<PAGE>
zAs filed with the Securities and Exchange Commission on June 28, 1999
Registration No. 333-07197
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
AMENDMENT NO. 3
to
PART II OF
FORM S-1
REGISTRATION STATEMENT
Under
The Securities Act of 1933
--------------
HCI Direct, Inc.
(Formerly, Hosiery Corporation of America, Inc.)
(Exact Name of Registrant as Specified in Its Charter)
--------------
Delaware 2251 36-0782950
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification No.)
incorporation or
organization)
3369 Progress Drive
Bensalem, Pennsylvania 19020
(215) 244-9600
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
--------------
John F. Biagini
Chief Executive Officer
Hosiery Corporation of America, Inc.
3369 Progress Drive
Bensalem, Pennsylvania 19020
(215) 244-9600
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
Gregory A. Fernicola Peter J. Loughran
Skadden, Arps, Slate, Meagher & Flom Debevoise & Plimpton
LLP 875 Third Avenue
919 Third Avenue New York, New York 10022
New York, New York 10022 (212) 909-6000
(212) 735-3000
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Approximate date of commencement of the proposed sale to the public: As soon
as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), check the following box. [_]
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. [_]
--------------
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, or until the Registration Statement shall become effective
on such date as the Securities and Exchange Commission, acting pursuant to
Section 8(a), may determine.
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<PAGE>
EXPLANATORY NOTE
This Amendment No. 3 is filed for the purposes of filing certain exhibits
to the Registration Statement (Registration 333-07197) and updating information
in Part II of the Registration Statement. The Prospectus constituting part of
the Registration Statement has been omitted from this Amendment No. 3 as no
changes have been made to the Prospectus previously filed on June 28, 1999.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. Other Expenses of Issuance and Distribution.
The following is a list of estimated expenses in connection with the
issuance and distribution of the securities being registered:
<TABLE>
<S> <C>
SEC registration fee............................................. $ 62,680
Printing and engraving costs..................................... 350,000
Legal fees and expenses.......................................... 1,000,000
Accounting fees and expenses..................................... 250,000
NYSE listing fee................................................. 102,000
NASD filing fee.................................................. 17,750
Miscellaneous.................................................... 817,570
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Total.......................................................... $2,600,000
==========
</TABLE>
ITEM 14. Indemnification of Directors and Officers.
Subsection (a) of Section 145 of the General Corporation Law of the State
of Delaware (the "DGCL") empowers a corporation to 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 an action by or in the right of the corporation)
by reason of the fact that he is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees) judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.
Subsection (b) of Section 145 empowers a corporation to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that he
acted in any of the capacities set forth above, against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection with the
defense or settlement of such action or suit if he acted under similar
standards, except that no indemnification may be made in respect of any claim,
issue or matter as to which such person shall have been adjudged to be liable
to the corporation unless and only to the extent that the Court of Chancery or
the court in which action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
Section 145 further provides that to the extent that a director or officer
of a corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in subsections (a) and (b) of
Section 145, or in the defense of any claim, issue or matter therein, he shall
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith; that indemnification
provided by, or granted pursuant to, Section 145 shall not be deemed exclusive
of any other rights to which those seeking indemnification may be entitled; and
empowers the corporation to purchase and maintain insurance on behalf of any
person
II-1
<PAGE>
who is or was a director or officer of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or against
another corporation, partnership, joint venture, trust or other enterprise,
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such whether or not the corporation
would have the power to indemnify him against such liabilities under Section
145.
As permitted by the DGCL, the Restated Certificate of Incorporation of the
Company, a copy of which is filed as Exhibit 3.1 to this Registration
Statement, eliminates all liability of the Company's directors 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 Company or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) pursuant to Section
174 of the DGCL or (iv) for any transaction from which the director derived an
improper personal benefit.
The By-Laws of the Company, a copy of which is filed as Exhibit 3.4 to this
Registration Statement, provides the Company with the authority to indemnify
directors, officers and agents of the Company to the full extent allowed by the
laws of the State of Delaware.
The Company maintains directors' and officers' liability insurance for the
directors and officers of the Company through Executive Risk Indemnity up to
$3,000,000 for each loss and for each policy period.
ITEM 15. Recent Sales of Unregistered Securities.
On July 15, 1998, the Company issued an aggregate of 17,344 shares of
common stock upon exercise of options awarded to Mr. Henry in 1996 for an
aggregate consideration of $520,320.
The transaction described above was exempt from the registration
requirements of the Securities Act in reliance on Section 4(2) of the
Securities Act on the basis that such transaction did not involve a public
offering.
II-2
<PAGE>
ITEM 16. Exhibits and Financial Statement Schedules.
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<C> <S>
1.1 Form of Underwriting Agreement.
2.1 Recapitalization and Stock Purchase Agreement, dated as of July 19,
1994 among the Company, Joseph A. Murphy and HCA Holdings, Inc.
(incorporated by reference to the Company's Registration Statement on
Form S-1, File No. 33-87392).
2.2 First Amendment to Recapitalization and Stock Purchase Agreement,
dated as of October 4, 1994 (incorporated by reference to the
Company's Registration Statement on Form S-1, File No. 33-87392).
2.3 Kelso Investment Associates V, L.P. letter agreement, dated October
17, 1994 to purchase securities of the Company (incorporated by
reference to the Company's Registration Statement on Form S-1, File
No. 33-87392).
2.4 Kelso Equity Partners V, L.P. letter agreement, dated October 17, 1994
to purchase securities of the Company (incorporated by reference to
the Company's Registration Statement on Form S-1, File No. 33-87392).
2.5 Form of Stock Subscription Agreement, dated as of October 17, 1994
between the Company and certain stockholders of the Company
(incorporated by reference to the Company's Registration Statement on
Form S-1, File No. 33-87392).
2.6 Management Stock Purchase and Restricted Stock Award Agreement, dated
as of October 17, 1994, between the Company and John F. Biagini
(incorporated by reference to the Company's Registration Statement on
Form S-1, File No. 33-87392).
2.7 Management Stock Purchase and Restricted Stock Award Agreement, dated
as of October 17, 1994, between the Company and Hans Lengers
(incorporated by reference to the Company's Registration Statement on
Form S-1, File No. 33-87392).
2.8 Escrow Agreement, dated as of October 17, 1994, among the Company,
Joseph A. Murphy and Midlantic Bank, N.A., as Escrow Agent
(incorporated by reference to the Company's Registration Statement on
Form S-1, File No. 33-87392).
2.9 Pledge Agreement, dated as of October 17, 1994, between Joseph A.
Murphy, as Pledgor, and the Company, as Pledgee (incorporated by
reference to the Company's Registration Statement on Form S-1, File
No. 33-87392).
2.10 Indemnity Agreement, dated as of October 17, 1994, between Joseph A.
Murphy and the Company (incorporated by reference to the Company's
Registration Statement on Form S-1, File No. 33-87392).
2.11 Form of Seventh Amendment to Recapitalization and Stock Purchase
Agreement, dated as of April 12, 1995, and First Amendment to Escrow
Agreement, dated as of April 12, 1995, as a part thereof (incorporated
by reference to the Company's Registration Statement on Form S-1, File
No. 33-87392).
3.1 Restated Certificate of Incorporation of the Company filed with the
Secretary of State of the state of Delaware on June 24, 1999.
3.2 Form of Restated Certificate of Incorporation of the Company to be
filed by the Company with the Secretary of State of the state of
Delaware immediately following the completion of the offering.
3.3 By-Laws of the Company (incorporated by reference to the Company's
Registration Statement on Form S-1, File No. 33-87392).
3.4 Form of Restated By-Laws of the Company.
4.1 Indenture, dated as of October 17, 1994, between the Company and
United States Trust Company of New York, as Trustee (incorporated by
reference to the Company's Registration Statement on Form S-1, File
No. 33-87392).
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<C> <S>
4.2 Form of New Notes (incorporated by reference to the Company's
Registration Statement on Form S-1, File No. 33-87392).
4.3 Exchange and Registration Rights Agreement, dated as of October 17,
1994, among the Company, Bear Stearns & Co. Inc. and BT Securities
Corporation (incorporated by reference to the Company's Registration
Statement on Form S-1, File No. 33-87392).
4.4 Specimen Common Stock Certificate.
4.5 First Supplemental Indenture, dated as of June 25, 1999, between the
Company and United States Trust Company of New York, as Trustee.
5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP.
9.1 Stockholders' Agreement, dated as of October 17, 1994, among the
Company, Kelso Investment Associates V, L.P., Kelso Equity Partners V,
L.P., Joseph A. Murphy, John F. Biagini, Hans L. Lengers and such
other stockholders who become parties to such agreement pursuant to
such agreement (incorporated by reference to the Company's
Registration Statement on Form S-1, File No. 33-87392).
9.2 Form of Letter Agreement between the Company and certain stockholders
of the Company dated October 17, 1994 relating to the Stockholders'
Agreement (incorporated by reference to the Company's Registration
Statement on Form S-1, File No. 33-87392).
9.3 First Amendment to the Stockholders Agreement among the Company, Kelso
Investment Associates V, L.P., Kelso Equity Partners V, L.P. and
certain other stockholders of the Company dated as of July 1, 1999.
10.1 Credit Agreement, dated as of October 17, 1994, among the Company,
National Westminster Bank PLC, as Co-Agent, and the financial
institutions listed on the signature pages thereto (incorporated by
reference to the Company's Registration Statement on Form S-1, File
No. 33-87392).
10.2 Employment Agreement between U.S. Textile Corp. and Hans Lengers,
dated as of August 29, 1980, and an Amendment thereto among U.S.
Textile Corp., the Company and Hans Lengers, dated as of September 12,
1994 (incorporated by reference to the Company's Registration
Statement on Form S-1, File No. 33-87392).
10.3 Executive Employment Agreement between the Company and Robert J.
Mooney, dated as of September 16, 1993 (incorporated by reference to
the Company's Registration Statement on Form S-1, File No. 33-87392).
10.4 Letter Agreement dated October 17, 1994 between the Company and Kelso
& Company, Inc. regarding financial advisory and other services
(incorporated by reference to the Company's Registration Statement on
Form S-1, File No. 33-87392).
10.5 Purchase Agreement, dated as of October 7, 1994 among the Company,
Bear, Stearns & Co. Inc. and BT Securities Corporation (incorporated
by reference to the Company's Registration Statement on Form S-1, File
No. 33-87392).
10.6 Mailing List Contracts (incorporated by reference to the Company's
Registration Statement on Form S-1, File No. 33-87392).
10.7 Executive Employment Agreement between the Company and Robert M.
Henry, dated as of August 7, 1995 (incorporated by reference to the
Company's Form 10-K for the fiscal year ended December 31, 1995).
10.8 Amended and Restated Hosiery Corporation of America, Inc. 1996 Stock
Option Plan.
10.9 Form of Hosiery Corporation of America, Inc. 1996 Stock Option Plan
Stock Option Agreement.
10.10 HCI Direct, Inc. 1999 Stock Option Plan.
10.11 Executive Employment Agreement between the Company and Philip G.
Whalen, dated as of March 16, 1998 (incorporated by reference to the
Company's Form 10-Q for the second quarter of 1998).
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description
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<C> <S>
10.12 Executive Employment Agreement between the Company and Martin J.
Pearson, dated as of June 30, 1998 (incorporated by reference to the
Company's Quarterly Report on Form 10-Q for the third quarter of
1998).
10.13 Form of Credit Agreement dated as of July , 1999 among the Company,
Bankers Trust Company and First Union.
+21.1 List of Subsidiaries of the Company.
+23.1 Consent of Independent Auditors, Deloitte & Touche LLP.
Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in
23.2 Exhibit 5.1).
+24.1 Power of Attorney.
</TABLE>
- --------
+ Previously filed.
(b) Financial Statement Schedules
<TABLE>
<S> <C>
Schedule I--Valuation and Qualifying Accounts--For the years ended
December 31, 1996, 1997 and 1998...................................... S-1
</TABLE>
All other Financial Statement Schedules have been omitted because they are
not applicable or not required or the required information is included in the
Consolidated Financial Statements or notes thereto.
ITEM 17. Undertakings.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the foregoing provisions, 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 Securities
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 officer, 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 of
whether such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus 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.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized in Bucks County,
Commonwealth of Pennsylvania, on the 14th day of July 1999.
HCI Direct, Inc.
/s/ John F. Biagini
By: __________________________________
John F. Biagini
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 2 to the Registration Statement has been signed by the
following persons in the capacities and on the dates indicated.
Signature Title Date
/s/ John F. Biagini Chairman and Chief
- ------------------------------------ Executive Officer July 14, 1999
John F. Biagini and Director
(principal
executive officer)
* Vice President and
- ------------------------------------ Chief Financial July 14, 1999
Arthur C. Hughes Officer (principal
accounting and
financial officer)
* Director
- ------------------------------------ July14, 1999
Michael B. Goldberg
* Director
- ------------------------------------ July 14, 1999
Frank K. Bynum, Jr.
* Director
- ------------------------------------ July 14, 1999
Hans L. Lengers
*By: /s/ John F. Biagini
- ------------------------------------
as Attorney-in-fact
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description Page
------- ----------- ----
<C> <S> <C>
1.1 Form of Underwriting Agreement.
2.1 Recapitalization and Stock Purchase Agreement, dated as of July
19, 1994 among the Company, Joseph A. Murphy and HCA Holdings,
Inc. (incorporated by reference to the Company's Registration
Statement on Form S-1, File No. 33-87392).
2.2 First Amendment to Recapitalization and Stock Purchase
Agreement, dated as of October 4, 1994 (incorporated by
reference to the Company's Registration Statement on Form S-1,
File No. 33-87392).
2.3 Kelso Investment Associates V, L.P. letter agreement, dated
October 17, 1994 to purchase securities of the Company
(incorporated by reference to the Company's Registration
Statement on Form S-1, File No. 33-87392).
2.4 Kelso Equity Partners V, L.P. letter agreement, dated October
17, 1994 to purchase securities of the Company (incorporated by
reference to the Company's Registration Statement on Form S-1,
File No. 33-87392).
2.5 Form of Stock Subscription Agreement, dated as of October 17,
1994 between the Company and certain stockholders of the
Company (incorporated by reference to the Company's
Registration Statement on Form S-1, File No. 33-87392).
2.6 Management Stock Purchase and Restricted Stock Award Agreement,
dated as of October 17, 1994, between the Company and John F.
Biagini (incorporated by reference to the Company's
Registration Statement on Form S-1, File No. 33-87392).
2.7 Management Stock Purchase and Restricted Stock Award Agreement,
dated as of October 17, 1994, between the Company and Hans
Lengers (incorporated by reference to the Company's
Registration Statement on Form S-1, File No. 33-87392).
2.8 Escrow Agreement, dated as of October 17, 1994, among the
Company, Joseph A. Murphy and Midlantic Bank, N.A., as Escrow
Agent (incorporated by reference to the Company's Registration
Statement on Form S-1, File No. 33-87392).
2.9 Pledge Agreement, dated as of October 17, 1994, between Joseph
A. Murphy, as Pledgor, and the Company, as Pledgee
(incorporated by reference to the Company's Registration
Statement on Form S-1, File No. 33-87392).
2.10 Indemnity Agreement, dated as of October 17, 1994, between
Joseph A. Murphy and the Company (incorporated by reference to
the Company's Registration Statement on Form S-1, File No. 33-
87392).
2.11 Form of Seventh Amendment to Recapitalization and Stock
Purchase Agreement, dated as of April 12, 1995, and First
Amendment to Escrow Agreement, dated as of April 12, 1995, as a
part thereof (incorporated by reference to the Company's
Registration Statement on Form S-1, File No. 33-87392).
3.1 Restated Certificate of Incorporation of the Company filed with
the Secretary of State of the state of Delaware on June 24, 1999.
3.2 Form of Restated Certificate of Incorporation of the Company to
be filed by the Company with the Secretary of State of Delaware
immediately following the completion of the offering.
3.3 By-Laws of the Company (incorporated by reference to the
Company's Registration Statement on Form S-1, File No. 33-
87392).
3.4 Form of Restated By-Laws of the Company.
4.1 Indenture, dated as of October 17, 1994, between the Company
and United States Trust Company of New York, as Trustee
(incorporated by reference to the Company's Registration
Statement on Form S-1, File No. 33-87392).
4.2 Form of New Notes (incorporated by reference to the Company's
Registration Statement on Form S-1, File No. 33-87392).
4.3 Exchange and Registration Rights Agreement, dated as of October
17, 1994, among the Company, Bear Stearns & Co. Inc. and BT
Securities Corporation (incorporated by reference to the
Company's Registration Statement on Form S-1, File No. 33-
87392).
4.4 Specimen Common Stock Certificate.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description Page
------- ----------- ----
<C> <S> <C>
4.5 First Supplemental Indenture, dated as of June 25, 1999,
between the Company and United States Trust Company of New
York, as Trustee.
5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP.
9.1 Stockholders' Agreement, dated as of October 17, 1994, among
the Company, Kelso Investment Associates V., L.P., Kelso Equity
Partners V., L.P., Joseph A. Murphy, John F. Biagini, Hans
Lengers and such other stockholders who become parties to such
agreement pursuant to such agreement (incorporated by reference
to the Company's Registration Statement on Form S-1, File No.
33-87392).
9.2 Form of Letter Agreement between the Company and certain
stockholders of the Company dated October 17, 1994 relating to
the Stockholders' Agreement (incorporated by reference to the
Company's Registration Statement on Form S-1, File No. 33-
87392).
9.3 First Amendment to the Stockholders' Agreement among the Company,
Kelso Investment Associates V, L.P., Kelso Equity Partners V, L.P.
and certain other stockholders of the Company dated as of July 1,
1999.
10.1 Credit Agreement, dated as of October 17, 1994, among the
Company, National Westminster Bank PLC, as Co-Agent, and the
financial institutions listed on the signature pages thereto
(incorporated by reference to the Company's Registration
Statement on Form S-1, File No. 33-87392).
10.2 Employment Agreement between U.S. Textile Corp. and Hans
Lengers, dated as of August 29, 1980, and an Amendment thereto
among U.S. Textile Corp., the Company and Hans Lengers, dated
as of September 12, 1994 (incorporated by reference to the
Company's Registration Statement on Form S-1, File No. 33-
87392).
10.3 Executive Employment Agreement between the Company and Robert
J. Mooney, dated as of September 16, 1993 (incorporated by
reference to the Company's Registration Statement on Form S-1,
File No. 33-87392).
10.4 Letter Agreement dated October 17, 1994 between the Company and
Kelso & Company, Inc. regarding financial advisory and other
services (incorporated by reference to the Company's
Registration Statement on Form S-1, File No. 33-87392).
10.5 Purchase Agreement, dated as of October 7, 1994 among the
Company, Bear, Stearns & Co. Inc. and BT Securities Corporation
(incorporated by reference to the Company's Registration
Statement on Form S-1, File No. 33-87392).
10.6 Mailing List Contracts (incorporated by reference to the
Company's Registration Statement on Form S-1, File No. 33-
87392).
10.7 Executive Employment Agreement between the Company and Robert
M. Henry, dated as of August 7, 1995 (incorporated by reference
to the Company's Form 10-K for the fiscal year ended December
31, 1995).
10.8 Amended and Restated Hosiery Corporation of America, Inc. 1996
Stock Option Plan.
10.9 Form of Hosiery Corporation of America, Inc. 1996 Stock Option
Plan Stock Option Agreement.
10.10 HCI Direct, Inc. 1999 Stock Option Plan.
10.11 Executive Employment Agreement between the Company and Philip
G. Whalen, dated as of March 16, 1998 (incorporated by
reference to the Company's Form 10-Q for the second quarter of
1998).
10.12 Executive Employment Agreement between the Company and Martin
J. Pearson, dated as of June 30, 1998 (incorporated by
reference to the Company's Quarterly Report on Form 10-Q for
the third quarter of 1998).
10.13 Form of Credit Agreement dated as of July , 1999 among the
Company, Bankers Trust Company and First Union.
+21.1 List of Subsidiaries of the Company.
+23.1 Consent of Independent Auditors, Deloitte & Touche LLP.
23.2 Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included
in Exhibit 5.1).
+24.1 Power of Attorney.
</TABLE>
- --------
+ Previously filed.
<PAGE>
EXHIBIT 1.1
HCI Direct, Inc.
Common Stock, Par Value $.01 Per Share
________________
Underwriting Agreement
----------------------
July __, 1999
Goldman, Sachs & Co.,
Bear, Stearns & Co. Inc.,
BancBoston Robertson Stephens Inc.,
First Union Capital Markets Corp.
As representatives of the several Underwriters
named in Schedule I hereto,
c/o Goldman, Sachs & Co.,
85 Broad Street,
New York, New York 10004.
Ladies and Gentlemen:
HCI Direct, Inc., a Delaware corporation (the "Company"), proposes,
subject to the terms and conditions stated herein, to issue and sell to the
Underwriters named in Schedule I hereto (the "Underwriters") an aggregate of
[10,000,000] shares (the "Firm Shares") of Common Stock, par value $.01 per
share ("Stock"), of the Company, and the Company and the stockholders of the
Company named in Schedule II hereto (the "Selling Stockholders") propose,
subject to the terms and conditions stated herein, to sell to the Underwriters,
at the election of the Underwriters, up to [1,500,000] additional shares (the
"Optional Shares") of Stock. The Firm Shares and the Optional Shares that the
Underwriters elect to purchase pursuant to Section 2 hereof are collectively
called the "Shares".
1. (A) The Company represents and warrants to, and agrees with, each of
the Underwriters that:
(a) A registration statement on Form S-1 (File No. 333-07197) (the
"Initial Registration Statement") in respect of the Shares has been filed
with the Securities and Exchange Commission (the "Commission"); the Initial
Registration Statement and any
<PAGE>
post-effective amendment thereto, each in the form heretofore delivered to
you, and, excluding exhibits thereto, to you for each of the other
Underwriters, have been declared effective by the Commission in such form;
other than a registration statement, if any, increasing the size of the
offering (a "Rule 462(b) Registration Statement"), filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended (the "Act"), which became
effective upon filing, no other document (other than transmittal letters,
letters responding to comments and supplemental materials requested by the
staff of the Commission, copies of which have been provided to you) with
respect to the Initial Registration Statement has heretofore been filed with
the Commission; and no stop order suspending the effectiveness of the Initial
Registration Statement, any post-effective amendment thereto or the Rule
462(b) Registration Statement, if any, has been issued and no proceeding for
that purpose has been initiated or threatened by the Commission (any
preliminary prospectus included in the Initial Registration Statement or
filed with the Commission pursuant to Rule 424(a) of the rules and
regulations of the Commission under the Act is hereinafter called a
"Preliminary Prospectus"; the various parts of the Initial Registration
Statement and the Rule 462(b) Registration Statement, if any, including all
exhibits thereto and including the information contained in the form of final
prospectus filed with the Commission pursuant to Rule 424(b) under the Act in
accordance with Section 5(a) hereof and deemed by virtue of Rule 430A under
the Act to be part of the Initial Registration Statement at the time it was
declared effective, each as amended at the time such part of the Initial
Registration Statement became effective or such part of the Rule 462(b)
Registration Statement, if any, became or hereafter becomes effective, are
hereinafter collectively called the "Registration Statement"; and such final
prospectus, in the form first filed pursuant to Rule 424(b) under the Act, is
hereinafter called the "Prospectus");
(b) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary
Prospectus, at the time of filing thereof, conformed in all material respects
to the requirements of the Act and the rules and regulations of the
Commission thereunder, and did not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that this
representation and warranty shall not apply to any statements or omissions
made in reliance upon and in conformity with information furnished in writing
to the Company by an Underwriter through Goldman, Sachs & Co. expressly for
use therein;
(c) The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of the
Act and the rules and regulations of the Commission thereunder and do not and
will not, as of the applicable
2
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effective date as to the Registration Statement and any amendment thereto,
and as of the applicable filing date as to the Prospectus and any amendment
or supplement thereto, contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make
the statements therein not misleading; provided, however, that this
representation and warranty shall not apply to any statements or omissions
made in reliance upon and in conformity with information furnished in writing
to the Company by an Underwriter through Goldman, Sachs & Co. expressly for
use therein;
(d) Neither the Company nor any of its "significant subsidiaries" (as such
term is defined in Rule 1-02 of Regulation S-X) (each a "Significant
Subsidiary" and, collectively, the "Significant Subsidiaries") has sustained
since the date of the latest audited financial statements included in the
Prospectus any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or
from any labor dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the Prospectus; and, other
than as set forth or contemplated in the Prospectus, since the respective
dates as of which information is given in the Registration Statement and the
Prospectus, there has not been any change in the issued and outstanding
capital stock or long-term debt of the Company or any of its Significant
Subsidiaries or any material adverse change, or any development involving a
prospective material adverse change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of operations
of the Company and its subsidiaries, otherwise than as set forth or
contemplated in the Prospectus;
(e) The Company and its Significant Subsidiaries have good and marketable
title in fee simple to all real property and good title to all personal
property owned by them which is material to the business of the Company and
its subsidiaries taken as a whole, in each case free and clear of all liens,
encumbrances and defects except (i) such as are described in the Prospectus
or (ii such as do not materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of such
property by the Company and its Significant Subsidiaries; and any real
property and buildings held under lease by the Company and its subsidiaries
are held by them under valid, subsisting and enforceable leases with such
exceptions as are not material and do not materially interfere with the use
made and proposed to be made of such property and buildings by the Company
and its subsidiaries;
(f) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware, with
power and authority (corporate and other) to own its properties and conduct
its business as described in the Prospectus; has been duly qualified as a
foreign corporation for the
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transaction of business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties or conducts any business
so as to require such qualification, except where the failure to be so
qualified or in good standing would not have a material adverse effect on the
business, the management or the current or future consolidated financial
position, stockholders' equity or results of operations of the Company and
its subsidiaries taken as a whole (a "Material Adverse Effect"); and each
Significant Subsidiary of the Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation;
(g) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company have
been duly and validly authorized and issued, are fully paid and non-
assessable and conform to the description of the Stock contained in the
Prospectus; and all of the issued shares of capital stock of each Significant
Subsidiary of the Company have been duly and validly authorized and issued,
are fully paid and non-assessable and (except for directors' qualifying
shares) are owned directly or indirectly by the Company, free and clear of
all liens, encumbrances, equities or claims (collectively, "Liens"), except
for Liens securing borrowings under the Company's existing or new credit
facility, each as described in the Registration Statement;
(h) The unissued Shares to be issued and sold by the Company to the
Underwriters hereunder have been duly and validly authorized and, when issued
and delivered against payment therefor as provided herein, will be duly and
validly issued and fully paid and non-assessable and will conform to the
description of the Stock contained in the Prospectus;
(i) The issue and sale of the Shares by the Company and the compliance by
the Company with all of the provisions of this Agreement and the consummation
of the transactions contemplated herein and in the Prospectus under the
caption "Use of Proceeds" will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or any of its Significant
Subsidiaries is a party or by which the Company or any of its Significant
Subsidiaries is bound or to which any of the property or assets of the
Company or any of its Significant Subsidiaries is subject, nor will such
action result in any violation of the provisions of the Certificate of
Incorporation or By-laws of the Company or any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction
over the Company or any of its Significant Subsidiaries or any of their
properties; and no consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body is
required for
4
<PAGE>
the issue and sale of the Shares or the consummation by the Company of the
transactions contemplated herein and in the Prospectus under the caption "Use
of Proceeds", except the registration under the Act of the Shares and such
consents, approvals, authorizations, registrations or qualifications as may
be required under state securities or Blue Sky laws or the securities laws of
foreign jurisdictions in connection with the purchase and distribution of the
Shares by the Underwriters;
(j) Neither the Company nor any of its Significant Subsidiaries is in
violation of its Certificate of Incorporation or By-laws or in default in the
performance or observance of any material obligation, agreement, covenant or
condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a party or
by which it or any of its properties may be bound;
(k) The statements set forth in the Prospectus under the caption
"Description of Capital Stock", insofar as they purport to constitute a
summary of the terms of the Stock, and under the captions "Risk Factors--
Government regulation may adversely affect our business", "Business--
Government Regulation" and "Underwriting", insofar as they purport to
describe the legal matters and the provisions of the laws and documents
referred to therein, are accurate, complete and fair in all material
respects;
(l) Other than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property of the Company or any of its
subsidiaries is the subject which, if determined adversely to the Company or
any of its subsidiaries, would individually or in the aggregate have a
material adverse effect on the current or future consolidated financial
position, stockholders' equity or results of operations of the Company and
its subsidiaries; and, to the Company's actual knowledge, no such proceedings
are threatened or contemplated by governmental authorities or threatened by
others;
(m) The Company is not and, after giving effect to the offering and sale
of the Shares, will not be an "investment company", as such term is defined
in the Investment Company Act of 1940, as amended (the "Investment Company
Act");
(n) Deloitte & Touche LLP, who have certified certain consolidated
financial statements of the Company, are independent public accountants as
required by the Act and the rules and regulations of the Commission
thereunder;
(o) The Company has reviewed its operations and that of its subsidiaries
and any third parties with which the Company or any of its subsidiaries has a
material relationship to evaluate the extent to which the business or
operations of the Company or any of its subsidiaries will be affected by the
Year 2000 Problem. As a result of such
5
<PAGE>
review, except as disclosed in the Prospectus, the Company has no reason to
believe, and does not believe, that the Year 2000 Problem will have a
Material Adverse Effect or result in any material loss or interference with
the Company's business or operations. The "Year 2000 Problem" as used herein
means any significant risk that computer hardware or software used in the
receipt, transmission, processing, manipulation, storage, retrieval,
retransmission or other utilization of data or in the operation of mechanical
or electrical systems of any kind will not, in the case of dates or time
periods occurring after December 31, 1999, function at least as effectively
as in the case of dates or time periods occurring prior to January 1, 2000;
(p) Each of the Company and its subsidiaries has all necessary consents,
authorizations, approvals, orders, certificates, licenses and permits
(collectively, "Permits") of and from, and has made all declarations and
filings with, all foreign, federal, state, local and other governmental
authorities, all self-regulatory organizations and all courts and other
tribunals, to own, lease, license and use its properties and assets and to
conduct its business in the manner described in the Prospectus, except where
the failure to so obtain or file would not individually and in the aggregate
have a Material Adverse Effect; and, other than as set forth in the
Prospectus, the Company and its subsidiaries are in compliance in all
material respects with the terms and conditions of (x) all such Permits and
(y) the 1984 consent injunction issued by the Federal District Court for the
Eastern District of Pennsylvania (the "1984 Consent Injunction") and the 1997
agreement with a multistate group consisting of eleven states (the "1997
Multistate Agreement"), each as described in the Prospectus;
(q) The Company and its subsidiaries (i) are in compliance with any and
-
all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), (ii) have received all permits, licenses or other
--
approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
---
conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and
conditions of such permits, licenses or approvals would not individually and
in the aggregate have a Material Adverse Effect;
(r) There are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the Company
to file a registration statement under the Act with respect to any securities
of the Company or to require the Company to include such securities with the
Shares registered pursuant to
6
<PAGE>
the Registration Statement, except as referred to in the Registration
Statement or the exhibits thereto;
(s) The Company and its Significant Subsidiaries own or possess, or can
acquire on reasonable terms, all material patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information,
systems or procedures), trademarks, service marks and trade names currently
employed by them in connection with the business now operated by them, and
neither the Company nor any of its subsidiaries has received any notice of
infringement of or conflict with asserted rights of others with respect to
any of the foregoing which individually or in the aggregate, if the subject
of an unfavorable decision, ruling or finding, would result in a Material
Adverse Effect;
(t) No material labor dispute with the employees of the Company or any of
its subsidiaries exists, except as described in or contemplated by the
Prospectus, or, to the knowledge of the Company, is imminent; and the Company
is not aware of any existing, threatened or imminent labor disturbance by the
employees of any of its principal suppliers, manufacturers or contractors
that could result in a Material Adverse Effect;
(u) The Company and each of its Significant Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which
they are engaged; and neither the Company nor any such subsidiary has any
reason to believe that it will not be able to renew its existing insurance
coverage from similar insurers as may be necessary to continue its business
at a cost consistent with the recent past, except as described in or
contemplated by the Prospectus; and
(v) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed
in accordance with management's general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability, (iii) access to assets is permitted only in
accordance with management's general or specific authorization, and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(B) Each of the Selling Stockholders severally represents and warrants to,
and agrees with, each of the Underwriters and the Company that:
(a) All consents, approvals, authorizations and orders necessary for the
execution and delivery by such Selling Stockholder of this Agreement and the
Power of Attorney
7
<PAGE>
and the Custody Agreement hereinafter referred to, and for the sale and
delivery of the Shares to be sold by such Selling Stockholder hereunder, have
been obtained; and such Selling Stockholder has full right, power and
authority to enter into this Agreement, the Power of Attorney and the Custody
Agreement and to sell, assign, transfer and deliver the Shares to be sold by
such Selling Stockholder hereunder;
(b) The sale of the Shares to be sold by such Selling Stockholder
hereunder and the compliance by such Selling Stockholder with all of the
provisions of this Agreement, the Power of Attorney and the Custody Agreement
and the consummation of the transactions herein and therein contemplated will
not conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any statute, indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which such Selling Stockholder is a party or by which such Selling
Stockholder is bound or to which any of the property or assets of such
Selling Stockholder is subject, nor will such action result in any violation
of the provisions of the partnership agreement of such Selling Stockholder if
such Selling Stockholder is a partnership or any statute or any order, rule
or regulation of any court or governmental agency or body having jurisdiction
over such Selling Stockholder or the property of such Selling Stockholder;
(c) Such Selling Stockholder has, and immediately prior to each Time of
Delivery (as defined in Section 4 hereof) will have, good and valid title to
the Shares to be sold by such Selling Stockholder hereunder, free and clear
of all liens, encumbrances, equities or claims; and, upon delivery of such
Shares and payment therefor pursuant hereto, good and valid title to such
Shares, free and clear of all liens, encumbrances, equities or claims, will
pass to the several Underwriters;
(d) During the period beginning from the date hereof and continuing to and
including the date 180 days after the date of the Prospectus, such Selling
Stockholder will not offer, sell, contract to sell or otherwise dispose of,
except as provided hereunder, any securities of the Company that are
substantially similar to the Shares, including but not limited to any
securities that are convertible into or exchangeable for, or that represent
the right to receive, Stock or any such substantially similar securities or
enter into any hedging transactions with respect to any of the foregoing,
without your prior written consent;
(e) Such Selling Stockholder has not taken and will not take, directly or
indirectly, any action which is designed to or which has constituted or which
might reasonably be expected to cause or result in stabilization or
manipulation of the price of any security of the Company to facilitate the
sale or resale of the Shares;
8
<PAGE>
(f) To the extent that any statements or omissions made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto are made in reliance upon and in conformity
with written information furnished to the Company by such Selling Stockholder
expressly for use therein, such Preliminary Prospectus and the Registration
Statement did, and the Prospectus and any further amendments or supplements
to the Registration Statement and the Prospectus, when they become effective
or are filed with the Commission, as the case may be, will conform in all
material respects to the requirements of the Act and the rules and
regulations of the Commission thereunder and will not contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein not misleading,
provided that, for all purposes of this Agreement, the only information
furnished to the Company by such Selling Stockholder expressly for use in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto are the statements pertaining to the number
of shares owned and the number of shares proposed to be sold by such Selling
Stockholder under the caption "Security Ownership of Management and
Beneficial Owners of More Than of 5% of Our Common Stock";
(g) In order to document the Underwriters' compliance with the reporting
and withholding provisions of the Tax Equity and Fiscal Responsibility Act of
1982 with respect to the transactions herein contemplated, such Selling
Stockholder will deliver to you prior to or at the First Time of Delivery (as
hereinafter defined) a properly completed and executed United States Treasury
Department Form W-9 (or other applicable form or statement specified by
Treasury Department regulations in lieu thereof);
(h) Certificates in negotiable form representing all of the Shares to be
sold by such Selling Stockholder hereunder have been placed in custody under
a Custody Agreement, in the form heretofore furnished to you (the "Custody
Agreement"), duly executed and delivered by such Selling Stockholder to
American Stock Transfer & Trust Company, as custodian (the "Custodian"), and
such Selling Stockholder has duly executed and delivered a Power of Attorney,
in the form heretofore furnished to you (the "Power of Attorney"), appointing
[specify attorneys-in-fact], and each of them, as such Selling Stockholder's
attorneys-in-fact (the "Attorneys-in-Fact") with authority to execute and
deliver this Agreement on behalf of such Selling Stockholder, to determine
the purchase price to be paid by the Underwriters to such Selling Stockholder
as provided in Section 2 hereof, to authorize the delivery of the Shares to
be sold by such Selling Stockholder hereunder and otherwise to act on behalf
of such Selling Stockholder in connection with the transactions contemplated
by this Agreement and the Custody Agreement; and
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<PAGE>
(i) The Shares represented by the certificates held in custody for such
Selling Stockholder under the Custody Agreement are subject to the interests
of the Underwriters hereunder; the arrangements made by such Selling
Stockholder for such custody, and such Selling Stockholder's appointment of
the Attorneys-in-Fact by the Power of Attorney, are to that extent
irrevocable; the obligations of the Selling Stockholders hereunder shall not
be terminated by operation of law, whether by the death or incapacity of any
individual Selling Stockholder or, in the case of a partnership, by the
dissolution of such partnership, or by the occurrence of any other event; if
any individual Selling Stockholder should die or become incapacitated, if any
such partnership should be dissolved or if any other such event should occur
before the delivery of the Shares hereunder, certificates representing the
Shares shall be delivered by or on behalf of the Selling Stockholders in
accordance with the terms and conditions of this Agreement and of the Custody
Agreements; and actions taken by the Attorneys-in-Fact pursuant to the Power
of Attorney shall be as valid as if such death, incapacity, dissolution or
other event had not occurred, regardless of whether or not the Custodian, the
Attorneys-in-Fact, or any of them, shall have received notice of such death,
incapacity, dissolution or other event.
2. Subject to the terms and conditions herein set forth, (a) the Company
agrees to issue and sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Company, at
a purchase price per share of $________, the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule I hereto and (b) in the event
and to the extent that the Underwriters shall exercise the election to purchase
Optional Shares as provided below, the Company and each of the Selling
Stockholders agree, severally and not jointly, to sell to each of the
Underwriters, and each of the Underwriters agrees, severally and not jointly, to
purchase from the Company and each of the Selling Stockholders, at the purchase
price per share set forth in clause (a) of this Section 2, that portion of the
number of Optional Shares as to which such election shall have been exercised
(to be adjusted by you so as to eliminate fractional shares) determined by
multiplying such number of Optional Shares by a fraction, the numerator of which
is the maximum number of Optional Shares which such Underwriter is entitled to
purchase as set forth opposite the name of such Underwriter in Schedule I hereto
and the denominator of which is the maximum number of Optional Shares that all
of the Underwriters are entitled to purchase hereunder.
The Company and the Selling Stockholders, as and to the extent indicated
in Schedule II hereto, hereby grant, severally and not jointly, to the
Underwriters the right to purchase at the Underwriters' election up to
[1,500,000] Optional Shares, at the purchase price per share set forth in the
paragraph above, for the sole purpose of covering sales of shares in the
offering contemplated by the Registration Statement in excess of the number of
Firm Shares. Any such election to purchase Optional Shares shall be made in
proportion
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<PAGE>
to the maximum number of Optional Shares to be sold by Company and each Selling
Stockholder as set forth in Schedule II hereto. Any such election to purchase
Optional Shares may be exercised only by written notice from you to the Company
and the Attorneys-in-Fact, given within a period of 30 calendar days after the
date of this Agreement, setting forth the aggregate number of Optional Shares to
be purchased and the date on which such Optional Shares are to be delivered, as
determined by you but in no event earlier than the First Time of Delivery (as
defined in Section 4 hereof) or, unless you and the Company and the
Attorneys-in-Fact otherwise agree in writing, earlier than two or later than ten
business days after the date of such notice.
3. Upon the authorization by you of the release of the Firm Shares, the
several Underwriters propose to offer the Firm Shares for sale upon the terms
and conditions set forth in the Prospectus.
4. (a) The Shares to be purchased by each Underwriter hereunder, in
definitive form, and in such authorized denominations and registered in such
names as Goldman, Sachs & Co. may request upon at least forty-eight hours' prior
notice to the Company and the Selling Stockholders shall be delivered by or on
behalf of the Company and the Selling Stockholders to Goldman, Sachs & Co.,
through the facilities of the Depository Trust Company ("DTC"), for the account
of such Underwriter, against payment by or on behalf of such Underwriter of the
purchase price therefor by wire transfer of Federal (same-day) funds to the
accounts specified by the Company and the Custodian to Goldman, Sachs & Co. at
least forty-eight hours in advance. The Company will cause the certificates
representing the Shares to be made available for checking and packaging at least
twenty-four hours prior to the Time of Delivery (as defined below) with respect
thereto at the office of DTC or its designated custodian (the "Designated
Office"). The time and date of such delivery and payment shall be, with respect
to the Firm Shares, 9:30 a.m., New York City time, on July __, 1999, or such
other time and date as Goldman, Sachs & Co. and the Company may agree upon in
writing, and, with respect to the Optional Shares, 9:30 a.m., New York time, on
the date specified by Goldman, Sachs & Co. in the written notice given by
Goldman, Sachs & Co. of the Underwriters' election to purchase such Optional
Shares, or such other time and date as Goldman, Sachs & Co. and the Company may
agree upon in writing. Such time and date for delivery of the Firm Shares is
herein called the "First Time of Delivery", such time and date for delivery of
the Optional Shares, if not the First Time of Delivery, is herein called the
"Second Time of Delivery", and each such time and date for delivery is herein
called a "Time of Delivery".
(b) The documents to be delivered at each Time of Delivery by or on behalf
of the parties hereto pursuant to Section 7 hereof, including the cross receipt
for the Shares and all documents and certificates to be delivered pursuant to
Section 7(m) hereof, will be delivered at the offices of Debevoise & Plimpton,
875 Third Avenue, New York, New York 10022 (the
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<PAGE>
"Closing Location"), and the Shares will be delivered at the Designated Office,
all at such Time of Delivery. A meeting will be held at the Closing Location at
2:00 p.m., New York City time, on the New York Business Day next preceding such
Time of Delivery, at which meeting the final drafts of the documents to be
delivered pursuant to the preceding sentence will be available for review by the
parties hereto. For the purposes of this Section 4, "New York Business Day"
shall mean each Monday, Tuesday, Wednesday, Thursday and Friday which is not a
day on which banking institutions in New York are generally authorized or
obligated by law or executive order to close.
5. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you and to file such
Prospectus pursuant to Rule 424(b) under the Act not later than the
Commission's close of business on the second business day following the
execution and delivery of this Agreement, or, if applicable, such earlier
time as may be required by Rule 430A(a)(3) under the Act; to make no further
amendment or any supplement to the Registration Statement or Prospectus prior
to the last Time of Delivery which shall be disapproved by you promptly after
reasonable notice thereof; to advise you, promptly after it receives notice
thereof, of the time when any amendment to the Registration Statement has
been filed or becomes effective or any supplement to the Prospectus or any
amended Prospectus has been filed and to furnish you with copies thereof; to
advise you, promptly after it receives notice thereof, of the issuance by the
Commission of any stop order or of any order preventing or suspending the use
of any Preliminary Prospectus or prospectus, of the suspension of the
qualification of the Shares for offering or sale in any jurisdiction, of the
initiation or threatening of any proceeding for any such purpose, or of any
request by the Commission for the amending or supplementing of the
Registration Statement or Prospectus or for additional information; and, in
the event of the issuance of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or prospectus or suspending
any such qualification, promptly to use its best efforts to obtain the
withdrawal of such order;
(b) Promptly from time to time to take such action as you may reasonably
request to qualify the Shares for offering and sale under the securities laws
of such domestic jurisdictions as you may request and to comply with such
laws so as to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the distribution of
the Shares, provided that in connection therewith the Company shall not be
required to qualify as a foreign corporation or to file a general consent to
service of process in any jurisdiction or to be subjected to any ongoing
reporting requirements in any such jurisdiction;
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<PAGE>
(c) Prior to 10:00 A.M., New York City time, on the New York Business Day
next succeeding the date of this Agreement and from time to time, to furnish
the Underwriters with copies of the Prospectus in New York City in such
quantities as you may reasonably request, and, if the delivery of a
prospectus is required by law at any time prior to the expiration of nine
months after the time of issue of the Prospectus in connection with the
offering or sale of the Shares and if at such time any event shall have
occurred as a result of which the Prospectus as then amended or supplemented
would include an untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made when such Prospectus is
delivered, not misleading, or, if for any other reason it shall be necessary
during such period to amend or supplement the Prospectus in order to comply
with the Act, to notify you and upon your request to prepare and furnish
without charge to each Underwriter and to any dealer in securities (if such
dealer is then required by law to so deliver a Prospectus) as many copies as
you may from time to time reasonably request of an amended Prospectus or a
supplement to the Prospectus which will correct such statement or omission or
effect such compliance, and in case any Underwriter is required to deliver a
prospectus in connection with sales of any of the Shares at any time nine
months or more after the time of issue of the Prospectus, upon your request
but at the expense of such Underwriter, to prepare and deliver to such
Underwriter as many copies as you may request of an amended or supplemented
Prospectus complying with Section 10(a)(3) of the Act;
(d) To make generally available to its security holders as soon as
practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c) under
the Act), an earning statement of the Company and its subsidiaries (which
need not be audited) complying with Section 11(a) of the Act and the rules
and regulations thereunder (including, at the option of the Company, Rule
158);
(e) During the period beginning from the date hereof and continuing to and
including the date 180 days after the date of the Prospectus, not to offer,
sell, contract to sell or otherwise dispose of, except as provided hereunder,
any securities of the Company that are substantially similar to the Shares,
including but not limited to any securities that are convertible into or
exchangeable for, or that represent the right to receive, Stock or any such
substantially similar securities (other than pursuant to employee stock
option plans existing on, or upon the conversion or exchange of convertible
or exchangeable securities outstanding as of, the date of this Agreement), or
file any registration statement under the Act (other than registration
statements on Form S-4 or S-8 or similar successor forms) or enter into any
hedging transaction with respect to any of the foregoing, without your prior
written consent;
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(f) To furnish to its stockholders as soon as practicable after the end of
each fiscal year an annual report (including a balance sheet and statements
of income, stockholders' equity and cash flows of the Company and its
consolidated subsidiaries certified by independent public accountants) and,
as soon as practicable after the end of each of the first three quarters of
each fiscal year (beginning with the fiscal quarter ending after the
effective date of the Registration Statement), to make available to its
stockholders consolidated summary financial information of the Company and
its subsidiaries for such quarter in reasonable detail;
(g) During a period of two years from the effective date of the
Registration Statement, to furnish to you, if you so request, copies of all
reports or other communications (financial or other) furnished to
stockholders, and to deliver to you, if you so request, (i) as soon as they
are available, copies of any reports and financial statements furnished to or
filed with the Commission or any national securities exchange on which any
class of securities of the Company is listed; and (ii) such additional
information concerning the business and financial condition of the Company as
you may from time to time reasonably request (such financial statements to be
on a consolidated basis to the extent the accounts of the Company and its
subsidiaries are consolidated in reports furnished to its stockholders
generally or to the Commission);
(h) To use the net proceeds received by it from the sale of the Shares
pursuant to this Agreement in the manner specified in the Prospectus under
the caption "Use of Proceeds";
(i) To use its best efforts to list, subject to notice of issuance, the
Shares on the New York Stock Exchange (the "Exchange"); and
(j) If the Company elects to rely upon Rule 462(b), the Company shall file
a Rule 462(b) Registration Statement with the Commission in compliance with
Rule 462(b) by 10:00 P.M., Washington, D.C. time, on the date of this
Agreement, and the Company shall at the time of filing either pay to the
Commission the filing fee for the Rule 462(b) Registration Statement or give
irrevocable instructions for the payment of such fee pursuant to Rule 111(b)
under the Act.
6. The Company covenants and agrees with the several Underwriters that the
Company will pay or cause to be paid the following: (i) the fees, disbursements
and expenses of the Company's counsel and accountants in connection with the
registration of the Shares under the Act and all other expenses in connection
with the preparation, printing and filing of the Registration Statement, any
Preliminary Prospectus and the Prospectus and amendments and supplements thereto
and the mailing and delivering of copies thereof to the Underwriters and
dealers; (ii) the cost of printing or producing any Agreement among
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Underwriters, this Agreement, the Blue Sky Memorandum, closing documents
(including any compilations thereof) and any other documents prepared by the
Company in connection with the offering, purchase, sale and delivery of the
Shares; (iii) all expenses in connection with the qualification of the Shares
for offering and sale under state securities laws as provided in Section 5(b)
hereof, including the reasonable fees and disbursements of counsel for the
Underwriters in connection with such qualification and in connection with the
Blue Sky survey; (iv) all fees and expenses in connection with listing the
Shares on the Exchange; (v) the filing fees incident to, and the fees and
disbursements of counsel for the Underwriters in connection with, securing any
required review by the National Association of Securities Dealers, Inc. of the
terms of the sale of the Shares; (vi) the cost of preparing stock certificates;
(vii) the cost and charges of any transfer agent or registrar and the fees and
expenses of the Attorneys-in-Fact and the Custodian; and (viii) all other costs
and expenses incident to the performance of its obligations hereunder which are
not otherwise specifically provided for in this Section. Each of the Selling
Stockholders will pay or cause to be paid all costs and expenses incident to the
performance of such Selling Stockholder's obligations hereunder which are not
otherwise specifically provided for in this Section, including any fees and
expenses of such Selling Stockholder's counsel and all expenses and taxes
incident to the sale and delivery of the Shares to be sold by such Selling
Stockholder to the Underwriters hereunder. In connection with the preceding
sentence, Goldman, Sachs & Co. agrees to pay New York State stock transfer tax,
and such Selling Stockholder agrees to reimburse Goldman, Sachs & Co. for
associated carrying costs if such tax payment is not rebated on the day of
payment and for any portion of such tax payment not rebated. It is understood,
however, that, except as provided in this Section, and Sections 8 and 11 hereof,
the Underwriters will pay all of their own costs and expenses, including the
fees of their counsel, stock transfer taxes on resale of any of the Shares by
them, and any advertising expenses connected with any offers they may make.
7. The obligations of the Underwriters hereunder, as to the Shares to be
delivered at each Time of Delivery, shall be subject, in their discretion, to
the condition that all representations and warranties and other statements of
the Company and of the Selling Stockholders herein are, at and as of such Time
of Delivery, true and correct, the condition that the Company and the Selling
Stockholders shall have performed all of their respective obligations hereunder
theretofore to be performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission pursuant to
Rule 424(b) within the applicable time period prescribed for such filing by
the rules and regulations under the Act and in accordance with Section 5(a)
hereof; if the Company has elected to rely upon Rule 462(b), the Rule 462(b)
Registration Statement shall have become effective by 10:00 P.M., Washington,
D.C. time, on the date of this Agreement; no stop order suspending the
effectiveness of the Registration Statement or any part
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<PAGE>
thereof shall have been issued and no proceeding for that purpose shall have
been initiated or threatened by the Commission; and all requests for
additional information on the part of the Commission shall have been complied
with to your reasonable satisfaction;
(b) Debevoise & Plimpton, counsel for the Underwriters, shall have
furnished to you such written opinion or opinions (a draft of such opinion is
attached as Annex II(a) hereto), dated such Time of Delivery, with respect to
the matters covered in paragraphs (i), (ii), (iii), (iv) (including as to any
Optional Shares being sold by the Selling Stockholders), (vi), (ix), (xii),
(xv) and the penultimate paragraph of Annex II(b) hereto, as well as such
other related matters as you may reasonably request, and such counsel shall
have received such papers and information as they may reasonably request to
enable them to pass upon such matters;
(c) Skadden, Arps, Slate, Meagher & Flom, LLP, special counsel for the
Company, shall have furnished to you their written opinion, dated such Time
of Delivery, substantially in the form attached as Annex II(b) hereto.
(d) Hall Dickler Kent Friedman & Wood LLP, special regulatory counsel for
the Company, shall have furnished to you their written opinion, dated such
Time of Delivery, substantially in the form attached as Annex II(c) hereto.
(e) Morgan, Lewis & Bockius LLP, counsel for Joseph A. Murphy, and James
J. Connors, II, Esq., counsel for the Kelso Selling Stockholders, shall have
furnished to you their written opinions, dated such Time of Delivery, with
respect to the Optional Shares to be sold by Joseph A. Murphy and the Kelso
Selling Stockholders, respectively, substantially in the form attached as
Annex II(d) hereto.
(f) On the date of the Prospectus at a time prior to the execution of this
Agreement, at 9:30 a.m., New York City time, on the effective date of any
post-effective amendment to the Registration Statement filed subsequent to
the date of this Agreement and also at each Time of Delivery, Deloitte &
Touche LLP shall have furnished to you a letter or letters, dated the
respective dates of delivery thereof, in form and substance satisfactory to
you, to the effect set forth in Annex I hereto (the executed copy of the
letter delivered prior to the execution of this Agreement is attached as
Annex I(a) hereto and a draft of the form of letter to be delivered on the
effective date of any post-effective amendment to the Registration Statement
and as of each Time of Delivery is attached as Annex I(b) hereto);
(g) (i) Neither the Company nor any of its Significant Subsidiaries
shall have sustained since the date of the latest audited financial
statements included in the
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Prospectus any loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from any
labor dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectus, and (ii) other than as
set forth or contemplated in the Prospectus, since the respective dates as of
which information is given in the Prospectus there shall not have been any
change in the issued and outstanding capital stock or long-term debt of the
Company or any of its Significant Subsidiaries or any change, or any
development involving a prospective change, in or affecting the general
affairs, management, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries, otherwise than as set forth
or contemplated in the Prospectus, the effect of which, in any such case
described in clause (i) or (ii), is in the judgment of the Representatives so
material and adverse as to make it impracticable or inadvisable to proceed
with the public offering or the delivery of the Shares being delivered at
such Time of Delivery on the terms and in the manner contemplated in the
Prospectus;
(h) On or after the date hereof (i) no downgrading shall have occurred in
the rating accorded the Company's debt securities by any "nationally
recognized statistical rating organization", as that term is defined by the
Commission for purposes of Rule 436(g)(2) under the Act, and (ii) no such
organization shall have publicly announced that it has under surveillance or
review, with possible negative implications, its rating of any of the
Company's debt securities;
(i) On or after the date hereof there shall not have occurred any of the
following: (i) a suspension or material limitation in trading in securities
generally on the Exchange; (ii) a suspension or material limitation in
trading in the Company's securities on the Exchange; (iii) a general
moratorium on commercial banking activities declared by either Federal or New
York State authorities; or (iv) the outbreak or escalation of hostilities
involving the United States or the declaration by the United States of a
national emergency or war, if the effect of any such event specified in this
clause (iv) in the judgment of the Representatives makes it impracticable or
inadvisable to proceed with the public offering or the delivery of the Shares
being delivered at such Time of Delivery on the terms and in the manner
contemplated in the Prospectus;
(j) The Shares to be sold at such Time of Delivery shall have been duly
listed, subject to notice of issuance, on the Exchange;
(k) The Company has obtained and delivered to the Underwriters executed
copies of an agreement from the persons named in Schedule III hereto,
substantially to the effect set forth in Section 5(e) hereof in form and
substance satisfactory to you;
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(l) The Company shall have complied with the provisions of Section 5(c)
hereof with respect to the furnishing of prospectuses on the New York
Business Day next succeeding the date of this Agreement; and
(m) The Company and the Selling Stockholders shall have furnished or
caused to be furnished to you at such Time of Delivery certificates of
officers of the Company and of the Selling Stockholders, respectively,
satisfactory to you as to the accuracy of the representations and warranties
of the Company and the Selling Stockholders, respectively, herein at and as
of such Time of Delivery, as to the performance by the Company and the
Selling Stockholders of all of their respective obligations hereunder to be
performed at or prior to such Time of Delivery and as to the matters set
forth in subsections (a) and (g) of this Section.
8. (a) The Company will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter for any legal or
other expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, the Registration Statement
or the Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
through Goldman, Sachs & Co. expressly for use therein.
(b) Each of the Selling Stockholders will indemnify and hold harmless each
Underwriter against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in any Preliminary Prospectus, the Registration
Statement or the Prospectus or any such amendment or
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<PAGE>
supplement in reliance upon and in conformity with written information furnished
to the Company by such Selling Stockholder expressly for use therein; and will
reimburse each Underwriter for any legal or other expenses reasonably incurred
by such Underwriter in connection with investigating or defending any such
action or claim as such expenses are incurred; provided, however, that (i) such
Selling Stockholder shall not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
any Preliminary Prospectus, the Registration Statement or the Prospectus or any
such amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through Goldman, Sachs &
Co. expressly for use therein and (ii) the amount of each indemnity under this
subsection (b) shall be limited to an amount equal to the total net proceeds
received by such Selling Stockholder from the offering of the Shares purchased
from such Selling Stockholder under this Agreement.
(c) Each Underwriter will indemnify and hold harmless the Company and each
Selling Stockholder against any losses, claims, damages or liabilities to which
the Company or such Selling Stockholder may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in any Preliminary Prospectus, the Registration
Statement or the Prospectus or any such amendment or supplement in reliance upon
and in conformity with written information furnished to the Company by such
Underwriter through Goldman, Sachs & Co. expressly for use therein; and will
reimburse the Company and each Selling Stockholder for any legal or other
expenses reasonably incurred by the Company or such Selling Stockholder in
connection with investigating or defending any such action or claim as such
expenses are incurred.
(d) Promptly after receipt by an indemnified party under subsection (a),
(b) or (c) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall
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not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under such
subsection for any legal expenses of other counsel or any other expenses, in
each case subsequently incurred by such indemnified party, in connection with
the defense thereof other than reasonable costs of investigation. No
indemnifying party shall, without the written consent of the indemnified party,
effect the settlement or compromise of, or consent to the entry of any judgment
with respect to, any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified party is an actual or potential party to such action or claim)
unless such settlement, compromise or judgment (i) includes an unconditional
release of the indemnified party from all liability arising out of such action
or claim and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of any indemnified party.
(e) If the indemnification provided for in this Section 8 is unavailable
to or insufficient to hold harmless an indemnified party under subsection (a),
(b) or (c) above in respect of any losses, claims, damages or liabilities (or
actions in respect thereof) referred to therein, then each indemnifying party
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect the relative benefits
received by the Company and the Selling Stockholders on the one hand and the
Underwriters on the other from the offering of the Shares. If, however, the
allocation provided by the immediately preceding sentence is not permitted by
applicable law or if the indemnified party failed to give the notice required
under subsection (d) above, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company and the Selling Stockholders on the one hand and the
Underwriters on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Company and the Selling Stockholders on the one hand
and the Underwriters on the other shall be deemed to be in the same proportion
as the total net proceeds from the offering (before deducting expenses) received
by the Company and the Selling Stockholders bear to the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover page of the Prospectus. The relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or the Selling
Stockholders on the one hand or the Underwriters on the other and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. Notwithstanding the foregoing, no Selling
Stockholder shall be
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obligated to make contributions hereunder that are on a basis other than
specified in subsection (b) of this Section 8 or that in the aggregate exceed
the amount for which such Selling Stockholder would have been liable pursuant to
subsection (b) of this Section 8 had indemnification been available thereunder.
The Company, the Selling Stockholders and the Underwriters agree that it would
not be just and equitable if contributions pursuant to this subsection (e) were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this
subsection (e). The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (e) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (e), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Shares underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection (e) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(f) The obligations of the Company and the Selling Stockholders under this
Section 8 shall be in addition to any liability which the Company and the
Selling Stockholders may otherwise have and shall extend, upon the same terms
and conditions, to each person, if any, who controls any Underwriter within the
meaning of the Act; and the obligations of the Underwriters under this Section 8
shall be in addition to any liability which the respective Underwriters may
otherwise have and shall extend, upon the same terms and conditions, to each
officer and director of the Company and to each person, if any, who controls the
Company within the meaning of the Act.
9. (a) If any Underwriter shall default in its obligation to purchase the
Shares which it has agreed to purchase hereunder at a Time of Delivery, you may
in your discretion arrange for you or another party or other parties to purchase
such Shares on the terms contained herein. If within thirty-six hours after
such default by any Underwriter you do not arrange for the purchase of such
Shares, then the Company shall be entitled to a further period of thirty-six
hours within which to procure another party or other parties satisfactory to you
to purchase such Shares on such terms. In the event that, within the respective
prescribed periods, you notify the Company that you have so arranged for the
purchase of such Shares, or the Company notifies you that it has so arranged for
the purchase of such Shares, you or the Company shall have the right to postpone
such Time of Delivery for a
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period of not more than seven days, in order to effect whatever changes may
thereby be made necessary in the Registration Statement or the Prospectus, or in
any other documents or arrangements, and the Company agrees to file promptly any
amendments to the Registration Statement or the Prospectus which in your opinion
may thereby be made necessary. The term "Underwriter" as used in this Agreement
shall include any person substituted under this Section with like effect as if
such person had originally been a party to this Agreement with respect to such
Shares.
(b) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Company as
provided in subsection (a) above, the aggregate number of such Shares which
remains unpurchased does not exceed one-eleventh of the aggregate number of all
the Shares to be purchased at such Time of Delivery, then the Company shall have
the right to require each non-defaulting Underwriter to purchase the number of
Shares which such Underwriter agreed to purchase hereunder at such Time of
Delivery and, in addition, to require each non-defaulting Underwriter to
purchase its pro rata share (based on the number of Shares which such
Underwriter agreed to purchase hereunder) of the Shares of such defaulting
Underwriter or Underwriters for which such arrangements have not been made; but
nothing herein shall relieve a defaulting Underwriter from liability for its
default.
(c) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Company as
provided in subsection (a) above, the aggregate number of such Shares which
remains unpurchased exceeds one-eleventh of the aggregate number of all the
Shares to be purchased at such Time of Delivery, or if the Company shall not
exercise the right described in subsection (b) above to require non-defaulting
Underwriters to purchase Shares of a defaulting Underwriter or Underwriters,
then this Agreement (or, with respect to the Second Time of Delivery, the
obligations of the Underwriters to purchase and of the Company and the Selling
Stockholders to sell the Optional Shares) shall thereupon terminate, without
liability on the part of any non-defaulting Underwriter or the Company, except
for the expenses to be borne by the Company and the Selling Stockholders and the
Underwriters as provided in Section 6 hereof and the indemnity and contribution
agreements in Section 8 hereof; but nothing herein shall relieve a defaulting
Underwriter from liability for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company, the Selling Stockholders and the several
Underwriters, as set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall remain in full force and effect,
regardless of any investigation (or any statement as to the results thereof)
made by or on behalf of any Underwriter or any controlling person of any
Underwriter, or the Company or the Selling Stockholders, or any
22
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officer or director or controlling person of the Company, and shall survive
delivery of and payment for the Shares.
11. If this Agreement shall be terminated pursuant to Section 9 hereof,
neither the Company nor the Selling Stockholders shall then be under any
liability to any Underwriter except as provided in Sections 6 and 8 hereof; but,
if for any other reason any Shares are not delivered by or on behalf of the
Company and the Selling Stockholders as provided herein, the Company will
reimburse the Underwriters through you for all out-of-pocket expenses approved
in writing by you, including fees and disbursements of counsel, reasonably
incurred by the Underwriters in making preparations for the purchase, sale and
delivery of the Shares not so delivered, but the Company and the Selling
Stockholders shall then be under no further liability to any Underwriter in
respect of the Shares not so delivered except as provided in Sections 6 and 8
hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by Goldman, Sachs & Co. on behalf of you as the
representatives; and in all dealings with any Selling Stockholder hereunder, you
and the Company shall be entitled to act and rely upon any statement, request,
notice or agreement on behalf of such Selling Stockholder made or given by any
or all of the Attorneys-in-Fact for such Selling Stockholder.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to you as the representatives in care of Goldman, Sachs &
Co., 32 Old Slip, 21st Floor, New York, New York 10005, Attention: Registration
Department; if to Joseph A. Murphy shall be delivered or sent by mail, telex or
facsimile transmission to Morgan, Lewis & Bockius LLP as counsel for Joseph A.
Murphy at ____________; if to the Kelso Selling Stockholders shall be delivered
or sent by mail, telex or facsimile transmission to Kelso & Company, 320 Park
Avenue, 24/th/ Floor, New York, New York 10022, Attention: James J. Connors, II,
Esq.; and if to the Company shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Company set forth in the
Registration Statement, Attention: Secretary; provided, however, that any notice
to an Underwriter pursuant to Section 8(d) hereof shall be delivered or sent by
mail, telex or facsimile transmission to such Underwriter at its address set
forth in its Underwriters' Questionnaire, or telex constituting such
Questionnaire, which address will be supplied to the Company or the Selling
Stockholders by you upon request. Any such statements, requests, notices or
agreements shall take effect upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters, the Company and the Selling Stockholders and, to
the extent provided in
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Sections 8 and 10 hereof, the officers and directors of the Company and each
person who controls the Company, any Selling Stockholder or any Underwriter, and
their respective heirs, executors, administrators, successors and assigns, and
no other person shall acquire or have any right under or by virtue of this
Agreement. No purchaser of any of the Shares from any Underwriter shall be
deemed a successor or assign by reason merely of such purchase.
14. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
15. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
If the foregoing is in accordance with your understanding, please sign and
return to us ten counterparts hereof, and upon the acceptance hereof by you, on
behalf of each of the Underwriters, this letter and such acceptance hereof shall
constitute a binding agreement between each of the Underwriters, the Company and
each of the Selling Stockholders. It is understood that your acceptance of this
letter on behalf of each of the Underwriters is pursuant to the authority set
forth in a form of Agreement among Underwriters, the form of which shall be
submitted to the Company and the Selling Stockholders for examination upon
request, but without warranty on your part as to the authority of the signers
thereof.
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Any person executing and delivering this Agreement as Attorney-in-Fact for
a Selling Stockholder represents by so doing that he has been duly appointed as
Attorney-in-Fact by such Selling Stockholder pursuant to a validly existing and
binding Power of Attorney which authorizes such Attorney-in-Fact to take such
action.
Very truly yours,
HCI Direct, Inc.
By: _____________________________
Name:
Title:
Kelso Investment Associates V, L.P.
Kelso Equity Partners V, L.P.
Joseph A. Murphy
[names of other Selling Stockholders]
By: _____________________________
Name:
As Attorney-in-Fact acting on
behalf of each of the Selling
Stockholders named in Schedule II
to this Agreement
Accepted as of the date hereof:
Goldman, Sachs & Co.
Bear, Stearns & Co. Inc.
BancBoston Robertson Stephens Inc.
First Union Capital Markets Corp.
By: _____________________________
(Goldman, Sachs & Co.)
On behalf of each of the Underwriters
25
<PAGE>
SCHEDULE I
Number of
Optional
Shares to be
Total Number of Purchased if
Firm Shares Maximum Option
Underwriter to be Purchased Exercised
----------- --------------- --------------
Goldman, Sachs & Co. ...................
Bear, Stearns & Co. Inc. ...............
BancBoston Robertson Stephens Inc. .....
First Union Capital Markets Corp. ......
--------------- --------------
Total .............................
=============== ==============
<PAGE>
SCHEDULE II
Number of
Optional
Shares to be
Total Number of Sold if
Firm Shares Maximum Option
to be Sold Exercised
---------------- --------------
The Company .............................. [10,000,000] [875,000]
The Selling Stockholders: 0
Kelso Investment Associates V, L.P. .... 0
Kelso Equity Partners V, L.P. .......... 0
Joseph A. Murphy .......................
[Names of Other Selling Stockholders]
---------------- --------------
Total................................
================ ==============
<PAGE>
SCHEDULE III
John F. Biagini
Philip G. Whalen
Martin J. Pearson
Hans L. Lengers
Arthur C. Hughes
Frank K. Bynum, Jr.
Michael B. Goldberg
Kelso Investment Associates V, L.P.
Kelso Equity Partners V, L.P.
William J. Kelly
Joseph A. Murphy
<PAGE>
ANNEX I
Pursuant to Section 7(f) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with respect to the
Company and its subsidiaries within the meaning of the Act and the applicable
published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any supplementary
financial information and schedules (and, if applicable, financial forecasts
and/or pro forma financial information) examined by them and included in the
Prospectus or the Registration Statement comply as to form in all material
respects with the applicable accounting requirements of the Act and the
related published rules and regulations thereunder; and, if applicable, they
have made a review in accordance with standards established by the American
Institute of Certified Public Accountants of the unaudited consolidated
interim financial statements, selected financial data, pro forma financial
information, financial forecasts and/or condensed financial statements
derived from audited financial statements of the Company for the periods
specified in such letter, as indicated in their reports thereon, copies of
which have been separately furnished to the representatives of the
Underwriters (the "Representatives");
(iii) They have made a review in accordance with standards established by
the American Institute of Certified Public Accountants of the unaudited
condensed consolidated statements of income, consolidated balance sheets and
consolidated statements of cash flows included in the Prospectus as indicated
in their reports thereon copies of which have been separately furnished to
the Representatives; and on the basis of specified procedures including
inquiries of officials of the Company who have responsibility for financial
and accounting matters regarding whether the unaudited condensed consolidated
financial statements referred to in paragraph (vi)(A)(i) below comply as to
form in all material respects with the applicable accounting requirements of
the Act and the related published rules and regulations, nothing came to
their attention that cause them to believe that the unaudited condensed
consolidated financial statements do not comply as to form in all material
respects with the applicable accounting requirements of the Act and the
related published rules and regulations;
(iv) The unaudited selected financial information with respect to the
consolidated results of operations and financial position of the Company for
the five most recent fiscal years included in the Prospectus agrees with the
corresponding amounts (after restatements where applicable) in the audited
consolidated financial statements for such five fiscal years which were
included or incorporated by reference in the Company's Annual Reports on Form
10-K for such fiscal years;
<PAGE>
(v) They have compared the information in the Prospectus under selected
captions with the disclosure requirements of Regulation S-K and on the basis
of limited procedures specified in such letter nothing came to their
attention as a result of the foregoing procedures that caused them to believe
that this information does not conform in all material respects with the
disclosure requirements of Items 301, 302, 402 and 503(d), respectively, of
Regulation S-K;
(vi) On the basis of limited procedures, not constituting an examination
in accordance with generally accepted auditing standards, consisting of a
reading of the unaudited financial statements and other information referred
to below, a reading of the latest available interim financial statements of
the Company and its subsidiaries, inspection of the minute books of the
Company and its subsidiaries since the date of the latest audited financial
statements included in the Prospectus, inquiries of officials of the Company
and its subsidiaries responsible for financial and accounting matters and
such other inquiries and procedures as may be specified in such letter,
nothing came to their attention that caused them to believe that:
(A) (i) the unaudited consolidated statements of income, consolidated
balance sheets and consolidated statements of cash flows included in the
Prospectus do not comply as to form in all material respects with the
applicable accounting requirements of the Act and the related published
rules and regulations, or (ii) any material modifications should be made
to the unaudited condensed consolidated statements of income, consolidated
balance sheets and consolidated statements of cash flows included in the
Prospectus for them to be in conformity with generally accepted accounting
principles;
(B) any other unaudited income statement data and balance sheet items
included in the Prospectus do not agree with the corresponding items in
the unaudited consolidated financial statements from which such data and
items were derived, and any such unaudited data and items were not
determined on a basis substantially consistent with the basis for the
corresponding amounts in the audited consolidated financial statements
included in the Prospectus;
(C) the unaudited financial statements which were not included in the
Prospectus but from which were derived any unaudited condensed financial
statements referred to in clause (A) and any unaudited income statement
data and balance sheet items included in the Prospectus and referred to in
clause (B) were not determined on a basis substantially consistent with
the basis for the audited consolidated financial statements included in
the Prospectus;
2
<PAGE>
(D) any unaudited pro forma consolidated condensed financial statements
included in the Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of the Act and the
published rules and regulations thereunder or the pro forma adjustments
have not been properly applied to the historical amounts in the
compilation of those statements;
(E) as of a specified date not more than five days prior to the date of
such letter, there have been any changes in the consolidated capital stock
(other than issuances of capital stock upon exercise of options and stock
appreciation rights, upon earn-outs of performance shares and upon
conversions of convertible securities, in each case which were outstanding
on the date of the latest financial statements included in the Prospectus)
or any increase in the consolidated long-term debt of the Company and its
subsidiaries, or any decreases in consolidated net current assets or
stockholders' equity or other items specified by the Representatives, or
any increases in any items specified by the Representatives, in each case
as compared with amounts shown in the latest balance sheet included in the
Prospectus, except in each case for changes, increases or decreases which
the Prospectus discloses have occurred or may occur or which are described
in such letter; and
(F) for the period from the date of the latest financial statements
included in the Prospectus to the specified date referred to in clause (E)
there were any decreases in consolidated net revenues or operating profit
or the total or per share amounts of consolidated net income or other
items specified by the Representatives, or any increases in any items
specified by the Representatives, in each case as compared with the
comparable period of the preceding year and with any other period of
corresponding length specified by the Representatives, except in each case
for decreases or increases which the Prospectus discloses have occurred or
may occur or which are described in such letter; and
(vii) In addition to the examination referred to in their report(s)
included in the Prospectus and the limited procedures, inspection of minute
books, inquiries and other procedures referred to in paragraphs (iii) and
(vi) above, they have carried out certain specified procedures, not
constituting an examination in accordance with generally accepted auditing
standards, with respect to certain amounts, percentages and financial
information specified by the Representatives, which are derived from the
general accounting records of the Company and its subsidiaries, which appear
in the Prospectus, or in Part II of, or in exhibits and schedules to, the
Registration Statement specified by the Representatives, and have compared
certain of such amounts, percentages and financial information with the
accounting records of the Company and its subsidiaries and have found them to
be in agreement.
3
<PAGE>
ANNEX I(a)
Form of comfort letter
[To be attached.]
<PAGE>
ANNEX I(b)
Form of bring-down comfort letter
[To be attached.]
<PAGE>
ANNEX II(a)
Form of Debevoise & Plimpton opinion
[To be attached.]
<PAGE>
ANNEX II(b)
Form of Skadden, Arps, Slate, Meagher & Flom, LLP opinion
[To be attached.]
<PAGE>
ANNEX II(c)
Form of Hall Dickler Kent Friedman & Wood LLP opinion
1. To the best of such counsel's knowledge and other than as set forth in
the Prospectus, the Company and its subsidiaries are in substantial
compliance with the terms and conditions of each of the 1984 Consent
Injunction and the 1997 Multistate Agreement.
2. The statements set forth in the Prospectus under the captions "Risk
Factors--Government regulation may adversely affect our business" and
"Business--Government Regulation", insofar as they purport to describe the
legal matters and the provisions of the laws and documents referred to
therein, are accurate, complete and fair.
3. To the best of such counsel's knowledge and other than as set forth in
the Prospectus, there are no legal or governmental proceedings (relating to
regulatory matters of the type referred to in the Prospectus under the
captions "Risk Factors--Government regulation may adversely affect our
business" and "Business--Government Regulation") pending to which the Company
or any of its subsidiaries is a party or of which any property of the Company
or any of its subsidiaries is the subject which, if determined adversely to
the Company or any of its subsidiaries, would individually or in the
aggregate have a material adverse effect on the current or future
consolidated financial position, stockholders' equity or results of
operations of the Company and its subsidiaries; and, to the best of such
counsel's knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
<PAGE>
ANNEX II(d)
Form of Selling Stockholder Opinion
1. A Power of Attorney and a Custody Agreement have been duly executed
and delivered by such Selling Stockholder and constitute valid and binding
agreements of such Selling Stockholder enforceable in accordance with their
terms.
2. This Agreement has been duly executed and delivered by or on behalf of
such Selling Stockholder; and the sale of the Shares to be sold by such
Selling Stockholder hereunder and such Selling Stockholder's compliance with
all of the provisions of this Agreement, the Power of Attorney and the
Custody Agreement and the consummation of the transactions herein and therein
contemplated will not conflict with or result in a breach or violation of any
terms or provisions of, or constitute a default under, any statute,
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument known to such counsel to which such Selling Stockholder is a party
or by which such Selling Stockholder is bound or to which any of the property
or assets of such Selling Stockholder is subject, nor will such action result
in any violation of the provisions of the partnership agreement of such
Selling Stockholder if such Selling Stockholder is a partnership or any
order, rule or regulation known to such counsel of any court or governmental
agency or body having jurisdiction over such Selling Stockholder or the
property of such Selling Stockholder.
3. No consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation of the
transactions contemplated by this Agreement in connection with the Shares to
be sold by such Selling Stockholder hereunder, except such as have been
obtained under the Act and such as may be required under state securities or
Blue Sky laws in connection with the purchase and distribution of such Shares
by the Underwriters.
4. Immediately prior to Time of Delivery, such Selling Stockholder had
good and valid title to the Shares to be sold at such Time of Delivery by
such Selling Stockholder under this Agreement, free and clear of all liens,
encumbrances, equities or claims, and full right, power and authority to
sell, assign, transfer and deliver the Shares to be sold by such Selling
Stockholder hereunder.
5. Good and valid title to such Shares, free and clear of all liens,
encumbrances, equities or claims, has been transferred to each of the several
Underwriters who have purchased such Shares in good faith and without notice
of any such lien, encumbrance, equity or claim or any other adverse claim
within the meaning of the Uniform Commercial Code.
In rendering the opinion in paragraph 4, such counsel may rely upon a
certificate of such Selling Stockholder in respect of matters of fact as to
ownership of, and liens, encumbrances,
<PAGE>
equities or claims on, the Shares sold by such Selling Stockholder, provided
that such counsel shall state that they believe that both you and they are
justified in relying upon such certificate.
2
<PAGE>
EXHIBIT 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
HOSIERY CORPORATION OF AMERICA, INC.
(pursuant to Sections 242 and 245 of the
Delaware General Corporation Law)
HOSIERY CORPORATION OF AMERICA, INC., a Delaware corporation (the
"Corporation"), the original Certificate of Incorporation of which was filed
with the Secretary of State of the State of Delaware on August 9, 1979 under the
name Bear Brand Hosiery Corporation, HEREBY CERTIFIES AS FOLLOWS:
1. Effective upon the filing of this Restated Certificate of
Incorporation with the Secretary of State, each share of Common Stock
outstanding shall be reclassified on a basis of 8.6976942 shares of Common Stock
for each share of Common Stock outstanding and, accordingly, each share of
Common Stock outstanding shall, without further action by the Corporation or any
stockholder, be deemed to represent 8.6976942 shares of Common Stock, provided
that all fractional shares resulting therefrom shall be eliminated and each
holder thereof shall be entitled to receive a cash payment equal to such
holder's fraction of a share of Common Stock multiplied by the per share fair
market value, as determined by the Board of Directors.
2. Effective upon the filing of this Restated Certificate of
Incorporation with the Secretary of State each share of Class A Common Stock
outstanding shall be reclassified on a basis of 8.6976942 shares of Class A
Common Stock for each share of Class A Common Stock outstanding and,
accordingly, each share of Class A Common Stock outstanding shall, without
further action by the Corporation or any stockholder, be deemed to represent
8.6976942 shares of Class A Common Stock, provided that all fractional shares
resulting therefrom shall be eliminated and each holder thereof shall be
entitled to receive a cash payment equal to such holder's fraction of a share of
Class A Common Stock multiplied by the per share fair market value, as
determined by the Board of Directors.
<PAGE>
3. This Restated Certificate of Incorporation, restates, integrates
and further amends the Corporation's Restated Certificate of Incorporation, as
heretofore amended and restated. This Restated Certificate of Incorporation was
proposed by the Board of Directors and was duly adopted by the written consent
of the stockholders of the Corporation along with the provision of the requisite
written notice in accordance with Sections 228, 242 and 245 of the General
Corporation Law of the State of Delaware as set forth in Title 8 of the Delaware
Code (the "GCL"). The text of this Restated Certificate of Incorporation, as so
amended and restated is as follows:
FIRST: The name of the Corporation is HCI Direct, Inc. (hereinafter
-----
the "Corporation").
SECOND: The address of the registered office of the Corporation in
------
the State of Delaware is 1209 Orange Street, in the City of Wilmington, County
of New Castle. The name of its registered agent at that address is The
Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act
-----
or activity for which a corporation may be organized under the GCL.
FOURTH: The total number of shares of capital stock which the
------
Corporation shall have authority to issue is 73,000,000 shares, consisting of
(i) 60,000,000 shares of Common Stock, par value $.01 per share (the "Common
Stock"), (ii) 1,000,000 shares of Class A Common Stock, par value $0.01 per
share (the "Class A Common Stock") and (iii) 12,000,000 shares of preferred
stock, par value $.01 per share (the "Preferred Stock"), which includes
4,000,000 shares of Pay-In-Kind Preferred Stock, par value $.01 per share,
having the powers, preferences and rights, and qualifications, limitations and
restrictions set forth in paragraph C below.
2
<PAGE>
A. Common Stock and Class A Common Stock.
-------------------------------------
Except as otherwise provided in this Article FOURTH or as otherwise required by
law, shares of Common Stock and Class A Common Stock shall be identical and
shall entitle the holders thereof to the same rights and privileges, subject to
the same qualifications, limitations and restrictions.
1. Voting Rights. Except as otherwise required by applicable
-------------
law, the holders of Common Stock will be entitled to one vote per share on all
matters to be voted on by the Corporation's Common Stockholders and the holders
of Class A Common Stock will have no voting rights.
2. Dividends. When and as dividends are declared thereon,
---------
whether payable in cash, property or securities of the Corporation, the holders
of Common Stock and the holders of Class A Common Stock will be entitled to
share equally, share for share, in such dividends; provided, however, that if
-------- -------
dividends are declared which are payable in shares of Common Stock or Class A
Common Stock, dividends will be declared which are payable at the same rate on
each class of stock, and the dividends payable in shares of Common Stock will be
payable to holders of Common Stock, and the dividends payable in shares of Class
A Common Stock will be payable to holders of Class A Common Stock.
3. Conversion and Exchange. (a) Upon the occurrence of any
-----------------------
Conversion Event, each record holder of Class A Common Stock shall be entitled,
without the payment of any consideration whatsoever, to convert into the same
number of shares of Common Stock any or all of the shares of such holder's Class
A Common Stock being sold, distributed or otherwise disposed of or converted in
connection with the occurrence of such Conversion Event. For purposes of this
Section 3 (i) a "Conversion Event" shall mean (A) any transfer of shares of
Class A Common Stock to any person or persons who are not affiliates of the
transferor, including, without limitation, pursuant to any public offering or
public sale of securities of the Corporation (including a public offering
registered under the Securities Act of 1933, as amended (the "Securities Act"),
and a public sale pursuant to Rule 144 under the Securities Act, or any similar
rule
3
<PAGE>
then in force) or (B) conversion of shares of Class A Common Stock into shares
of Common Stock at the option of the holder (whether all or a portion of such
holder's shares) at such time that all applicable waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (or any
successor statute), and the regulations promulgated thereunder (the "HSR Act")
shall have expired or shall have terminated, or, if it is determined that no
filings under the HSR Act are applicable, at any time or (C) in the case of
shares of Class A Common Stock owned by a holder other than Kelso & Company,
Inc. or any of its affiliates or designees, conversion of shares of Class A
Common Stock at the option of the holder (whether all or a portion of such
holder's shares) at any time, (ii) a "person" shall mean any natural person or
any corporation, partnership, joint venture, trust, unincorporated organization
and any other entity or organization and (iii) an "affiliate", with respect to
any person, shall mean such person's spouse, parents, members of such person's
family or such person's lineal decedents and any other person that directly, or
indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with such person. In addition, all of the Corporation's
Class A Common Stock shall be automatically and mandatorily converted into the
same number of shares of Common Stock without any action on the part of any
holder upon notice to such effect by the Corporation to the record holders of
Class A Common Stock, provided that all applicable waiting periods under the HSR
Act shall have expired, shall be inapplicable or shall have terminated.
