in its entirety, and the following is substituted in
lieu thereof:
"10.06. The Borrower shall not declare, make, pay or agree to
pay, any dividend or other distribution of any nature (whether
in cash, property, securities or otherwise) on account of or
in respect of shares of its capital stock or on account of the
purchase, redemption, retirement or acquisition of any shares
of capital stock (or warrants, options or rights therefor),
provided, however, that, in addition to amounts paid by the
Borrower on or prior to the Fifth Amendment Closing Date as
dividends or to repurchase stock, the Borrower shall be
permitted to declare and pay dividends or repurchase stock so
long as the amount to be declared and paid as a dividend or
the amount to be paid to repurchase stock, as the case may be,
together with all such amounts theretofore paid after the
Fifth Amendment Closing Date, shall not exceed, in the
aggregate, the sum of $2,000,000 plus, if and to the extent
that the Net Income of the Parent, calculated on a cumulative
basis for the period commencing with the fiscal quarter during
which the Fifth Amendment Closing Date occurs and ending with
the fiscal quarter preceding any date of determination,
exceeds $1,000,000, an amount equal to (x) one-half of such
cumulative Net Income in excess of $1,000,000 minus (y) all
amounts after the Fifth Amendment Closing Date and prior to
such date of determination distributed as dividends or paid to
repurchase stock (including
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amounts so distributed or paid pursuant to the $2,000,000
basket hereinabove provided), provided further that (a) at the
time of, and after giving effect to, any such payment of
dividends or repurchase of stock, no Event of Default shall
have occurred and be continuing, (b) the undrawn Availability
before and after the making of any such dividend payment or
stock repurchase shall be not less than $5,000,000.00 and (c)
solely for purposes of determining the Borrower's compliance
with this covenant, the calculation of such Net Income shall
exclude negative goodwill."
(P) SECTION 10.15. MINIMUM CONSOLIDATED TANGIBLE NET WORTH. Section
10.15 is deleted in its entirety, and the following is substituted in lieu
thereof:
"10.15 Minimum Consolidated Tangible Net Worth. The Borrower
will not permit the Parent's Consolidated Tangible Net Worth,
as of any date of determination, to be less than an amount
equal to $35,000,000 minus the aggregate amount of dividends
and repurchases of stock paid in cash, in accordance with the
terms of Section 10.06, during the period commencing on the
Fifth Amendment Closing Date and ending on such date of
determination, provided, however, that solely for purposes of
determining the Borrower's compliance with this covenant, the
calculation of such Consolidated Tangible Net Worth shall
include the value of goodwill, determined in accordance with
GAAP, created from the acquisition, directly or indirectly, by
the Parent, after the Fifth Amendment Closing Date, of stock
or assets, so long as such acquisition shall have been
consented to in advance, in writing, by CIT."
(Q) SECTION 10.16. MINIMUM CONSOLIDATED WORKING CAPITAL. Section 10.16
is deleted in its entirety, and the following is substituted in lieu thereof:
"10.16 Minimum Consolidated Working Capital. The Borrower will
not permit the Parent's Consolidated Working Capital, as of
any date of determination, to be less than an amount equal to
$30,000,000 minus the aggregate amount of dividends and
repurchases of stock paid in cash, in accordance with the
terms of Section 10.06, during the period commencing on the
Fifth Amendment Closing Date and ending on such date of
determination, provided, however, that solely for purposes of
determining the Borrower's compliance with this covenant, the
calculation of such Consolidated Working Capital shall include
the value of goodwill, determined in accordance with GAAP,
created from the acquisition, directly or indirectly, by the
Parent, after the Fifth Amendment Closing Date, of stock or
assets, so long as such acquisition shall have been consented
to in advance, in writing, by CIT."
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(R) SECTION 10.17. MINIMUM RATIO OF CONSOLIDATED CURRENT ASSETS TO
CONSOLIDATED CURRENT LIABILITIES. Section 10.17 is deleted in its entirety, and
the following is substituted in lieu thereof:
"10.17 Minimum Ratio of Consolidated Current Assets to
Consolidated Current Liabilities. The Borrower will not permit
the ratio of the Parent's Consolidated Current Assets to the
Parent's Consolidated Current Liabilities, as of any date of
determination, to be less than 2.50 to 1.00, provided,
however, that solely for purposes of determining the
Borrower's compliance with this covenant, the calculation of
such Consolidated Current Assets shall be deemed to be
increased by (i) the aggregate amount of dividends and
repurchases of stock paid in cash, in accordance with the
terms of Section 10.06, during the period commencing on the
Fifth Amendment Closing Date and ending on such date of
determination, and (ii) the value of goodwill, determined in
accordance with GAAP, created from the acquisition, directly
or indirectly, by the Parent, after the Fifth Amendment
Closing Date, of stock or assets, so long as such acquisition
shall have been consented to in advance, in writing, by CIT."