(b) Subject to Section 3(e) of this Part A, each conversion of
shares of Class A Common Stock into shares of Common Stock at the option of the
holder shall be effected by (i) the surrender of the certificate or certificates
representing the shares to be converted at the principal office of the
Corporation, or at the office of any transfer agent for the Common Stock and the
Class A Common Stock, together with a written notice by the holder of such Class
A Common Stock stating that such holder desires to convert the shares, or a
stated number of the shares, of such Class A Common Stock represented by such
certificate or certificates into shares of Common Stock (and including
instructions for issuance of the Common Stock to be issued upon such
conversion), or (ii) in the case of any global certificate representing shares
4
<PAGE>
of Class a Common Stock which is deposited with the Depository Trust Company, or
any successor depositary (the "Depositary"), or a custodian therefor, and
registered in the name of the Depositary or its nominee (a "Global
Certificate"), the conversion of any shares represented thereby in accordance
with the applicable rules and the operating procedures of the Depositary, in
either case, at any time (including within a reasonable time prior to the
occurrence of any Conversion Event, if necessary to effect the conversion of
shares related thereto, provided, however, that the holders of such shares will
not be entitled to vote on any matters to be voted on by the Corporation's
stockholders during such interim period, such certificates being deemed to
represent only shares of Class A Common Stock for such purpose) during normal
business hours. Each conversion at the option of the holder shall be deemed to
have been effected as of the close of business on the date on which (i) the
certificate or certificates representing shares of Class A Common Stock shall
have been surrendered to, and such notice shall have been received by, the
Corporation as set forth in the preceding sentence or (ii) in the case of any
Global Certificate, the shares of Class A Common Stock represented thereby shall
have been converted in accordance with the applicable rules and operating
procedures of the Depositary, as the case may be (or, if the events described in
either clause (i) or clause (ii) above shall have occurred prior to the
occurrence of a Conversion Event as provided in the preceding sentence, the date
of the occurrence of the Conversion Event), and at such time the rights of the
holder of the converted Class A Common Stock, as a holder of Class A Common
Stock, shall cease and the person or persons in whose name or names the
certificate or certificates for shares of Common Stock are to be issued upon
such conversion shall be deemed to have become the holder or holders of record
of the shares represented thereby. Promptly after the surrender of certificates
and the receipt of written notice, the Corporation shall issue and deliver in
accordance with the surrendering holder's instructions (a) a certificate or
certificates for the shares of Common Stock issuable upon such conversion and
(b) a certificate representing any shares of Class A Common Stock which were
represented by the certificate or certificates delivered to the Corporation in
connection with such conversion but which were not converted. Promptly after the
conversion of any shares of Class A Common Stock
5
<PAGE>
represented by a Global Certificate, the Corporation shall issue and deliver in
accordance with applicable rules and operating procedures of the Depositary a
certificate or certificates, which may be one or more Global Certificates, for
the shares of Common Stock issuable upon such conversion and take such other
action as may be required to effect such conversion in accordance with the
applicable rules and operating procedures of the Depositary. If any shares of
Class A Common Stock are converted into shares of Common Stock in connection
with a Conversion Event described in clause (A) of the definition thereof and
such shares of Common Stock are not actually sold, distributed or otherwise
disposed of so that such Conversion Event does not actually occur, such shares
of Common Stock shall be automatically converted back into the same number of
shares of Class A Common Stock. The issuance of certificates upon conversion
will be made without charge to the holders of such shares for any issuance tax
in respect thereof or any other cost whatsoever incurred by the Corporation in
connection with such conversion. Any mandatory conversion of shares of Class A
Common Stock into Common Stock shall be effected upon the Corporation delivering
to the holders of such shares, to the last address appearing for such holders on
the books of the Corporation, written notice to the effect that the Board of
Directors has determined to mandatorily convert the Class A Common Stock into
Common Stock and upon and after such notice all of the shares of Class A Common
Stock so converted shall be deemed to be no longer outstanding, any right to
receive dividends thereon shall cease and all rights and privileges with respect
to the Class A Common Stock so converted shall cease except for the right of
the holder thereof to receive any previously declared but unpaid dividends on
the Class A Common Stock, and the certificates which theretofore had represented
Class A Common Stock shall for all purposes represent only Common Stock ;
provided, however, that no dividends on the Common Stock shall be paid to such
- -------- -------
holder unless and until the certificates for the Class A Common Stock have been
surrendered to the Corporation or, in the case of any Global Certificate, shares
of Class A Common Stock represented thereby have been converted in accordance
with applicable rules and operating procedures of the Depositary, and the
Corporation shall thereupon issue certificates for the Common Stock to such
holder, if necessary, and pay to such holder any dividends on the Common Stock
which have been declared as of a record
6
<PAGE>
date, and which otherwise would have been paid, since the date the shares of
Class A Common Stock were deemed to have been converted.
(c) The Corporation shall at all times reserve and keep
available out of its authorized but unissued shares of Common Stock solely for
the purpose of issuance upon the conversion of the Class A Common Stock, such
number of shares of Common Stock issuable upon the conversion of all outstanding
Class A Common Stock. All shares of Common Stock which are so issuable shall,
when issued, be duly and validly issued, fully paid and nonassessable and free
from all taxes, liens and charges. The Corporation shall take all such actions
as it deems necessary or appropriate to assure that all such shares of Common
Stock may be so issued without violation of any applicable law or governmental
regulation or any requirements of any domestic securities exchange upon which
shares of Common Stock may be listed.
(d) If the Corporation in any manner subdivides (by stock split,
stock dividend or otherwise) or combines (by reverse stock split or otherwise)
the outstanding shares of Common Stock, the outstanding shares of the Class A
Common Stock will be proportionately subdivided or combined, as the case may be,
and effective provision shall be made by the Board of Directors of the
Corporation (whose determination with respect thereto will be final and
binding) for the protection of all conversion rights hereunder.
(e) In case the Corporation shall be a party to any transaction
(including without limitation a merger, consolidation or sale of all or
substantially all of the Corporation's assets) as a result of which shares of
Common Stock shall be converted into the right to receive cash, stock,
securities or other property (or any combination thereof) (each of the foregoing
being referred to as a "Transaction"), each share of Class A Common Stock shall
thereafter be convertible into the kind and amount of cash, stock, securities
and other property (or any combination thereof) receivable upon the consummation
of such Transaction by a holder of one share of Common Stock.
4. Tag-Along and Drag-Along Rights. So long as the
-------------------------------
Stockholders Agreement, dated as of October
7
<PAGE>
17, 1994, among the Company and certain of its stockholders (the "Stockholders
Agreement") shall be in effect:
(i) None of Kelso Investment Associates V, L.P., a Delaware limited
partnership ("KIA V"), Kelso Equity Partners V, L.P., a Delaware limited
partnership ("KEP V" and, together with KIA V, "Kelso"), and any of their
Permitted Transferees (as defined in the Stockholders Agreement)
(collectively, the "Kelso Group") shall, individually or collectively, in
any one transaction or any series of similar transactions, directly or
indirectly, sell, assign, mortgage, transfer, pledge, hypothecate or
otherwise dispose of or transfer (collectively, "Transfer") any shares of
Common Stock or Class A Common Stock, except pursuant to an Excluded
Transaction (as defined below) or pursuant to the following paragraph (ii),
to any third party or parties unaffiliated with Kelso (a "Third Party")
unless the other holders of Common Stock and the other holders of Class A
Common Stock are offered the right, at the option of each such other
holder, to participate in such Transfer, all as provided by and in
accordance with Section 6.6(a) of the Stockholders Agreement, as amended
from time to time. An "Excluded Transaction" shall mean any Transfer by KIA
V or KEP V or any of their Permitted Transferees to any affiliate (as
defined in the Stockholders Agreement), any Permitted Transferee thereof or
the Company, or pursuant to a bona fide public offering pursuant to an
effective registration statement, other than a registration statement on
Form S-4 or S-8 or any successor forms, under the Securities Act of 1933,
that covers shares of Common Stock or Class A Common Stock.
(ii) If any member or members of the Kelso Group shall, individually
or collectively, propose to Transfer at least 75% of all shares of Common
Stock and Class A Common Stock collectively owned by the Kelso Group to a
Third Party, then holders of Common Stock and holders of Class A Common
Stock (in addition to the rights of such holders of Common Stock or Class A
Common Stock to participate in such Transfer pursuant to the preceding
paragraph (i)) shall, upon written notice by any member of the Kelso Group,
be obligated to participate in such
8
<PAGE>
Transfer, all as provided by and in accordance with Section 6.6(b) of the
Stockholders Agreement, as amended from time to time.
A copy of the Stockholders Agreement is on file with the Secretary of the
Corporation, at the Corporation's principal executive offices (currently located
at 3369 Progress Drive, Bensalem, Pennsylvania 19020), and is available without
charge to any stockholder of record upon written request.
B. Preferred Stock. The Board of Directors is expressly authorized
---------------
to provide for the issuance of all or any shares of the Preferred Stock in one
or more classes or series, and to fix for each such class or series such voting
powers, full or limited, or no voting powers, and such distinctive designations,
preferences and relative, participating, optional or other special rights and
such qualifications, limitations or restrictions thereof, as shall be stated and
expressed in the resolution or resolutions adopted by the Board of Directors
providing for the issuance of such class or series and as may be permitted by
the GCL, including, without limitation, the authority to provide that any such
class or series may be (i) subject to such mandatory or optional redemption at
such time or times and at such price or prices, or, if appropriate, not subject
to such mandatory or optional redemption, (ii) entitled to receive dividends
(which may be cumulative or non-cumulative) at such rates, on such conditions,
and at such times, and payable in preference to, or in such relation to, the
dividends payable on any other class or classes or any other series, (iii)
entitled to such rights upon the dissolution of, or upon any distribution of the
assets of, the Corporation, or (iv) convertible into, or exchangeable for,
shares of any other class or classes of stock, or of any other series of the
same or any other class or classes of stock, of the Corporation at such price or
prices or at such rates of exchange and with such adjustments, all as may be
stated in such resolution or resolutions.
C. PAY-IN-KIND PREFERRED STOCK
---------------------------
1. Designation. The designation of said series of preferred stock
-----------
shall be Pay-In-Kind Preferred Stock (the "PIK Preferred Stock"). The
authorized number of shares of PIK Preferred Stock shall be 4,000,000
9
<PAGE>
shares. The par value of the PIK Preferred Stock shall be $.01 per share. The
PIK Preferred Stock shall not be subject to any sinking fund or mandatory
redemption provision.
2. Dividends. The holders of shares of PIK Preferred Stock shall be
---------
entitled to receive, when, as and if properly declared by the Board of Directors
or a duly authorized committee thereof, out of funds legally available therefor,
cumulative dividends, payable at a rate per annum of $2.50 per share in
additional shares of PIK Preferred Stock or fractions thereof (based on a value
of $10.00 per share of such additional PIK Preferred Stock). Dividends shall be
payable semiannually on February 1 and August 1 of each year, commencing
February 1, 1995. Dividends shall accrue from the date on which the Corporation
initially issues shares of this series and are cumulative from such date,
whether or not there shall be funds of the Corporation legally available for
payment of such dividends and whether or not such dividends are declared.
Dividends shall be payable in arrears to the holders of record of PIK Preferred
Stock, as they appear on the stock records of the Company at the close of
business on the 15th day of the month preceding the month in which the
particular dividend payment date occurs, or on such other record date, not
exceeding 60 days preceding the corresponding payment date, as shall be fixed by
the Board of Directors.
The amount of dividends payable for each semiannual dividend period
for the PIK Preferred Stock shall be computed by dividing the annual dividend
rate by two. The amount of dividends payable on the PIK Preferred Stock for any
partial semiannual dividend period shall be computed on the basis of a 360-day
year consisting of twelve 30-day months and, solely with respect to any partial
month, the actual number of days elapsed. No interest, or sum of money in lieu
of interest, shall be payable in respect of any dividend payment or payments on
the PIK Preferred Stock which may be in arrears. Prior to the payment of any
dividend declared by the Board of Directors, the Corporation shall take all
action necessary, including, without limitation, amending its Restated
Certificate of Incorporation or this Certificate of Designation, Powers,
Preferences and Rights, to ensure that the Corporation has sufficient authorized
but unissued shares of PIK Preferred Stock to pay such dividend.
10
<PAGE>
Except as otherwise set forth in this paragraph, so long as any shares
of the PIK Preferred Stock are outstanding, no dividends (other than in stock
ranking junior to the PIK Preferred Stock as to dividends and upon liquidation,
dissolution or winding up, and rights to acquire the foregoing) shall be paid or
declared and set apart for payment and no other distribution shall be made upon
the stock of the Corporation ranking junior to or on a parity with the PIK
Preferred Stock as to dividends, nor shall any such stock of the Corporation be
redeemed, purchased or otherwise acquired for any consideration (or any moneys
be paid to or made available for a sinking fund for the redemption of any shares
of any such stock) by the Corporation (except by conversion into or exchange for
stock of the Corporation ranking junior to the PIK Preferred Stock as to
dividends and upon liquidation, dissolution or winding up) unless, in each case,
all accumulated and unpaid dividends (whether or not declared) on all
outstanding shares of the PIK Preferred Stock shall have been paid, and
sufficient funds shall have been set apart for the payment of the dividend for
the current dividend period with respect to the PIK Preferred Stock. If
dividends are not paid in full upon the PIK Preferred Stock and any other
preferred stock of the Corporation ranking on a parity with the PIK Preferred
Stock as to dividends, all dividends declared on the PIK Preferred Stock and
such other preferred stock may only be declared pro rata so that in all cases
the amount of dividends declared per share on the PIK Preferred Stock and such
other preferred stock bear to each other the same ratio that accumulated and
unpaid dividends(whether or not declared) per share on the shares of the PIK
Preferred Stock and such other preferred stock bear to each other.
3. Redemption. The shares of PIK Preferred Stock will be redeemable
----------
for cash at the option of the Corporation, subject to the notice provisions
described below, in whole or in part, at any time or from time to time out of
funds legally available therefor, at a price per share of PIK Preferred Stock
equal to the liquidation preference thereof plus the liquidation preference of
all accumulated and unpaid dividends thereon (whether or not declared), if any,
to the redemption date (the "Redemption Price").
11
<PAGE>
If full cumulative dividends on the PIK Preferred Stock have not
been paid, the PIK Preferred Stock may not be redeemed in part and the
Corporation may not purchase or otherwise acquire any shares of PIK Preferred
Stock otherwise than pursuant to a purchase or exchange offer made on the same
terms to all holders of PIK Preferred Stock.
If fewer than all the outstanding shares of PIK Preferred Stock are to
be redeemed pursuant to the first paragraph of this Section 3, the shares to be
redeemed shall be determined in good faith by the Board of Directors, and such
shares shall be redeemed by lot or pro rata from the holders of Preferred Stock
in proportion to the number of shares of PIK Preferred Stock held by such
holders or some other equitable manner determined in good faith by the Board of
Directors. If fewer than all the shares of PIK Preferred Stock represented by
any certificates are redeemed, a new certificate shall be issued representing
the unredeemed shares without any cost to the holder thereof.
In the event the Corporation shall exercise its option to redeem
shares of PIK Preferred Stock, notice of such redemption shall be given by first
class mail, postage prepaid, mailed at least 20 but no more than 60 days prior
to the redemption date, to each holder of record of PIK Preferred Stock to be
redeemed, at such holder's address as the same appears on the stock records of
the Company. Each such notice shall state: (1) the redemption date; (2) the
number of shares of PIK Preferred Stock to be redeemed and, if less than all the
shares held by such holder are to be redeemed, the number of such shares to be
redeemed from such holder; (3) the Redemption Price; (4) the place or places
where certificates for such shares are to be surrendered for payment of the
Redemption Price; and (5) that dividends on the shares to be redeemed shall
cease to accrue on such redemption date. Notice having been mailed as aforesaid,
on and after the redemption date, provided that the Redemption Price has been
duly paid or provided for, (i) dividends shall cease to accrue on the PIK
Preferred Stock so called for redemption, (ii) such shares shall no longer be
deemed to be outstanding and (iii) all rights of the holders of such shares as
holders of PIK Preferred Stock of the Corporation shall cease except the right
to receive the Redemption Price, without interest thereon,
12
<PAGE>
upon surrender of the certificates evidencing such shares. The Corporation's
obligation to provide moneys in accordance with the preceding sentence shall be
deemed fulfilled if, on or before the redemption date, the Corporation shall
deposit with a bank or trust company having an office or agency in the Borough
of Manhattan, City of New York, and having a combined capital and surplus of at
least $100,000,000, funds necessary for such redemption, in trust, with
irrevocable instructions that such funds be applied to the redemption of the
shares of PIK Preferred Stock so called for redemption. Any interest accrued on
such funds shall be paid to the Corporation from time to time. Any funds so
deposited to which holders of PIK Preferred Stock are lawfully entitled but
which are unclaimed at the end of two years from such redemption date shall be
released or repaid to the Corporation, after which, subject to any applicable
laws relating to escheat or unclaimed property, the holder or holders of such
shares of PIK Preferred Stock so called for redemption shall look only to the
Corporation for payment of the Redemption Price. Upon surrender, in accordance
with the notice of redemption, of the certificates evidencing such shares to be
so redeemed (properly endorsed or assigned for transfer, if the Board of
Directors shall so require and the notice shall so state), such shares shall be
redeemed by the Corporation at the applicable Redemption Price.
4. Liquidation, Dissolution or Winding Up. Upon the liquidation,
--------------------------------------
dissolution or winding up of the Corporation, whether voluntary or involuntary,
the holders of the PIK Preferred Stock then outstanding shall be entitled to
be paid out of the assets of the Corporation, or any proceeds thereof, available
for distribution to the Corporation's stockholders, whether such assets are
capital, surplus or earnings, following payment or provision for payment of
all amounts owed in respect of the Corporation's obligations, liquidating
distributions in an amount (the "Liquidation Preference") equal to $10.00 for
each share outstanding, plus the liquidation preference of all accumulated and
unpaid dividends thereon (whether or not declared) before any payment shall be
made or any assets distributed to the holders of capital stock of the
Corporation that are junior to the shares of PIK Preferred Stock with respect to
the distribution of assets upon liquidation, dissolution or winding up of the
Corporation. If the assets of the Company are not suffi-
13
<PAGE>
cient to pay in full the aggregate liquidation preference payable to the holders
of outstanding shares of the PIK Preferred Stock and any shares of preferred
stock of the Corporation ranking pari passu with the PIK Preferred Stock with
respect to the distribution of assets upon liquidation, dissolution or winding
up of the Corporation, then the holders of all such shares shall share ratably
in such distribution of assets in proportion to the preferential amounts which
they would have received if paid in full. Except as provided in this Section 4,
the holders of PIK Preferred Stock shall not be entitled to any distribution in
the event of the liquidation, dissolution or winding up of the affairs of the
Corporation. A consolidation or merger of the Corporation with one or more
corporations or a sale or other transfer of all or substantially all of the
assets of the Corporation shall not be deemed to be a liquidation, dissolution
or winding up of the Corporation for purposes of this Section 4.
5. Voting Rights. Except as set forth herein and as otherwise
-------------
required by law, the holders of the PIK Preferred Stock shall have no voting
rights. So long as any shares of the PIK Preferred Stock remain outstanding,
the Corporation will not, without the affirmative vote at a meeting or the
written consent with or without a meeting of the holders of at least a majority
of the shares of PIK Preferred Stock then outstanding (voting or consenting in
writing as a separate class):
(i) authorize, create or issue, or increase the authorized or
issued amount, of any class or series of capital stock ranking prior to or
on parity with the PIK Preferred Stock as to dividends or as to the
distribution of assets upon liquidation, dissolution or winding up, or
securities convertible into or exchangeable or exercisable for such stock;
(ii) amend, alter or repeal any of the provisions of the
Restated Certificate of Incorporation of the Corporation (including,
without limitation, the provisions of this Certificate of Designation,
Powers, Preferences and Rights) but excluding (except as provided by (i)
above) the adoption of any certificate of designation relating to any other
series of preferred stock; or
14
<PAGE>
(iii) merge, consolidate or sell all or substantially all of the
assets of the Corporation, or reclassify any of the Corporation's
authorized or issued capital stock; provided however, a vote of the PIK
Preferred Stock shall not be required in order to increase the authorized
shares of the PIK Preferred Stock to an amount not to exceed 4,250,000
shares, nor to authorize, create or issue, or increase the authorized or
issued amount, of any class or series of capital stock ranking on a parity
with the PIK Preferred Stock as to dividends or as to the distribution of
assets upon liquidation, dissolution or winding up, or securities
convertible into or exchangeable or exercisable for such, in or up to an
amount of shares not to exceed the difference between 4,250,000 shares and
the number of issued and outstanding shares of PIK Preferred Stock at such
time.
In exercising the voting rights set forth in this Section 5 or when
otherwise granted voting rights by operation of law, each share of PIK Preferred
Stock shall be entitled to one vote.
6. Waiver. The holders of at least a majority of the shares of PIK
------
Preferred Stock may by written notice to the Corporation waive or modify past,
present or future compliance by the Corporation with any of the conditions,
covenants or obligations set forth in this Certificate of Designation, Powers,
Preferences and Rights. Any waiver by the holders of PIK Preferred Stock of a
breach of any provision of this Certificate of Designation, Powers, Preferences
and Rights as contemplated by the preceding sentence, shall not operate or be
construed as a waiver of any preceding or succeeding breach and no failure by
the holders of the PIK Preferred Stock to exercise any right or privilege
hereunder shall be deemed a waiver of such holders' rights to exercise the same
at any subsequent time or times hereunder.
7. Shares to be Retired. All shares of PIK Preferred Stock which are
--------------------
purchased or redeemed by the Corporation shall revert to the status of
authorized but unissued shares of preferred stock of the corporation, without
designation as to series."
15
<PAGE>
8. Redemption of Shares Held by Management of the Corporation.
----------------------------------------------------------
Anything herein to the contrary notwithstanding, the Corporation is hereby
authorized to redeem, repurchase or otherwise acquire (i) Common Stock in
accordance with the Stockholders Agreement dated as of October 17, 1994 among
the Corporation and certain of its stockholders (the "Stockholders Agreement")
without first having made payment of any or all accumulated and unpaid dividends
(whether or not declared) on all outstanding shares of the PIK Preferred Stock
and without first having set apart funds for the payment of the dividend for the
current dividend period with respect to the PIK Preferred Stock; and (ii) PIK
Preferred Stock in accordance with the Preferred Stockholders Agreement dated
as of August 14, 1995 among the Corporation and certain of its stockholders (the
"Preferred Stockholders Agreement") without first having paid full cumulative
dividends on the PIK Preferred Stock.
FIFTH: The following provisions are inserted for the management of
-----
the business and the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and stockholders:
(1) The business and affairs of the Corporation shall be managed
by or under the direction of the Board of Directors.
(2) The directors shall have concurrent power with the
stockholders to make, alter, amend, change, add to or repeal the By-Laws of the
Corporation.
(3) The number of directors of the Corporation shall not be less
than three (3) nor more than fifteen (15), the exact number of directors to be
fixed from time to time by, or in the manner provided in, the By-Laws of the
Corporation. Election of directors need not be by written ballot unless the By-
Laws so provide.
(4) No director shall be personally liable to the Corporation or
any of 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 know-
16
<PAGE>
ing violation of law, (iii) pursuant to Section 174 of the GCL or (iv) for any
transaction from which the director derived an improper personal benefit. Any
repeal or modification of this Article FIFTH by the stockholders of the
Corporation shall not adversely affect any right or protection of a director of
the Corporation existing at the time of such repeal or modification with respect
to acts or omissions occurring prior to such repeal or modification.
(5) In addition to the powers and authority hereinbefore or by
statute expressly conferred upon them, the directors are hereby empowered to
exercise all such powers and do all such acts and things as may be exercised or
done by the Corporation, subject, nevertheless, to the provisions of the GCL,
this Restated Certificate of Incorporation, and any By-Laws adopted by the
stockholders; provided, however, that no By-Laws hereafter adopted by the
-------- -------
stockholders shall invalidate any prior act of the directors which would have
been valid if such By-Laws had not been adopted.
SIXTH: Meetings of stockholders may be held within or without the
-----
State of Delaware, as the By-Laws may provide. The books of the Corporation may
be kept (subject to any provision contained in the GCL) outside the State of
Delaware as such place or places as may be designated from time to time by the
Board of Directors or in the By-Laws of the Corporation.
SEVENTH: The private property of the stockholders shall not be
-------
subject to the payment of corporate debts to any extent whatsoever.
EIGHTH: The Corporation reserves the right to amend, alter, change or
------
repeal any provision contained in this Restated Certificate of Incorporation, in
the manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
17
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be executed this 24th day of June, 1999.
HOSIERY CORPORATION OF
AMERICA, INC.
By: /s/ John F. Biagini
----------------------------------
Name: John F. Biagini
Title: Chairman and Chief
Executive Officer
18
<PAGE>
EXHIBIT 3.2
FORM OF
RESTATED CERTIFICATE OF INCORPORATION
OF
HCI DIRECT, INC.
(pursuant to Sections 242 and 245 of the
Delaware General Corporation Law)
HOSIERY CORPORATION OF AMERICA, INC., a Delaware corporation (the
"Corporation"), the original Certificate of Incorporation of which was filed
with the Secretary of State of the State of Delaware on August 9, 1979 under the
name Bear Brand Hosiery Corporation, HEREBY CERTIFIES AS FOLLOWS:
1. Effective upon the filing of this Restated Certificate of
Incorporation with the Secretary of State, each share of Common Stock
outstanding shall be reclassified on a basis of __________ shares of Common
Stock for each share of Common Stock outstanding and, accordingly, each share of
Common Stock out standing shall, without further action by the Corporation or
any stockholder, be deemed to represent ____________ shares of Common Stock,
provided that all fractional shares resulting therefrom shall be eliminated and
each holder thereof shall be entitled to receive a cash payment equal to such
holder's fraction of a share of Common Stock multiplied by the per share fair
market value, as determined by the Board of Directors.
2. This Restated Certificate of Incorporation, restates, integrates
and further amends the Corporation's Restated Certificate of Incorporation, as
heretofore amended and restated. This Restated Certificate of Incorporation was
proposed by the Board of Directors and was duly adopted by the written consent
of the stock holders of the Corporation along with the provision of the
requisite written notice in accordance with Sections 228, 242 and 245 of the
General Corporation Law of the State of Delaware as set forth in Title 8 of the
Delaware Code (the "GCL"). The text of this Restated Certificate of
Incorporation, as so amended and restated is as follows:
FIRST: The name of the Corporation is HCI Direct, Inc. (hereinafter
-----
the "Corporation").
<PAGE>
SECOND: The address of the registered office of the Corporation in
------
the State of Delaware is 1209 Orange Street, in the City of Wilmington, County
of New Castle. The name of its registered agent at that address is The
Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act
-----
or activity for which a corporation may be organized under the GCL.
FOURTH: The total number of shares of capital stock which the
------
Corporation shall have authority to issue is 72,000,000 shares, consisting of
(i) 60,000,000 shares of Common Stock, par value $.01 per share (the "Common
Stock") and (ii) 12,000,000 shares of preferred stock, par value $.01 per share
(the "Preferred Stock").
A. Common Stock.
------------
1. Voting Rights. Except as otherwise required by applicable
-------------
law, the holders of Common Stock will be entitled to one vote per share on all
matters to be voted on by the Corporation's Common Stockholders.
2. Dividends. When and as dividends are declared thereon,
---------
whether payable in cash, property or securities of the Corporation, the holders
of Common Stock will be entitled to share equally, share for share, in such
dividends.
B. Preferred Stock. The Board of Directors is expressly autho rized
---------------
to provide for the issuance of all or any shares of the Preferred Stock in one
or more classes or series, and to fix for each such class or series such voting
powers, full or limited, or no voting powers, and such distinctive designations,
preferences and relative, participating, optional or other special rights and
such qualifications, limitations or restrictions thereof, as shall be stated and
expressed in the resolution or resolutions adopted by the Board of Directors
providing for the issuance of such class or series and as may be permitted by
the GCL, including, without limitation, the authority to provide that any such
class or series may be (i) subject to such mandatory or optional redemption at
such time or times and at such price or prices, or, if appropriate, not subject
to such mandatory or optional redemption, (ii) entitled to re ceive dividends
(which may be cumulative or non-cumulative) at such rates, on such conditions,
and at such times, and payable in preference to, or in such relation to, the
dividends payable on any other class or classes or any other series, (iii)
entitled to such rights upon the dissolution of, or upon any distribution of the
assets of,
2
<PAGE>
the Corporation, or (iv) convertible into, or exchangeable for, shares of any
other class or classes of stock, or of any other series of the same or any other
class or classes of stock, of the Corporation at such price or prices or at such
rates of exchange and with such adjustments, all as may be stated in such
resolution or resolutions.
FIFTH: The following provisions are inserted for the management of
-----
the business and the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and stockholders:
(1) The business and affairs of the Corporation shall be managed
by or under the direction of the Board of Directors.
(2) The directors shall have concurrent power with the
stockholders to make, alter, amend, change, add to or repeal the By-Laws of the
Corporation.
(3) The number of directors of the Corporation shall not be less
than three (3) nor more than fifteen (15), the exact number of directors to be
fixed from time to time by, or in the manner provided in, the By-Laws of the
Corpo ration. Election of directors need not be by written ballot unless the By-
Laws so provide.
(4) No director shall be personally liable to the Corporation or
any of its stockholders for monetary damages for breach of fiduciary duty as a
direc tor, 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) pursuant to Section 174 of the GCL or (iv) for any transaction from
which the director derived an improper personal benefit. Any repeal or
modification of this Article FIFTH by the stockholders of the Corporation shall
not adversely affect any right or protection of a director of the Corporation
existing at the time of such repeal or modification with respect to acts or
omissions occurring prior to such repeal or modification.
(5) In addition to the powers and authority hereinbefore or by
statute expressly conferred upon them, the directors are hereby empowered to
exercise all such powers and do all such acts and things as may be exercised or
done by the Corporation, subject, nevertheless, to the provisions of the GCL,
this Restated
3
<PAGE>
Certificate of Incorporation, and any By-Laws adopted by the stockholders;
provided, however, that no By-Laws hereafter adopted by the stockholders shall
- -------- -------
invalidate any prior act of the directors which would have been valid if such
By-Laws had not been adopted.
SIXTH: Meetings of stockholders may be held within or without the
-----
State of Delaware, as the By-Laws may provide. The books of the Corporation may
be kept (subject to any provision contained in the GCL) outside the State of
Dela ware as such place or places as may be designated from time to time by the
Board of Directors or in the By-Laws of the Corporation.
SEVENTH: The private property of the stockholders shall not be
-------
subject to the payment of corporate debts to any extent whatsoever.
EIGHTH: The Corporation reserves the right to amend, alter, change or
------
repeal any provision contained in this Restated Certificate of Incorporation, in
the manner now or hereafter prescribed by statute, and all rights conferred upon
stock holders herein are granted subject to this reservation.
4
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be executed this ____ day of July, 1999.
HCI DIRECT, INC.
By: ___________________________
Name: John F. Biagini
Title: Chairman and Chief
Executive Officer
5
<PAGE>
EXHIBIT 3.4
RESTATED BY-LAWS
OF
HCI DIRECT, INC.
(FORMERLY, HOSIERY CORPORATION OF AMERICA, INC.)
(hereinafter called the "Corporation")
ARTICLE I
OFFICES
-------
Section 1. Registered Office. The registered office of the
--------- -----------------
Corporation shall be in the City of Wilmington, County of New Castle, State of
Delaware.
Section 2. Other Offices. The Corporation may also have offices at
--------- -------------
such other places both within and without the State of Delaware as the Board of
Directors may from time to time determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
------------------------
Section 1. Place of Meetings. Meetings of the stockholders for the
--------- -----------------
election of directors or for any other purpose shall be held at such time and
place, either within or without the State of Delaware as shall be designated
from time to time by the Board of Directors
<PAGE>
and stated in the notice of the meeting or in a duly executed waiver of notice
thereof.
Section 2. Annual Meetings. The Annual Meetings of Stockholders for
--------- ---------------
the election of directors shall be held on such date and at such time as shall
be designated from time to time by the Board of Directors and stated in the
notice of the meeting, at which meetings the stockholders shall elect by a
plurality vote a Board of Directors, and transact such other business as may
properly be brought before the meeting.
Section 3. Special Meetings. Unless otherwise required by law or by
--------- ----------------
the certificate of incorporation of the Corporation, as amended and restated
from time to time (the "Certificate of Incorporation"), Special Meetings of
Stockholders, for any purpose or purposes, may be called by either (i) the
Chairman of the Board of Directors, if there be one, or (ii) the President,
(iii) any Vice President, if there be one, (iv) the Secretary or (v) any
Assistant Secretary, if there be one, and shall be called by any such officer at
the request in writing of a majority of the Board of Directors or at the request
in writing of stockholders owning a majority of the outstanding capital stock of
the Corporation at the time entitled to vote. Such request shall state the
purpose
2
<PAGE>
or purposes of the proposed meeting. At a Special Meeting of stockholders, only
such business shall be conducted as shall be specified in the notice of meeting
(or any supplement thereto).
Section 4. Notice. Whenever stockholders are
--------- ------
required or permitted to take any action at a meeting, a written notice of the
meeting shall be given which shall state the place, date and hour of the
meeting, and, in the case of a special meeting, the purpose or purposes for
which the meeting is called. Unless otherwise required by law, the written
notice of any meeting shall be given not less than ten (10) nor more than sixty
(60) days before the date of the meeting to each stockholder entitled to vote at
such meeting.
Section 5. Adjournments. Any meeting of the stockholders may be
--------- ------------
adjourned from time to time to reconvene at the same or some other place, and
notice need not be given of any such adjourned meeting if the time and place
thereof are announced at the meeting at which the adjournment is taken. At the
adjourned meeting, the Corporation may transact any business which might have
been transacted at the original meeting. If the adjournment is for more than
thirty (30) days, or if after the adjournment a new record date is fixed for the
adjourned
3
<PAGE>
meeting, notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting.
Section 6. Quorum. Except as otherwise required by law or the
--------- ------
Certificate of Incorporation, the holders of a majority of the capital stock
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business. A quorum, once established, shall
not be broken by the withdrawal of enough votes to leave less than a quorum.
If, however, such quorum shall not be present or represented at any meeting of
the stockholders, the stockholders entitled to vote thereat, present in person
or represented by proxy, shall have power to adjourn the meeting from time to
time, in the manner provided in Section 5, until a quorum shall be present or
represented.
Section 7. Voting. Unless otherwise required by law, the Certificate
--------- ------
of Incorporation or these By-Laws, any question brought before any meeting of
stockholders, other than the election of directors, shall be decided by the vote
of the holders of a majority of the total number of votes of the capital stock
represented
4
<PAGE>
and entitled to vote thereat, voting as a single class. Unless
otherwise provided in the Certificate of Incorporation, and subject to Section 5
of Article V hereof, each stockholder represented at a meeting of stockholders
shall be entitled to cast one vote for each share of the capital stock entitled
to vote thereat held by such stockholder. Such votes may be cast in person or
by proxy but no proxy shall be voted on or after three (3) years from its date,
unless such proxy provides for a longer period. The Board of Directors, in its
discretion, or the officer of the Corporation presiding at a meeting of
stockholders, in such officer's discretion, may require that any votes cast at
such meeting shall be cast by written ballot.
Section 8. Consent of Stockholders in Lieu of Meeting. Unless
--------- ------------------------------------------
otherwise provided in the Certificate of Incorporation, any action required or
permitted to be taken at any Annual or Special Meeting of Stockholders of the
Corporation, may be taken without a meeting, without prior notice and without a
vote, if a consent in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares
5
<PAGE>
entitled to vote thereon were present and voted and shall be delivered to the
Corporation by delivery to its registered office in the State of Delaware, its
principal place of business, or an officer or agent of the Corporation having
custody of the book in which proceedings or meetings of stockholders are
recorded. Delivery made to the Corporation's registered office shall be by hand
or by certified or registered mail, return receipt requested. Every written
consent shall bear the date of signature of each stockholder who signs the
consent and no written consent shall be effective to take the corporate action
referred to therein unless, within sixty (60) days of the earliest dated consent
delivered in the manner required by this Section 8 to the Corporation, written
consents signed by a sufficient number of holders to take action are delivered
to the Corporation by delivery to its registered office in the State of
Delaware, its principal place of business, or an officer or agent of the
Corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing and who, if the action had been
taken
6
<PAGE>
at a meeting, would have been entitled to notice of the meeting if the
record date for such meeting had been the date that written consents signed by a
sufficient number of holders to take the action were delivered to the
Corporation as provided above in this section.
Section 9. List of Stockholders Entitled to Vote. The officer of the
--------- -------------------------------------
Corporation who has charge of the stock ledger of the Corporation shall prepare
and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open
to the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder of the Corporation who is
present.
7
<PAGE>
Section 10. Stock Ledger. The stock ledger of the Corporation shall
---------- ------------
be the only evidence as to who are the stockholders entitled to examine the
stock ledger, the list required by Section 9 of this Article II or the books of
the Corporation, or to vote in person or by proxy at any meeting of
stockholders.
Section 11. Conduct of Meetings. The Board of Directors of the
---------- -------------------
Corporation may adopt by resolution such rules and regulations for the conduct
of the meeting of the stockholders as it shall deem appropriate. Except to the
extent inconsistent with such rules and regulations as adopted by the Board of
Directors, the chairman of any meeting of the stockholders shall have the right
and authority to prescribe such rules, regulations and procedures and to do all
such acts as, in the judgment of such chairman, are appropriate for the proper
conduct of the meeting. Such rules, regulations or procedures, whether adopted
by the Board of Directors or prescribed by the chairman of the meeting, may
include, without limitation, the following: (i) the establishment of an agenda
or order of business for the meeting; (ii) the determination of when the polls
shall open and close for any given matter to be voted on at the meeting; (iii)
rules and procedures for maintaining order at the meeting and the
8
<PAGE>
safety of those present; (iv) limitations on attendance at or participation in
the meeting to stockholders of record of the corporation, their duly authorized
and constituted proxies or such other persons as the chairman of the meeting
shall determine; (v) restrictions on entry to the meeting after the time fixed
for the commencement thereof; and (vi) limitations on the time allotted to
questions or comments by participants.
ARTICLE III
DIRECTORS
---------
Section 1. Number and Election of Directors. The number of Directors
--------- --------------------------------
shall be fixed from time to time by resolution of the Board of Directors adopted
in accordance with Section 6 of this Article III (the "Board Resolution"), or by
resolution adopted by the vote of a majority of the stockholders of the Common
Stock or by consent executed on behalf of such stockholders (the "Stockholder
Resolution"); provided, that in the event of a conflict between the Board
--------
Resolution and the Stockholder Resolution, the Stockholder Resolution shall
govern; provided further, that the Board of Directors shall at no time consist
-------- -------
of fewer than three (3) directors. Except as provided in Section 2 of this
Article
9
<PAGE>
III, directors shall be elected by a plurality of the votes cast at
Annual Meetings of Stockholders, and each director so elected shall hold office
until the next Annual Meeting of Stockholders and until such director's
successor is duly elected and qualified, or until such director's earlier death,
resignation or removal. Any director may resign at any time upon written notice
to the Corporation. Directors need not be stockholders.
Section 2. Vacancies. Unless otherwise required by law or the
--------- ---------
Certificate of Incorporation, vacancies arising through death, resignation,
removal, an increase in the number of directors or otherwise may be filled only
by a majority of the directors then in office, though less than a quorum, or by
a sole remaining director, and the directors so chosen shall hold office until
the next annual election and until their successors are duly elected and
qualified, or until their earlier death, resignation or removal.
Section 3. Duties and Powers. The business and affairs of the
--------- -----------------
Corporation shall be managed by or under the direction of the Board of Directors
which may exercise all such powers of the Corporation and do all such lawful
acts and things as are not by statute or by the Certificate of Incorporation or
by these By-Laws
10
<PAGE>
directed or required to be exercised or done by the stockholders.
Section 4. Meetings. The Board of Directors may hold meetings, both
--------- --------
regular and special, either within or without the State of Delaware. Regular
meetings of the Board of Directors may be held without notice at such time and
at such place as may from time to time be determined by the Board of Directors.
Special meetings of the Board of Directors may be called by the Chairman of the
Board of Directors, if there be one, the President, or any directors. Notice
thereof stating the place, date and hour of the meeting shall be given to each
director either by mail not less than forty-eight (48) hours before the date of
the meeting, by telephone or telegram on twenty-four (24) hours' notice, or on
such shorter notice as the person or persons calling such meeting may deem
necessary or appropriate in the circumstances.
Section 5. Quorum. Except as otherwise required by law or the
--------- ------
Certificate of Incorporation, at all meetings of the Board of Directors, a
majority of the entire Board of Directors shall constitute a quorum for the
transaction of business and the act of a majority of the directors present at
any meeting at which there is a
11
<PAGE>
quorum shall be the act of the Board of Directors. If a quorum shall not be
present at any meeting of the Board of Directors, the directors present thereat
may adjourn the meeting from time to time, without notice other than
announcement at the meeting of the time and place of the adjourned meeting,
until a quorum shall be present.
Section 6. Actions by Written Consent. Unless otherwise provided in
--------- --------------------------
the Certificate of Incorporation or these By-Laws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if all the members of the
Board of Directors or committee, as the case may be, consent thereto in writing,
and the writing or writings are filed with the minutes of proceedings of the
Board of Directors or committee.
Section 7. Meetings by Means of Conference Telephone. Unless
--------- -----------------------------------------
otherwise provided in the Certificate of Incorporation, members of the Board of
Directors of the Corporation, or any committee thereof, may participate in a
meeting of the Board of Directors or such committee by means of a conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and
12
<PAGE>
participation in a meeting pursuant to this Section 7 shall constitute presence
in person at such meeting.
Section 8. Committees. The Board of Directors may, by resolution
--------- ----------
passed by a majority of the entire Board of Directors, designate one or more
committees, each committee to consist of one or more of the directors of the
Corporation. The Board of Directors may designate one or more directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of any such committee. In the absence or disqualification
of a member of a committee, and in the absence of a designation by the Board of
Directors of an alternate member to replace the absent or disqualified member,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not such member or members constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any absent or disqualified member. Any committee, to
the extent permitted by law and provided in the resolution establishing such
committee, shall have and may exercise all the powers and authority of the Board
of Directors in the management of the business and affairs of the Corporation,
and may authorize the seal of the Corporation to be
13
<PAGE>
affixed to all papers which may require it. Each committee shall keep regular
minutes and report to the Board of Directors when required.
Section 9. Compensation. The directors may be paid their expenses,
--------- ------------
if any, of attendance at each meeting of the Board of Directors and may be paid
a fixed sum for attendance at each meeting of the Board of Directors or a stated
salary as director, payable in cash or securities. No such payment shall
preclude any director from serving the Corporation in any other capacity and
receiving compensation therefor. Members of special or standing committees may
be allowed like compensation for attending committee meetings.
Section 10. Interested Directors. No contract or transaction between
---------- --------------------
the Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof which
authorizes the contract or transaction, or solely because the director
14
<PAGE>
or officer's vote is counted for such purpose if (i) the material facts as to
the director or officer's relationship or interest and as to the contract or
transaction are disclosed or are known to the Board of Directors or the
committee, and the Board of Directors or committee in good faith authorizes the
contract or transaction by the affirmative votes of a majority of the
disinterested directors, even though the disinterested directors be less than a
quorum; or (ii) the material facts as to the director or officer's relationship
or interest and as to the contract or transaction are disclosed or are known to
the stockholders entitled to vote thereon, and the contract or transaction is
specifically approved in good faith by vote of the stockholders; or (iii) the
contract or transaction is fair as to the Corporation as of the time it is
authorized, approved or ratified, by the Board of Directors, a committee thereof
or the stockholders. Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the Board of Directors or
of a committee which authorizes the contract or transaction.
15
<PAGE>
ARTICLE IV
OFFICERS
--------
Section 1. General. The officers of the Corporation shall be chosen
--------- -------
by the Board of Directors and shall be a Chief Executive Officer, a President, a
Secretary and a Treasurer. The Board of Directors, in its discretion, may also
choose a Chairman of the Board of Directors (who must be a director) and one or
more Vice Presidents, Assistant Secretaries, Assistant Treasurers and other
officers. Any number of offices may be held by the same person, unless
otherwise prohibited by law or the Certificate of Incorporation. The officers
of the Corporation need not be stockholders of the Corporation nor, except in
the case of the Chairman of the Board of Directors, need such officers be
directors of the Corporation.
Section 2. Election. The Board of Directors, at its first meeting
--------- --------
held after each Annual Meeting of Stockholders (or action by written consent in
lieu of the Annual Meeting of Stockholders), shall elect the officers of the
Corporation who shall hold their offices for such terms and shall exercise such
powers and perform such duties as shall be determined from time to time by the
Board of Directors; and all officers of the Corporation
16
<PAGE>
shall hold office until their successors are chosen and qualified, or until
their earlier death, resignation or removal. Any officer elected by the Board of
Directors may be removed at any time by the affirmative vote of a majority of
the Board of Directors. Any vacancy occurring in any office of the Corporation
shall be filled by the Board of Directors. The salaries of all officers of the
Corporation shall be fixed by the Board of Directors.
Section 3. Voting Securities Owned by the Corporation. Powers of
--------- ------------------------------------------
attorney, proxies, waivers of notice of meeting, consents and other instruments
relating to securities owned by the Corporation may be executed in the name of
and on behalf of the Corporation by the President or any Vice President or any
other officer authorized to do so by the Board of Directors and any such officer
may, in the name of and on behalf of the Corporation, take all such action as
any such officer may deem advisable to vote in person or by proxy at any meeting
of security holders of any corporation in which the Corporation may own
securities and at any such meeting shall possess and may exercise any and all
rights and power incident to the ownership of such securities and which, as the
owner thereof, the Corporation might have exercised and possessed if present.
The Board of Directors
17
<PAGE>
may, by resolution, from time to time confer like powers upon any other person
or persons.
Section 4. Chairman of the Board of Directors. The Chairman of the
--------- ----------------------------------
Board of Directors, if there be one, shall preside at all meetings of the
stockholders and of the Board of Directors. The Chairman of the Board of
Directors shall be the Chief Executive Officer of the Corporation, unless the
Board of Directors designates the President as the Chief Executive Officer, and,
except where by law the signature of the President is required, the Chairman of
the Board of Directors shall possess the same power as the President to sign all
contracts, certificates and other instruments of the Corporation which may be
authorized by the Board of Directors. During the absence or disability of the
President, the Chairman of the Board of Directors shall exercise all the powers
and discharge all the duties of the President. The Chairman of the Board of
Directors shall also perform such other duties and may exercise such other
powers as may from time to time be assigned to the Chairman by these By-Laws or
by the Board of Directors.
Section 5. President. The President shall, subject to the control of
--------- ---------
the Board of Directors and, if there be one, the Chairman of the Board of
Directors,
18
<PAGE>
have general supervision of the business and affairs of the Corporation and
shall see that all orders and resolutions of the Board of Directors are carried
into effect. The President shall execute all bonds, mortgages, contracts and
other instruments of the Corporation requiring a seal, under the seal of the
Corporation, except where required or permitted by law to be otherwise signed
and executed and except that the other officers of the Corporation may sign and
execute documents when so authorized by these By-Laws, the Board of Directors or
the President. In the absence or disability of the Chairman of the Board of
Directors, or if there be none, the President shall preside at all meetings of
the stockholders and the Board of Directors. If there be no Chairman of the
Board of Directors, or if the Board of Directors shall otherwise designate, the
President shall be the Chief Executive Officer of the Corporation. The President
shall also perform such other duties and may exercise such other powers as may
from time to time be assigned to the President by these By-Laws or by the Board
of Directors.
Section 6. Vice Presidents. At the request of the President or in
--------- ---------------
the President's absence or in the event of the President's inability or refusal
to act (and
19
<PAGE>
if there be no Chairman of the Board of Directors), the Vice President or the
Vice Presidents if there is more than one (in the order designated by the Board
of Directors) shall perform the duties of the President, and when so acting,
shall have all the powers of and be subject to all the restrictions upon the
President. Each Vice President shall perform such other duties and have such
other powers as the Board of Directors from time to time may prescribe. If there
be no Chairman of the Board of Directors and no Vice President, the Board of
Directors shall designate the officer of the Corporation who, in the absence of
the President or in the event of the inability or refusal of the President to
act, shall perform the duties of the President, and when so acting, shall have
all the powers of and be subject to all the restrictions upon the President.
Section 7. Secretary. The Secretary shall attend all meetings of the
--------- ---------
Board of Directors and all meetings of stockholders and record all the
proceedings thereat in a book or books to be kept for that purpose; the
Secretary shall also perform like duties for the standing committees when
required. The Secretary shall give, or cause to be given, notice of all meetings
of the stockholders and special meetings of the Board of Directors,
20
<PAGE>
and shall perform such other duties as may be prescribed by the Board of
Directors, the Chairman of the Board of Directors or the President, under whose
supervision the Secretary shall be. If the Secretary shall be unable or shall
refuse to cause to be given notice of all meetings of the stockholders and
special meetings of the Board of Directors, and if there be no Assistant
Secretary, then either the Board of Directors or the President may choose
another officer to cause such notice to be given. The Secretary shall have
custody of the seal of the Corporation and the Secretary or any Assistant
Secretary, if there be one, shall have authority to affix the same to any
instrument requiring it and when so affixed, it may be attested by the signature
of the Secretary or by the signature of any such Assistant Secretary. The Board
of Directors may give general authority to any other officer to affix the seal
of the Corporation and to attest to the affixing by such officer's signature.
The Secretary shall see that all books, reports, statements, certificates and
other documents and records required by law to be kept or filed are properly
kept or filed, as the case may be.
Section 8. Treasurer. The Treasurer shall have the custody of the
--------- ---------
corporate funds and securities
21
<PAGE>
and shall keep full and accurate accounts of receipts and disbursements in books
belonging to the Corporation and shall deposit all moneys and other valuable
effects in the name and to the credit of the Corporation in such depositories as
may be designated by the Board of Directors. The Treasurer shall disburse the
funds of the Corporation as may be ordered by the Board of Directors, taking
proper vouchers for such disbursements, and shall render to the President and
the Board of Directors, at its regular meetings, or when the Board of Directors
so requires, an account of all transactions as Treasurer and of the financial
condition of the Corporation. If required by the Board of Directors, the
Treasurer shall give the Corporation a bond in such sum and with such surety or
sureties as shall be satisfactory to the Board of Directors for the faithful
performance of the duties of the office of the Treasurer and for the restoration
to the Corporation, in case of the Treasurer's death, resignation, retirement or
removal from office, of all books, papers, vouchers, money and other property of
whatever kind in the Treasurer's possession or under the Treasurer's control
belonging to the Corporation.
Section 9. Assistant Secretaries. Assistant Secretaries, if there be
--------- ---------------------
any, shall perform such duties
22
<PAGE>
and have such powers as from time to time may be assigned to them by the Board
of Directors, the President, any Vice President, if there be one, or the
Secretary, and in the absence of the Secretary or in the event of the
Secretary's disability or refusal to act, shall perform the duties of the
Secretary, and when so acting, shall have all the powers of and be subject to
all the restrictions upon the Secretary.
Section 10. Assistant Treasurers. Assistant Treasurers, if there be
---------- --------------------
any, shall perform such duties and have such powers as from time to time may be
assigned to them by the Board of Directors, the President, any Vice President,
if there be one, or the Treasurer, and in the absence of the Treasurer or in the
event of the Treasurer's disability or refusal to act, shall perform the duties
of the Treasurer, and when so acting, shall have all the powers of and be
subject to all the restrictions upon the Treasurer. If required by the Board of
Directors, an Assistant Treasurer shall give the Corporation a bond in such sum
and with such surety or sureties as shall be satisfactory to the Board of
Directors for the faithful performance of the duties of the office of Assistant
Treasurer and for the restoration to the Corporation, in case of the Assistant
Treasurer's death,
23
<PAGE>
resignation, retirement or removal from office, of all books, papers, vouchers,
money and other property of whatever kind in the Assistant Treasurer's
possession or under the Assistant Treasurer's control belonging to the
Corporation.
Section 11. Other Officers. Such other officers as the Board of
---------- --------------
Directors may choose shall perform such duties and have such powers as from time
to time may be assigned to them by the Board of Directors. The Board of
Directors may delegate to any other officer of the Corporation the power to
choose such other officers and to prescribe their respective duties and powers.
ARTICLE V
STOCK
-----
Section 1. Form of Certificates. Every holder of stock in the
--------- --------------------
Corporation shall be entitled to have a certificate signed, in the name of the
Corporation (i) by the Chairman of the Board of Directors, the President or a
Vice President and (ii) by the Treasurer or an Assistant Treasurer, or the
Secretary or an Assistant Secretary of the Corporation, certifying the number of
shares owned by such stockholder in the Corporation.
24
<PAGE>
Section 2. Signatures. Any or all of the signatures on a certificate
--------- ----------
may be a facsimile. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if such person were such officer, transfer agent or registrar at the date of
issue.
Section 3. Lost Certificates. The Board of Directors may direct a
--------- -----------------
new certificate to be issued in place of any certificate theretofore issued by
the Corporation alleged to have been lost, stolen or destroyed, upon the making
of an affidavit of that fact by the person claiming the certificate of stock to
be lost, stolen or destroyed. When authorizing such issue of a new
certificate, the Board of Directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed certificate, or the owner's legal representative, to advertise the
same in such manner as the Board of Directors shall require and/or to give the
Corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the Corporation with
25
<PAGE>
respect to the certificate alleged to have been lost, stolen or destroyed
or the issuance of such new certificate.
Section 4. Transfers. Stock of the Corporation shall be transferable
--------- ---------
in the manner prescribed by law and in these By-Laws. Transfers of stock shall
be made on the books of the Corporation only by the person named in the
certificate or by such person's attorney lawfully constituted in writing and
upon the surrender of the certificate therefor, which shall be cancelled before
a new certificate shall be issued. No transfer of stock shall be valid as
against the Corporation for any purpose until it shall have been entered in the
stock records of the Corporation by an entry showing from and to whom
transferred.
Section 5. Record Date.
--------- -----------
(a) In order that the Corporation may determine the stockholders entitled
to notice of or to vote at any meeting of stockholders or any adjournment
thereof, the board of directors may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is adopted
by the Board of Directors, and which record date shall not be more than sixty
(60) nor less than ten (10) days before the date of such
26
<PAGE>
meeting. If no record date is fixed by the Board of Directors, the record date
for determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; providing, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
(b) In order that the Corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the Board
of Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which record date shall not be more than ten (10) days after the
date upon which the resolution fixing the record date is adopted by the Board of
Directors. If no record date has been fixed by the Board of Directors, the
record date for determining stockholders entitled to consent to corporate action
in writing without a meeting,
27
<PAGE>
when no prior action by the Board of Directors is required by law, shall be the
first date on which a signed written consent setting forth the action taken or
proposed to be taken is delivered to the Corporation by delivery to its
registered office in this State, its principal place of business, or an officer
or agent of the Corporation having custody of the book in which proceedings of
meetings of stockholders are recorded. Delivery made to a corporation's
registered office shall be by hand or by certified or registered mail, return
receipt requested. If no record date has been fixed by the Board of Directors
and prior action by the Board of Directors is required by law, the record date
for determining stockholders entitled to consent to corporate action in writing
without a meeting shall be at the close of business on the day on which the
Board of Directors adopts the resolutions taking such prior action.
(c) In order that the Corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the stockholders entitled to exercise any rights in respect of
any change, conversion or exchange of stock, or for the purpose of any other
lawful action, the Board of Directors may fix a record date, which record date
28
<PAGE>
shall not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than sixty (60) days prior to
such action. If no record date is fixed, the record date for determining
stockholders for any such purpose shall be at the close of business on the day
on which the Board of Directors adopts the resolution relating thereto.
Section 6. Record Owners. The Corporation shall be entitled to
--------- -------------
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise required by
law.
ARTICLE VI
NOTICES
-------
Section 1. Notices. Whenever written notice is required by law, the
--------- -------
Certificate of Incorporation or these By-Laws, to be given to any director,
member of a committee or stockholder, such notice may be given by
29
<PAGE>
mail, addressed to such director, member of a committee or stockholder, at such
person's address as it appears on the records of the Corporation, with postage
thereon prepaid, and such notice shall be deemed to be given at the time when
the same shall be deposited in the United States mail. Written notice may also
be given personally or by telegram, telex or cable.
Section 2. Waivers of Notice. Whenever any notice is required by
--------- -----------------
law, the Certificate of Incorporation or these By-Laws, to be given to any
director, member of a committee or stockholder, a waiver thereof in writing,
signed, by the person or persons entitled to said notice, whether before or
after the time stated therein, shall be deemed equivalent thereto. Attendance
of a person at a meeting, present in person or represented by proxy, shall
constitute a waiver of notice of such meeting, except where the person attends
the meeting for the express purpose of objecting at the beginning of the meeting
to the transaction of any business because the meeting is not lawfully called or
convened.
30
<PAGE>
ARTICLE VII
GENERAL PROVISIONS
------------------
Section 1. Dividends. Dividends upon the capital stock of the
--------- ---------
Corporation, subject to the requirements of the DGCL and the provisions of the
Certificate of Incorporation, if any, may be declared by the Board of Directors
at any regular or special meeting of the Board of Directors (or any action by
written consent in lieu thereof in accordance with Section 6 of Article III
hereof), and may be paid in cash, in property, or in shares of the Corporation's
capital stock. Before payment of any dividend, there may be set aside out of
any funds of the Corporation available for dividends such sum or sums as the
Board of Directors from time to time, in its absolute discretion, deems proper
as a reserve or reserves to meet contingencies, or for equalizing dividends, or
for repairing or maintaining any property of the Corporation, or for any proper
purpose, and the Board of Directors may modify or abolish any such reserve.
Section 2. Disbursements. All checks or demands for money and notes
--------- -------------
of the Corporation shall be signed by such officer or officers or such other
person
31
<PAGE>
or persons as the Board of Directors may from time to time designate.
Section 3. Fiscal Year. The fiscal year of the Corporation shall be
--------- -----------
fixed by resolution of the Board of Directors.
Section 4. Corporate Seal. The corporate seal shall have inscribed
--------- --------------
thereon the name of the Corporation, the year of its organization and the words
"Corporate Seal, Delaware". The seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise.
ARTICLE VIII
INDEMNIFICATION
---------------
Section 1. Power to Indemnify in Actions, Suits or Proceedings other
--------- ---------------------------------------------------------
than Those by or in the Right of the Corporation. Subject to Section 3 of this
- ------------------------------------------------
Article VIII, the Corporation shall 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 an action by or in the right of the Corporation) by
reason of the fact that such person is or was a director or officer of the
Corporation, or is
32
<PAGE>
or was a director or officer of the Corporation serving at the request of the
Corporation as a director or officer, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person 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 the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe such person's conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
---- ----------
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which such person reasonably believed to be in
or not opposed to the best interests of the Corporation, and, with respect to
any criminal action or proceeding, had reasonable cause to believe that such
person's conduct was unlawful.
Section 2. Power to Indemnify in Actions, Suits or Proceedings by or
--------- ---------------------------------------------------------
in the Right of the Corporation.
33
<PAGE>
Subject to Section 3 of this Article VIII, the
- -------------------------------
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the Corporation to procure a judgment in its favor by reason of the
fact that such person is or was a director or officer of the Corporation, or is
or was a director or officer of the Corporation serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred by
such person in connection with the defense or settlement of such action or suit
if such person acted in good faith and in a manner such person reasonably
believed to be in or not opposed to the best interests of the Corporation;
except that no indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable to the
Corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case,
34
<PAGE>
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.
Section 3. Authorization of Indemnification. Any indemnification
--------- --------------------------------
under this Article VIII (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of the director or officer is proper in the circumstances
because such person has met the applicable standard of conduct set forth in
Section 1 or Section 2 of this Article VIII, as the case may be. Such
determination shall be made, with respect to a person who is a director or
officer at the time of such determination, (i) by a majority of the directors
who are not parties to such action, suit or proceeding, even though less than a
quorum, or (ii) by a committee of such directors designated by a majority vote
of such directors, even though less than a quorum, or (iii) if there are no such
directors, or if such directors so direct, by independent legal counsel in a
written opinion or (iv) by the stockholders. Such determination should be made,
with respect to former officers and directors, by any person or persons having
the authority to act on the matter on behalf of the Corporation. To the extent,
however, that
35
<PAGE>
a present or former director or officer of the Corporation has been successful
on the merits or otherwise in defense of any action, suit or proceeding
described above, or in defense of any claim, issue or matter therein, such
person shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by such person in connection therewith, without
the necessity of authorization in the specific case.
Section 4. Good Faith Defined. For purposes of any determination
--------- ------------------
under Section 3 of this Article VIII, a person shall be deemed to have acted in
good faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of the Corporation, or, with respect to any
criminal action or proceeding, to have had no reasonable cause to believe such
person's conduct was unlawful, if such person's action is based on the records
or books of account of the Corporation or another enterprise, or on information
supplied to such person by the officers of the Corporation or another enterprise
in the course of their duties, or on the advice of legal counsel for the
Corporation or another enterprise or on information or records given or reports
made to the Corporation or another enterprise by
36
<PAGE>
an independent certified public accountant or by an appraiser or other expert
selected with reasonable care by the Corporation or another enterprise. The term
"another enterprise" as used in this Section 4 shall mean any other corporation
or any partnership, joint venture, trust, employee benefit plan or other
enterprise of which such person is or was serving at the request of the
Corporation as a director, officer, employee or agent. The provisions of this
Section 4 shall not be deemed to be exclusive or to limit in any way the
circumstances in which a person may be deemed to have met the applicable
standard of conduct set forth in Section 1 or 2 of this Article VIII, as the
case may be.
Section 5. Indemnification by a Court. Notwithstanding any contrary
--------- --------------------------
determination in the specific case under Section 3 of this Article VIII, and
notwithstanding the absence of any determination thereunder, any director or
officer may apply to the Court of Chancery in the State of Delaware for
indemnification to the extent otherwise permissible under Section 1 and 2 of
this Article VIII. The basis of such indemnification by a court shall be a
determination by such court that indemnification of the director or officer is
proper in the circumstances because such person has met the applicable standards
of conduct set forth in Sections 1 or 2 of this Article VIII, as the case may
be. Neither a contrary determination in the specific case under Section 3 of
this Article VIII nor the absence of any determination thereunder shall be a
defense to such application or create a presumption that the director or officer
seeking indemnification has not met any applicable
37
<PAGE>
standard of conduct. Notice of any application for indemnification pursuant to
this Section 5 shall be given to the Corporation promptly upon the filing of
such application. If successful, in whole or in part, the director or officer
seeking indemnification shall also be entitled to be paid the expense of
prosecuting such application.
Section 6. Expenses Payable in Advance. Expenses incurred by a
--------- ---------------------------
director or officer in defending any civil, criminal, administrative or
investigative action, suit or proceeding shall be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that such person is not entitled to
be indemnified by the Corporation as authorized in this Article VIII.
38
<PAGE>
Section 7. Nonexclusivity of Indemnification and Advancement of
--------- ----------------------------------------------------
Expenses. The indemnification and advancement of expenses provided by or
- --------
granted pursuant to this Article VIII shall not be deemed exclusive of any other
rights to which those seeking indemnification or advancement of expenses may be
entitled under the Certificate of Incorporation, any By-Law, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in such
person's official capacity and as to action in another capacity while holding
such office, it being the policy of the Corporation that indemnification of the
persons specified in Section 1 and 2 of this Article VIII shall be made to the
fullest extent permitted by law. The provisions of this Article VIII shall not
be deemed to preclude the indemnification of any person who is not specified in
Sections 1 or 2 of this Article VIII but whom the Corporation has the power or
obligation to indemnify under the provisions of the General Corporation Law of
the State of Delaware, or otherwise.
Section 8. Insurance. The Corporation may purchase and maintain
--------- ---------
insurance on behalf of any person who is or was a director or officer of the
Corporation, or is or was a director or officer of the Corporation
39
<PAGE>
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise against any liability asserted against such
person and incurred by such person in any such capacity, or arising out of such
person's status as such, whether or not the Corporation would have the power or
the obligation to indemnify such person against such liability under the
provisions of this Article VIII.
Section 9. Certain Definitions. For purposes of this Article VIII,
--------- -------------------
references to "the Corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors or officers, so that any person who is or was a director or officer of
such constituent corporation, or is or was a director or officer of such
constituent corporation serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise, shall stand in
the same position under the provisions of this Article VIII with
40
<PAGE>
respect to the resulting or surviving corporation as such person would have with
respect to such constituent corporation if its separate existence had continued.
For purposes of this Article VIII, references to "fines" shall include any
excise taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the Corporation" shall include any
service as a director, officer, employee or agent of the Corporation which
imposes duties on, or involves services by, such director or officer with
respect to an employee benefit plan, its participants or beneficiaries; and a
person who acted in good faith and in a manner such person reasonably believed
to be in the interest of the participants and beneficiaries of an employee
benefit plan shall be deemed to have acted in a manner "not opposed to the best
interests of the Corporation" as referred to in this Article VIII.
Section 10. Survival of Indemnification and Advancement of Expenses.
---------- -------------------------------------------------------
The indemnification and advancement of expenses provided by, or granted pursuant
to, this Article VIII shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director or officer and
shall inure to
41
<PAGE>
the benefit of the heirs, executors and administrators of such a person.
Section 11. Limitation on Indemnification. Notwithstanding anything
---------- -----------------------------
contained in this Article VIII to the contrary, except for proceedings to
enforce rights to indemnification (which shall be governed by Section 5 hereof),
the Corporation shall not be obligated to indemnify any director or officer in
connection with a proceeding (or part thereof) initiated by such person unless
such proceeding (or part thereof) was authorized or consented to by the Board of
Directors of the Corporation.
Section 12. Indemnification of Employees and Agents. The Corporation
---------- ---------------------------------------
may, to the extent authorized from time to time by the Board of Directors,
provide rights to indemnification and to the advancement of expenses to
employees and agents of the Corporation similar to those conferred in this
Article VIII to directors and officers of the Corporation.
42
<PAGE>
ARTICLE IX
AMENDMENTS
----------
Section 1. These By-Laws may be altered, amended or repealed, in
---------
whole or in part, or new By-Laws may be adopted by the stockholders or by the
Board of Directors, provided, however, that notice of such alteration,
amendment, repeal or adoption of new By-Laws be contained in the notice of such
meeting of stockholders or Board of Directors, as the case may be. All such
amendments must be approved by either the holders of a majority of the
Corporation's outstanding capital stock entitled to vote thereon or by a
majority of the entire Board of Directors then in office.
Section 2. Entire Board of Directors. As used in this Article IX and
--------- -------------------------
in these By-Laws generally, the term "entire Board of Directors" means the total
number of directors which the Corporation would have if there were no vacancies.
43
<PAGE>
EXHIBIT 4.4
[FRONT]
TEMPORARY CERTIFICATE - THIS CERTIFICATE IS EXCHANGEABLE
FOR DEFINITIVE ENGRAVED CERTIFICATE WHEN READY FOR DELIVERY
NUMBER SHARES
T
HCI DIRECT, INC.
INCORPORATED UNDER THE LAWS OF
THE STATE OF DELAWARE
COMMON STOCK CUSIP
SEE REVERSE
FOR CERTAIN
DEFINITIONS
This is To Certify That
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK OF THE PAR VALUE OF
$.01 EACH OF
HCI DIRECT, INC. (hereinafter called the "Corporation"), transferable on
the books of the Corporation by the holder hereof in person or by duly
authorized attorney, upon surrender of this certificate properly endorsed. This
certificate and the shares represented hereby are issued and shall be held
subject to all of the provisions of the Certificate of Incorporation of the
Corporation and all amendments thereto, to all of which the holder of this
certificate assents by his acceptance hereof.
This certificate is not valid unless countersigned and registered by the
Transfer Agent and Registrar.
WITNESS the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.
[HCI DIRECT, INC.]
[Corporate Seal]
Dated:
/s/ Arthur C. Hughes /s/ John F. Biagini
SECRETARY CHAIRMAN AND CHIEF EXECUTIVE OFFICER
Countersigned and Registered:
American Stock Transfer & Trust Company
Transfer Agent and Registrar
By
Authorized Signature
<PAGE>
[REVERSE]
HCI DIRECT, INC.
The Corporation will furnish without charge to each stockholder who so
requests a statement of the designations, powers, preferences and relative
participating, optional or other special rights of each class of stock or series
thereof of the Corporation and the qualifications, limitations or restrictions
of such preferences and/or rights. Such request may be made to the Corporation
or the Transfer Agent.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations.
TEN COM - as tenants in common UNIF GIFT MIN ACT - _____ Custodian _______
(Cust) (Minor)
TEN ENT - as tenants
by the entireties
JT TEN - as joint tenants with under Uniform Gifts to Minors
right of survivorship Act _________________________
and not as tenants in (State)
common
UNIF TRANS MIN ACT - _____ Custodian _______
(Cust) (Minor)
under Uniform Transfers to Minors
Act _________________________
(State)
Additional abbreviations may also be used though not in the above list.
For value received, ____________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
________________________________________________________________________________
________________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE OF ASSIGNEE
________________________________________________________________________________
________________________________________________________________________________
_________________________________________________________________________ Shares
of the Common Stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint _____________________________________________
________________________________________________________________________________
2
<PAGE>
Attorney to transfer the said stock on the books of the within-named Corporation
with full power of substitution in the premises.
Dated: _______________
_______________________________________________________
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH
THE NAME AS WRITTEN UPON THE FACE OF THIS CERTIFICATE
IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT,
OR ANY CHANGE WHATEVER.
Signature Guaranteed: _______________________________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE
GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND
LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN
AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM),
PURSUANT TO S.E.C. RULE 17Ad-15.
KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN, MUTILATED OR
DESTROYED, THE CORPORATION WILL REQUIRE A BOND OF INDEMNITY AS A CONDITION TO
THE ISSUANCE OF A REPLACEMENT CERTIFICATE.
3
<PAGE>
EXHIBIT 4.5
HCI DIRECT, INC.
(Formerly known as
Hosiery Corporation of America, Inc.)
and
UNITED STATES TRUST COMPANY OF NEW YORK
as Trustee
---------------------
First Supplemental Indenture
Dated as of June 25, 1999
to Indenture
Dated as of October 17, 1994
13 3/4% Senior Subordinated Exchange Notes due 2002
------------------------------------------------------------
<PAGE>
FIRST SUPPLEMENTAL INDENTURE, dated as of June 25, 1999(this "First
Supplemental Indenture"), to the Indenture, dated as of October 17, 1994 (as
amended, modified or supplemented from time to time in accordance therewith, the
"Indenture"), between HCI DIRECT, INC., a Delaware corporation (the "Company"),
formerly known as Hosiery Corporation of America, Inc. and UNITED STATES TRUST
COMPANY OF NEW YORK (the "Trustee").
RECITALS
WHEREAS, the Company has heretofore executed and delivered to the
Trustee the Indenture, providing for, among other things, the creation and
issuance by the Company of its 13 3/4% Senior Subordinated Exchange Notes due
2002 (the "Notes"); and
WHEREAS, Section 9.2 of the Indenture provides that the Company, when
authorized by a Board resolution, and the Trustee, with the written consent of
the Holders of at least a majority in aggregate principal amount of the Notes
outstanding, may amend the Indenture, subject to certain exceptions specified in
Section 9.2 of the Indenture; and
WHEREAS, the parties hereto are entering into this First Supplemental
Indenture to eliminate or amend certain of the covenants and other provisions
contained in Article 4 or Article 5 of the Indenture (such proposed eliminations
or amendments are collectively referred to herein as the "Proposals"); and
WHEREAS, the Holders of at least a majority in aggregate principal
amount of the Notes outstanding have duly consented to the Proposals; and
WHEREAS, the conditions set forth in the Indenture for the execution
and delivery of this First Supplemental Indenture have been complied with;
and
WHEREAS, all things necessary to make this First Supplemental
Indenture a valid agreement of the Company and the Trustee, in accordance with
its terms, and a valid amendment of, and supplement to, the Indenture have
been done;
<PAGE>
NOW THEREFORE:
In consideration of the premises, the parties have executed and
delivered this First Supplemental Indenture, and the Company hereby covenants
and agrees with the Trustee, for the equal and proportionate benefit of all
Holders of the Notes, that the Indenture is supplemented and amended, to the
extent and for the purposes expressed herein, as follows:
SECTION 1. Definitions. (a) For all purposes of this First
-----------
Supplemental Indenture, except as otherwise expressly provided or unless the
context otherwise re quires, terms used herein shall have the meanings as
signed to them in the Indenture.
(b) Any defined terms and any references thereto which are used solely
in the sections, subsections or provisions of the Indenture deleted by operation
of Section 2 of this First Supplemental Indenture are hereby deleted in their
entireties from Section 1.1 of the Indenture.
SECTION 2. Elimination of Certain Provisions of Articles 4 and 5 of
--------------------------------------------------------
the Indenture. Sections 4.3, 4.7, 4,8, 4.9, 4.10, 4.11, 4.12, 4.16, 5.1 and 5.2
- -------------
of the Indenture are hereby deleted in their entireties together with any
references thereto in the Indenture.
SECTION 3. Operation of Proposed Amendments. Upon the execution and
--------------------------------
delivery of this First Supplemental Indenture by the Trustee and the Company,
this First Supplemental Indenture will become operative but the provisions of
Sections 1(b) and 2 hereof will not become effective until the Notes validly
tendered pursuant to the Company's offer to purchase and consent solicitation
contained in the Company's Offer to Purchase and Consent Solicitation Statement
dated June 14, 1999, and the related Consent and Letter of Transmittal (in each
case, as the same may be amended, modified or supplemented from time to time in
accordance therewith) are accepted for purchase by the Company in accordance
with the terms and conditions set forth therein.
SECTION 4. Recitals. The recitals of fact contained herein shall be
--------
taken as the statements of the
2
<PAGE>
Company, and the Trustee assumes no responsibility for the correctness of the
same. The Trustee makes no representations as to the validity or adequacy of
this First Supplemental Indenture or the due execution hereof by the
Company.
SECTION 5. Ratification and Confirmation of Indenture. Except as
------------------------------------------
hereby expressly amended, the Indenture is in all respects ratified and
confirmed and all the terms, provisions and conditions thereof shall be and
remain in full force and effect.
SECTION 6. Governing Law. THE INTERNAL LAW OF THE STATE OF NEW YORK
-------------
SHALL GOVERN AND BE USED TO CON STRUE THIS FIRST SUPPLEMENTAL INDENTURE.
SECTION 7. Successors. All agreements of the Company in this First
----------
Supplemental Indenture and the Notes shall bind its successors. All agreements
of the Trustee in this First Supplemental Indenture shall bind its successors.
SECTION 8. Duplicate Originals. The parties may sign any number of
-------------------
copies of this First Supplemental Indenture. Each signed copy shall be an
original, but all such executed copies together represent the same agreement.
SECTION 9. Severability. In case any provision of this First
------------
Supplemental Indenture shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby, and a Holder shall have no claim therefor against
any party hereto.
SECTION 10. Headings. The headings of the sections of this First
--------
Supplemental Indenture have been inserted for convenience of reference only, are
not to be considered a part hereof and shall in no way modify or restrict any of
the terms or provisions hereof.
SECTION 11. Trust Indenture Act Controls. If any provision of this
----------------------------
First Supplemental Indenture limits, qualifies or conflicts with the duties
imposed by TIA (S)(S)310-317 by operation of TIA (S)318(c), the imposed duties
shall control.
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed as of the day and year first above
written.
HCI DIRECT, INC. (Formerly,
HOSIERY CORPORATION OF AMERICA, INC.)
By: /s/ John Biagini
---------------------------------
Name: John Biagini
Title: Chief Executive Officer
UNITED STATES TRUST COMPANY OF
NEW YORK, as Trustee
By: /s/ Louis P. Young
---------------------------------
Name: Louis P. Young
Title: Vice President
4
<PAGE>
EXHIBIT 5.1
[LETTERHEAD OF SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP]
July 13, 1999
HCI Direct, Inc.
3369 Progress Drive
Bensalem, Pennsylvania 19020
Re: Registration on Form S-1 (No. 333-07197)
----------------------------------------
Ladies and Gentlemen:
We have acted as special counsel to HCI Direct, Inc. (formerly,
Hosiery Corporation of America, Inc.), a Delaware corporation (the "Company"),
in connection with the public offering by the Company of up to 10,875,000 shares
(the "Company Shares") of the Company's common stock, par value $0.01 per share
("Common Stock") (including up to 875,000 shares subject to an over-allotment
option) and by stockholders of the Company (the "Selling Stockholders") of up to
625,000 shares of Common Stock subject to an over-allotment option (the "Second
ary Shares" and, together with the Company Shares, the "Shares").
This opinion is being furnished in accordance with the requirements of
Item 601(b)(5) of Regulation S-K under the Securities Act of 1933, as amended
(the "Act").
In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of (i) the Registration
Statement on Form S-1 (File No. 333-07197) as filed with the Securities and Ex
change Commission (the "Commission") on June 28, 1996 under the Act, Amendment
No. 1 thereto, filed with the Commission on May 26, 1999, Amendment No. 2
thereto, filed with the Commission on June 28, 1999 and Amendment No. 3 thereto,
to be filed with the Commission on the date hereof (such Registration Statement,
as so amended, being hereinafter referred to as the "Registration Statement");
(ii) the
<PAGE>
HCI Direct, Inc.
June , 1999
Page 2
form of the Underwriting Agreement (the "Underwriting Agreement") proposed to be
entered into between the Company, as issuer, the Selling Stockholders and
Goldman, Sachs & Co., Bear, Stearns & Co., Inc., BancBoston Robertson Stephens
Inc. and First Union Capital Markets Corp., as representatives of the several
Underwriters to be named therein (the "Underwriters"), filed as an exhibit to
the Registration Statement; (iii) a specimen certificate representing the
Common Stock; (iv) the Restated Certificate of Incorporation of the Company, as
amended to date; (v) the Restated By-Laws of the Company, as amended to date;
and (vi) certain resolutions of the Board of Directors of the Company and drafts
of certain resolutions (the "Draft Resolutions") of the Pricing Committee
appointed by the Board of Directors of the Company (the "Pricing Committee") in
each case relating to the issuance and sale of the Company Shares and related
matters. We have also examined originals or copies, certified or otherwise
identified to our satisfaction, of such records of the Company and such
agreements, certificates of public officials, certificates of officers or other
representatives of the Company and others, and such other documents,
certificates and records as we have deemed necessary or appropriate as a basis
for the opinions set forth herein.
In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified, conformed or photostatic copies and the
authenticity of the originals of such latter documents. In making our
examination of executed documents or documents to be executed, we have assumed
that the parties thereto, other than the Company, had or will have the power,
corporate or other, to enter into and perform all obligations thereunder and
have also assumed the due authorization by all requisite action, corporate or
other, and execution and delivery by such parties of such documents and the
validity and binding effect thereof. As to any facts material to the opinions
expressed herein which we have not independently established or verified, we
have relied upon statements and representations of officers and other
representatives of the Company and others. In rendering the opinion set forth in
numbered paragraph 2 below, we have assumed that the Company has received the
entire amount of the consideration contemplated by the resolutions of the Board
of Directors of the Company authorizing the original issuance of the Secondary
Shares.
<PAGE>
HCI Direct, Inc.
June , 1999
Page 3
Members of our firm are admitted to the bar in the State of New York,
and we do not express any opinion as to the laws of any jurisdiction other than
the Delaware General Corporation Law.
Based upon and subject to the foregoing, we are of the opinion that:
1. When (i) the Registration Statement becomes effective under the Act; (ii)
the Draft Resolutions have been adopted by the Pricing Committee; (iii) the
price at which the Company Shares are to be sold to the Underwriters
pursuant to the Underwriting Agreement and other matters relating to the
issuance and sale of the Company Shares have been approved by the Pricing
Committee in accordance with the Draft Resolutions; (iv) the Underwriting
Agreement has been duly executed and delivered; and (v) certificates
representing the Company Shares in the form of the specimen certificates
examined by us have been manually signed by an authorized officer of the
transfer agent and registrar for the Common Stock and registered by such
transfer agent and registrar, and the Company Shares have been delivered to
and paid for by the Underwriters at a price per share not less than the per
share par value of the Common Stock as contemplated by the Underwriting
Agreement, the issuance and sale of the Company Shares will have been duly
authorized, and the Company Shares will be validly issued, fully paid and
nonassessable.
2. The Secondary Shares have been duly authorized and validly issued and are
fully paid and nonassessable.
We call to your attention that, with respect to the Secondary Shares
held by one of the Selling Stockholders, the Company has been unable to locate,
and we therefore have not had an opportunity to review, resolutions of the
stockholders of the Company authorizing a merger transaction pursuant to which
those Secondary Shares (as constituted prior to a stock split effected in
October 1994) were issued. We have, however, reviewed a certificate, dated
November 16, 1979, of the Secretary of the Company attached to the applicable
Agreement of Merger as filed with Secretary of State of Delaware, which
indicates that such merger was duly authorized by the stockholders of the
Company. In rendering the opinion set forth in numbered paragraph 2 above, we
have assumed, with your permission, that such stockholder approval was duly
obtained.
<PAGE>
HCI Direct, Inc.
June , 1999
Page 4
We hereby consent to the filing of this opinion with the Commission as
an exhibit to the Registration Statement. We also consent to the reference to
our firm under the caption "Legal Matters" in the Registration Statement. In
giving this consent, we do not thereby admit that we are included in the
category of persons whose consent is required under Section 7 of the Act or the
rules and regulations of the Commission.
Very truly yours,
/s/ SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
--------------------------------------------
<PAGE>
EXHIBIT 9.3
FIRST AMENDMENT TO
STOCKHOLDERS AGREEMENT
----------------------
Reference is made to the Stockholders Agreement dated as of October
17, 1994, among HCI DIRECT, INC. (formerly, Hosiery Corporation of America,
Inc.) (the "Company"), KELSO INVESTMENT ASSOCIATES V, L.P. ("KIA V"), KELSO
EQUITY PARTNERS V, L.P. (together with KIA V, "Kelso"), JOSEPH A. MURPHY ("JAM")
and certain other stockholders of the Company (the "Stockholders Agreement").
This is a First Amendment to the Stockholders Agreement (the "First
Amendment") and is dated as of July 1, 1999.
WHEREAS, Kelso, the Company and JAM desire to amend Section 7.2 of the
Stockholders Agreement, and Section 10.7 of the Stockholders Agreement provides
that Section 7.2 of the Stockholders Agreement may be amended, modified or
supplemented only with the written consent of Kelso and JAM.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged by Kelso, the Company and JAM, Kelso,
the Company and JAM hereby agree as follows:
1. Each capitalized term not otherwise expressly defined herein
shall have the meaning ascribed to such term in the Stockholders Agreement.
2. The first paragraph of Section 7.2 of the Stockholders Agreement
is hereby amended to remove any reference to a Unit Share Holder, and therefore,
the definition of Holder for the purposes of Section 7.2 of the Stockholders
Agreement shall not include any Unit Share Holder.
3. Section 7.2(c) of the Stockholders Agreement is hereby amended to
eliminate sub-clause (ii) thereof.
4. Except as expressly set forth herein, this First Amendment is in
no way intended to alter the rights, duties, obligations or any other
relationship between the parties to the Stockholders Agreement. Except as
expressly amended hereby, the Stockholders Agreement is not in any way amended,
modified or waived hereby and shall remain in full force and effect.
<PAGE>
5. This First Amendment shall be governed by and interpreted and
enforced in accordance with the substantive laws of the State of Delaware,
without giving effect to the choice of law principles thereof.
6. This First Amendment may be executed in counterparts, each of
which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this First
Amendment as of the date first written above.
KELSO INVESTMENT
ASSOCIATES V, L.P.
By: Kelso Partners V, L.P.
General Partner
By: /s/ Michael B. Goldberg
------------------------------------
General Partner
KELSO EQUITY PARTNERS V, L.P.
By: /s/ Michael B. Goldberg
------------------------------------
General Partner
HCI DIRECT, INC. (formerly, Hosiery
Corporation of America, Inc.)
By: /s/ John F. Biagini
------------------------------------
John F. Biagini
Chief Executive Officer
JOSEPH A. MURPHY
/s/ Joseph A. Murphy
---------------------------------------
2
<PAGE>
EXHIBIT 10.8
AMENDED AND RESTATED
HOSIERY CORPORATION OF AMERICA, INC.
1996 STOCK OPTION PLAN
(amended and restated as of June 24, 1999
1. Purpose; Construction.
---------------------
The purpose of the Amended and Restated Hosiery Corporation of
America, Inc. 1996 Stock Option Plan (the "Plan") is to afford an incentive to
executive officers, other key employees and consultants of Hosiery Corporation
of America, Inc. (the "Company"), or any subsidiary of the Company which now
exists or hereafter is organized or acquired by the Company, to acquire a
proprietary interest in the Company, to continue as employees or consultants, to
increase their efforts on behalf of the Company and to promote the success of
the Company's business.
2. Definitions.
-----------
As used in this Plan, the following words and phrases shall have the
meanings indicated:
(a) "Agreement" shall mean an agreement entered into between
the Company and a Grantee in connection with an Option under the Plan.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Committee" shall mean a committee established by the
Board to administer the Plan or, if no such committee is established, the Board.
From and after the consummation of an Initial Public Offering, the Committee
shall at all times consist of persons who are (i) "Nonemployee Directors" as
defined in Rule 16b-3 issued under the Securities Exchange Act of 1934, as
amended, and (ii) "outside directors" as defined in Section 162 (m) of the
Internal Revenue Code of 1986, as amended.
(d) "Common Stock" shall mean shares of common stock, par value
$0.01 per share, of the Company.
<PAGE>
(e) "Company" shall mean Hosiery Corporation of America, Inc.,
a corporation organized under the laws of the State of Delaware, or any
successor corporation.
(f) "Disability" shall mean a Grantee's inability to perform his
duties with the Company or any of its affiliates by reason of any physical or
mental impairment.