(S) SECTION 10.18. MINIMUM RATIO OF CONSOLIDATED EBITDA TO CONSOLIDATED
INTEREST EXPENSE. Section 10.18 is deleted in its entirety, and the following is
substituted in lieu thereof:
"10.18 Minimum Ratio of Consolidated EBITDA to Consolidated
Interest Expense. The Borrower will not permit the ratio of
the Parent's Consolidated EBITDA to the Parent's Consolidated
Interest Expense as at the end of each fiscal quarter,
commencing with the fiscal quarter ended on January 2, 1999,
on a cumulative basis with the preceding fiscal quarters of
the then current fiscal year, to be less than 3.00 to 1.00."
(T) A new Exhibit A-1, in the form of Exhibit A-1 annexed to this
Amendment, is hereby added to the Credit Agreement.
(U) In each instance in which the phrase "the Loan", "the Loans", or
"any Loan" appears in Sections 10.21, 12.06, 12.11 and 12.14, each such Section
shall be deemed amended by the insertion immediately before such phrase of the
phrase "the Term Loan and" or "the Term Loan or", as applicable, and in each
instance in which the phrase "the Note" appears in Section 5.03, 7.27, 11.02,
12.01 through 12.05, 12.11, 12.12 and 12.15, each such Section shall be deemed
amended by the insertion immediately before such phrase of the phrase "the Term
Note and" or "the Term Note or", as applicable.
SECTION TWO - CONSENT. Based on the representations and warranties made
by the Borrower pursuant to Section Four hereof, upon the fulfillment of the
conditions contained in Section Three hereof, effective as of August 25, 1999,
CIT hereby consents to the distribution by the Borrower to the Parent,
concurrent with and pursuant to the consummation of the Redemption, of cash in
an aggregate amount not to exceed $7,087,640, of which $5,000,000 shall
constitute proceeds of the Term Loan and up to $2,087,640 of which shall
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constitute proceeds of Loans, in each case made by CIT to the Borrower on the
Fifth Amendment Closing Date. CIT has been advised by the Borrower that during
the month of December, 1998, the Paymaster Affiliate merged with and into the
Borrower. The Borrower hereby represents and warrants that immediately prior to
the effectiveness of such merger, the Paymaster Affiliate had no obligations,
liabilities or indebtedness of any kind, whether absolute or contingent, whether
disclosable on a balance sheet prepared in accordance with GAAP, or otherwise,
except for (i) the contingent liability of the Paymaster Affiliate arising under
the Guaranty dated as of June 2, 1997 executed by the Paymaster Affiliate in
favor of CIT and (ii) as set forth on the Schedule annexed hereto. Based on such
representation and warranty, CIT hereby consents to such merger as of the
effective date thereof, and CIT hereby waives as an Event of Default the
Borrower's violation of Section 10.07 of the Credit Agreement, which prohibits
such merger.
SECTION THREE-CONDITIONS PRECEDENT. This Amendment shall become
effective on the date when all of the following conditions, the fulfillment of
each of which is a condition precedent to the effectiveness of this Amendment,
shall have occurred:
(A) CIT shall have received a fully executed counterpart or original of
this Amendment and the Term Note, together with a First Amendment to the
Factoring Agreement, in substantially the form annexed hereto as Exhibit B, and
a letter agreement executed in favor of CIT by each of the Guarantors, by the
Parent, as pledgor under the Stock Pledge Agreement, and by the Trademark
Affiliate, as party to the Trademark Agreement, in substantially the form
annexed hereto as Exhibit C.
(B) CIT shall have received a Certificate of the Secretary of the
Borrower relating to the adoption of the resolutions of the Board of Directors
of the Borrower, approving this Amendment, and a Solvency Certificate from the
chief financial officer of the Parent and the Borrower;
(C) Upon the effectiveness of this Amendment, all representations and
warranties set forth in the Credit Agreement (except for such inducing
representations and warranties that were only required to be true and correct as
of a prior date) shall be true and correct in all material respects on and as of
the effective date hereof, and no Event of Default shall have occurred and be
continuing;
(D) No event or development shall have occurred since the date of
delivery to CIT of the most recent financial statements of the Parent and its
Subsidiaries which event or development has had or is reasonably likely to have
a Material Adverse Effect;
(E) All corporate and legal proceedings and all documents and
instruments executed or delivered in connection with this Amendment shall be
satisfactory in form and substance to CIT and its counsel;
(F) CIT shall have received payment for its own account of a closing
fee in the amount of $250,000, which shall be payable in cash and which, when
paid, shall be deemed to be fully earned and non-refundable;
(G) The Redemption shall have been consummated in accordance with the
terms of the agreement described in the definition of such term, all of the
conditions precedent to
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its effectiveness shall have occurred, and CIT and its counsel shall have
received and reviewed to their satisfaction true and correct copies all of
material documents and agreements executed or delivered in connection with the
Redemption;
(H) CIT shall have received and reviewed to its satisfaction an
appraisal of the trademarks and other intellectual property of the Trademark
Affiliate; and (I) CIT shall have received a legal opinion from the firm of
Parker Chapin Flattau & Klimpl, LLP, in form and substance satisfactory to CIT
and its counsel, and such further agreements, consents, instruments and
documents as may be necessary or proper in the reasonable opinion of CIT and its
counsel to carry out the provisions and purposes of this Amendment.
SECTION FOUR-REPRESENTATIONS AND WARRANTIES. The Borrower represents
and warrants (which representations and warranties shall survive the execution
and delivery hereof) to CIT that:
(A) The Borrower has the corporate power, authority and legal right to
execute, deliver and perform this Amendment, and the instruments, agreements,
documents and transactions contemplated hereby, and has taken all actions
necessary to authorize the execution, delivery and performance of this
Amendment, and the instruments, agreements, documents and transactions
contemplated hereby;
(B) No consent of any Person (including, without limitation,
stockholders or creditors of the Borrower or creditors of the Parent, as the
case may be) other than CIT, and no consent, permit, approval or authorization
of, exemption by, notice or report to, or registration, filing or declaration
with (collectively a "Consent") any governmental authority, is required in
connection with the execution, delivery, performance, validity or enforceability
of this Amendment, and the instruments, agreements, documents and transactions
contemplated hereby;
(C) This Amendment has been duly executed and delivered on behalf of
the Borrower by its duly authorized officer, and constitutes the legal, valid
and binding obligation of the Borrower, enforceable in accordance with its
terms;
(D) The Borrower is not in default under any indenture, mortgage, deed
of trust, or other material agreement or material instrument to which it is a
party or by which it may be bound. Neither the execution and delivery of this
Amendment, nor the consummation of the transactions herein contemplated, nor
compliance with the provisions hereof will (i) violate any law or regulation
applicable to it, or (ii) cause a violation by the Borrower, of any order or
decree of any court or government instrumentality applicable to it, or (iii)
conflict with, or result in the breach of, or constitute a default under, any
indenture, mortgage, deed of trust, or other material agreement or material
instrument to which the Borrower is a party or by which it may be bound, or (iv)
result in the creation or imposition of any lien, charge, or encumbrance upon
any of the property of the Borrower, except in favor of CIT, to secure the
Obligations, or (v) violate any provision of the Certificate of Incorporation,
By-Laws or any capital stock provisions of the Borrower;
(E) No Event of Default has occurred and is continuing; and
(F) Since the date of CIT's receipt of the financial statements of the
Parent and Subsidiaries on a consolidated and consolidating basis for the annual
period ending on January 2,
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1999, no change or event has occurred which has had or is reasonably likely to
have a Material Adverse Effect.
SECTION FIVE-GENERAL PROVISIONS.
(A) Except as herein expressly amended, the Credit Agreement and all
other agreements, documents, instruments and certificates executed in connection
therewith, are ratified and confirmed in all respects and shall remain in full
force and effect in accordance with their respective terms.
(B) All references in the Related Documents and Loan Documents to the
Credit Agreement shall mean the Credit Agreement as amended as of the effective
date hereof, and as amended hereby and as hereafter amended, supplemented or
modified from time to time. From and after the date hereof, all references in
the Credit Agreement to "this Agreement," "hereof," "herein," or similar terms,
shall mean and refer to the Credit Agreement as amended by this Amendment.
(C) This Amendment may be executed by the parties hereto individually
or in combination, in one or more counterparts, each of which shall be an
original and all of which shall constitute one and the same agreement.
(D) This Amendment shall be governed and controlled by the laws of the
State of New York without reference to its choice of law principles.