(g) "Exercise Price" shall mean the per share price at which the
shares of Common stock underlying an Option may be purchased by a Grantee.
(h) "Fair Market Value" per share of Common Stock as of a
particular date shall mean, unless otherwise provided in an Agreement (i) the
closing sales price per share of Common Stock on the national securities
exchange on which the Common Stock is principally traded for the last preceding
date on which there was a sale of such Common Stock on such exchange, or (ii) if
the shares of Common Stock are then traded in an over-the-counter market, the
average of the closing bid and asked prices for the shares of Common Stock in
such over-the-counter market for the last preceding date on which there was a
sale of such Common Stock in such market, or (iii) if the shares of Common
Stock are not then listed on a national securities exchange or traded in an
over-the-counter market, such value as the Committee, in its sole discretion,
shall determine; provided, however, that the Fair market Value per share on the
date of an Initial Public Offering shall equal the initial public offering price
per share or such other price that the Committee determines in its sole
discretion.
(i) "Grantee" shall mean a person who receives a grant of
Options under the Plan.
(j) "Initial Public Offering " shall mean the first underwritten
initial public offering of shares of Common Stock.
(k) "Option" shall mean a grant to a Grantee of an option to
purchase shares of Common Stock.
(l) " Plan" means this Amended and Restated Hosiery Corporation
of America, Inc. 1996 Stock
2
<PAGE>
Option Plan, as it may be further amended from time to time.
(m) "Retirement" shall mean a Grantee's retirement in accordance
with the terms of any tax-qualified retirement plan maintained by the Company in
which the Grantee participates.
3. Administration.
--------------
The Plan shall be administered by the Committee. The Committee shall
have the authority in its discretion, subject to and not inconsistent with the
express provisions of the Plan, to administer the Plan and to exercise all the
powers and authorities either specifically granted to it under the Plan or
necessary or advisable in the administration of the Plan, including, without
limitation, the authority to grant Options; to determine the Exercise Price of
each Option; to determine the persons to whom, and the time or times at which
Options shall be granted; to determine the number of shares to be covered by
each Option; to interpret the Plan; to prescribe, amend and rescind rules and
regulations relating to the Plan; to determine the terms and provisions of the
Agreements (which need not be identical) and to cancel or suspend Options, as
necessary; and to make all other determinations deemed necessary or advisable
for the administration of the Plan.
All decisions, determinations and interpretations of the Committee
shall be final and binding on all Grantees of any Options under this Plan. No
member of the Board or Committee shall be liable for any action taken or
determination made in good faith with respect to the Plan or any Option granted
hereunder.
4. Eligibility.
-----------
Options may be granted to executive officers, other key employees and
consultants of the Company or any subsidiary of the Company which now exists or
hereafter is organized or acquired by the Company. In determining the persons
to whom Options shall be granted and the number of shares to be covered by each
Option, the Committee shall take into account the duties of the respective
persons, their present and potential contributions to the success of the Company
and such other factors as
3
<PAGE>
the Committee shall deem relevant in connection with accomplishing the purpose
of the Plan.
5. Common Stock.
------------
The maximum number of shares of Common Stock reserved for the grant of
Options under the Plan shall be 2,795,170, subject to adjustment as provided in
Section 7 hereof. Such shares may, in whole or in part, be authorized but
unissued shares or shares that shall have been or may be reacquired by the
Company. If any outstanding Option under the Plan should, for any reason expire,
be cancelled or be forfeited, without having been exercised in full, the shares
of Common Stock allocable to the unexercised, cancelled or terminated portion of
such Option shall become available for subsequent grants of Options under the
Plan. From and after the consummation of an Initial Public Offering, the
aggregate number of shares of Common Stock with respect to which an Option or
Options may be granted to any Grantee during any fiscal year shall not exceed
2,795,170.
6. Terms and Conditions of Options.
-------------------------------
Each Option granted pursuant to the Plan shall be evidenced by an
Agreement, in such form and containing such terms and conditions as the
Committee shall from time to time approve, which Agreement shall comply with and
be subject to the following terms and conditions, unless otherwise specifically
provided in such Agreement.
(a) NUMBER OF SHARES. Each Agreement shall state the number of
shares of Common Stock to which the Option relates.
(b) EXERCISE PRICE. Each Agreement shall state the Exercise
Price, which shall be subject to adjustment as provided in Section 7 hereof or
as otherwise provided in the Agreement.
(c) MEDIUM AND TIME OF PAYMENT. The Exercise Price shall be
paid in full, at the time of exercise, in cash, or in such other manner as the
Committee shall determine.
(d) TERM AND EXERCISABILITY OF OPTIONS. Each Agreement shall
provide the exercise schedule for
4
<PAGE>
the Option as determined by the Committee provided, however, an Agreement may
-------- -------
provide that the related Option is immediately exercisable in full, and further
-------
provided, however, the Committee shall have the authority to accelerate the
- -------- -------
exercisability of any outstanding Option at such time and under such
circumstances as it, in its sole discretion, deems appropriate. The Agreement
may provide that the vesting of Options shall be subject to performance
criteria. The term of any Option granted under the Plan shall be ten (10) years
from the date of the grant of such Option unless otherwise determined by the
Committee, but, notwithstanding anything in the Plan or any Agreement to the
contrary, in no event shall such term extend beyond ten (10) years from the date
of grant. The term shall be subject to earlier termination as provided in
Sections 6(e) and 6(f) hereof or as set forth in an Agreement. An Option may be
exercised, as to any or all full shares of Common Stock as to which the Option
has become exercisable, by written notice accompanied by payment of the Exercise
Price delivered in person or by mail to the Secretary of the Company, specifying
the number of shares of Common Stock with respect to which the Option is being
exercised.
(e) TERMINATION. Except as otherwise provided herein, or as
otherwise provided in the applicable Agreement, an Option may not be exercised
unless the Grantee is then in the employ of or maintaining a consultant
relationship with the Company or a subsidiary thereof, and unless the Grantee
has remained continuously so employed or in the consultant relationship since
the date of grant of the Option. Except as otherwise provided in an Agreement
evidencing an Option, in the event that the employment or consultant
relationship of a Grantee shall terminate (other than by reason of death,
Disability or Retirement), all Options of such Grantee that are exercisable at
the time of such termination may, unless earlier terminated in accordance with
their terms, be exercised within ninety (90) days after the date of such
termination (or such different period as the Committee shall prescribe) and all
Options of such Grantee that are not exercisable at such time shall
automatically terminate.
(f) DEATH, DISABILITY OR RETIREMENT OF GRANTEE. Except as otherwise
provided in an Agreement evidencing an Option, if a Grantee shall die while em-
5
<PAGE>
ployed by, or maintaining a consultant relationship with, the Company or a
subsidiary thereof, or if the Grantee's employment or consultant relationship
shall terminate by reason of Disability, all Options theretofore granted to such
Grantee (to the extent then exercisable) may, unless earlier terminated in
accordance with their terms, be exercised by the Grantee or by the Grantee's
estate or by a person who acquired the right to exercise such Options by bequest
or inheritance or otherwise by reason of death or Disability of the Grantee, at
any time within one year after the death or Disability of the Grantee (or such
different period as the Committee shall prescribe) and all Options theretofore
granted to such Grantee, to the extent not then exercisable, shall automatically
terminate. In the event that an Option granted hereunder shall be exercised by
the legal representatives of a deceased or former Grantee, written notice of
such exercise shall be accompanied by a certified copy of letters testamentary
or equivalent proof of the right of such legal representative to exercise such
Option. Except as otherwise provided in the applicable Agreement, in the event
that the employment or consultant relationship of a Grantee shall terminate on
account of such Grantee's Retirement, all outstanding Options of such Grantee at
the time of such Retirement may (to the extent then exercisable), unless earlier
terminated in accordance with their terms, be exercised at any time within one
hundred eighty (180) days after the date of such Retirement (or such different
period as the Committee shall prescribe).
(g) OTHER PROVISIONS. Any Option which is not exercised while the
Grantee is in the employ of or maintaining a consulting relationship with the
Company or within the time periods described in Sections 6(e) or 6(f) hereof
shall automatically terminate. The Agreements evidencing Options under the Plan
shall contain such other terms and conditions as the Committee may determine.
7. Effect of Certain Changes.
-------------------------
(a) In the event of any extraordinary dividend, stock dividend,
recapitalization, merger, consolidation, stock split, reclassification or
subdivision, combination or exchange of shares that effects the Common Stock, or
other similar transactions, the number
6
<PAGE>
any type of shares of Common Stock (or other property) available for Options,
the number of such shares covered by outstanding Options, and the Exercise
Price of Options may be equitably adjusted by the Committee to reflect such
event and preserve the value of such Options or shall be subject to adjustment
as set forth in the applicable Agreement; provided, however, that any fractional
-------- -------
shares resulting from such adjustment shall be eliminated.
(b) In the event of a change in the Common Stock of the Company
as presently constituted that is limited to a change of all of its authorized
shares of Common Stock into the same number of shares with a different par value
or without par value, the shares resulting from any such change shall be deemed
to be the Common Stock within the meaning of the Plan.
8. Period During Which Options May Be Granted.
------------------------------------------
Options may be granted pursuant to the Plan from time to time until
June 28, 2006.
9. Nontransferability of Options.
-----------------------------
Options granted under the Plan shall not be transferable otherwise
than by will or by the laws of descent and distribution, and Options may be
exercised or otherwise realized, during the lifetime of the Grantee, only by the
Grantee or by his guardian or legal representative.
10. Agreement by Grantee Regarding Withholding Taxes.
------------------------------------------------
If the Committee shall so require, as a condition of exercise of an
Option (a "Tax Event"), each Grantee shall agree that no later than the date of
the Tax Event, the Grantee will pay to the Company or make arrangements
satisfactory to the Committee regarding payment of any federal, state or local
taxes of any kind required by law to be withheld upon the Tax Event.
Alternatively, the Committee may provide that a Grantee may elect, to the extent
permitted or required by law, to have the Company deduct federal, state and
local taxes of any kind required by law to be withheld upon the Tax Event from
any payment of any kind due to the Grantee. The Committee may provide that such
withholding obliga-
7
<PAGE>
tion may be satisfied by the withholding or delivery of Common Stock.
11. Amendment and Termination of the Plan.
-------------------------------------
The Board at any time and from time to time may suspend, terminate,
modify or amend the Plan. Except as otherwise provided herein, no suspension,
termination, modification or amendment of the Plan may adversely affect any
Option previously granted, unless the written consent of the Grantee is
obtained.
12. Right as a Stockholder.
----------------------
A Grantee or a transferee of an Option shall have no rights as a
stockholder with respect to any Common Stock covered by the Option until the
date of the issuance of a stock certificate to him for such Common Stock.
13. No Rights to Employment.
-----------------------
Nothing in the plan or in any Agreement entered into pursuant hereto
shall confer upon any Grantee the right to continue in the employ of, or in a
consultant relationship with, the Company or any subsidiary or to be entitled to
any remuneration or benefits not set forth in the Plan or such Agreement or to
interfere with or limit in any way the right of the Company or any such
subsidiary to terminate such Grantee's employment. Options granted under the
Plan shall not be affected by any change in duties or position of a Grantee as
long as such Grantee continues to be employed by, or in a consultant
relationship with, the Company or any subsidiary.
14. Beneficiary.
-----------
A Grantee may file with the Committee a written designation of a
beneficiary on such form as may be prescribed by the Committee and may, from
time to time, amend or revoke such designation. If no designated beneficiary
survives the Grantee, the executor or administrator of the Grantee's estate
shall be deemed to be the Grantee's beneficiary.
8
<PAGE>
15. Governing Law.
-------------
The Plan and all determinations made and actions taken pursuant hereto
shall be governed by the laws of the State of New York.
9
<PAGE>
EXHIBIT 10.9
AMENDED AND RESTATED HOSIERY CORPORATION OF AMERICA, INC.
1996 STOCK OPTION PLAN
STOCK OPTION AGREEMENT
----------------------
AGREEMENT, effective as of June 28, 1996, by and between Hosiery
Corporation of America, Inc., a Delaware corporation (the "Company"), and
____________ (the "Executive").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company maintains the Amended and Restated Hosiery
Corporation of America, Inc. 1996 Stock Option Plan (the "Plan") (capitalized
terms used herein but not otherwise defined herein shall have the meanings set
forth in the Plan); and
WHEREAS, the Company desires, in connection with the employment of the
Executive, to grant to the Executive the right to acquire shares of common
stock, par value $0.01 per share ("Common Stock"), of the Company on the terms
and conditions provided herein and in the Plan.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein set forth and other good and valuable consideration, the parties to this
Agreement hereby agree as follows:
1. Confirmation of Grant of Option. Pursuant to a determination by
-------------------------------
the Board of Directors of the Company, the Company, subject to the terms and
conditions of this Agreement and the Plan, hereby grants, effective as of June
28, 1996 (the "Date of Grant"), the right to purchase from the Company (i)
_______ shares of Common Stock (the "Series A Options") and (ii) ________
shares of Common Stock (the "Series B Options" and, collectively with the Series
A Options, the "Options"), each subject to adjustment as provided in the Plan.
The Series A Options and the Series B Options shall constitute two separate
option grants, each of which shall be exercisable independently.
2. Exercise Price. The price at which shares of Common Stock shall
--------------
be purchasable upon exercise of the Series A Options shall be $______ per
share (the "Series A Exercise Price") and the price at which shares of Common
Stock shall be purchasable upon exercise of the Series B Options shall be the
per share price to the public in the
<PAGE>
Initial Public Offering (the "Series B Exercise Price" and, together with the
Series A Exercise Price, the "Exercise Price"), in each case subject to
adjustment as provided in the Plan.
3. Non-transferability of Options. The Options may not be assigned,
------------------------------
transferred or otherwise disposed of, or pledged or hypothecated in any way, and
shall not be subject to execution, attachment or other process otherwise than by
will or by the laws of descent and distribution, and the Options may be
exercised during the lifetime of the Executive only by him. Any purported
assignment, transfer, pledge, hypothecation or other disposition of any of the
Options attempted contrary to the provisions of this Agreement or the Plan, or
any levy of execution, attachment or other process attempted upon any of the
Options, shall be null and void and without effect and shall, at the sole
discretion of the Committee, result in the immediate and automatic cancellation
of all of the Options.
4. Term and Exercise of Options. (a) The Options shall remain
----------------------------
outstanding during a period of ten years beginning on the Date of Grant (the
"Option Term"), subject to earlier termination pursuant to Section 6 hereof. The
Options (whether or not then exercisable) shall expire immediately following the
Option Term.
(b) None of the Series A Options shall be exercisable until after the
earlier to occur of (i) the consummation of the Initial Public Offering and (ii)
the occurrence of a Change in Control (as defined below). As used herein,
"Change in Control" means (i) any sale, transfer or other conveyance (whether
directly or indirectly or through a merger, consolidation or similar
transaction), or series of related sales, transfers or other conveyances, of the
outstanding capital stock of the Company pursuant to which any person (or group
of affiliated persons) other than an Excluded Person (as defined below), becomes
the beneficial owner of more than 50% of the outstanding Common Stock or (ii)
any sale, transfer or other conveyance of all or substantially all of the
Company's assets to any person (or group of affiliated persons) other than to an
Excluded Person. For purposes of the foregoing definition, "Excluded Person"
means and includes (i) Kelso & Company, any of its affiliates and any partner,
officer, director, stockholder or trustee of any of them, (ii) any corporation
owned, directly or indirectly, by the stockholders of the Company in substan-
2
<PAGE>
tially the same proportions as their ownership of stock of the Company and (iii)
the Company or any subsidiary of the Company.
(c) None of the Series B Options shall be exercisable until after the
consummation of the Initial Public Offering.
(d) Notwithstanding anything to the contrary contained herein or in
the Plan (other than as set forth in Section 6 hereof), all of the Options shall
become exercisable immediately prior to the tenth anniversary of the Date of
Grant.
5. Vesting of Options. All of the Options shall vest on the Date of
------------------
Grant.
6. Termination. Except as set forth herein, the Options shall, to
-----------
the extent unexercised, remain outstanding during the Option Term. If the
Executive is terminated from his employment with the Company for Cause (as
defined below), all of the Options (whether or not exercisable) shall
automatically terminate and be deemed to be cancelled (without any action on the
part of the Company) as of the date of such termination. For purposes of this
Agreement, "Cause" shall mean (i) the failure by the Executive to devote his
full business time and attention to, and to use his best efforts in, the
performance of the Executive's duties and responsibilities or any breach by the
Executive, in any material respect, of the terms of his employment with the
Company, (ii) the engaging by the Executive in misconduct which is injurious to
the Company, monetarily or otherwise, (iii) the embezzlement or misappropriation
of funds or property of the Company by the Executive or (iv) the conviction of
the Executive of a felony or a plea of guilty by the Executive to a felony.
7. Method of Exercise of Options. Subject to the terms and
-----------------------------
conditions of this Agreement and the Plan, the Options shall be exercisable by
notice (an "Exercise Notice") and payment to the Company in accordance with the
procedure prescribed in the Plan. If the Executive fails to accept delivery of
and pay for all or any part of the number of shares specified in the Exercise
Notice upon tender or delivery thereof, his right to exercise the Options with
respect to such undelivered shares may be terminated in the sole discretion of
the Committee. Each Exercise Notice shall (i) state the number of shares of
3
<PAGE>
Common Stock which are being acquired pursuant to the exercise of the Option,
(ii) be signed by the person or persons entitled to exercise such Option, and
(iii) include an undertaking by the Executive to enter into the Stockholders
Agreement of the Company, dated October 17, 1994, as amended from time to time
thereafter. If such Option is being exercised by any person or persons other
than the Executive, the Exercise Notice shall be accompanied by proof,
satisfactory to the Company and its counsel, of the right of such person or
persons to exercise such Options.
8. No Right to Continued Employment. Nothing in this Agreement
--------------------------------
shall confer upon the Executive the right to continue in the employ of the
Company or to be entitled to any right or benefit not set forth in this
Agreement or the Plan or to interfere with or limit in any way the right of the
Company to terminate the Executive's employment.
9. Withholding Taxes. The Company shall have the right to require
-----------------
the Executive (or such other person, if any, who has the right to exercise the
Option) to pay the Company in cash the amount of any taxes that the Company may
be required to withhold before delivering to the Executive (or such other
person) a certificate or certificates representing shares of Common Stock
issuable hereunder.
10. Approval of Counsel. Any exercise of the Options and the issuance
-------------------
and delivery of shares of Common Stock pursuant thereto shall be subject to
approval by the Company's counsel of all legal matters in connection therewith,
including compliance with the requirements of the Securities Act of 1933, as
amended (the "Securities Act") and the rules and regulations thereunder, the
requirements of any stock exchange upon which the Common Stock may then be
listed and any applicable state securities or "blue sky" laws. The Executive
understands that, as of the date hereof, neither the Options nor the shares of
Common Stock issuable upon exercise of the Options have been registered under
the Securities Act or any applicable state securities or "blue sky" laws.
11. Resale of Common Stock. Unless otherwise determined by the
----------------------
Company, upon any sale or transfer of the Common Stock purchased upon exercise
of the Options, the Executive shall deliver to the Company an opinion of counsel
satisfactory to the Company to the effect that
4
<PAGE>
either (a) the sale of the Common Stock to be sold or transferred has been
registered under the Securities Act or (b) such Common Stock may then be sold
without registration under the Securities Act and applicable state securities
laws.
The certificates evidencing the shares of Common Stock issued upon
exercise of the options shall bear a legend to the following effect (unless the
Company permits otherwise):
THE SHARES EVIDENCED BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED,
PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNLESS, IN THE OPINION OF COUNSEL
FOR THE COMPANY, SUCH REGISTRATION IS NOT REQUIRED.
12. Notices. Each notice relating to this Agreement shall be in
-------
writing and delivered in person or by certified mail to the proper address. All
notices to the Company shall be addressed to it at:
Hosiery Corporation of America, Inc.
3369 Progress Drive
Bensalem, Pennsylvania 19020
Attention: General Counsel
All notices to the Executive or other person or persons then entitled
to exercise the Options shall be addressed to the Executive or such other person
or persons at the address on file at the Company's offices.
Anyone to whom a notice may be given under this Agreement may
designate a new address by notice to that effect.
13. Successors. The terms of this Agreement shall inure to the
----------
benefit of and be binding upon each successor and assign of the Company. All
obligations imposed upon the Executive and all rights granted to the Company
under this Agreement shall be binding upon the Executive and, to the limited
extent set forth herein, the Executive's heirs, legal representatives and
successors. No other person shall have any rights under this Agreement.
5
<PAGE>
14. Severability. In the event that any one or more provisions of
------------
this Agreement shall be deemed to be illegal or unenforceable, such illegality
or unenforceability shall not affect the validity and enforceability of the
remaining legal and enforceable provisions herein, which shall be construed as
if such illegal or unenforceable provision or provisions had not been inserted.
15. Incorporation by Reference; Entire Agreement. The parties hereto
--------------------------------------------
agree that this Agreement and the Plan contain the entire understanding and
agreement between them, and supersedes all prior understandings and agreements
between the parties respecting the subject matter hereof, and that the
provisions of this Agreement may not be modified, waived or discharged unless
such waiver, modification or discharge is agreed to in writing signed by the
parties hereto. The provisions of the Plan are hereby incorporated herein by
reference. Except as otherwise expressly set forth herein, this Agreement shall
be construed in accordance with the provisions of the Plan. The Committee shall
have final authority to interpret and construe the Plan and this Agreement and
to make any and all determinations hereunder and thereunder, and its decision
shall be binding and conclusive upon the Executive and his/her legal
representative in respect of any questions arising under the Plan or this
Agreement.
16. Bound by the Plan. By signing this Agreement, the Executive
-----------------
acknowledges that he has received a copy of the Plan and has had an opportunity
to review the Plan and agrees to be bound by all terms and provisions of the
Plan.
17. Governing Law. This Agreement shall be construed and governed in
-------------
accordance with the laws of the State of New York, without regard to the
conflicts of law principles thereof.
18. Modifications. No change, modifications, amendment or waiver of
-------------
any provision of this Agreement shall be valid unless the same be in writing and
signed by the parties hereto.
19. Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed to be an original but both of which together shall
constitute one and the same instrument.
6
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by an authorized officer and the Executive has hereunto set his hand
all as of the day, month and year first above written.
HOSIERY CORPORATION OF AMERICA, INC.
By: ____________________________________
Name:
Title:
Executive:
________________________________________
<PAGE>
EXHIBIT 10.10
HOSIERY CORPORATION OF AMERICA, INC.
1999 STOCK OPTION PLAN
1. Purpose: Restrictions on Amount Available under the Plan.
This Hosiery Corporation of America, Inc. 1999 Stock Option Plan ("Plan")
is intended to afford an incentive to selected employees, consultants and
directors of Hosiery Corporation of America, Inc. (the "Company"), to acquire a
proprietary interest in the Company, to continue to perform services for the
Company, to increase their efforts on behalf of the Company and to promote the
success of the Company's business.
2. Definitions.
As used in this Plan, the following words and phrases shall have the
meanings indicated:
(a) "Affiliate Corporation" or "Affiliate" shall mean any
corporation, directly, or indirectly, through one or more intermediaries,
controlling, controlled by, or under common control with Hosiery
Corporation of America, Inc.
(b) "Award" shall mean any Option, SAR, Restricted Stock or
Unrestricted Stock granted under the Plan.
(c) "Award Agreement" shall mean any written agreement, contract, or
other instrument or document between the Company and a Participant
evidencing an Award.
(d) "Board" shall mean the Board of Directors of the Company.
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(f) "Disability" shall mean a Participant's inability to engage in
any substantial gainful activity by reason of medically determinable
physical or mental impairment that can be expected to result in death or
that has lasted or can be expected to last for a continuous period of not
less than twelve (12) months.
(g) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(h) "Fair Market Value" per share as of a particular date shall mean
(i) the closing sales price per share of Common Stock (as defined in
Section 5 hereof) on the New York Stock Exchange for the last preceding
date on which there was a sale of such Common Stock on such exchange, or
(ii) if the shares of Common Stock are not then admitted for trading on the
New York Stock Exchange, the closing price for the shares of Common Stock
in such other national securities exchange or interdealer quotation system
on which Common Stock is then traded for the last preceding date on which
there was a sale of such Common Stock in such market, or (iii) if the
shares of Common Stock are not then listed on a national securities
exchange or interdealer quotation system, such value as the Committee in
its discretion may determine.
(i) "Incentive Stock Option" shall mean an Option that meets the
requirements of Section 422 of the Code, or any successor provision, and
that is designated by the Committee as an Incentive Stock Option.
(j) "Nonqualified Stock Option" shall mean an Option other that an
Incentive Stock Option.
(k) "Option" shall mean the right, granted pursuant to this Plan, of
a holder to purchase shares of Common Stock at a price and upon the terms
to be specified by the Committee.
<PAGE>
(l) "Parent Corporation" shall mean any corporation (other than the
Company) in an unbroken chain of corporations ending with the Company if, at the
time of granting an Award, each of such corporations (other than the Company)
owns stock possessing fifty percent (50%) or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain.
(m) "Participant" shall mean an officer, employee, consultant or director
of the Company who is, pursuant to Section 4 of the Plan, selected to
participate herein.
(n) "Restricted Stock" shall mean an Award of shares of Common Stock to a
Participant under Section 8 that may be subject to certain restrictions and to a
risk of forfeiture.
(o) "SAR" shall mean a tandem or freestanding stock appreciation right,
granted to a Participant under Section 7, to be paid an amount measured by the
appreciation in the Fair Market Value of Common Stock from the date of grant
to the date of exercise of the right.
(p) "Subsidiary Corporation" shall mean any corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company if, at
the time of granting an Award, each of such corporations other than the last
corporation in the unbroken chain owns stock possessing fifty percent (50%) or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.
(q) "Ten Percent Stockholder" shall mean a Participant who, at the time an
Incentive Stock Option is granted, owns stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or its Subsidiary Corporations.
(r) "Unrestricted Stock" shall mean an Award of shares of Common Stock to a
Participant under Section 9.
3. Administration.
Unless otherwise determined by the Board, the Plan shall be administered by
a committee of the Board ("Compensation Committee"), which shall consist of two
or more members of the Board who are "outside directors" within the meaning of
section 162(m) of the Code and "nonemployee directors" within the meaning of
Section 16 of the Exchange Act. The Compensation Committee may, in its
discretion, delegate to a subcommittee or to an officer of the Company its
duties hereunder, including the grant of Awards. The full Board shall also have
the authority, in its discretion, to grant Awards under the Plan and to
administer the Plan. For all purposes under the Plan, any entity which performs
the duties described herein, shall be referred to as the "Committee."
The Committee shall have the authority in its discretion, subject to and
not inconsistent with the express provisions of the Plan, to administer the Plan
and to exercise all the powers and authorities either specifically granted to it
under the Plan or necessary or advisable in the administration of the Plan,
including, without limitation, the authority to grant Awards; to determine the
persons to whom and the time or times at which Awards shall be granted; to
determine the type and number of Awards to be granted, the number of shares of
Common Stock to which an Award may relate and the terms, conditions and
restrictions relating to any Award; to determine whether, to what extent, and
under what circumstances an Award may be settled, cancelled, forfeited,
exchanged, or surrendered; to construe and interpret the Plan and any Award; to
prescribe, amend and rescind rules and regulations relating to the Plan; to
determine the terms and provisions of Award Agreements; and to make all other
determinations deemed necessary or advisable for the administration of the Plan.
No member of the Committee shall be liable for any action taken or
determination made in good faith with respect to the Plan or any Award granted
hereunder.
2
<PAGE>
4. Eligibility.
Awards may be granted to employees, consultants and directors of the
Company, except that Incentive Stock Options shall be granted only to
individuals who, on the date of such grant, are employees of the Company or a
Subsidiary Corporation. In determining the persons to whom Awards shall be
granted and the number of shares to be covered by each Award, the Committee
shall take into account the duties of the respective persons, their present and
potential contributions to the success of the Company and such other factors as
the Committee shall deem relevant in connection with accomplishing the purpose
of the Plan.
5. Stock.
The stock subject to Awards hereunder shall be shares of the Company's
common stock, par value $0.01 per share ("Common Stock"). Such shares may, in
whole or in part, be authorized but unissued shares or shares that shall have
been or that may be reacquired by the Company. The aggregate number of shares of
Common Stock as to which Awards may be granted from time to time under the Plan
shall not exceed 600,000. No person may be granted Options or SARs under the
Plan during any calendar year representing an aggregate of more than 400,000
shares of Common Stock. Shares of Common Stock subject to an Award that remain
unissued upon expiration or cancellation of the Award shall be available for
other Awards under the Plan. The limitations established by the preceding two
sentences shall be subject to adjustment as provided in Section 10 hereof.
6. Stock Options.
The Committee shall have authority to grant Nonqualified Stock Options and
Incentive Stock Options to Participants on the following terms and conditions:
(a) Number of Shares. Each Award Agreement shall state the number of
----------------
shares of Common Stock to which the Option relates.
(b) Type of Option. Each Award Agreement shall specifically state
--------------
that the Option constitutes an Incentive Stock Option or a Nonqualified Stock
Option.
(c) Option Price. Each Award Agreement shall state the Option Price.
------------
The Option Price per share of Common Stock purchasable under an Option shall be
determined by the Committee; provided that, in the case of an Incentive Stock
-------- ----
Option, such exercise price shall be not less than the Fair Market Value of a
share of Common Stock on the date of grant of such Option. The date as of which
the Committee adopts a resolution expressly granting an Option shall be
considered the day on which such Option is granted.
(d) Method and Time of Payment. The Option Price shall be paid in
--------------------------
full, at the time of exercise, in cash or in shares of Common Stock having a
Fair Market Value equal to such Option Price or in a combination of cash and
Common Stock or, in the sole discretion of the Committee, through a cashless
exercise procedure.
(e) Term and Exercisability of Options. Options shall be exercisable
----------------------------------
over the exercise period (which, with respect to Incentive Stock Options, shall
not exceed ten years from the date of grant), at such times and upon such
conditions as the Committee may determine, as reflected in the Award Agreement;
provided that, the Committee shall have the authority to accelerate the
- -------- ----
exercisability of any outstanding Option at such time and under such
circumstances as it, in its sole discretion, deems appropriate. An Option may be
exercised, as to any or all full shares of Common Stock as to which the Option
has become exercisable, by written notice delivered in person or by mail to the
Compensation Committee, specifying the number of shares of Common Stock with
respect to which the Option is being exercised. The exercise period shall be
subject to earlier termination as provided in Section 6(f) hereof.
3
<PAGE>
(f) Termination. If a Participant's employment by, or service as a
-----------
consultant or director with, the Company terminates:
(i) Unless provided otherwise in the applicable Award
Agreement, upon a Participant's termination of employment or service
as a consultant or a director with the Company by reason of death or
Disability, all Options shall become immediately exercisable and shall
remain exercisable for a period of one year following such termination
and shall terminate thereafter;
(ii) Unless provided otherwise in the applicable Award
Agreement, if a Participant's employment or service as a consultant or
a director with the Company is terminated for any reason other than
death or Disability, all Options that are not then exercisable shall
immediately terminate and all Options that are then exercisable shall
remain exercisable for a period of three months from the date of such
termination and shall terminate thereafter.
(g) Other Provisions. Options may be subject to such other conditions
----------------
including, but not limited to, restrictions on transferability of the shares
acquired upon exercise of such Options, as the Committee may prescribe in its
discretion.
(h) Incentive Stock Options. Options granted as Incentive Stock
-----------------------
Options shall be subject to the following special terms and conditions, in
addition to the general terms and conditions specified in this Section 6(h).
(i) Value of Shares. The aggregate Fair Market Value
---------------
(determined as of the date the Incentive Stock Option is granted) of
the shares of Common Stock with respect to which Incentive Stock
Options granted under this Plan and all other plans of the Company
become exercisable for the first time by each Participant during any
calendar year shall not exceed $100,000.
(ii) Ten Percent Stockholder. In the case of an Incentive
-----------------------
Stock Option granted to a Ten Percent Stockholder, (x) the Option
Price shall not be less than one hundred ten percent (110%) of the
Fair Market Value of the shares of Common Stock on the date of grant
of such Incentive Stock Option, and (y) the exercise period shall not
exceed five (5) years from the date of grant of such Incentive Stock
Option.
7. Stock Appreciation Rights. The Committee is authorized to grant
freestanding SARs and SARs granted in tandem with an Option to Participants on
the following terms and conditions:
(a) In General. Unless the Committee determines otherwise, (1) an SAR
----------
granted in tandem with a Nonqualified Stock Option may be granted at the time of
grant of the related Nonqualified Stock Option or at any time thereafter or (2)
an SAR granted in tandem with an Incentive Stock Option may only be granted at
the time of grant of the related Incentive Stock Option. An SAR granted in
tandem with an Option shall be exercisable only to the extent the underlying
Option is exercisable.
(b) SARs. An SAR shall confer on the Participant a right to receive
----
with respect to each share subject thereto, upon exercise thereof, the excess of
(1) the Fair Market Value of one share of Common Stock on the date of exercise
over (2) the grant price of the SAR (which in the case of an SAR granted in
tandem with an Option shall be equal to the exercise price of the underlying
Option, and which in the case of any other SAR shall be such price as the
Committee may determine).
(c) Treatment of Related Options and Tandem SARs Upon Exercise. Upon
----------------------------------------------------------
the exercise of a tandem SAR, the related Option shall be cancelled to the
extent of the number of shares of Common Stock as to which the tandem SAR is
exercised and upon the exercise of an Option granted in connection with a tandem
SAR, the tandem SAR shall be cancelled to the extent of the number of shares of
Common Stock as to which the Option is exercised.
4
<PAGE>
(d) Method of Exercise. SARs shall be exercised by a Participant only
------------------
by a written notice delivered in person or by mail to the Compensation
Committee, specifying the number of shares of Common Stock with respect to which
the SAR is being exercised.
(e) Form of Payment. Payment of the amount determined under paragraph
---------------
(b) above may be made in whole shares of Common Stock in a number determined
based upon their Fair Market Value on the date of exercise of the SAR or,
alternatively, at the sole discretion of the Committee, solely in cash, or in a
combination of cash and shares of Common Stock as the Committee deems advisable.
If the Committee decides to make full payment in shares of Common Stock, and the
amount payable results in a fractional share, payment for the fractional share
will be made in cash.
(f) Term and Exercisability of Freestanding SARs. Each Award
--------------------------------------------
Agreement shall provide the exercise schedule for the freestanding SAR as
determined by the Committee, provided, that, the Committee shall have the
-------- ----
authority to accelerate the exercisability of any freestanding SAR at such time
and under such circumstances as it, in its sole discretion, deems appropriate.
The exercise period shall be ten (10) years from the date of the grant of the
freestanding SAR or such other period as is determined by the Committee. The
exercise period shall be subject to earlier termination as provided in Section
7(g) hereof.
(g) Termination. The terms and conditions set forth in Section
-----------
6(f) hereof, relating to exercisability of Options in the event of termination
of employment or service as a consultant or director with the Company, shall
apply equally with respect to the exercisability of freestanding SARs following
termination of employment or service as a consultant or director.
8. Restricted Stock. The Committee is authorized to grant Restricted Stock to
Participants on the following terms and conditions:
(a) Issuance and Restrictions. The Award Agreement shall set forth
-------------------------
the number of shares of Restricted Stock granted pursuant to the Award
Agreement. Restricted Stock shall be subject to such restrictions on
transferability and other restrictions, if any, as the Committee may impose at
the date of grant or thereafter, which restrictions may lapse separately or in
combination at such times, under such circumstances, in such installments, or
otherwise, as the Committee may determine at the date of grant or thereafter.
(b) Restrictions. Except as permitted by the Committee, prior to
------------
vesting, shares of Restricted Stock may not be sold, assigned, transferred,
pledged, hypothecated or otherwise disposed of, except by will or the laws of
decent and distribution. Certificates for shares of Common Stock issued pursuant
to awards of Restricted Stock shall bear an appropriate legend referring to such
restrictions, and any attempt to dispose of any such shares of Common Stock in
contravention of such restrictions shall be null and void and without effect.
Prior to vesting, such certificates shall be held in escrow by an escrow agent
appointed by the Committee.
(c) Forfeiture. If the Participant's employment or service as a
----------
consulant or director with the Company shall terminate for any reason other than
death or Disability prior to vesting of the Restricted Stock, then, except to
the extent provided otherwise in the applicable Award Agreement, any shares
remaining subject to restrictions shall thereupon be forfeited by the
Participant and transferred to, and reacquired by, the Company at no cost to the
Company. If the Participant's employment or service as consultant or director
with the Company shall terminate by reason of death or Disability prior to
vesting of Restricted Stock, then, except to the extent provided otherwise in
the applicable Award Agreement, restrictions or forfeiture conditions relating
to Restricted Stock will be waived.
(d) Rights as a Stockholder. Except to the extent provided otherwise
-----------------------
under the Award Agreement, a Participant shall have all of the rights of a
stockholder including, without limitation, the right to vote Restricted Stock
and the right to receive dividends thereon. Dividends paid on Restricted Stock
shall be either paid at the dividend payment date, or deferred for payment to
such date as determined by the committee, in cash or in shares
5
<PAGE>
of unrestricted Common Stock having a Fair Market Value equal to the amount of
such dividends. Stock distributed in connection with a stock split or stock
dividend, and other property distributed as a dividend, shall be subject to
restrictions and a risk of forfeiture to the same extent as the Restricted Stock
with respect to which such Common Stock or other property has been distributed.
(e) Other Provisions. The Restricted Stock Agreements authorized under
----------------
the Plan shall contain such other provisions not inconsistent with this Plan,
including, without limitation, the imposition of restrictions upon the
transferability of Restricted Stock and conditions on vesting of Restricted
Stock as the Committee shall deem advisable.
9. Unrestricted Stock Awards. The Committee is authorized to grant to
Participants such Awards of Common Stock, as deemed by the Committee to be
consistent with the purposes of the Plan. The Committee shall determine the
terms and conditions of such Awards at the date of grant or thereafter.
10. Effect of Certain Changes.
If there is any change in the number of outstanding shares of Common Stock
by reason of any stock dividend, stock split, recapitalization, combination,
exchange of shares, merger, consolidation, liquidation, split-up, spin-off or
other similar change in capitalization, any distribution to common shareholders,
including a rights offering, other than cash dividends, or any like change, then
the number of and kind of shares of Common Stock available for Awards, the
number and kind of such shares covered by outstanding Awards, and the Option
Price of such Options or the applicable grant price of SARs, may be equitably
adjusted by the Compensation Committee to reflect such change or distribution;
provided, however, that any fractional shares resulting from such adjustment
shall be eliminated. In the event of a change in the Common Stock of the Company
as presently constituted, which is limited to a change of all its authorized
shares with par value into the same number of shares with a different par value
or without par value, the shares resulting from any such change shall be deemed
to be the Common Stock within the meaning of the Plan. To the extent that the
foregoing adjustments relate to stock or securities of the Company, such
adjustments shall be made by the Committee, whose determination in that respect
shall be final, binding and conclusive, provided that each Incentive Stock
Option granted pursuant to this Plan shall not be adjusted in a manner that
causes such Option to fail to continue to qualify as an Incentive Stock Option
within the meaning of Section 422 of the Code.
11. General Provisions.
(a) Compliance with Legal Requirements. The Plan and the granting and
-----------------------------------
exercising of Awards, and the other obligations of the Company under the Plan
and any Award Agreement or other agreement shall be subject to all applicable
federal and state laws, rules and regulations, and to such approvals by any
regulatory or governmental agency as may be required. The Company, in its
discretion, may postpone the issuance or delivery of Common Stock under any
Award as the Company may consider appropriate, and may require any Participant
to make such representations and furnish such information as it may consider
appropriate in connection with the issuance or delivery of Common Stock in
compliance with applicable laws, rules and regulations.
(b) Nontransferability. Except to the extent provided otherwise in the
------------------
applicable Award Agreement, Awards shall not be transferable by a Participant
except by will or the laws of descent and distribution and shall be exercisable
during the lifetime of a Participant only by such Participant or his guardian or
legal representative.
(c) No Right To Continued Employment. Nothing in the Plan or in any
--------------------------------
Award granted or any Award Agreement or other agreement entered into pursuant
hereto shall confer upon any Participant the right to continue in the employ of
the Company or to be entitled to any remuneration or benefits not set forth in
the Plan or such Award Agreement or other agreement or to interfere with or
limit in any way the right of the Company to terminate such Participant's
employment.
6
<PAGE>
(d) Withholding Taxes. Where a Participant or other person is
-----------------
entitled to receive shares of Common Stock or cash pursuant to an Award
hereunder, the Company shall have the right to require the Participant or such
other person to pay to the Company the amount of any taxes which the Company may
be required to withhold before delivery to such Participant or other person of
cash or a certificate or certificates representing such shares. Unless otherwise
prohibited by the Committee or by applicable law, a Participant may satisfy any
such withholding tax obligation by either of the following methods, or by a
combination of such methods: (a) tendering a cash payment; or (b) delivering to
the Company previously acquired shares of Common Stock having an aggregate Fair
Market Value, determined as of the date the withholding tax obligation arises,
less than or equal to the amount of the total withholding tax obligation.
(e) Amendment and Termination of the Plan. The Board or the
-------------------------------------
Committee may at any time and from time to time alter, amend, suspend, or
terminate the Plan in whole or in part; provided that, no amendment which
-------------
requires stockholder approval under applicable law or in order for the Plan to
continue to comply with Code Section 162(m) shall be effective unless the same
shall be approved by the requisite vote of the stockholders of the Company.
Notwithstanding the foregoing, no amendment shall affect adversely any of the
rights of any Participant, without such Participant's consent, under any Award
theretofore granted under the Plan. The power to grant Awards under the Plan
will automatically terminate ten years after the adoption of the Plan by the
Board. If the Plan is terminated, any unexercised Award shall continue to be
exercisable in accordance with its terms and the terms of the Plan in effect
immediately prior to such termination.
(f) Participant Rights. No Participant shall have any claim to
------------------
be granted any Award under the Plan, and there is no obligation for uniformity
of treatment for Participants. Except as provided specifically herein, a
Participant or a transferee of an Award shall have no rights as a stockholder
with respect to any shares covered by any Award until the date of the issuance
of a stock certificate to him for such shares.
(g) No Fractional Shares. No fractional shares of Common Stock
--------------------
shall be issued or delivered pursuant to the Plan or any Award. The Committee
shall determine whether cash, other Awards, or other property shall be issued or
paid in lieu of such fractional shares or whether such fractional shares or any
rights thereto shall be forfeited or otherwise eliminated.
(h) Governing Law. The Plan and all determinations made and
-------------
actions taken pursuant hereto shall be governed by the laws of the State of New
York without giving effect to the conflict of laws principles thereof.
(i) Interpretation, Construction. The Plan is designed and
----------------------------
intended to comply with Section 162(m) of the Code, and all provisions hereof
shall be construed in a manner to so comply. The section and subsection headings
contained herein are for convenience only and shall not affect the construction
hereof.
12. Effectiveness.
The Plan shall take effect upon its adoption by the Board.
7
<PAGE>
Exhibit 10.13
[Draft: (New York) June 30, 1999]
================================================================================
CREDIT AGREEMENT
among
HCI DIRECT, INC.
VARIOUS LENDING INSTITUTIONS,
BANKERS TRUST COMPANY,
AS ADMINISTRATIVE AGENT
and
FIRST UNION,
AS DOCUMENTATION AGENT
____________________________________
Dated as of July __, 1999
____________________________________
[$135,000,000]
================================================================================
<PAGE>
CREDIT AGREEMENT, dated as of July __, 1999, among HCI DIRECT, INC.
(the "Borrower"), a Delaware corporation, the lending institutions listed from
time to time on Annex I hereto (each, a "Lender" and, collectively, the
"Lenders"), BANKERS TRUST COMPANY, as Administrative Agent (the "Administrative
Agent") and FIRST UNION, as Documentation Agent (the "Documentation Agent").
Unless otherwise defined herein, all capitalized terms used herein and defined
in Section 10 are used herein as so defined.
W I T N E S S E T H:
-------------------
WHEREAS, the Borrower and the Lenders desire to enter into this
Agreement to provide for the credit facilities described herein;
NOW, THEREFORE, IT IS AGREED:
SECTION 1. Amount and Terms of Credit.
--------------------------
1.01 Commitment. Subject to and upon the terms and conditions herein
----------
set forth, each Lender severally agrees to make a loan or loans (each, a "Loan"
and, collectively, the "Loans") to the Borrower, which Loans shall be drawn, to
the extent such Lender has a commitment under such Facility, under the Term
Facility and the Revolving Facility, as set forth below:
(a) Loans under the Term Facility (each, a "Term Loan" and,
collectively, the "Term Loans") (i) shall be made pursuant to a single
drawing on the Initial Borrowing Date, (ii) may be incurred and maintained
as, and/or converted into, Base Rate Loans or Eurodollar Loans provided
that all Term Loans outstanding as part of the same Borrowing shall, unless
specifically provided herein, consist of Term Loans of the same Type and
(iii) shall not exceed in aggregate principal amount for any TF Lender at
the time of incurrence thereof the Term Commitment of such Lender in effect
on such date. Once repaid, Term Loans borrowed hereunder may not be
reborrowed.
(b) Loans under the Revolving Facility (each, a "Revolving Loan" and,
collectively, the "Revolving Loans") (i) shall be made at any time and from
time to time on and after the Initial Borrowing Date and prior to the
Revolving Maturity Date, (ii) except as hereinafter provided, may, at the
option of the Borrower, be incurred and maintained as, and/or converted
into, Base Rate Loans or Eurodollar Loans, provided that all Revolving
Loans made as part of the same Borrowing shall, unless otherwise
specifically provided herein, consist of Revolving Loans of the same Type,
(iii) may be repaid and reborrowed in accordance with the provisions
hereof, (iv) shall not exceed for all RC Lenders at any time outstanding
that aggregate principal amount which, when combined with the aggregate
principal amount of all Swingline Loans then outstanding, the Borrowing
Base at such time and (v) shall not exceed for any RC Lender at any time
outstanding that aggregate principal amount which, when combined with the
aggregate outstanding principal amount of all other Revolving Loans of such
Lender and such Lender's Adjusted RC Percentage of the sum of (x) the
Letter of Credit Outstandings (exclusive of Unpaid Drawings which are
repaid with the proceeds of, and
<PAGE>
simultaneously with the incurrence of, the respective incurrence of
Revolving Loans) at such time and (y) the outstanding principal amount of
Swingline Loans (exclusive of Swingline Loans which are repaid with the
proceeds of, and simultaneously with the incurrence of, the respective
incurrence of Revolving Loans) at such time, equals (1) if such RC Lender
is a Non-Defaulting Lender, the Adjusted Revolving Commitment of such RC
Lender at such time and (2) if such RC Lender is a Defaulting Lender, the
Revolving Commitment of such RC Lender at such time.
(c) Subject to and upon the terms and conditions herein set forth,
BTCo in its individual capacity agrees to make at any time and from time to
time after the Initial Borrowing Date and prior to the Swingline Expiry
Date, a loan or loans to the Borrower (each, a "Swingline Loan", and,
collectively, the "Swingline Loans"), which Swingline Loans (i) shall be
made and maintained as Base Rate Loans, (ii) may be repaid and reborrowed
in accordance with the provisions hereof, (iii) shall not exceed in
aggregate principal amount at any time outstanding, when combined with the
aggregate principal amount of all Revolving Loans made by Non-Defaulting
Lenders then outstanding and the Letter of Credit Outstandings (exclusive
of Unpaid Drawings which are repaid with the proceeds of, and
simultaneously with the incurrence of, the respective incurrence of
Revolving Loans) at such time, an amount equal to the Adjusted Total
Revolving Commitment then in effect (after giving effect to any reductions
to the Adjusted Total Revolving Commitment on such date), (iv) shall not
exceed in aggregate principal amount at any time outstanding, when combined
with the aggregate principal amount of all Revolving Loans then
outstanding, the Borrowing Base at such time and (v) shall not exceed in
aggregate principal amount at any time outstanding the Maximum Swingline
Amount. BTCo will not make a Swingline Loan after it has received written
notice from the Required Lenders that one or more of the applicable
conditions to Credit Events specified in Section 5.02 are not then
satisfied.
(d) On any Business Day, BTCo may, in its sole discretion, give
notice to the RC Lenders that its outstanding Swingline Loans shall be
funded with a Borrowing of Revolving Loans (provided that each such notice
shall be deemed to have been automatically given upon the occurrence of an
Event of Default under Section 9.05 or upon the exercise of any of the
remedies provided in the last paragraph of Section 9), in which case a
Borrowing of Revolving Loans constituting Base Rate Loans (each such
Borrowing, a "Mandatory Borrowing") shall be made on the immediately
succeeding Business Day by all RC Lenders pro rata based on each RC
--- ----
Lender's Adjusted RC Percentage, and the proceeds thereof shall be applied
directly to repay BTCo for such outstanding Swingline Loans. Each RC
Lender hereby irrevocably agrees to make Base Rate Loans upon one Business
Day's notice pursuant to each Mandatory Borrowing in the amount and in the
manner specified in the preceding sentence and on the date specified in
writing by BTCo notwithstanding (i) that the amount of the Mandatory
Borrowing may not comply with the Minimum Borrowing Amount otherwise
required hereunder, (ii) whether any conditions specified in Section 5.02
are then satisfied, (iii) whether a Default or an Event of Default has
occurred and is continuing, (iv) the date of such Mandatory Borrowing and
(v) any reduction in the Total Revolving Commitment or
-3-
<PAGE>
the Adjusted Total Revolving Commitment or the Borrowing Base after any
such Swingline Loans were made. In the event that any Mandatory Borrowing
cannot for any reason be made on the date otherwise required above
(including, without limitation, as a result of the commencement of a
proceeding under the Bankruptcy Code in respect of the Borrower), each RC
Lender (other than BTCo) hereby agrees that it shall forthwith purchase
from BTCo (without recourse or warranty) such assignment of the outstanding
Swingline Loans as shall be necessary to cause the RC Lenders to share in
such Swingline Loans ratably based upon their respective Adjusted RC
Percentages, provided that all interest payable on the Swingline Loans
shall be for the account of BTCo until the date the respective assignment
is purchased and, to the extent attributable to the purchased assignment,
shall be payable to the RC Lender purchasing same from and after such date
of purchase.
1.02 Minimum Borrowing Amounts, etc. The aggregate principal amount
-------------------------------
of each Borrowing under a Facility shall not be less than the Minimum Borrowing
Amount for such Facility. The aggregate principal amount of each Borrowing of
Swingline Loans shall not be less than $100,000, and, if greater, shall be in an
integral multiple of $50,000. More than one Borrowing may be incurred on any
day, provided that at no time shall there be outstanding more than seven
Borrowings of Eurodollar Loans.
1.03 Notice of Borrowing. (a) Whenever the Borrower desires to
-------------------
incur Loans under any Facility (excluding Borrowings of Swingline Loans and
Mandatory Borrowings), it shall give the Administrative Agent at its Notice
Office, prior to 11:00 A.M. (New York time), at least three Business Days' prior
written notice (or telephonic notice promptly confirmed in writing) of each
Borrowing of Eurodollar Loans and at least one Business Day's prior written
notice (or telephonic notice promptly confirmed in writing) of each Borrowing of
Base Rate Loans to be made hereunder. Each such notice (each, a "Notice of
Borrowing") shall be in the form of Exhibit A and shall be irrevocable and shall
specify (i) the Facility pursuant to which such Borrowing is being made, (ii)
the aggregate principal amount of the Loans to be made pursuant to such
Borrowing, (iii) the date of Borrowing (which shall be a Business Day) and (iv)
whether the respective Borrowing shall consist of Base Rate Loans or (to the
extent permitted) Eurodollar Loans and, if Eurodollar Loans, the Interest Period
to be initially applicable thereto. The Administrative Agent shall promptly
give each Lender written notice (or telephonic notice promptly confirmed in
writing) of each proposed Borrowing, of such Lender's proportionate share
thereof and of the other matters covered by the Notice of Borrowing.
(b) (i) Whenever the Borrower desires to make a Borrowing of
Swingline Loans hereunder, it shall give BTCo, prior to 11:00 A.M. (New York
time) on the day such Swingline Loan is to be made, written notice (or
telephonic notice promptly confirmed in writing) of each Swingline Loan to be
made hereunder. Each such notice shall be irrevocable and shall specify in each
case (x) the date of such Borrowing (which shall be a Business Day) and (y) the
aggregate principal amount of the Swingline Loan to be made pursuant to such
Borrowing.
(ii) Mandatory Borrowings shall be made upon the notice specified in
Section 1.01(d), with the Borrower irrevocably agreeing, by its incurrence of
any Swingline
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<PAGE>
Loan, to the making of Mandatory Borrowings as set forth in such Section
1.01(d).
(c) Without in any way limiting the obligation of the Borrower to
confirm in writing any telephonic notice permitted to be given hereunder, the
Administrative Agent, BTCo (in the case of a Borrowing of Swingline Loans) or
the Letter of Credit Issuer (in the case of the issuance of Letters of Credit),
as the case may be, may prior to receipt of written confirmation act without
liability upon the basis of such telephonic notice, believed by the
Administrative Agent, BTCo or the Letter of Credit Issuer in good faith to be
from an Authorized Officer of the Borrower. In each such case, the Borrower
hereby waives the right to dispute the Administrative Agent's, BTCo's or the
Letter of Credit Issuer's record of the terms of such telephonic notice.
1.04 Disbursement of Funds. (a) No later than 1:00 P.M. (New York
---------------------
time) on the date specified in each Notice of Borrowing or each notice described
in Section 1.03(b)(i) or (ii), each Lender with a Commitment under the
respective Facility will make available its pro rata share of each Borrowing
--- ----
requested to be made on such date (or in the case of Swingline Loans, BTCo shall
make available the full amount thereof) in the manner provided below. All such
amounts shall be made available to the Administrative Agent in U.S. dollars and
immediately available funds at the Payment Office and the Administrative Agent
promptly will make available to the Borrower by depositing to its account at the
Payment Office the aggregate of the amounts so made available in the type of
funds received. Unless the Administrative Agent shall have been notified by any
Lender prior to the date of Borrowing that such Lender does not intend to make
available to the Administrative Agent its portion of the Borrowing or Borrowings
to be made on such date, the Administrative Agent may assume that such Lender
has made such amount available to the Administrative Agent on such date of
Borrowing, and the Administrative Agent, in reliance upon such assumption, may
(in its sole discretion and without any obligation to do so) make available to
the Borrower a corresponding amount. If such corresponding amount is not in
fact made available to the Administrative Agent by such Lender and the
Administrative Agent has made available same to the Borrower, the Administrative
Agent shall be entitled to recover such corresponding amount from such Lender.
If such Lender does not pay such corresponding amount forthwith upon the
Administrative Agent's demand therefor, the Administrative Agent shall promptly
notify the Borrower, and the Borrower shall immediately pay such corresponding
amount to the Administrative Agent. The Administrative Agent shall also be
entitled to recover on demand from such Lender or the Borrower, as the case may
be, interest on such corresponding amount in respect of each day from the date
such corresponding amount was made available by the Administrative Agent to the
Borrower to the date such corresponding amount is recovered by the
Administrative Agent, at a rate per annum equal to (x) if paid by such Lender,
the overnight Federal Funds Effective Rate or (y) if paid by the Borrower, the
then applicable rate of interest, calculated in accordance with Section 1.08,
for the respective Loans.
(b) Nothing herein shall be deemed to relieve any Lender from its
obligation to fulfill its commitments hereunder or to prejudice any rights which
the Borrower may have against any Lender as a result of any default by such
Lender hereunder.
1.05 Register. (a) The Borrower's obligation to pay the principal
--------
of, and interest
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<PAGE>
on, the Loans made to it by each Lender shall be set forth in the Register
maintained by the Administrative Agent pursuant to Section 12.16 and, if
requested by any Lender, shall be evidenced by a promissory note (each a "Note"
and collectively, the "Notes") (i) if Term Loans, substantially in the form of
Exhibit B-1 with blanks appropriately completed in conformity herewith, (ii) if
Revolving Loans, substantially in the form of Exhibit B-2 with blanks
appropriately completed in conformity herewith and (iii) if Swingline Loans, by
a promissory note substantially in the form of Exhibit B-3, with blanks
appropriately completed in conformity herewith.
(b) Each Lender will note on its internal records the amount of each
Loan made by it and each payment in respect thereof and will, prior to any
transfer of any of its Notes (if any), endorse on the reverse side thereof the
outstanding principal amount of Loans evidenced thereby. Failure to make any
such notation shall not affect the Borrower's obligations in respect of such
Loans.
1.06 Conversions. The Borrower shall have the option to convert on
-----------
any Business Day all or a portion at least equal to the applicable Minimum
Borrowing Amount of the outstanding principal amount of the Loans owing (other
than Swingline Loans, which at all times shall be maintained as Base Rate Loans)
pursuant to a single Facility into a Borrowing or Borrowings pursuant to such
Facility of another Type of Loan, provided that (i) except as otherwise provided
in Section 1.10(b), Eurodollar Loans may be converted into Base Rate Loans only
on the last day of an Interest Period applicable thereto and no partial
conversion of a Borrowing of Eurodollar Loans shall reduce the outstanding
principal amount of the Eurodollar Loans made pursuant to such Borrowing to less
than the Minimum Borrowing Amount applicable thereto, (ii) Base Rate Loans may
only be converted into Eurodollar Loans (x) if no Default or Event of Default is
in existence on the date of the conversion and (y) if prior to the Syndication
Date, on the first day of a PSD Interest Period and (iii) Borrowings of
Eurodollar Loans resulting from this Section 1.06 shall be limited in number as
provided in Section 1.02. Each such conversion shall be effected by the Borrower
giving the Administrative Agent at its Notice Office, prior to 10:00 A.M. (New
York time), at least three Business Days' (or two Business Days', in the case of
a conversion into Base Rate Loans) prior written notice (or telephonic notice
promptly confirmed in writing) (each, a "Notice of Conversion") specifying the
Loans to be so converted, the Type of Loans to be converted into and, if to be
converted into a Borrowing of Eurodollar Loans, the Interest Period to be
initially applicable thereto. The Administrative Agent shall give each Lender
prompt notice of any such proposed conversion affecting any of its Loans.
1.07 Pro Rata Borrowings. All Loans under this Agreement (other than
-------------------
Swingline Loans) shall be made by the Lenders pro rata on the basis of their
--- ----
Term Commitments or Revolving Commitments, as the case may be. It is understood
that no Lender shall be responsible for any default by any other Lender in its
obligation to make Loans hereunder and that each Lender shall be obligated to
make the Loans provided to be made by it hereunder, regardless of the failure of
any other Lender to fulfill its commitments hereunder.
1.08 Interest. (a) The unpaid principal amount of each Base Rate
--------
Loan shall bear
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<PAGE>
interest from the date of the Borrowing thereof until maturity (whether by
acceleration or otherwise) at a rate per annum which shall at all times be the
Applicable Base Rate Margin plus the Base Rate in effect from time to time.
(b) The unpaid principal amount of each Eurodollar Loan shall bear
interest from the date of the Borrowing thereof until maturity (whether by
acceleration or otherwise) at a rate per annum which shall at all times be the
Applicable Eurodollar Margin plus the relevant Eurodollar Rate.
(c) All overdue principal and, to the extent permitted by law,
overdue interest in respect of each Loan and any other overdue amount payable
hereunder shall bear interest at a rate per annum equal to the Base Rate in
effect from time to time plus the sum of (i) 2% and (ii) the Applicable Base
Rate Margin, provided that no Loan shall bear interest after maturity (whether
by acceleration or otherwise) at a rate per annum less than 2% plus the rate of
interest applicable thereto at maturity.
(d) Interest shall accrue from and including the date of any
Borrowing to but excluding the date of any repayment thereof and shall be
payable (i) in respect of each Base Rate Loan, quarterly in arrears on the last
Business Day of each March, June, September and December, (ii) in respect of
each Eurodollar Loan, on the last day of each Interest Period applicable thereto
and, in the case of an Interest Period in excess of three months, on each date
occurring at three month intervals after the first day of such Interest Period
and (iii) in respect of each Loan, on any prepayment or conversion (other than
the prepayment or conversion of any Revolving Loan that is a Base Rate Loan) (on
the amount prepaid or converted), at maturity (whether by acceleration or
otherwise) and, after such maturity, on demand.
(e) All computations of interest hereunder shall be made in
accordance with Section 12.07(b).
(f) The Administrative Agent, upon determining the interest rate for
any Borrowing of Eurodollar Loans for any Interest Period, shall promptly notify
the Borrower and the Lenders thereof.
1.09 Interest Periods. (a) At the time the Borrower gives a Notice
----------------
of Borrowing or Notice of Conversion in respect of the making of, or conversion
into, a Borrowing of Eurodollar Loans (in the case of the initial Interest
Period applicable thereto) or prior to 10:00 A.M. (New York time) on the third
Business Day prior to the expiration of an Interest Period applicable to a
Borrowing of Eurodollar Loans, it shall have the right to elect by giving the
Administrative Agent written notice (or telephonic notice promptly confirmed in
writing) of the Interest Period applicable to such Borrowing, which Interest
Period shall, at the option of the Borrower, be a one, two, three or six month,
or if available to all RC Lenders or TF Lenders, as the case may be, twelve
month period. Notwithstanding anything to the contrary contained above:
(i) the initial Interest Period for any Borrowing of Eurodollar
Loans shall commence on the date of such Borrowing (including the date of
any conversion from a
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<PAGE>
Borrowing of Base Rate Loans) and each Interest Period occurring thereafter
in respect of such Borrowing shall commence on the day on which the next
preceding Interest Period expires;
(ii) if any Interest Period begins on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period, such Interest Period shall end on the last Business Day of
such calendar month;
(iii) if any Interest Period would otherwise expire on a day which is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day, provided that if any Interest Period would
otherwise expire on a day which is not a Business Day but is a day of the
month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day;
(iv) subject to the foregoing clauses (i) through (iii), inclusive,
only a one month Interest Period shall be available to be selected prior to
the Syndication Date, with all Term Loans constituting Eurodollar Loans
during such period to be outstanding pursuant to a single Borrowing and all
Revolving Loans constituting Eurodollar Loans during such period to be
outstanding pursuant to a single Borrowing, with all such Borrowings to
commence and end on the same day;
(v) no Interest Period with respect to a Borrowing of Revolving Loan
shall extend beyond the Revolving Maturity Date;
(vi) no Interest Period with respect to any Borrowing of Term Loans
may be elected that would extend beyond any date upon which a Scheduled
Repayment is required to be made if, after giving effect to the selection
of such Interest Period, the aggregate principal amount of Term Loans
maintained as Eurodollar Loans with Interest Periods ending after such date
would exceed the aggregate principal amount of Term Loans permitted to be
outstanding after such Scheduled Repayment; and
(vii) no Interest Period may be elected at any time when a violation
of Section 9.01 or an Event of Default is then in existence if the
Administrative Agent or the Required Lenders have determined that such an
election at such time would be disadvantageous to the Lenders.
(b) If upon the expiration of any Interest Period, the Borrower has
failed to (or may not) elect a new Interest Period to be applicable to the
respective Borrowing of Eurodollar Loans as provided above, the Borrower shall
be deemed to have elected to convert such Borrowing into a Borrowing of Base
Rate Loans effective as of the expiration date of such current Interest Period.
1.10 Increased Costs, Illegality, etc. (a) In the event that (x) in
---------------------------------
the case of clause (i) below, the Administrative Agent or (y) in the case of
clauses (ii) and (iii) below, any Lender shall have determined (which
determination shall, absent manifest error, be final and conclusive and binding
upon all parties hereto):
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<PAGE>
(i) on any date for determining the Eurodollar Rate for any Interest
Period that, by reason of any changes arising after the date of this
Agreement affecting the interbank Eurodollar market, adequate and fair
means do not exist for ascertaining the applicable interest rate on the
basis provided for in the definition of Eurodollar Rate; or
(ii) at any time, that such Lender shall incur increased costs or
reductions in the amounts received or receivable hereunder with respect to
any Eurodollar Loans (other than any increased cost or reduction in the
amount received or receivable resulting from the imposition of or a change
in the rate of taxes or similar charges) because of (x) any change since
the Effective Date in any applicable law, governmental rule, regulation,
guideline or order (or in the interpretation or administration thereof and
including the introduction of any new law or governmental rule, regulation,
guideline or order) (such as, for example, but not limited to, a change in
official reserve requirements, but, in all events, excluding reserves
required under Regulation D to the extent included in the computation of
the Eurodollar Rate) and/or (y) other circumstances affecting such Lender,
the interbank Eurodollar market or the position of such Lender in such
market; or
(iii) at any time, that the making or continuance of any Eurodollar
Loan has become unlawful by compliance by such Lender in good faith with
any law, governmental rule, regulation, guideline (or would conflict with
any such governmental rule, regulation, guideline or order not having the
force of law but with which such Lender customarily complies even though
the failure to comply therewith would not be unlawful), or has become
impracticable as a result of a contingency occurring after the Effective
Date which materially and adversely affects the interbank Eurodollar
market;
then, and in any such event, such Lender (or the Administrative Agent in the
case of clause (i) above) shall (x) on such date and (y) within ten Business
Days of the date on which such event no longer exists give notice (by telephone
confirmed in writing) to the Borrower and to the Administrative Agent of such
determination (which notice the Administrative Agent shall promptly transmit to
each of the other Lenders). Thereafter (x) in the case of clause (i) above,
Eurodollar Loans shall no longer be available until such time as the
Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice by the Administrative Agent no longer
exist, and any Notice of Borrowing or Notice of Conversion given by the Borrower
with respect to Eurodollar Loans which have not yet been incurred shall be
deemed rescinded by the Borrower, (y) in the case of clause (ii) above, the
Borrower shall pay to such Lender, upon written demand therefor, such additional
amounts (in the form of an increased rate of, or a different method of
calculating, interest or otherwise as such Lender in its sole discretion shall
determine) as shall be required to compensate such Lender for such increased
costs or reductions in amounts receivable hereunder (a written notice as to the
additional amounts owed to such Lender, showing the basis for the calculation
thereof, submitted to the Borrower by such Lender shall, absent manifest error,
be final and conclusive and binding upon all parties hereto) and (z) in the case
of clause (iii) above, the Borrower shall take one of the actions specified in
Section 1.10(b) as promptly as possible and, in any event, within the time
period required by law.
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in Section 1.10(a)(ii) or (iii), the Borrower may (and
in the case of a Eurodollar Loan
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<PAGE>
affected pursuant to Section 1.10(a)(iii), the Borrower shall) either (i) if the
affected Eurodollar Loan is then being made pursuant to a Borrowing, cancel said
Borrowing by giving the Administrative Agent telephonic notice (confirmed
promptly in writing) thereof on the same date that the Borrower was notified by
a Lender pursuant to Section 1.10(a)(ii) or (iii), or (ii) if the affected
Eurodollar Loan is then outstanding, upon at least three Business Days' notice
to the Administrative Agent, require the affected Lender to convert each such
Eurodollar Loan into a Base Rate Loan, provided that if more than one Lender is
affected at any time, then all affected Lenders must be treated the same
pursuant to this Section 1.10(b).
(c) If any Lender shall have determined that after the Effective
Date, the adoption or effectiveness of any applicable law, rule or regulation
regarding capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by such Lender or any corporation controlling such Lender
with any request or directive regarding capital adequacy (whether or not having
the force of law) of any such authority, central bank or comparable agency, has
or would have the effect of reducing the rate of return on such Lender's or such
corporation's capital or assets as a consequence of its commitments or
obligations hereunder to a level below that which such Lender or such
corporation could have achieved but for such adoption, effectiveness, change or
compliance (taking into consideration such Lender's or such corporation's
policies with respect to capital adequacy), then from time to time, within 15
days after demand by such Lender (with a copy to the Administrative Agent), the
Borrower shall pay to such Lender such additional amount or amounts as will
compensate such Lender or such corporation for such reduction. Each Lender,
upon determining in good faith that any additional amounts will be payable
pursuant to this Section 1.10(c), will give prompt written notice thereof to the
Borrower, which notice shall set forth the basis of the calculation of such
additional amounts, although the failure to give any such notice shall not
release or diminish any of the Borrower's obligations to pay additional amounts
pursuant to this Section 1.10(c) upon the subsequent receipt of such notice.
1.11 Compensation. (a) The Borrower shall compensate each Lender,
------------
upon its written request (which request shall set forth the basis for requesting
such compensation), for all reasonable losses, expenses and liabilities
(including, without limitation, any loss, expense or liability incurred by
reason of the liquidation or reemployment of deposits or other funds required by
such Lender to fund its Eurodollar Loans but excluding in any event the loss of
anticipated profits) which such Lender may sustain: (i) if for any reason
(other than a default by such Lender or the Administrative Agent) a Borrowing of
Eurodollar Loans does not occur on a date specified therefor in a Notice of
Borrowing or Notice of Conversion (whether or not withdrawn by the Borrower or
deemed withdrawn pursuant to Section 1.10(a)); (ii) if any prepayment, repayment
or conversion of any of its Eurodollar Loans occurs on a date which is not the
last day of an Interest Period applicable thereto; (iii) if any prepayment of
any of its Eurodollar Loans is not made on any date specified in a notice of
prepayment given by the Borrower; or (iv) as a consequence of (x) any other
default by the Borrower to repay its Eurodollar Loans when required by the terms
of this Agreement or (y) an election made pursuant to Section 1.10(b).
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<PAGE>
(b) Notwithstanding anything in this Agreement to the contrary, to
the extent any notice required by Section 1.10, 2.06 or 4.04 is given by any
Lender more than 180 days after such Lender obtained, or reasonably should have
obtained, knowledge of the occurrence of the event giving rise to the additional
costs of the type described in such Section, such Lender shall not be entitled
to compensation under Section 1.10, 2.06 or 4.04 for any amounts incurred or
accruing prior to the giving of such notice to the Borrower.
1.12 Change of Lending Office. Each Lender agrees that, upon the
------------------------
occurrence of any event giving rise to the operation of Section 1.10(a)(ii) or
(iii), 1.10(c), 2.06 or 4.04 with respect to such Lender, it will, if requested
by the Borrower, use reasonable efforts (subject to overall policy
considerations of such Lender) to designate another lending office for any Loans
affected by such event, provided that such designation is made on such terms
that such Lender and its lending office suffer no economic, legal or regulatory
disadvantage, with the object of avoiding the consequence of the event giving
rise to the operation of any such Section. Nothing in this Section 1.12 shall
affect or postpone any of the obligations of the Borrower or the right of any
Lender provided in Section 1.10, 2.06 or 4.04.
1.13 Replacement of Lenders. (x) Upon the occurrence of any event
----------------------
giving rise to the operation of Section 1.10(a)(ii) or (iii), Section 1.10(c),
Section 2.06 or Section 4.04 with respect to any Lender which results in such
Lender charging to the Borrower increased costs in excess of those being
generally charged by the other Lenders, (y) if a Lender becomes a Defaulting
Lender and/or (z) in the case of a refusal by a Lender to consent to a proposed
change, waiver, discharge or termination with respect to this Agreement which
has been approved by the Required Lenders as provided in Section 12.12, the
Borrower shall have the right, if no Default or Event of Default then exists, to
replace such Lender (the "Replaced Lender") with one or more other Eligible
Transferee or Transferees, none of whom shall constitute a Defaulting Lender at
the time of such replacement (collectively, the "Replacement Lender") reasonably
acceptable to the Administrative Agent, provided that (i) at the time of any
replacement pursuant to this Section 1.13, the Replacement Lender shall enter
into one or more Assignment Agreements pursuant to Section 12.04(b) (and with
all fees payable pursuant to said Section 12.04(b) to be paid by the Replacement
Lender) pursuant to which the Replacement Lender shall acquire all of the
Commitments and outstanding Loans of, and in each case participations in Letters
of Credit by, the Replaced Lender and, in connection therewith, shall pay to (x)
the Replaced Lender in respect thereof an amount equal to the sum of (A) an
amount equal to the principal of, and all accrued interest on, all outstanding
Loans of the Replaced Lender, (B) an amount equal to all Unpaid Drawings that
have been funded by (and not reimbursed to) such Replaced Lender, together with
all then unpaid interest with respect thereto at such time and (C) an amount
equal to all accrued, but theretofore unpaid, Fees owing to the Replaced Lender
pursuant to Section 3.01 and (y) the Letter of Credit Issuer an amount equal to
such Replaced Lender's RC Percentage of any Unpaid Drawing (which at such time
remains an Unpaid Drawing) to the extent such amount was not theretofore funded
by such Replaced Lender, and (ii) all obligations of the Borrower owing to the
Replaced Lender (other than those specifically described in clause (i) above in
respect of which the assignment purchase price has been, or is concurrently
being, paid) shall be paid in full to such Replaced Lender concurrently with
such replacement. Upon the execution of the respective Assignment and Assumption
Agreements, the payment of amounts
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<PAGE>
referred to in clauses (i) and (ii) above, the recordation of the assignment in
the Register as provided in Section 12.16 and, if so requested by the
Replacement Lender, delivery to the Replacement Lender of the appropriate Note
or Notes executed by the Borrower, the Replacement Lender shall become a Lender
hereunder and the Replaced Lender shall cease to constitute a Lender hereunder,
except with respect to indemnification provisions applicable to the Replaced
Lender under this Agreement, which shall survive as to such Replaced Lender.
SECTION 2. Letters of Credit.
-----------------
2.01 Letters of Credit. (a) Subject to and upon the terms and
-----------------
conditions herein set forth, the Borrower may request that a Letter of Credit
Issuer at any time and from time to time on or after the Initial Borrowing Date
and prior to the date which is five Business Days prior to the Revolving
Maturity Date issue, for the account of the Borrower and in support of (x) trade
obligations of the Borrower and/or its Subsidiaries (each such letter of credit
a "Trade Letter of Credit" and, collectively, the "Trade Letters of Credit")
and/or (y) such other obligations of the Borrower that are acceptable to the
Administrative Agent (each such letter of credit, a "Standby Letter of Credit"
and, collectively, the "Standby Letters of Credit" and together with the Trade
Letters of Credit and the Existing Letters of Credit the "Letters of Credit")
and, subject to and upon the terms and conditions herein set forth, such Letter
of Credit Issuer agrees to issue from time to time, irrevocable letters of
credit denominated in U.S. dollars and issued on a sight basis, in such form as
may be approved by such Letter of Credit Issuer and the Administrative Agent.
(b) Notwithstanding the foregoing, (i) no Letter of Credit shall be
issued, the Stated Amount of which, when added to the Letter of Credit
Outstandings (exclusive of Unpaid Drawings which are repaid on the date of, and
prior to the issuance of, the respective Letter of Credit) at such time, would
exceed either (x) $5,000,000 or (y) when added to the aggregate principal amount
of all Revolving Loans made by Non-Defaulting Lenders and all Swingline Loans
then outstanding, the Adjusted Total Revolving Commitment at such time and (ii)
(x) each Standby Letter of Credit shall have an expiry date occurring not later
than one year after such Letter of Credit's date of issuance, provided that any
such Letter of Credit may be extendable for successive periods of up to 12
months on terms acceptable to the Letter of Credit Issuer and in no event shall
any Standby Letter of Credit have an expiry date occurring later than five
Business Days prior to the Revolving Maturity Date and (y) each Trade Letter of
Credit shall have an expiry date occurring no later than the earlier of (a) 180
days after the issuance thereof or (b) 30 days prior to the Revolving Maturity
Date.
(c) Notwithstanding the foregoing, in the event a Lender Default
exists, the Letter of Credit Issuer shall not be required to issue any Letter of
Credit unless the Letter of Credit Issuer has entered into arrangements
satisfactory to it and the Borrower to eliminate the Letter of Credit Issuer's
risk with respect to the participation in Letters of Credit of the Defaulting
Lender or Lenders, including by cash collateralizing such Defaulting Lender's or
Lenders' Revolving Percentage of the Letter of Credit Outstandings.
(d) Annex III hereto contains a description of each letter of credit
issued under the Existing Credit Agreement that is outstanding on, and that will
continue in effect after, the
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Initial Borrowing Date and that is issued by a Lender (each, an "Existing Letter
of Credit"). Each such Existing Letter of Credit shall (x) constitute a Letter
of Credit issued for all purposes of this Agreement on the Initial Borrowing
Date and (y) continue to have the same expiry date as in effect on the Initial
Borrowing Date, subject to renewal on a basis consistent with renewals permitted
by Section 2.01(b).
2.02 Minimum Stated Amount. The initial Stated Amount of each Letter
---------------------
of Credit shall be not less than $150,000 or such lesser amount acceptable to
the Letter of Credit Issuer.
2.03 Letter of Credit Requests; Notices of Issuance. (a) Whenever
----------------------------------------------
it desires that a Letter of Credit be issued, the Borrower shall give the
Administrative Agent and the Letter of Credit Issuer written notice (including
by way of facsimile transmission) in the form of Exhibit C thereof prior to 1:00
P.M. (New York time) at least three Business Days (or such shorter period as may
be acceptable to the Letter of Credit Issuer) prior to the proposed date of
issuance (which shall be a Business Day) (each, a "Letter of Credit Request"),
which Letter of Credit Request shall include any documents that the Letter of
Credit Issuer customarily requires in connection therewith.
(b) Each Letter of Credit Issuer shall, promptly after each issuance
of a Standby Letter of Credit by it, give the Administrative Agent, each RC
Lender and the Borrower written notice of the issuance of such Letter of Credit,
accompanied by a copy to the Administrative Agent of such Letter of Credit or
Letters of Credit issued by it. Each Letter of Credit Issuer shall provide to
the Administrative Agent a weekly summary describing each Trade Letter of
Credit, if any, issued by such Letter of Credit Issuer and then outstanding.
Based on the foregoing, the Administrative Agent will send to each RC Lender,
upon such Letter of Credit fee payment date, a report setting forth for the
period covered by such fee the daily aggregate Letter of Credit Outstandings
during such period.
2.04 Agreement to Repay Letter of Credit Drawings. (a) The Borrower
--------------------------------------------
hereby agrees to reimburse the Letter of Credit Issuer, by making payment to the
Administrative Agent at the Payment Office, for any payment or disbursement made
by the Letter of Credit Issuer under any Letter of Credit (each such amount so
paid or disbursed until reimbursed, an "Unpaid Drawing") immediately after, and
in any event on the date on which the Borrower is notified by the Letter of
Credit Issuer of such payment or disbursement with interest on the amount so
paid or disbursed by the Letter of Credit Issuer, to the extent not reimbursed
prior to 1:00 P.M. (New York time) on the date of such payment or disbursement,
from and including the date paid or disbursed to but not including the date the
Letter of Credit Issuer is reimbursed therefor at a rate per annum which shall
be the Applicable Base Rate Margin plus the Base Rate as in effect from time to
time (plus an additional 2% per annum if not reimbursed by the third Business
Day after the date of such notice of payment or disbursement), such interest
also to be payable on demand.
(b) The Borrower's obligation under this Section 2.04 to reimburse
the Letter of Credit Issuer with respect to Unpaid Drawings (including, in each
case, interest thereon) shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff,
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counterclaim or defense to payment which the Borrower may have or have had
against the Letter of Credit Issuer, the Administrative Agent or any Lender,
including, without limitation, any defense based upon the failure of any drawing
under a Letter of Credit to conform to the terms of the Letter of Credit or any
non-application or misapplication by the beneficiary of the proceeds of such
drawing; provided, however, that the Borrower shall not be obligated to
reimburse the Letter of Credit Issuer for any wrongful payment made by the
Letter of Credit Issuer under a Letter of Credit as a result of acts or
omissions constituting willful misconduct or gross negligence on the part of the
Letter of Credit Issuer.
2.05 Letter of Credit Participations. (a) Immediately upon the
-------------------------------
issuance by the Letter of Credit Issuer of any Letter of Credit, the Letter of
Credit Issuer shall be deemed to have sold and transferred to each other RC
Lender, and each such RC Lender (each, a "Participant") shall be deemed
irrevocably and unconditionally to have purchased and received from such Letter
of Credit Issuer, without recourse or warranty, an undivided interest and
participation, to the extent of such Participant's Adjusted RC Percentage, in
such Letter of Credit, each substitute letter of credit, each drawing made
thereunder and the obligations of the Borrower under this Agreement with respect
thereto (although the Letter of Credit Fee shall be payable directly to the
Administrative Agent for the account of the RC Lenders as provided in Section
3.01(b) and the Participants shall have no right to receive any portion of any
Facing Fees) and any security therefor or guaranty pertaining thereto. Upon any
change in the Revolving Commitments or Adjusted RC Percentages of the RC Lenders
pursuant to Section 12.04(b) or upon a Lender Default, it is hereby agreed that,
with respect to all outstanding Letters of Credit and Unpaid Drawings, there
shall be an automatic adjustment to the participations pursuant to this Section
2.05 to reflect the new Adjusted RC Percentages of the assigning and assignee RC
Lender or of all RC Lenders, as the case may be.
(b) In determining whether to pay under any Letter of Credit, the
Letter of Credit Issuer shall not have any obligation relative to the
Participants other than to determine that any documents required to be delivered
under such Letter of Credit have been delivered and that they strictly comply on
their face with the requirements of such Letter of Credit. Any action taken or
omitted to be taken by the Letter of Credit Issuer under or in connection with
any Letter of Credit if taken or omitted in the absence of gross negligence or
willful misconduct, shall not create for the Letter of Credit Issuer any
resulting liability.
(c) In the event that the Letter of Credit Issuer makes any payment
under any Letter of Credit and the Borrower shall not have reimbursed such
amount in full to the Letter of Credit Issuer pursuant to Section 2.04(a), the
Letter of Credit Issuer shall promptly notify the Administrative Agent, and the
Administrative Agent shall promptly notify each Participant of such failure, and
each Participant shall promptly and unconditionally pay to the Administrative
Agent for the account of the Letter of Credit Issuer, the amount of such
Participant's Adjusted RC Percentage of such payment in U.S. dollars and in same
day funds; provided, however, that no Participant shall be obligated to pay to
the Administrative Agent its Adjusted RC Percentage of such unreimbursed amount
for any wrongful payment made by the Letter of Credit Issuer under a Letter of
Credit as a result of acts or omissions constituting willful misconduct or gross
negligence on the part of the Letter of Credit Issuer. If the Administrative
Agent so notifies any
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Participant required to fund an Unpaid Drawing under a Letter of Credit prior to
11:00 A.M. (New York time) on any Business Day, such Participant shall make
available to the Administrative Agent for the account of the Letter of Credit
Issuer such Participant's Adjusted RC Percentage of the amount of such payment
on such Business Day in same day funds. If and to the extent such Participant
shall not have so made its Adjusted RC Percentage of the amount of such Unpaid
Drawing available to the Administrative Agent for the account of the Letter of
Credit Issuer, such Participant agrees to pay to the Administrative Agent for
the account of the Letter of Credit Issuer, forthwith on demand such amount,
together with interest thereon, for each day from such date until the date such
amount is paid to the Administrative Agent for the account of the Letter of
Credit Issuer at the overnight Federal Funds Effective Rate. The failure of any
Participant to make available to the Administrative Agent for the account of the
Letter of Credit Issuer its Adjusted RC Percentage of any Unpaid Drawing under
any Letter of Credit shall not relieve any other Participant of its obligation
hereunder to make available to the Administrative Agent for the account of the
Letter of Credit Issuer its Adjusted RC Percentage of any payment under any
Letter of Credit on the date required, as specified above, but no Participant
shall be responsible for the failure of any other Participant to make available
to the Administrative Agent for the account of the Letter of Credit Issuer such
other Participant's Adjusted RC Percentage of any such payment.
(d) Whenever the Letter of Credit Issuer receives a payment of a
reimbursement obligation as to which the Administrative Agent has received for
the account of the Letter of Credit Issuer any payments from the Participants
pursuant to clause (c) above, the Letter of Credit Issuer shall pay to the
Administrative Agent and the Administrative Agent shall promptly pay to each
Participant which has paid its Adjusted RC Percentage thereof, in U.S. dollars
and in same day funds, an amount equal to such Participant's Adjusted RC
Percentage of the principal amount thereof and interest thereon accruing at the
overnight Federal Funds Effective Rate after the purchase of the respective
participations.
(e) The obligations of the Participants to make payments to the
Administrative Agent for the account of the Letter of Credit Issuer with respect
to Letters of Credit shall be irrevocable and not subject to counterclaim, set-
off or other defense or any other qualification or exception whatsoever
(provided that no Participant shall be required to make payments resulting from
the Administrative Agent's gross negligence or willful misconduct) and shall be
made in accordance with the terms and conditions of this Agreement under all
circumstances, including, without limitation, any of the following
circumstances:
(i) any lack of validity or enforceability of this Agreement or any
of the other Credit Documents;
(ii) the existence of any claim, set-off, defense or other right
which the Borrower or any of its Subsidiaries may have at any time against
a beneficiary named in a Letter of Credit, any transferee of any Letter of
Credit (or any Person for whom any such transferee may be acting), the
Administrative Agent, the Letter of Credit Issuer, any Lender or other
Person, whether in connection with this Agreement, any Letter of Credit,
the transactions contemplated herein or any unrelated transactions
(including any
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underlying transaction between the Borrower and the beneficiary named in
any such Letter of Credit);
(iii) any draft, certificate or other document presented under the
Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect;
(iv) the surrender or impairment of any security for the performance
or observance of any of the terms of any of the Credit Documents; or
(v) the occurrence of any Default or Event of Default.