IN WITNESS WHEREOF, the parties have caused this Amendment to be duly
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
LESLIE FAY MARKETING, INC.
/s/
By:________________________________________
Name:
Title:
THE CIT GROUP/COMMERCIAL SERVICES, INC.
/s/
By:________________________________________
Name:
Title:
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EXHIBIT A-1
TERM NOTE
$5,000,000 New York, New York
as of August 25, 1999
FOR VALUE RECEIVED, LESLIE FAY MARKETING, INC., a Delaware corporation
("Borrower"), promises to pay to the order of THE CIT GROUP/COMMERCIAL SERVICES,
INC. ("CIT") on or before the Maturity Date (as defined in the Agreement
referred to below), the principal sum of FIVE MILLION DOLLARS ($5,000,000) or so
much of such principal sum as shall be outstanding and unpaid on the Maturity
Date. The Borrower further promises to pay to the order of CIT (a) the principal
amount of this Term Note in installments as set forth in Section 2.07 of the
Agreement, (b) mandatory prepayments of principal of this Term Note as set forth
in Section 2.04 of the Agreement and (c) interest on the unpaid principal amount
hereof from time to time outstanding at the rate per annum set forth in Section
2.05 to the Agreement, payable on the dates set forth in the Agreement.
This Note is the "Term Note" referred to in, and is entitled to the
benefits of, the Revolving Credit Agreement dated as of June 2, 1997 by and
between the Borrower and CIT (as the same may be amended, modified or
supplemented from time to time, the "Agreement") which, among other things,
provides for the acceleration of the maturity hereof upon the occurrence of
certain events and for prepayments in certain circumstances and upon certain
terms and conditions. Terms defined in the Agreement have the same meanings
herein.
This Term Note is secured by and is entitled to the benefits of the
liens and security interests granted by the Agreement and the other Related
Documents referred to in the Agreement, and is further entitled to the benefits
of the security agreements, guarantees and other Related Documents referred to
in the Agreement.
The Borrower hereby expressly waives presentment, demand, notice,
protest and all other demands and notices in connection with the delivery,
acceptance, performance, default or enforcement of this Term Note and the
Agreement, and an action for amounts due hereunder or thereunder shall
immediately accrue.
This Term Note shall be governed by, construed and enforced in
accordance with the laws of the State of New York, without regard to choice of
law principles.
LESLIE FAY MARKETING, INC.
______________________________________________
By: Warren Wishart
Title: Senior Vice President
Chief Financial Officer and Treasurer
EXHIBIT 5.1
[PARKER CHAPIN FLATTAU & KLIMPL, LLP LETTERHEAD]
October 29, 1999
The Leslie Fay Company, Inc.
1412 Broadway
New York, New York 10018
Ladies and Gentlemen:
We have acted as counsel to The Leslie Fay Company, Inc. a Delaware
corporation (the "Company"), in connection with its filing of a registration
statement on Form S-3 (the "Registration Statement") covering 193,822 shares of
Common Stock, par value $.01 per share (the "Shares"), that may be sold by
Dickstein & Co., L.P. and Dickstein International Limited, all as more
particularly described in the Registration Statement.
In our capacity as counsel to the Company, we have examined originals
or copies, satisfactory to us, of the Company's (1) certificate of
incorporation, (2) bylaws and (3) resolutions of the Company's Board of
Directors. We have also reviewed such other matters of law and examined and
relied upon such corporate records, agreements, certificates and other documents
as we have deemed relevant and necessary as a basis for the opinion hereinafter
expressed. In such examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals and
the conformity with the original documents of all documents submitted to us as
copies or facsimiles. As to any facts material to such opinion, we have, to the
extent that relevant facts were not independently established by us, relied on
certificates of public officials and certificates of officers or other
representatives of the Company.
On the basis of the foregoing, we are of the opinion that the Shares
have been validly authorized and legally issued and are fully paid and
non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference made to us under the caption "Legal
Matters" in the prospectus constituting part of the Registration Statement.
Very truly yours,
/S/ Parker Chapin Flattau & Klimpl, LLP
PARKER CHAPIN FLATTAU & KLIMPL, LLP
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our report dated
March 1, 1999, except with respect to Notes 2 and 10 as to which the date is
March 5, 1999 and with respect to Note 7 as to which the date is March 29, 1999,
included in The Leslie Fay Company, Inc.'s Form 10-K for the fiscal year ended
January 2, 1999 and to all references to our Firm included in this registration
statement.
Arthur Andersen LLP
New York, New York
October 27, 1999