(f) To the extent the Letter of Credit Issuer is not indemnified by
the Borrower, the Participants will reimburse and indemnify the Letter of Credit
Issuer, in proportion to their respective "percentages" of the Total Revolving
Commitment, for and against any and all liabilities, obligations, losses,
damages, penalties, claims, actions, judgments, costs, expenses or disbursements
of whatsoever kind or nature which may be imposed on, asserted against or
incurred by the Letter of Credit Issuer in performing its respective duties in
any way relating to or arising out of its issuance of Letters of Credit;
provided that no Participants shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the Letter of Credit Issuer's
gross negligence or willful misconduct.
2.06 Increased Costs. If at any time after the Effective Date, the
---------------
adoption or effectiveness of any applicable law, rule or regulation, or any
change therein, or any change in the interpretation or administration thereof by
any governmental authority, central Lender or comparable agency charged with the
interpretation or administration thereof, or compliance by the Letter of Credit
Issuer or any Participant with any request or directive (whether or not having
the force of law) by any such authority, central Lender or comparable agency
shall either (i) impose, modify or make applicable any reserve, deposit, capital
adequacy or similar requirement against Letters of Credit issued by the Letter
of Credit Issuer or such Participant's participation therein, or (ii) shall
impose on the Letter of Credit Issuer or any Participant any other conditions
affecting this Agreement, any Letter of Credit or such Participant's
participation therein; and the result of any of the foregoing is to increase the
cost to the Letter of Credit Issuer or such Participant of issuing, maintaining
or participating in any Letter of Credit, or to reduce the amount of any sum
received or receivable by the Letter of Credit Issuer or such Participant
hereunder (other than any increased cost or reduction in the amount received or
receivable resulting from the imposition of or a change in the rate of taxes or
similar charges), then, upon demand to the Borrower by the Letter of Credit
Issuer or such Participant (a copy of which notice shall be sent by the Letter
of Credit Issuer or such Participant to the Administrative Agent), the Borrower
shall pay to the Letter of Credit Issuer or such Participant such additional
amount or amounts as will compensate the Letter of Credit Issuer or such
Participant for such increased cost or reduction. A certificate submitted to the
Borrower by the Letter of Credit Issuer or such Participant, as the case may be
(a copy of which certificate shall be sent by the Letter of Credit Issuer or
such Participant to the Administrative Agent), setting forth the basis for the
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<PAGE>
determination of such additional amount or amounts necessary to compensate the
Letter of Credit Issuer or such Participant as aforesaid shall be conclusive and
binding on the Borrower absent manifest error, although the failure to deliver
any such certificate shall not release or diminish any of the Borrower's
obligations to pay additional amounts pursuant to this Section 2.06 upon the
subsequent receipt thereof.
SECTION 3. Fees; Commitments.
-----------------
3.01 Fees. (a) The Borrower agrees to pay to the Administrative
----
Agent a commitment commission ("Commitment Commission") for the account of each
Non-Defaulting Lender with a Revolving Commitment for the period from and
including the Initial Borrowing Date to, but not including, the date the Total
Revolving Commitment has been terminated, computed at a rate per annum for each
day equal to Applicable CC Fee on the daily average of such Lender's Unutilized
Revolving Commitment. Such Commitment Commission shall be due and payable in
arrears on the last Business Day of each March, June, September and December and
on the date upon which the Total Revolving Commitment is terminated.
(b) The Borrower agrees to pay to the Administrative Agent for the
account of each RC Lender that is a Non-Defaulting Lender pro rata on the basis
--- ----
of its respective Adjusted RC Percentage, a fee in respect of each Letter of
Credit (the "Letter of Credit Fee") computed at the rate equal to the Applicable
Eurodollar Margin then in effect on the daily Stated Amount of such Letter of
Credit. Accrued Letter of Credit Fees shall be due and payable quarterly in
arrears on the last Business Day of each March, June, September and December of
each year and on the date upon which the Total Revolving Commitment is
terminated.
(c) The Borrower agrees to pay to each Letter of Credit Issuer a fee
in respect of each Letter of Credit issued by it (the "Facing Fee") computed at
the rate of 1/4 of 1% per annum on the daily Stated Amount of such Letter of
Credit, provided that in no event shall the annual Facing Fee be less than $500
per year per Letter of Credit. Accrued Facing Fees shall be due and payable
quarterly in arrears on the last Business Day of each March, June, September and
December of each year and on the date upon which the Total Revolving Commitment
is terminated.
(d) The Borrower agrees to pay directly to the Letter of Credit
Issuer upon each issuance of, payment under, and/or amendment of, a Letter of
Credit issued by such Letter of Credit Issuer such amount as shall at the time
of such issuance, payment or amendment be the administrative charge which such
Letter of Credit Issuer is customarily charging for issuances of, payments under
or amendments of, letters of credit issued by it.
(e) The Borrower shall pay to the Administrative Agent (x) on the
Restatement Effective Date for its own account and/or for distribution to the
Lenders such fees as heretofore agreed by the Borrower and the Administrative
Agent and (y) for its own account such other fees as agreed to between the
Borrower and the Administrative Agent, when and as due.
(f) All computations of Fees shall be made in accordance with
Section 12.07(b).
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3.02 Voluntary Reduction of Commitments. Upon at least three
----------------------------------
Business Days' prior written notice (or telephonic notice confirmed in writing)
to the Administrative Agent at its Notice Office (which notice the
Administrative Agent shall promptly transmit to each of the Lenders), the
Borrower shall have the right, without premium or penalty, to terminate or
partially reduce the Total Unutilized Revolving Commitment, provided that (x)
any such termination shall apply to proportionately and permanently reduce the
Revolving Commitment of each Lender, (y) no such reduction shall reduce any Non-
Defaulting Lender's Revolving Commitment to an amount that is less than the sum
of (A) the outstanding Revolving Loans of such Lender plus (B) such Lender's
Adjusted RC Percentage of (i) outstanding Swingline Loans and (ii) Letter of
Credit Outstandings and (z) any partial reduction pursuant to this Section 3.02
shall be in the amount of at least $1,000,000.
3.03 Mandatory Adjustments of Commitments, etc. (a) The Total
------------------------------------------
Commitment (and the Total Term Commitment and the Total Revolving Commitment)
shall terminate on September 30, 1999 if the Initial Borrowing Date has not yet
occurred.
(b) The Total Term Commitment shall terminate in its entirety on the
Initial Borrowing Date (after giving effect to the making of Term Loans on such
date).
(c) The Total Revolving Commitment (and the Revolving Commitment of
each RC Lender) shall terminate in its entirety on the earlier of (i) the
Revolving Maturity Date and (ii) the date on which any Change of Control occurs.
(d) The Total Revolving Commitment shall be reduced at the time of
any mandatory repayment of Term Loans pursuant to Section 4.02(A)(c), (d), (e),
(f), (g) or (h) if Term Loans were then outstanding, in an amount, if any, by
which the amount of such repayment (determined as if an unlimited amount of Term
Loans were then outstanding) exceeds the aggregate amount of Term Loans then
outstanding.
(e) Each partial reduction of the Total Revolving Commitment
pursuant to this Section 3.03 shall apply proportionately to the Revolving
Commitment of each RC Lender.
SECTION 4. Payments.
--------
4.01 Voluntary Prepayments. The Borrower shall have the right to
---------------------
prepay Loans in whole or in part, without premium or penalty, from time to time
on the following terms and conditions: (i) the Borrower shall give the
Administrative Agent at the Payment Office written notice (or telephonic notice
promptly confirmed in writing) of its intent to prepay the Loans, whether such
Loans are Term Loans, Revolving Loans or Swingline Loans, the amount of such
prepayment and (in the case of Eurodollar Loans) the specific Borrowing(s)
pursuant to which made, which notice shall be given by the Borrower at least one
Business Day prior to the date of such prepayment with respect to Base Rate
Loans (other than Swingline Loans, with respect to which notice shall be given
by the Borrower on the day of prepayment) and at least two Business Days prior
to the date of such prepayment with respect to Eurodollar Loans, which notice
shall promptly be transmitted by the Administrative Agent to each of the
Lenders; (ii) (x) each partial prepayment of any Borrowing (other than a
Borrowing of Swingline Loans) shall be in an
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aggregate principal amount of at least $1,000,000 and, if greater in an integral
multiple of $100,000 and (y) each partial prepayment of any Borrowing of
Swingline Loans shall be in an aggregate principal amount of at least $100,000
and, if greater, in an integral multiple of $50,000, provided that no partial
prepayment of Eurodollar Loans made pursuant to a Borrowing shall reduce the
aggregate principal amount of the Loans outstanding pursuant to such Borrowing
to an amount less than the Minimum Borrowing Amount applicable thereto; (iii) at
the time of any prepayment of Eurodollar Loans pursuant to this Section 4.01 on
any date other than the last day of the Interest Period applicable thereto, the
Borrower shall pay the amounts required pursuant to Section 1.11; (iv) each
prepayment in respect of any Loans made pursuant to a Borrowing shall be applied
pro rata among such Loans, provided, that at the Borrower's election in
- --- ----
connection with any prepayment of Revolving Loans pursuant to this Section 4.01,
such prepayment shall not be applied to any Revolving Loans of a Defaulting
Lender; and (v) each prepayment of Term Loans pursuant to this Section 4.01
shall reduce the remaining Scheduled Repayments on a pro rata basis (based upon
--- ----
the then remaining principal amount of each such Scheduled Repayment), provided
that the amount of any such prepayment that is made with the Available Excess
Cash Flow Amount at such time (determined before giving effect to such
prepayment made with such Available Excess Cash Flow Amount) may, at the
Borrower's direction, reduce the then remaining Scheduled Repayments in the
direct order of their maturity.
4.02 Mandatory Prepayments.
---------------------
(A) Requirements:
------------
(a) (i) If on any date (i) the sum of the aggregate outstanding
principal amount of Revolving Loans made by Non-Defaulting Lenders, Swingline
Loans and the Letter of Credit Outstandings, exceeds the Adjusted Total
Revolving Commitment as then in effect or (ii) the aggregate outstanding
principal amount of all Revolving Loans and of all Swingline Loans shall have
exceeded the Borrowing Base at such time for any period of three consecutive
Business Days, the Borrower shall repay on such date the principal of Swingline
Loans, and if no Swingline Loans are or remain outstanding, Revolving Loans of
Non-Defaulting Lenders, in an aggregate amount equal to such excess. If, after
giving effect to the repayment of all outstanding Swingline Loans and Revolving
Loans of Non-Defaulting Lenders, the aggregate amount of Letter of Credit
Outstandings exceeds the Adjusted Total Revolving Commitment then in effect, the
Borrower shall pay to the Administrative Agent an amount in cash and/or Cash
Equivalents equal to such excess (up to the aggregate amount of the Letter of
Credit Outstandings at such time) and the Administrative Agent shall hold such
payment as security for the obligations of the Borrower hereunder pursuant to a
cash collateral agreement to be entered into in form and substance satisfactory
to the Administrative Agent (which shall permit certain investments in Cash
Equivalents satisfactory to the Administrative Agent, until the proceeds are
applied to the secured obligations).
(ii) If on any date the aggregate outstanding principal amount of the
Revolving Loans made by a Defaulting Lender exceeds the Revolving Commitment of
such Defaulting Lender, the Borrower shall repay principal of Revolving Loans of
such Defaulting Lender in an amount equal to such excess.
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(b) On each date set forth below, the Borrower shall be required to
repay the principal amount of Term Loans set forth opposite such date (each such
repayment, as the same may be reduced as provided in Sections 4.01 and 4.02(B),
a "Scheduled Repayment"):
Date Amount
---- ------
December 31, 1999 $2,500,000
March 31, 2000 2,250,000
June 30, 2000 2,250,000
September 30, 2000 2,250,000
December 31, 2000 2,250,000
March 31, 2001 3,750,000
June 30, 2001 3,750,000
September 30, 2001 3,750,000
December 31, 2001 3,750,000
March 31, 2002 4,062,500
June 30, 2002 4,062,500
September 30, 2002 4,062,500
December 31, 2002 4,062,500
March 31, 2003 5,312,500
June 30, 2003 5,312,500
September 30, 2003 5,312,500
December 31, 2003 5,312,500
March 31, 2004 6,250,000
June 30, 2004 6,250,000
September 30, 2004 6,250,000
December 31, 2004 6,250,000
March 31, 2005 6,250,000
June 30, 2005 6,250,000
Final Maturity Date 6,250,000
(c) On the Business Day following the date of receipt thereof by the
Borrower and/or any of its Subsidiaries of the Cash Proceeds from any Asset
Sale, an amount equal to 100% of the Net Cash Proceeds from such Asset Sale
shall be applied as a mandatory repayment of principal of the then outstanding
Term Loans, provided that up to an aggregate of [$3,500,000] of Net Cash
Proceeds from Asset Sales shall not be required to be used to so repay Term
Loans to the extent the Borrower elects, as hereinafter provided, to cause such
Net Cash Proceeds to be reinvested in Reinvestment Assets (a "Reinvestment
Election"). The Borrower may exercise its Reinvestment Election (within the
parameters specified in the preceding sentence) with respect to an Asset Sale if
(x) no Default or Event of Default exists and (y) the Borrower delivers a
Reinvestment Notice to the Administrative Agent on the Business Day following
the date of the consummation of the respective Asset Sale, with such
Reinvestment
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Election being effective with respect to the Net Cash Proceeds of such Asset
Sale equal to the Anticipated Reinvestment Amount specified in such Reinvestment
Notice.
(d) On the date of the receipt thereof by the Borrower and/or any of
its Subsidiaries, an amount equal to 100% of the proceeds (net of underwriting
discounts and commissions and other reasonable costs associated therewith) of
the incurrence of Indebtedness by the Borrower and/or any of its Subsidiaries
(other than Indebtedness permitted by Section 8.04), shall be applied as a
mandatory repayment of principal of the then outstanding Term Loans.
(e) On the date of the receipt thereof by the Borrower, an amount
equal to 100% of the proceeds (net of underwriting discounts and commissions and
other reasonable costs associated therewith) of any sale or issuance of its
equity (other than equity issued to management and other employees of the
Borrower and its Subsidiaries as provided for in Section 8.09(a)(ii)) and 100%
of any amount of cash received by the Borrower in connection with any capital
contributions shall be applied as a mandatory repayment of principal of the then
outstanding Term Loans.
(f) On each date which is 90 days after the last day of each fiscal
year of the Borrower (commencing with the fiscal year ending on December 31,
[1999]), the then Applicable ECF Percentage of Excess Cash Flow (such amount,
the "ECF Prepayment Amount") of the Borrower and its Subsidiaries for the fiscal
year then last ended shall be applied as a mandatory repayment of principal of
the then outstanding Term Loans.
(g) On the Reinvestment Prepayment Date with respect to a
Reinvestment Election, an amount equal to the Reinvestment Prepayment Amount, if
any, for such Reinvestment Election shall be applied as a repayment of the
principal amount of the then outstanding Term Loans.
(h) Notwithstanding anything to the contrary contained elsewhere in
this Agreement, (i) all then outstanding Swingline Loans shall be repaid in full
on the Swingline Expiry Date and (ii) all other then outstanding Loans shall be
repaid in full on the Final Maturity Date.
(i) On the date on which any Change of Control occurs, the
outstanding principal amount of the Term Loans, if any, shall become due and
payable in full.
(B) Application:
-----------
(a) Each mandatory repayment of Term Loans required to be made
pursuant to Section 4.02(A) (other than pursuant to clause (b) thereof) shall
reduce the next Scheduled Repayment to the extent thereof and then each other
remaining Scheduled Repayments on a pro rata basis (based upon the then
--- ----
remaining principal amount of each such Scheduled Repayment).
(b) With respect to each prepayment of Loans required by Section
4.02, the Borrower may designate the Types of Loans which are to be prepaid and
the specific
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Borrowing(s) under the affected Facility pursuant to which made, provided that
(i) Eurodollar Loans may so be designated for prepayment pursuant to this
Section 4.02 only on the last day of an Interest Period applicable thereto
unless all Eurodollar Loans made pursuant to such Facility with Interest Periods
ending on such date of required prepayment and all Base Rate Loans made pursuant
to such Facility have been paid in full; (ii) if any prepayment of Eurodollar
Loans made pursuant to a single Borrowing shall reduce the outstanding Loans
made pursuant to such Borrowing to an amount less than the Minimum Borrowing
Amount for such Borrowing, such Borrowing shall be immediately converted into
Base Rate Loans; (iii) each prepayment of any Revolving Loans made by Non-
Defaulting Lenders pursuant to a Borrowing shall be applied pro rata among such
--- ----
Revolving Loans; and (iv) each prepayment of any Revolving Loans made by
Defaulting Lenders pursuant to a Borrowing shall be applied pro rata among such
--- ----
Revolving Loans. In the absence of a designation by the Borrower as described in
the preceding sentence, the Administrative Agent shall, subject to the above,
make such designation in its sole discretion with a view, but no obligation, to
minimize breakage costs owing under Section 1.11.
4.03 Method and Place of Payment. Except as otherwise specifically
---------------------------
provided herein, all payments under this Agreement shall be made to the
Administrative Agent for the ratable (based on its pro rata share) account of
--- ----
the Lenders entitled thereto, not later than 1:00 P.M. (New York time) on the
date when due and shall be made in immediately available funds and in lawful
money of the United States of America at the Payment Office, it being understood
that written notice by the Borrower to the Administrative Agent to make a
payment from the funds in the Borrower's account at the Payment Office shall
constitute the making of such payment to the extent of such funds held in such
account. Any payments under this Agreement which are made later than 1:00 P.M.
(New York time) shall be deemed to have been made on the next succeeding
Business Day. Whenever any payment to be made hereunder shall be stated to be
due on a day which is not a Business Day, the due date thereof shall be extended
to the next succeeding Business Day and, with respect to payments of principal,
interest shall be payable during such extension at the applicable rate in effect
immediately prior to such extension.
4.04 Net Payments. (a) All payments made by the Borrower hereunder,
------------
under any Note or any other Credit Document, will be made without setoff,
counterclaim or other defense. Except as provided for in Section 4.04(b), all
such payments will be made free and clear of, and without deduction or
withholding for, any present or future taxes, levies, imposts, duties, fees,
assessments or other charges of whatever nature now or hereafter imposed by any
jurisdiction or by any political subdivision or taxing authority thereof or
therein (but excluding, except as provided in the second succeeding sentence,
any tax imposed on or measured by the net income (or any franchise tax) of a
Lender pursuant to the laws of the jurisdiction in which the principal office or
applicable lending office of such Lender is located or under the laws of any
political subdivision or taxing authority of any such jurisdiction in which the
principal office or applicable lending office of such Lender is located) and all
interest, penalties or similar liabilities with respect thereto (collectively,
"Taxes"). If any Taxes are so levied or imposed, the Borrower agrees to pay the
full amount of such Taxes and such additional amounts as may be necessary so
that every payment of all amounts due hereunder, under any Note or under any
other Credit Document, after withholding or deduction for or on account of any
Taxes, will not be less than the amount provided for herein or in such Note or
in such other Credit Document. If any amounts
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are payable in respect of Taxes pursuant to the preceding sentence, then the
Borrower shall also reimburse each Lender, upon the written request of such
Lender, for taxes imposed on or measured by the net income of such Lender
pursuant to the laws of the jurisdiction in which the principal office or
applicable lending office of such Lender is located or of any political
subdivision or taxing authority of any such jurisdiction and for any Taxes as
such Lender shall determine are payable by, or withheld from, such Lender in
respect of amounts paid to or on behalf of such Lender pursuant to this or the
preceding sentence. The Borrower will furnish to the Administrative Agent within
45 days after the date the payment of any Taxes, or any withholding or deduction
on account thereof, is due pursuant to applicable law certified copies of tax
receipts evidencing such payment by the Borrower. The Borrower will indemnify
and hold harmless the Administrative Agent and each Lender, and reimburse the
Administrative Agent or such Lender upon its written request, for the amount of
any Taxes so levied or imposed and paid or withheld by such Lender.
(b) Each Lender which is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) for Federal income tax purposes
agrees (i) that it will provide to the Borrower on or prior to the Initial
Borrowing Date two original signed copies of Internal Revenue Service Form 4224
or Form 1001 certifying to such Lender's entitlement to a complete exemption
from United States withholding tax with respect to payments to be made under
this Agreement, under any Note and under any other Credit Document and (ii) that
to the extent legally entitled to do so, (x) with respect to a Lender that is an
assignee or transferee of an interest under this Agreement pursuant to Section
12.04 hereof (unless the respective Lender was already a Lender hereunder
immediately prior to such assignment or transfer), upon the date of such
assignment or transfer to such Lender, and (y) with respect to any Lender which
is not a United States person (as such term is defined in Section 7701(a)(30) of
the Code) for U.S. Federal income tax purposes (including, without limitation,
any assignee or transferee), from time to time, upon the reasonable request by
the Borrower or the Administrative Agent after the Initial Borrowing Date, such
Lender will provide to each of the Borrower and the Administrative Agent two
original signed copies of Internal Revenue Service Form 4224 or Form 1001 (or
any successor forms and collectively the "Tax Forms") certifying to such
Lender's entitlement to a complete exemption from, or reduction in, United
States withholding tax with respect to payments to be made under this Agreement,
under any Note and under any other Credit Document, or (iii) if the Lender,
assignee or transferee, as the case may be, is not a "bank" within the meaning
of Section 881(c)(3)(A) of the Code and cannot deliver either Tax Form pursuant
to clauses (i) or (ii) above (either initially or upon request, as the case may
be), such Lender which is not a United States person (as such term is defined in
Section 7701(a)(30) of the Code) agrees to provide two accurate and complete
original signed copies of Internal Revenue Service Form W-8 (or successor form)
certifying to such Lender's entitlement to a complete exemption from United
States withholding tax with respect to payments of interest to be made under
this Agreement and under any Note. Notwithstanding anything to the contrary
contained in Section 4.04(a), the Borrower shall be entitled, to the extent it
is required to do so by law, to deduct or withhold income or other similar taxes
imposed by the United States (or any political subdivision or taxing authority
thereof or therein) from interest, fees or other amounts payable hereunder
(without any obligation under Section 4.04(a) to pay the respective Lender such
taxes or any additional amounts with respect thereto) for the account of any
Lender which is not a United
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<PAGE>
States person (as such term is defined in Section 7701(a)(30) of the Code) for
United States federal income tax purposes and which has not provided to the
Borrower such forms required to be provided to the Borrower by a Lender pursuant
to the first sentence of this Section 4.04(b), provided that if the Borrower
shall so deduct or withhold any such taxes, it shall provide a statement to the
Administrative Agent and such Lender, setting forth the amount of such taxes so
deducted or withheld, the applicable rate and any other information or
documentation which such Lender may reasonably request for assisting such Lender
in obtaining any allowable credits or deductions for the taxes so deducted or
withheld in the jurisdiction or jurisdictions in which such Lender is subject to
tax. Notwithstanding anything to the contrary contained in the preceding
sentence, the Borrower agrees to indemnify each Lender in the manner set forth
in Section 4.04(a) in respect of any amounts deducted or withheld by it as
described in the previous sentence as a result of any changes after the
Effective Date in any applicable law, treaty, governmental rule, regulation,
guideline or order, or in the interpretation thereof, relating to the deducting
or withholding of income or similar Taxes.
SECTION 5. Conditions Precedent.
--------------------
5.01 Conditions Precedent to Loans on the Initial Borrowing Date.
-----------------------------------------------------------
The obligation of the Lenders to make Loans, and of Letter of Credit Issuers to
issue Letters of Credit, on the Initial Borrowing Date is subject to the
satisfaction of the following conditions at such time:
(a) Effectiveness. The Effective Date shall have occurred.
-------------
(b) Opinions of Counsel. The Administrative Agent shall have
-------------------
received opinions, addressed to the Administrative Agent, and each of the
Lenders and dated the Initial Borrowing Date, from (i) Skadden, Arps, Slate,
Meagher & Flom LLP, counsel to the Borrower, which opinion shall cover the
matters contained in Exhibit D-1 hereto, (ii) White & Case LLP, special counsel
to the Administrative Agent, which opinion shall cover the matters contained in
Exhibit D-2 hereto and (iii) from such local counsel, if any, satisfactory to
the Administrative Agent as the Administrative Agent may request, which opinions
shall cover the perfection of the security interests granted pursuant to the
Security Documents and such other matters incident to the transactions
contemplated herein as the Administrative Agent may reasonably request and shall
be in form and substance satisfactory to the Administrative Agent.
(c) Corporate Proceedings. (I) The Administrative Agent shall have
---------------------
received from the Borrower a certificate, dated the Initial Borrowing Date,
signed by the President or any Vice-President of the Borrower in the form of
Exhibit E with appropriate insertions and deletions, together with (x) copies of
the certificate of incorporation, the by-laws, or other organizational documents
of each Credit Party and (y) the resolutions, or such other administrative
approval, of each Credit Party referred to in such certificate and all of the
foregoing (including each such certificate of formation, certificate of
incorporation and by-laws) shall be satisfactory to the Administrative Agent and
(z) a statement that all of the applicable conditions set forth in Sections
5.01(h), (l), (m) and (n) and 5.02 exist as of such date.
(II) On the Initial Borrowing Date, all corporate and legal
proceedings and all
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<PAGE>
instruments and agreements in connection with the transactions contemplated by
this Agreement and the other Documents shall be satisfactory in form and
substance to the Administrative Agent, and the Administrative Agent shall have
received all information and copies of all certificates, documents and papers,
including good standing certificates and any other records of corporate
proceedings and governmental approvals, if any, which the Administrative Agent
may have requested in connection therewith, such documents and papers, where
appropriate, to be certified by proper corporate or governmental authorities.
(d) Adverse Change, etc. From December 31, 1998, nothing shall have
--------------------
occurred (and neither the Lenders nor the Administrative Agent shall have become
aware of any facts or conditions not previously known) which the Administrative
Agent or the Required Lenders shall determine (i) has had, or is reasonably
likely to have, a material adverse effect on the rights or remedies of the
Lenders or the Administrative Agent hereunder or under any other Credit
Document, or on the ability of the Credit Parties taken as a whole to perform
their obligations to them, or (ii) has had, or is reasonably likely to have, a
Material Adverse Effect.
(e) Litigation. There shall be no actions, suits or proceedings
----------
pending or, to the knowledge of any Credit Party, threatened in writing (i) with
respect to this Agreement or any other Credit Document or (ii) which the
Administrative Agent or the Required Lenders shall determine has had, or is
reasonably likely to have, (x) a Material Adverse Effect or (y) a material
adverse effect on the rights or remedies of the Lenders or the Administrative
Agent hereunder or under any other Credit Document or on the ability of the
Credit Parties taken as a whole to perform their obligations under the Credit
Documents.
(f) Approvals. All material necessary governmental and third party
---------
approvals in connection with the Transaction and/or the Credit Documents shall
have been obtained and remain in effect, and all applicable waiting periods
shall have expired or shall have been terminated or waived without any action
being taken by any competent authority which restrains or prevents such
transactions or imposes, in the reasonable judgment of the Administrative Agent,
materially adverse conditions upon the consummation of the Transaction.
(g) Initial Borrowing Base Certificate. On the Initial Borrowing
----------------------------------
Date, the Administrative Agent shall have received a certificate in the form of
Exhibit F hereto (a "Borrowing Base Certificate") executed by the chief
financial officer of the Borrower setting forth the Borrowing Base determined as
of the BB Determination Date in the preceding month.
(h) Existing Credit Agreement. On the Initial Borrowing Date and
-------------------------
concurrently with the initial borrowing hereunder, (A) the Borrower shall have
(i) repaid in full the outstanding principal amount of all Loans under, and as
defined in, the Existing Credit Agreement, (ii) terminated all letters of credit
issued thereunder (other than Existing Letters of Credit) and all Commitments
under and as defined therein, and (iii) paid all accrued but unpaid interest and
fees under the Existing Credit Agreement, whether or not otherwise then due and
payable and (B) the Existing Credit Agreement shall have been terminated and be
of no further force or effect (except as to indemnities contained therein which
survive the termination of the Existing Credit Agreement in accordance with the
terms thereof).
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<PAGE>
(i) Subsidiary Guaranty. Each Subsidiary Guarantor shall have duly
-------------------
authorized, executed and delivered a Subsidiary Guaranty in the form of Exhibit
G hereto (as modified, amended or supplemented from time to time in accordance
with the terms hereof and thereof, the "Subsidiary Guaranty"), and the
Subsidiary Guaranty shall be in full force and effect.
(j) Security Documents. (i) Each of the Borrower and the Subsidiary
------------------
Guarantors shall have each duly authorized, executed and delivered a Pledge
Agreement in the form of Exhibits H-1 and H-2, respectively (each as modified,
amended or supplemented from time to time in accordance with the terms thereof
and hereof, a "Pledge Agreement" and, collectively, the "Pledge Agreements"),
and each shall have delivered, or caused to have been delivered, to the
Collateral Agent, as pledgee thereunder, all of the certificates representing
the Pledged Securities referred to therein, endorsed in blank or accompanied by
executed and undated stock powers, and each Pledge Agreement shall be in full
force and effect.
(ii) The Borrower and each Subsidiary Guarantor shall have each duly
authorized, executed and delivered a Security Agreement substantially in the
form of Exhibits I-1 and I-2, respectively (each as modified, supplemented or
amended from time to time in accordance with the terms thereof and hereof, a
"Security Agreement" and collectively, the "Security Agreements"), covering all
of such Credit Party's present and future Security Agreement Collateral, in each
case together with:
(I) executed copies of Financing Statements (Form UCC-1) in
appropriate form for filing under the UCC of each jurisdiction as may be
necessary to perfect the security interests purported to be created by the
Security Agreements;
(II) certified copies of Requests for Information or Copies (Form
UCC-11), or equivalent reports, each of recent date listing all effective
financing statements that name any Credit Party as debtor and that are filed in
the jurisdictions referred to in clause (I), together with copies of such
financing statements (none of which shall cover the Collateral except (x) those
with respect to which appropriate termination statements executed by the secured
lender thereunder have been filed or delivered to the Collateral Agent and (y)
to the extent evidencing Permitted Liens);
(III) evidence of the completion of all other recordings and filings
of, or with respect to, the Security Agreement as may be necessary or, in the
reasonable opinion of the Collateral Agent, desirable to perfect the security
interests intended to be created by the Security Agreements or acceptable
arrangements to effect such recordings and filings have been taken; and
(IV) evidence that all other actions necessary or, in the reasonable
opinion of the Collateral Agent, desirable to perfect and protect the security
interests purported to be created by the Security Agreements have been taken or
acceptable arrangements to effect such actions have been taken;
and the Security Agreements shall be in full force and effect.
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<PAGE>
(iii) The Collateral Agent shall have received:
(I) fully executed counterparts of deeds of trust, mortgages and
similar documents, in each case in form and substance reasonably satisfactory to
the Collateral Agent (as amended, modified or supplemented from time to time in
accordance with the terms thereof and hereof, each a "Mortgage" and,
collectively, the "Mortgages") with respect to each of the Mortgaged Properties,
and arrangements satisfactory to the Collateral Agent shall be in place to
provide that counterparts of such Mortgages shall be recorded on or promptly
after the Initial Borrowing Date in all places to the extent necessary or
desirable, in the judgment of the Collateral Agent, effectively to create a
valid and enforceable first priority mortgage Lien, subject only to Permitted
Encumbrances, on each such Mortgaged Property in favor of the Collateral Agent
(or such other trustee as may be required or desired under local law) for the
benefit of the Administrative Agent and the Lenders;
(II) mortgagee title insurance policies (or binding commitments to
issue such title insurance policies) issued by title insurers reasonably
satisfactory to the Collateral Agent (the "Mortgage Policies") in amounts
reasonably satisfactory to the Collateral Agent and assuring the Collateral
Agent that the Mortgages delivered pursuant to clause (I) above are valid and
enforceable first priority mortgage Liens on the respective Mortgaged
Properties, free and clear of all defects and encumbrances except Permitted
Encumbrances, and such Mortgage Policies shall be in form and substance
reasonably satisfactory to the Collateral Agent and (A) shall include (to the
extent available in the respective jurisdiction of each Mortgaged Property) an
endorsement for future advances under this Agreement, the Notes and the
Mortgages, and for such other matters that the Collateral Agent in its
discretion may reasonably request, (B) shall not include an exception for
mechanics' liens, and (C) shall provide for affirmative insurance and such
reinsurance (including direct access agreements) as the Collateral Agent in its
discretion may reasonably request; and
[(III) surveys, in form and substance reasonably satisfactory to the
Collateral Agent of each Mortgaged Property, dated a recent date and certified
in a manner acceptable to the Collateral Agent by a licensed professional
surveyor satisfactory to the Collateral Agent.]
(k) Solvency. The Borrower shall have delivered, or shall cause to
--------
be delivered to the Administrative Agent, a solvency letter in the form of
Exhibit J hereto dated the Initial Borrowing Date from the Chief Financial
Officer of the Borrower and acceptable in form and substance to the
Administrative Agent.
(l) IPO. The Borrower shall have consummated an initial public
---
offering of its common stock for gross cash proceeds of at least $160 million.
(m) PIK Preferred Stock. All of the PIK Preferred Stock shall have
-------------------
been redeemed in a manner reasonably satisfactory to the Administrative Agent.
(n) Senior Subordinated Notes. The Borrower shall have successfully
-------------------------
completed a tender offer and consent solicitation (collectively, the "Tender")
with respect to the Senior Subordinated Notes pursuant to which amendments to
the Senior Subordinated Note Indentures
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<PAGE>
shall have become effective that substantially eliminate the covenants and
restrictions contained in the Senior Subordinated Note Indenture, all as
contemplated by the Tender (without any waiver of any conditions specified
therein including the requirement that at least 51% of the Senior Subordinated
Notes are tendered), with the Tender to be reasonably satisfactory to the
Administrative Agent, and all Senior Subordinated Notes that have been duly
tendered under the Tender shall have been, or shall on the Initial Borrowing
Date be, redeemed.
(o) Insurance Policies. The Collateral Agent shall have received
------------------
evidence of insurance complying with the requirements of Section 7.03 for the
business and properties of the Borrower and its Subsidiaries, in form and
substance satisfactory to the Administrative Agent and, with respect to all
casualty insurance, naming the Collateral Agent as an additional insured and
loss payee.
(p) Fees. On the Initial Borrowing Date, the Borrower shall have
----
paid to the Administrative Agent and the Lenders all Fees and expenses agreed
upon by such parties to be paid on or prior to such date.
(q) Consent Letter. On the Initial Borrowing Date, the
--------------
Administrative Agent shall have received a letter from CT Corporation System,
presently located at 1633 Broadway, New York, New York, substantially in the
form of Exhibit K, indicating its consent to its appointment by each Credit
Party as such Credit Party's Administrative Agent to receive service of process
as specified in Section 12.08.
5.02 Conditions Precedent to All Credit Events. The obligation of
-----------------------------------------
each Lender to make Loans (including Loans made on the Initial Borrowing Date)
and the obligation of a Letter of Credit Issuer to issue any Letter of Credit is
subject, at the time of each such Credit Event, to the satisfaction of the
following conditions:
(a) Notice of Borrowing; Letter of Credit Request. The
---------------------------------------------
Administrative Agent shall have received a Notice of Borrowing meeting the
requirements of Section 1.02 with respect to the incurrence of Loans or a Letter
of Credit Request meeting the requirements of Section 2.03 with respect to the
issuance of a Letter of Credit.
(b) No Default; Representations and Warranties. At the time of each
------------------------------------------
Credit Event and also after giving effect thereto, (i) there shall exist no
Default or Event of Default and (ii) all representations and warranties made by
any Credit Party contained herein or in the other Credit Documents shall be true
and correct in all material respects with the same effect as though such
representations and warranties had been made on and as of the date of such
Credit Event, except to the extent that such representations and warranties
expressly relate to an earlier date.
The acceptance of the benefits of each Credit Event shall constitute a
representation and warranty by the Borrower to the Administrative Agent and each
of the Lenders that all of the applicable conditions specified in Section 5.01
(in the case of the Credit Events occurring on the Restatement Effective Date)
and/or 5.02, as the case may be, exist as of that time. All of the certificates,
legal opinions and other documents and papers referred to in Section 5.01,
unless otherwise specified, shall be delivered to the Administrative Agent at
its
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<PAGE>
Notice Office for the account of each of the Lenders and, except for the Notes,
in sufficient counterparts for each of the Lenders and shall be satisfactory in
form and substance to the Administrative Agent.
SECTION 6. Representations, Warranties and Agreements. In order to
------------------------------------------
induce the Lenders to enter into this Agreement and to make the Loans and issue
and/or participate in Letters of Credit provided for herein, the Borrower makes
the following representations and warranties to, and agreements with, the
Lenders, all of which shall survive the execution and delivery of this Agreement
and the making of the Loans (with the making of each Credit Event thereafter
being deemed to constitute a representation and warranty that the matters
specified in this Section 6 are true and correct in all material respects on and
as of the date of each such Credit Event unless such representation and warranty
expressly indicates that it is being made as of any specific date):
6.01 Corporate Status. Each of the Borrower and its Subsidiaries (i)
----------------
is a duly organized and validly existing corporation in good standing under the
laws of the jurisdiction of its organization and has the corporate power and
authority to own its property and assets and to transact the business in which
it is engaged and presently proposes to engage and (ii) has duly qualified and
is authorized to do business and is in good standing in all jurisdictions where
it is required to be so qualified and where the failure to be so qualified would
have a Material Adverse Effect.
6.02 Corporate Power and Authority. Each Credit Party has the
-----------------------------
corporate power and authority to execute, deliver and carry out the terms and
provisions of the Documents to which it is a party and has taken all necessary
corporate action to authorize the execution, delivery and performance of the
Credit Documents to which it is a party. Each Credit Party has duly executed and
delivered each Credit Document to which it is a party and each such Document
constitutes the legal, valid and binding obligation of such Person enforceable
in accordance with its terms.
6.03 No Violation. Neither the execution, delivery and performance
------------
by any Credit Party of the Credit Documents to which it is a party nor
compliance with the terms and provisions thereof, nor the consummation of the
transactions contemplated therein (i) will contravene any applicable provision
of any law, statute, rule, regulation, order, writ, injunction or decree of any
court or governmental instrumentality, (ii) will conflict or be inconsistent
with or result in any breach of, any of the terms, covenants, conditions or
provisions of, or constitute a default under, or (other than pursuant to the
Security Documents) result in the creation or imposition of (or the obligation
to create or impose) any Lien upon any of the property or assets of the Borrower
or any of its Subsidiaries pursuant to the terms of any indenture, mortgage,
deed of trust, agreement or other instrument to which the Borrower or any of its
Subsidiaries is a party or by which it or any of its property or assets are
bound or to which it may be subject or (iii) will violate any provision of the
certificate of incorporation or by-laws of the Borrower or any of its
Subsidiaries.
6.04 Litigation. There are no actions, suits or proceedings pending
----------
or threatened
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<PAGE>
with respect to the Borrower or any of its Subsidiaries (i) that are likely to
have a Material Adverse Effect or (ii) that could reasonably be expected to have
a material adverse effect on the rights or remedies of the Lenders or on the
ability of any Credit Party to perform its obligations to them hereunder and
under the other Credit Documents to which it is a party.
6.05 Use of Proceeds; Margin Regulations. (a) The proceeds of all
-----------------------------------
Term Loans shall be utilized on the Initial Borrowing Date (i) to refinance
Loans under and as defined in the Existing Credit Agreement and (ii) to finance
the Transaction and to pay certain fees and expenses relating thereto.
(b) The proceeds of all Revolving Loans incurred (i) on the Initial
Borrowing Date (which shall not exceed $_______), shall be used for the purposes
specified in Section 6.05(a) and (ii) thereafter, shall be used for the general
corporate and working capital purposes of the Borrower and its Subsidiaries.
(c) The proceeds of all Swingline Loans shall be utilized for the
general corporate and working capital purposes of the Borrower and its
Subsidiaries.
(d) Neither the making of any Loan hereunder, nor the use of the
proceeds thereof, will violate or be inconsistent with the provisions of
Regulation T, U or X of the Board of Governors of the Federal Reserve System and
no part of the proceeds of any Loan will be used to purchase or carry any Margin
Stock in violation of Regulation U or to extend credit for the purpose of
purchasing or carrying any Margin Stock.
6.06 Governmental Approvals. Except for filings and recordings in
----------------------
connection with the Security Documents, SEC filings [and those items listed on
Annex IV,] no order, consent, approval, license, authorization, or validation
of, or filing, recording or registration with, or exemption by, any foreign or
domestic governmental or public body or authority, or any subdivision thereof,
is required to authorize or is required in connection with (i) the execution,
delivery and performance of any Credit Document or (ii) the legality, validity,
binding effect or enforceability of any Credit Document.
6.07 Investment Company Act. None of the Borrower nor any of its
----------------------
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended.
6.08 Public Utility Holding Company Act. Neither the Borrower nor
----------------------------------
any of its Subsidiaries is a "holding company", or a "subsidiary company" of a
"holding company", or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company", within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
6.09 True and Complete Disclosure. All factual information (taken as
----------------------------
a whole) heretofore or contemporaneously furnished by or on behalf of the
Borrower or any of its Subsidiaries in writing to the Administrative Agent or
any Lender for purposes of or in connection with this Agreement or any
transaction contemplated herein is, and all other such factual information
(taken as a whole) hereafter furnished by or on behalf of any such Person in
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<PAGE>
writing to any Lender will be, true and accurate in all material respects on the
date as of which such information is dated or certified and not incomplete by
omitting to state any material fact necessary to make such information (taken as
a whole) not misleading at such time in light of the circumstances under which
such information was provided. The projections and pro forma financial
--- -----
information contained in such materials are based on good faith estimates and
assumptions believed by such Persons to be reasonable at the time made, it being
recognized by the Lenders that such projections as to future events are not to
be viewed as facts and that actual results during the period or periods covered
by any such projections may differ from the projected results. There is no fact
known to the Borrower which would have a Material Adverse Effect, which has not
been disclosed herein or in such other documents, certificates and statements
furnished to the Lenders for use in connection with the transactions
contemplated hereby.
6.10 Financial Condition; Financial Statements. (a) On and as of
-----------------------------------------
the Initial Borrowing Date, on a pro forma basis after giving effect to all
--- -----
Indebtedness incurred, and to be incurred, and Liens created, and to be created,
by each Credit Party in connection herewith, (x) the sum of the assets, at a
fair valuation, of the Borrower and its Subsidiaries taken as a whole will
exceed its debts, (y) the Borrower and its Subsidiaries taken as a whole will
not have incurred or intended to, or believe that they will, incur debts beyond
their ability to pay such debts as such debts mature and (z) the Borrower and
its Subsidiaries taken as a whole will not have unreasonably small capital with
which to conduct its business. For purposes of this Section 6.10, "debt" means
any liability on a claim, and "claim" means (i) right to payment whether or not
such a right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured
or unsecured; or (ii) right to an equitable remedy for breach of performance if
such breach gives rise to a payment, whether or not such right to an equitable
remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed,
undisputed, secured or unsecured.
(b) (i) The consolidated balance sheet of the Borrower at December
31, 1998 and March 27, 1999 and the related consolidated statements of
operations and cash flows of the Borrower for the fiscal year or the three-month
period, as the case may be, ended as of said dates, which, in the case of the
December 31, 1998 statements, have been examined by [Deloitte & Touche LLP,]
independent certified public accountants, who delivered an unqualified opinion
in respect therewith, and (ii) the pro forma consolidated balance sheet of the
--- -----
Borrower as of March 27, 1999, copies of which have heretofore been furnished to
each Lender, present fairly the financial position of such entities at the dates
of said statements and the results for the periods covered thereby (or, in the
case of the pro forma balance sheet, presents a good faith estimate of the
--- -----
consolidated pro forma financial condition of the Borrower at the date thereof)
--- -----
in accordance with GAAP, except to the extent provided in the notes to said
financial statements and, in the case of the March 27, 1999 statements, subject
to normal and recurring year-end audit adjustment. All such financial
statements (other than the aforesaid pro forma balance sheets) have been
--- -----
prepared in accordance with generally accepted accounting principles and
practices consistently applied except to the extent provided in the notes to
said financial statements. Nothing has occurred since December 31, 1998 that
has had or could reasonably be expected to have a Material Adverse Effect.
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<PAGE>
(c) Except as reflected in the financial statements and the notes
thereto described in Section 6.10(b), there were as of the Initial Borrowing
Date no liabilities or obligations with respect to the Borrower or any of its
Subsidiaries of a nature (whether absolute, accrued, contingent or otherwise and
whether or not due) which, either individually or in aggregate, would be
material to the Borrower and its Subsidiaries taken as a whole, except as
incurred in the ordinary course of business consistent with past practices
subsequent to December 31, 1998.
6.11 Security Interests. On and after the Initial Borrowing Date,
------------------
each of the Security Documents creates, as security for the Obligations
purported to be secured thereby, a valid and enforceable perfected security
interest in and Lien on all of the Collateral subject thereto, superior to and
prior to the rights of all third Persons and subject to no other Liens (except
(x) that the Security Agreement Collateral may be subject to the security
interests evidenced by Permitted Liens relating thereto and (y) the Mortgaged
Properties may be subject to Permitted Encumbrances relating thereto), in favor
of the Collateral Agent for the benefit of the Lenders. No filings or
recordings are required in order to perfect the security interests created under
any Security Document except for filings or recordings required in connection
with any such Security Document (other than the Pledge Agreement) which shall
have been made upon or prior to (or are the subject of arrangements,
satisfactory to the Administrative Agent, for filing on or promptly after the
date of) the execution and delivery thereof.
6.12 Tax Returns and Payments. Each of the Borrower and each of its
------------------------
Subsidiaries has filed all federal income tax returns and all other material tax
returns, domestic and foreign, required to be filed by it and has paid all
material taxes and assessments payable by it which have become due, other than
those not yet delinquent and except for those contested in good faith. The
Borrower and each of its Subsidiaries have paid, or have provided adequate
reserves (in the good faith judgment of the management of the Borrower) for the
payment of, all federal, state and foreign income taxes applicable for all prior
fiscal years and for the current fiscal year to the date hereof.
6.13 Compliance with ERISA. Each Plan is in substantial compliance
---------------------
with ERISA and the Code; no Reportable Event has occurred with respect to a
Plan; no Plan is insolvent or in reorganization; no Plan has an Unfunded Current
Liability; no Plan has an accumulated or waived funding deficiency, has
permitted decreases in its funding standard account or has applied for an
extension of any amortization period within the meaning of Section 412 of the
Code; neither the Borrower, nor any Subsidiary nor any ERISA Affiliate has
incurred any material liability to or on account of a Plan pursuant to Section
409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or
Section 401(a)(29), 4971, 4975 or 4980 of the Code or expects to incur any
liability (including any indirect, contingent or secondary liability) under any
of the foregoing Sections with respect to any Plan; no proceedings have been
instituted to terminate or appoint a trustee to administer any Plan; no
condition exists which presents a material risk to the Borrower or any
Subsidiary or any ERISA Affiliate of incurring a liability to or on account of a
Plan pursuant to the foregoing provisions of ERISA and the Code; using actuarial
assumptions and computation methods consistent with Part 1 of subtitle E of
Title IV of ERISA, the aggregate liabilities of the Borrower and its
Subsidiaries and its ERISA Affiliates to all Plans which are multiemployer plans
(as defined in Section 4001(a)(3) of
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ERISA) in the event of a complete withdrawal therefrom, as of the close of the
most recent fiscal year of each such Plan ended prior to the date of the most
recent Credit Event, would not exceed $1,000,000; no lien imposed under the Code
or ERISA on the assets of the Borrower or any Subsidiary or any ERISA Affiliate
exists or is likely to arise on account of any Plan; and the Borrower and its
Subsidiaries do not maintain or contribute to any employee welfare benefit plan
(as defined in Section 3(1) of ERISA) which provides benefits to retired
employees (other than as required by Section 601 of ERISA) or any employee
pension benefit plan (as defined in Section 3(2) of ERISA), except to the extent
that all events described in the preceding clauses of this Section 6.13 and then
in existence would not, in the aggregate, have or be likely to have a Material
Adverse Effect. With respect to Plans that are multiemployer plans (within the
meaning of Section 4001(a)(3) of ERISA) the representations and warranties in
this Section 6.13 are made to the best knowledge of the Borrower.
6.14 Subsidiaries. (a) Annex V hereto lists each Subsidiary of the
------------
Borrower (and the direct and indirect ownership interest of the Borrower
therein), in each case existing on the Initial Borrowing Date. The Borrower
will at all times own directly the percentages specified in said Annex V of the
outstanding capital stock of all of said entities, except to the extent
otherwise permitted pursuant to Section 8.02.
(b) On and after the Initial Borrowing Date, there are no
restrictions on the Borrower or any of its Subsidiaries which prohibit or
otherwise restrict the transfer of cash or other assets from any Subsidiary of
the Borrower to the Borrower, other than prohibitions or restrictions existing
under or by reason of (i) this Agreement and the other Credit Documents, (ii)
applicable law, (iii) customary non-assignment provisions entered into in the
ordinary course of business and consistent with past practices, (iv) any
restriction or encumbrance with respect to a Subsidiary of the Borrower imposed
pursuant to an agreement which has been entered into for the sale or disposition
of all or substantially all of the capital stock or assets of such Subsidiary,
so long as such sale or disposition is permitted under this Agreement, and (v)
any documents or instruments governing the terms of any Indebtedness or other
obligations secured by Liens permitted by Section 8.03, provided that such
prohibitions or restrictions apply only to the assets subject to such Liens.
6.15 Patents, etc. The Borrower and each of its Subsidiaries have
-------------
obtained all material patents, trademarks, service marks, trade names,
copyrights, licenses and other rights, free from burdensome restrictions, that
are necessary for the operation of their businesses taken as a whole as
presently conducted and as proposed to be conducted.
6.16 Pollution and Other Regulations. (a) Each of the Borrower and
-------------------------------
its Subsidiaries is in compliance with all applicable Environmental Laws
governing its business for which failure to comply is likely to have a Material
Adverse Effect, and neither the Borrower nor any of its Subsidiaries is liable
for any material penalties, fines or forfeitures for failure to comply with any
of the foregoing in the manner set forth above. All licenses, permits,
registrations or approvals required for the business of the Borrower and each of
its Subsidiaries, as conducted as of the Initial Borrowing Date, under any
Environmental Law have been secured and the Borrower and each of its
Subsidiaries is in substantial compliance therewith, except such
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licenses, permits, registrations or approvals the failure to secure or to comply
therewith is not likely to have a Material Adverse Effect. Neither the Borrower
nor any of its Subsidiaries is in any respect in noncompliance with, breach of
or default under any applicable writ, order, judgment, injunction, or decree to
which the Borrower or such Subsidiary is a party or which would affect the
ability of the Borrower or such Subsidiary to operate any real property and no
event has occurred and is continuing which, with the passage of time or the
giving of notice or both, would constitute noncompliance, breach of or default
thereunder, except in each such case, such noncompliance, breaches or defaults
as are not likely to, in the aggregate, have a Material Adverse Effect. There
are as of the Initial Borrowing Date no Environmental Claims pending or, to the
best knowledge of the Borrower, threatened, which (a) question the validity,
term or entitlement of the Borrower or any of its Subsidiaries for any permit,
license, order or registration required for the operation of any facility which
the Borrower or any of its Subsidiaries currently operates and (b) wherein an
unfavorable decision, ruling or finding would be reasonably likely to have a
Material Adverse Effect. There are no facts, circumstances, conditions or
occurrences on any Real Property or, to the knowledge of the Borrower, on any
property adjacent to any such Real Property that could reasonably be expected
(i) to form the basis of an Environmental Claim against the Borrower, any of its
Subsidiaries or any Real Property of the Borrower or any of its Subsidiaries, or
(ii) to cause such Real Property to be subject to any restrictions on the
ownership, occupancy, use or transferability of such Real Property under any
Environmental Law, except in each such case, such Environmental Claims or
restrictions that individually, or in the aggregate, are not reasonably likely
to have a Material Adverse Effect.
(b) Hazardous Materials have not at any time been (i) generated,
used, treated or stored on, or transported to or from, any Real Property of the
Borrower or any of its Subsidiaries or (ii) released on any Real Property, in
each case where such occurrence or event individually or in the aggregate is
reasonably likely to have a Material Adverse Effect.
6.17 Properties. The Borrower and each of its Subsidiaries have good
----------
and marketable title to all properties owned by them, including all property
reflected in the consolidated balance sheet of the Borrower and its Subsidiaries
as referred to in Section 6.10(b), free and clear of all Liens, other than (i)
as referred to in the consolidated balance sheet or in the notes thereto or (ii)
otherwise permitted by Section 8.03. Annex VI contains a true and complete list
of each Real Property owned or leased by the Borrower or any of its Subsidiaries
on the Initial Borrowing Date, the type of interest therein held by the Borrower
or the respective Subsidiary and whether such Real Property is a Mortgaged
Property.
6.18 Labor Relations. No Credit Party is engaged in any unfair labor
---------------
practice that could reasonably be expected to have a Material Adverse Effect.
There is (i) no unfair labor practice complaint pending against any Credit Party
or threatened against any of them, before the National Labor Relations Board,
and no grievance or arbitration proceeding arising out of or under any
collective bargaining agreement is so pending against any Credit Party or
threatened against any of them, (ii) no strike, labor dispute, slowdown or
stoppage pending against any Credit Party or threatened against any Credit Party
and (iii) no union representation question existing with respect to the
employees of any Credit Party and no union organizing activities are
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taking place, except with respect to any matter specified in clause (i), (ii) or
(iii) above, either individually or in the aggregate, such as is not reasonably
likely to have a Material Adverse Effect.
6.19 Senior Subordinated Notes. The subordination provisions
-------------------------
contained in the Stub Senior Subordinated Notes are enforceable by the Lenders
against the Borrower and the holders of such Stub Senior Subordinated Notes, and
all Obligations of the Borrower are or will be within the definition of "Senior
Indebtedness" included in such provisions of the Senior Subordinated Note
Documents.
6.20 Existing Indebtedness. Annex VII sets forth a true and complete
---------------------
list of all Indebtedness of the Borrower and each of its Subsidiaries as of the
Initial Borrowing Date and which is to remain outstanding after giving effect to
the refinancing of all Loans under and as defined in the Existing Credit
Agreement (excluding the Loans, the Letters of Credit and the Stub Senior
Subordinated Notes, the "Existing Indebtedness"), in each case showing the
aggregate principal amount thereof and the name of the respective borrower (or
issuer) and any other entity which directly or indirectly guaranteed such debt.
SECTION 7. Affirmative Covenants. The Borrower covenants and agrees
---------------------
that on the Initial Borrowing Date and thereafter for so long as this Agreement
is in effect and until the Commitments have terminated, no Letters of Credit or
Notes are outstanding and the Loans and Unpaid Drawings, together with interest,
Fees and all other Obligations incurred hereunder, are paid in full:
7.01 Information Covenants. The Borrower will furnish to each
---------------------
Lender:
(a) Annual Financial Statements. Within 90 days after the close of
---------------------------
each fiscal year of the Borrower, the consolidated balance sheet of the Borrower
and its Subsidiaries, as at the end of such fiscal year and the related
consolidated statements of income and retained earnings and of cash flows for
such fiscal year, in each case setting forth comparative consolidated figures
for the preceding fiscal year, and examined by independent certified public
accountants of recognized national standing whose opinion shall not be qualified
as to the scope of audit and as to the status of the Borrower or any of its
Subsidiaries as a going concern, together with a certificate of such accounting
firm stating that in the course of its regular audit of the business of the
Borrower, which audit was conducted in accordance with generally accepted
auditing standards, such accounting firm has obtained no knowledge of any
Default or Event of Default which has occurred and is continuing or, if in the
opinion of such accounting firm such a Default or Event of Default has occurred
and is continuing, a statement as to the nature thereof.
(b) Quarterly Financial Statements. As soon as available and in any
------------------------------
event within 45 days after the close of each of the first three quarterly
accounting periods in each fiscal year, the consolidated balance sheet of the
Borrower and its Subsidiaries, as at the end of such quarterly period and the
related consolidated statements of income and retained earnings and of cash
flows for such quarterly period and for the elapsed portion of the fiscal year
ended with the last day of such quarterly period, and in each case setting forth
comparative consolidated figures for the related periods in the prior fiscal
year, all of which shall be certified by the chief financial
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<PAGE>
officer or controller of the Borrower, subject to changes resulting from audit
and normal year-end audit adjustments.
(c) Monthly Reports. As soon as practicable, and in any event within
---------------
30 days, after the end of each monthly accounting period of each fiscal year
(other than the last monthly accounting period in such fiscal year) the
consolidated balance sheet of the Borrower and its Subsidiaries, as at the end
of such period, and the related consolidated statements of income and retained
earnings for such period, setting forth comparative figures for the
corresponding period of the previous year, all of which shall be certified by
the chief financial officer or controller of the Borrower subject to changes
resulting from audit and normal year-end audit adjustments.
(d) Budgets; etc. Not more than 60 days after the commencement of
-------------
each fiscal year of the Borrower, a budget of the Borrower and its Subsidiaries
in reasonable detail for each of the twelve months of such fiscal year.
Together with each delivery of consolidated financial statements pursuant to
Sections 7.01(a), (b) and (c), a comparison of the current year-to-date
financial results against the budgets required to be submitted pursuant to this
clause (d) shall be presented.
(e) Officer's Certificates. At the time of the delivery of the
----------------------
financial statements provided for in Sections 7.01(a), (b) and (c), a
certificate of the chief financial officer, controller or other Authorized
Officer of the Borrower to the effect that no Default or Event of Default exists
or, if any Default or Event of Default does exist, specifying the nature and
extent thereof, which certificate, in the case of the certificate delivered
pursuant to Sections 7.01(a) and (b), shall set forth the calculations required
to establish (I) the Adjusted Leverage Ratio on the last day of such fiscal year
or period and (II) whether the Borrower and its Subsidiaries were in compliance
with the provisions of Sections 8.05, 8.07, 8.09(a) (but only to the extent the
Borrower has made payments of the type described in clause (ii) thereof in such
period or year), 8.11 and 8.12 as at the end of such fiscal period or year, as
the case may be.
(f) Notice of Default or Litigation. Promptly, and in any event
-------------------------------
within three Business Days after the Borrower obtains knowledge thereof, notice
of (x) the occurrence of any event which constitutes a Default or Event of
Default which notice shall specify the nature thereof, the period of existence
thereof and what action the Borrower proposes to take with respect thereto and
(y) the commencement of or any significant development in any litigation or
governmental proceeding pending against the Borrower or any of its Subsidiaries
which is likely to have a Material Adverse Effect or is likely to have a
material adverse effect on the ability of the Borrower or any Credit Party to
perform its obligations hereunder or under any other Credit Document.
(g) Borrowing Base Certificates. Promptly after determining same,
---------------------------
and in any event within five days following the BB Determination Date for each
calendar month, a Borrowing Base Certificate executed by the chief financial
officer or controller of the Borrower setting forth the Borrowing Base
determined as of such BB Determination Date (together with reasonable detail as
to the computation thereof).
(h) Auditors' Reports. Promptly upon receipt thereof, a copy of each
-----------------
other final
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<PAGE>
report or "management letter" submitted to the Borrower by its independent
accountants in connection with any annual, interim or special audit made by it
of the books of the Borrower.
(i) Environmental Matters. Promptly after obtaining knowledge of any
---------------------
of the following (but only to the extent that any of the following could
reasonably be expected to (x) have a Material Adverse Effect, either
individually or in the aggregate, or (y) result in a remedial cost to the
Borrower or any of its Subsidiaries in excess of $2,000,000), written notice of:
(i) any pending or threatened Environmental claim against the
Borrower or any of its Subsidiaries or any Real Property owned or operated
by the Borrower or any of its Subsidiaries;
(ii) any condition or occurrence on any Real Property owned or
operated by the Borrower or any of its Subsidiaries that (x) results in
noncompliance by the Borrower or any of its Subsidiaries with any
applicable Environmental Law or (y) could reasonably be anticipated to form
the basis of an Environmental claim against the Borrower or any of its
Subsidiaries or any such Real Property;
(iii) any condition or occurrence on any Real Property owned or
operated by the Borrower or any of its Subsidiaries that could reasonably
be anticipated to cause such Real Property to be subject to any
restrictions on the ownership, occupancy, use or transferability by the
Borrower or its Subsidiary, as the case may be, of its interest in such
Real Property under any Environmental Law; and
(iv) the taking of any removal or remedial action in response to the
actual or alleged presence of any Hazardous Material on any Real Property
owned or operated by the Borrower or any of its Subsidiaries.
All such notices shall describe in reasonable detail the nature of the claim,
investigation, condition, occurrence or removal or remedial action and the
Borrower's response or proposed response thereto. In addition, the Borrower
agrees to provide the Lenders with copies of all material communications by the
Borrower or any of its Subsidiaries with any Person, government or governmental
agency relating to any of the matters set forth in clauses (i)-(iv) above, and
such detailed reports relating to any of the matters set forth in clauses (i)-
(iv) above as may reasonably be requested by the Administrative Agent or the
Required Lenders.
(j) Other Information. Promptly upon transmission thereof, (i)
-----------------
copies of any filings and registrations with, and reports to, the Securities and
Exchange Commission or any successor thereto (the "SEC") by the Borrower or any
of its Subsidiaries, (ii) copies of any material complaints or correspondence
received from the Federal Trade Commission and/or the postal service (x)
regarding compliance with the Federal Trade Commission Act, as amended (15
U.S.C. Subsection 45) or (y) in connection with advertising materials
distributed by the Borrower, and (iii) with reasonable promptness, such other
information or documents (financial or otherwise) as the Administrative Agent on
its own behalf or on behalf of the Required Lenders may reasonably request from
time to time.
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<PAGE>
7.02 Books, Records and Inspections. The Borrower will, and will
------------------------------
cause its Subsidiaries to, permit, upon reasonable notice to the chief financial
officer, controller or any other Authorized Officer of the Borrower (x) officers
and designated representatives of the Administrative Agent or the Required
Lenders to visit and inspect any of the properties or assets of the Borrower and
any of its Subsidiaries in whomsoever's possession, and to examine the books of
account of the Borrower and any of its Subsidiaries and discuss the affairs,
finances and accounts of the Borrower and of any of its Subsidiaries with, and
be advised as to the same by, its and their officers and independent
accountants, all at such reasonable times and intervals and to such reasonable
extent as the Administrative Agent or the Required Lenders may desire and (y)
not more than once per year the Administrative Agent, or a third party
designated by the Administrative Agent, to conduct, at the Borrower's expense,
an audit of the accounts receivable and inventories of the Borrower and its
Subsidiaries at such times as the Administrative Agent shall reasonably require.
7.03 Insurance. The Borrower will, and will cause each of its
---------
Subsidiaries to, at all times maintain in full force and effect insurance in
such amounts, covering such risks and liabilities and with such deductibles or
self-insured retentions as are in accordance with normal industry practice. At
any time that insurance at the levels described in Annex VIII is not being
maintained by the Borrower and its Subsidiaries, the Borrower will notify the
Lenders in writing thereof and, if thereafter notified by the Administrative
Agent to do so, the Borrower will, and will cause its Subsidiaries to, obtain
insurance at such levels at least equal to those set forth in Annex VIII to the
extent then generally available (but in any event within the deductible or self-
insured retention limitations set forth in the preceding sentence) or otherwise
as are acceptable to the Administrative Agent. The Borrower will, and will
cause each of its Subsidiaries to, furnish on the Restatement Effective Date and
annually thereafter to the Administrative Agent a summary of the insurance
carried together with certificates of insurance and other evidence of such
insurance, if any, naming the Collateral Agent as an additional insured and/or
loss payee.
7.04 Payment of Taxes. The Borrower will pay and discharge, and will
----------------
cause each of its Subsidiaries to pay and discharge, all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits, or
upon any properties belonging to it, prior to the date on which penalties attach
thereto, and all lawful claims which, if unpaid, might become a Lien or charge
upon any properties of the Borrower or any of its Subsidiaries, provided that
neither the Borrower nor any Subsidiary shall be required to pay any such tax,
assessment, charge, levy or claim which is being contested in good faith and by
proper proceedings if it has maintained adequate reserves (in the good faith
judgment of the management of the Borrower) with respect thereto in accordance
with GAAP.
7.05 Consolidated Corporate Franchises. The Borrower will do, and
---------------------------------
will cause each Subsidiary to do, or cause to be done, all things necessary to
preserve and keep in full force and effect its existence, material rights and
authority, provided that any transaction permitted by Section 8.02 will not
constitute a breach of this Section 7.05.
7.06 Compliance with Statutes, etc. The Borrower will, and will
------------------------------
cause each
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<PAGE>
Subsidiary to, comply with all applicable statutes, regulations and orders of,
and all applicable restrictions imposed by, all governmental bodies, domestic or
foreign, in respect of the conduct of its business and the ownership of its
property other than those the non-compliance with which would not have a
Material Adverse Effect or would not have a material adverse effect on the
ability of any Credit Party to perform its obligations under any Credit Document
to which it is party.
7.07 ERISA. As soon as possible and, in any event, within 10 days
-----
after the Borrower or any of its Subsidiaries knows or has reason to know of the
occurrence of any of the following, the Borrower will deliver to each of the
Lenders a certificate of the chief financial officer of the Borrower setting
forth details as to such occurrence and such action, if any, which the Borrower,
such Subsidiary or such ERISA Affiliate is required or proposes to take,
together with any notices required or proposed to be given to or filed with or
by the Borrower, the Subsidiary, the ERISA Affiliate, the PBGC, a Plan
participant (other than notices relating to an individual participant's
benefits) or the Plan administrator with respect thereto: that a Reportable
Event has occurred; that an accumulated funding deficiency has been incurred or
an application is reasonably likely to be or has been made to the Secretary of
the Treasury for a waiver or modification of the minimum funding standard
(including any required installment payments) or an extension of any
amortization period under Section 412 of the Code with respect to a Plan; that a
Plan which has an Unfunded Current Liability has been or may be terminated,
reorganized, partitioned or declared insolvent under Title IV of ERISA; that a
Plan has an Unfunded Current Liability and there is a failure to make a required
contribution, which gives rise to a lien under ERISA or the Code; that
proceedings are reasonably likely to be or have been instituted to terminate a
Plan which has an Unfunded Current Liability; that a proceeding has been
instituted pursuant to Section 515 of ERISA to collect a delinquent contribution
to a Plan; that the Borrower, any Subsidiary or any ERISA Affiliate will or may
incur any liability (including, any contingent or secondary liability) to or on
account of the termination of or withdrawal from a Plan under Section 4062,
4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or with respect to a Plan under
Section 401(a)(29), 4971, 4975 or 4980 of the Code or Section 409, 502(l) or
502(l) of ERISA or that the Borrower or any Subsidiary may incur any material
liability pursuant to any employee welfare benefit plan (as defined in Section
3(1) of ERISA) that provides benefits to retired employees or other former
employees (other than as required by Section 601 of ERISA) or any employee
pension benefit plan (as defined in Section 3(2) of ERISA). Upon request of a
Lender, the Borrower will deliver to such Lender a complete copy of the annual
report (Form 5500) of each Plan required to be filed with the Internal Revenue
Service. In addition to any certificates or notices delivered to the Lenders
pursuant to the first sentence hereof, copies of any annual reports and any
other material notices received by the Borrower or any Subsidiary with respect
to a Plan shall be delivered to the Lenders no later than 10 days after the
later of the date such notice has been filed with the Internal Revenue Service
or the PBGC, given to Plan participants (other than notices relating to an
individual participant's benefits) or received by the Borrower or such
Subsidiary.
7.08 Good Repair. The Borrower will, and will cause each of its
-----------
Subsidiaries to, ensure that its properties and equipment used or useful in its
business in whomsoever's possession they may be, are kept in good repair,
working order and condition, normal wear and
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<PAGE>
tear excepted, and, subject to Section 8.05, that from time to time there are
made in such properties and equipment all needful and proper repairs, renewals,
replacements, extensions, additions, betterments and improvements thereto, to
the extent and in the manner useful or customary for companies in similar
businesses.
7.09 End of Fiscal Years; Fiscal Quarters. The Borrower will, for
------------------------------------
financial reporting purposes, cause (i) each of its, and each of its
Subsidiaries' fiscal years to end on December 31 of each year and (ii) each of
its, and each of its Subsidiaries' fiscal quarters to end on a Quarter End Date.
7.10 Use of Proceeds. All proceeds of the Loans shall be used as
---------------
provided in Section 6.05.
7.11 Additional Security; Further Assurances. (a) The Borrower will,
---------------------------------------
and will cause its Domestic Subsidiaries to, grant to the Collateral Agent
security interests and mortgages (each, an "Additional Mortgage") in such owned
Real Property of the Borrower and its Subsidiaries that is not owned or subject
to a Mortgage on the Initial Borrowing Date as may be requested from time to
time by the Administrative Agent. All such mortgages shall be granted pursuant
to documentation reasonably satisfactory in form and substance to the
Administrative Agent and shall constitute valid and enforceable Liens superior
to and prior to the rights of all third Persons and subject to no other Liens
except as are permitted by Section 8.03. The Additional Mortgages or instruments
related thereto shall have been duly recorded or filed in such manner and in
such places as are required by law to establish, perfect, preserve and protect
the Liens in favor of the Collateral Agent required to be granted pursuant to
the Additional Mortgages and all taxes, fees and other charges payable in
connection therewith shall have been paid in full.
(b) The Borrower will, and will cause its Domestic Subsidiaries to,
at the expense of the Borrower, make, execute, endorse, acknowledge, file and/or
deliver to the Collateral Agent from time to time such vouchers, invoices,
schedules, confirmatory assignments, conveyances, financing statements, transfer
endorsements, powers of attorney, certificates, real property surveys, reports
and other assurances or instruments and take such further steps relating to the
collateral covered by any of the Security Documents as the Collateral Agent may
reasonably require. Furthermore, the Borrower shall cause to be delivered to
the Collateral Agent such opinions of counsel, title insurance and other related
documents as may be requested by the Administrative Agent to assure themselves
that this Section 7.11 has been complied with.
(c) The Borrower agrees that each action required above by this
Section 7.11 shall be completed as soon as possible, but in no event later than
60 days after such action is requested to be taken by the Administrative Agent
or the Required Lenders, provided that in no event shall the Borrower be
required to take any action, other than using its reasonable commercial efforts
without any material expenditure, to obtain consents from third parties with
respect to its compliance with this Section 7.11.
7.12 Compliance with Environmental Laws. (i) The Borrower will
----------------------------------
comply, and will cause each of its Subsidiaries to comply, with all
Environmental Laws applicable to the
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<PAGE>
ownership, lease or use of all Real Property now or hereafter owned, leased or
operated by the Borrower or any Subsidiary, will promptly pay or cause to be
paid all costs and expenses incurred in connection with such compliance, and
will keep or cause to be kept all such Real Property free and clear of any Liens
imposed pursuant to such Environmental Laws and (ii) neither the Borrower nor
any of its Subsidiaries will generate, use, treat, store, release or dispose of,
or permit the generation, use, treatment, storage, release or disposal of
Hazardous Materials on any Real Property now or hereafter owned, leased or
operated by the Company or any of its Subsidiaries, or transport or permit the
transportation of Hazardous Materials to or from any such Real Property, except
to the extent that the failure to comply with the requirements specified in
clause (i) or (ii) above, either individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect.
7.13 Interest Rate Agreements. The Borrower will, no later than the
------------------------
date occurring 90 days after the Initial Borrowing Date, enter into Interest
Rate Agreements which cover for the period from the date thereof to at least
three years from the Initial Borrowing Date, 50% or more of the aggregate
outstanding principal amount of Term Loans on terms reasonably satisfactory to
the Administrative Agent and the Borrower.
SECTION 8. Negative Covenants. The Borrower hereby covenants and
------------------
agrees that as of the Initial Borrowing Date and thereafter for so long as this
Agreement is in effect and until the Commitments have terminated, no Letters of
Credit or Notes are outstanding and the Loans and Unpaid Drawings, together with
interest, Fees and all other Obligations incurred hereunder, are paid in full:
8.01 Changes in Business. (a) The Borrower will not, and will not
-------------------
permit any of its Subsidiaries to, materially alter the character of the
business of the Borrower and its Subsidiaries from that conducted at the Initial
Borrowing Date, provided that this Section 8.01 shall not restrict the making of
any investment expressly permitted by Section 8.06.
(b) Borrower shall cause HCE to engage in no significant business and
at no time to have assets or liabilities with an aggregate value in excess of
$50,000.
8.02 Consolidation, Merger, Sale or Purchase of Assets, etc. The
-------------------------------------------------------
Borrower will not, and will not permit any Subsidiary to, wind up, liquidate or
dissolve its affairs, or enter into any transaction of merger or consolidation,
sell or otherwise dispose of all or any part of its property or assets (other
than inventory or obsolete equipment or excess equipment no longer needed in the
conduct of the business in the ordinary course of business) or purchase, lease
or otherwise acquire all or any part of the property or assets of any Person
(other than purchases or other acquisitions of inventory, leases, materials and
equipment in the ordinary course of business) or agree to do any of the
foregoing at any future time, except that the following shall be permitted:
(a) any Subsidiary of the Borrower may be merged or consolidated with
or into, or be liquidated into, the Borrower or a Subsidiary Guarantor (so
long as the Borrower or such Subsidiary Guarantor is the surviving
corporation), or all or any part of its business, properties and assets may
be conveyed, leased, sold or transferred to the Borrower or any
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<PAGE>
Subsidiary Guarantor (or any other Subsidiary), provided that neither the
Borrower nor any Subsidiary Guarantor may be a party to any merger,
consolidation or liquidation otherwise permitted by this clause (a)
involving a Subsidiary that is not a Wholly-Owned Subsidiary;
(b) capital expenditures to the extent within the limitations set
forth in Section 8.05 hereof;
(c) the investments, acquisitions and transfers or dispositions of
properties permitted pursuant to Section 8.06;
(d) each of the Borrower and the Subsidiary Guarantors may lease (as
lessee) real or personal property in the ordinary course of business (so
long as such lease does not create a Capitalized Lease Obligation not
otherwise permitted by Section 8.04(d));
(e) licenses or sublicenses by the Borrower and its Subsidiary
Guarantors of software, customer lists, trademarks and other intellectual
property in the ordinary course of business, provided, that such licenses
or sublicenses shall not interfere with the business of the Borrower or any
Subsidiary Guarantor;
(f) other sales or dispositions of assets in the ordinary course of
business, provided that (w) the aggregate Net Cash Proceeds received from
--------
all such sales and dispositions shall not exceed $1,500,000 in any fiscal
year of the Borrower, (x) each such sale shall be in an amount at least
equal to the fair market value thereof (as determined by the Board of
Directors of the Borrower in the case of sales in excess of $500,000) and
for proceeds consisting solely of not less than (A) 80% cash and (B) seller
indebtedness evidenced by promissory notes which notes shall be pledged and
delivered to the Collateral Agent pursuant to the Borrower Pledge
Agreement, and (y) the Net Cash Proceeds of any such sale are applied to
repay the Loans to the extent required by Section 4.02(A)(c), and provided
--------
further, that the sale or disposition of the capital stock of (i) the
-------
Borrower or any Subsidiary Guarantor shall be prohibited and (ii) any
Subsidiary of the Borrower (other than a Subsidiary Guarantor) shall be
prohibited unless it is for all of the outstanding capital stock of such
Subsidiary owned by the Borrower;
(g) other sales or dispositions of assets in each case to the extent
the Required Lenders have consented in writing thereto and subject to such
conditions as may be set forth in such consent;
(h) any Subsidiary may be liquidated into the Borrower or a
Subsidiary Guarantor; and
(i) acquisitions and dispositions of Permitted Acquisitions,
Permitted Investments and Permitted Joint Ventures in accordance with
Section 8.06(g).
8.03 Liens. The Borrower will not, and will not permit any of its
-----
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with
respect to any property or assets of
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<PAGE>
any kind (real or personal, tangible or intangible) of the Borrower or any such
Subsidiary whether now owned or hereafter acquired, or sell any such property or
assets subject to an understanding or agreement, contingent or otherwise, to
repurchase such property or assets (including sales of accounts receivable or
notes with recourse to the Borrower or any of its Subsidiaries) or assign any
right to receive income, or file or permit the filing of any financing statement
under the UCC or any other similar notice of Lien under any similar recording or
notice statute, except:
(a) Liens for taxes not yet due or Liens for taxes being contested in
good faith and by appropriate proceedings for which adequate reserves (in
the good faith judgment of the management of the Borrower) have been
established;
(b) Liens in respect of property or assets of the Borrower or any of
its Subsidiaries imposed by law which were incurred in the ordinary course
of business, such as carriers', warehousemen's and mechanics' Liens,
statutory landlord's Liens, and other similar Liens arising in the ordinary
course of business, and (x) which do not in the aggregate materially
detract from the value of such property or assets or materially impair the
use thereof in the operation of the business of the Borrower or any
Subsidiary or (y) which are being contested in good faith by appropriate
proceedings, which proceedings have the effect of preventing the forfeiture
or sale of the property or asset subject to such Lien;
(c) Liens created by or pursuant to this Agreement or the other
Credit Documents;
(d) Liens on assets of the Borrower and each Subsidiary existing on
the Initial Borrowing Date and listed on Annex IX hereto, without giving
effect to any subsequent extensions or renewals thereof;
(e) Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default under Section 9.09
provided, that no cash or property is deposited or delivered to secure any
respective judgment or award (or any appeal bond in respect thereof, except
as permitted by the following clause (f));
(f) Liens (other than any Lien imposed by ERISA) incurred or deposits
made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security, or
to secure the performance of tenders, statutory obligations, surety and
appeal bonds, bids, leases, government contracts, performance and return-
of-money bonds and other similar obligations incurred in the ordinary
course of business (exclusive of obligations in respect of the payment for
borrowed money), provided that the aggregate amount of deposits at any time
pursuant to this clause (f) shall not exceed $5,000,000;
(g) leases or subleases granted to others not interfering in any
material respect with the business of the Borrower or any of its
Subsidiaries;
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(h) easements, rights-of-way, restrictions, minor defects or
irregularities in title and other similar charges or encumbrances not
interfering in any material respect with the ordinary conduct of the
business of the Borrower or any of its Subsidiaries;
(i) Liens arising from UCC financing statements regarding leases
permitted by this Agreement;
(j) purchase money Liens securing payables arising from the purchase
by the Borrower or any Subsidiary Guarantor of any equipment or goods in
the normal course of business, provided that such payables shall not
constitute Indebtedness;
(k) any interest or title of a lessor under any lease permitted by
this Agreement;
(l) Liens arising pursuant to purchase money mortgages or security
interests securing Indebtedness representing the purchase price of assets
acquired by the Borrower or any Subsidiary Guarantor, provided that any
such Liens attach only to the assets so acquired and that all Indebtedness
secured by Liens created pursuant to this clause (l) shall not exceed
[$7,000,000] at any time outstanding;
(m) Liens created pursuant to Capital Leases permitted pursuant to
Section 8.04(d); and
(n) Liens securing Indebtedness not in excess of $2,500,000 at any
time outstanding.
8.04 Indebtedness. The Borrower will not, and will not permit any of
------------
its Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement and the other
Credit Documents;
(b) Indebtedness owing by (i) any Subsidiary Guarantor to another
Subsidiary Guarantor or the Borrower, (ii) any other Subsidiary to another
Subsidiary that is not a Subsidiary Guarantor and (iii) the Borrower to any
Subsidiary Guarantor;
(c) Indebtedness of the Borrower evidenced by the Stub Senior
Subordinated Notes;
(d) Capitalized Lease Obligations of the Borrower and each Subsidiary
Guarantor, provided that the aggregate Capitalized Lease Obligations under
all Capital Leases entered into after the Initial Borrowing Date shall not
exceed [$10,500,000];
(e) Existing Indebtedness, without giving effect to any subsequent
extension, renewal or refinancing thereof;
(f) Indebtedness under Interest Rate Agreements relating to the Loans
on terms and conditions satisfactory to the Administrative Agent to the
extent determined, in good
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faith by the Borrower, to be non-speculative in nature;
(g) Indebtedness of the Borrower represented by the obligations of
the Borrower to make payments with respect to the cancellation or
repurchase of certain stock of officers, employees and directors (or their
estates) of the Borrower and its Subsidiaries, to the extent permitted by
Section 8.09;
(h) Indebtedness incurred pursuant to purchase money mortgages
permitted by Section 8.03(l); and
(i) additional Indebtedness of the Borrower and the Subsidiary
Guarantors not to exceed an aggregate outstanding principal amount of
$5,000,000 at any time.
8.05 Capital Expenditures. (a) The Borrower will not, and will not
--------------------
permit any of its Subsidiaries to, incur Consolidated Capital Expenditures,
provided that the Borrower and the Subsidiary Guarantors may make Consolidated
Capital Expenditures of up to [$3,000,000] in any fiscal year.
(b) In the event that the maximum amount which is permitted to be
expended in respect of Consolidated Capital Expenditures during any fiscal year
pursuant to Section 8.05(a) (without giving effect to this clause (b)) is not
fully expended during such fiscal year, the maximum amount which may be expended
during the immediately succeeding fiscal year pursuant to Section 8.05(a) shall
be increased by such unutilized amount, provided that such increase shall not
exceed $1,000,000 in any fiscal year.
(c) In addition to the foregoing, the Borrower may make Consolidated
Capital Expenditures in amounts in excess of those permitted under Sections
8.05(a) and (b), provided that the amount of such additional Consolidated
Capital Expenditures shall not exceed the Available Excess Cash Flow Amount at
the time of such additional Consolidated Capital Expenditure (determined before
giving effect to the making of such additional Consolidated Capital
Expenditure).
8.06 Advances, Investments and Loans. The Borrower will not, and
-------------------------------
will not permit any of its Subsidiaries to, lend money or credit or make
advances to any Person, or purchase or acquire any stock, obligations or
securities of, or any other interest in, or make any capital contribution to any
Person, except:
(a) the Borrower or any Subsidiary may invest in cash and Cash
Equivalents;
(b) the Borrower and any Subsidiary may acquire and hold receivables
owing to them, if created or acquired in the ordinary course of business
and payable or dischargeable in accordance with customary trade terms;
(c) the intercompany Indebtedness described in Section 8.04(b) shall
be permitted;
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<PAGE>
(d) loans and advances to employees in the ordinary course of
business in an aggregate principal amount not to exceed $500,000 at any
time outstanding shall be permitted;
(e) the Borrower and each Subsidiary Guarantor may acquire and own
investments (including debt obligations) received in connection with the
bankruptcy or reorganization of suppliers and customers and in settlement
of delinquent obligations of, and other disputes with, customers and
suppliers arising in the ordinary course of business;
(f) Interest Rate Agreements permitted by Section 8.04(f) shall be
permitted;
(g) the Borrower or any Subsidiary Guarantor may make Permitted
Acquisitions, Permitted Investments (in accordance with the requirements
contained in the definition thereof) and/or make investments in Permitted
Joint Ventures not to exceed [$1,000,000] (plus amounts returned to the
Borrower as a result of sales of such investment or pursuant to a dividend
payment thereunder), in the aggregate for all the foregoing plus the
----
Available Excess Cash Flow Amount at the time of the making thereof (before
giving effect thereto);
(h) the Borrower may make contributions to an employee stock
ownership plan, provided such contributions are in Common Stock; and
(i) the Borrower may hold the promissory notes acquired in accordance
with Section 8.02(f).
8.07 Leases. The Borrower will not permit the aggregate payments
------
(including, without limitation, any property taxes paid by the Borrower and its
Subsidiaries as additional rent or lease payments) by the Borrower and its
Subsidiaries on a consolidated basis under agreements in effect as of the
Restatement Effective Date and/or entered into after the Restatement Effective
Date (including any such agreement that is an extension, replacement,
substitution, or renewal of any agreement entered into prior to such date) to
rent or lease any real or personal property (exclusive of Capitalized Lease
Obligations) to exceed [$3,000,000] in any fiscal year of the Borrower.
8.08 Prepayments of Indebtedness, etc. The Borrower will not, and
---------------------------------
will not permit any of its Subsidiaries to:
(a) make (or give any notice in respect thereof) any voluntary or
optional payment or prepayment or redemption or acquisition for value of
(including, without limitation, by way of depositing with the trustee with
respect thereto money or securities before due for the purpose of paying
when due) or exchange of the Stub Senior Subordinated Notes or any Existing
Indebtedness;
(b) amend or modify, or permit the amendment or modification of, any
provisions of any Senior Subordinated Note Documents; and/or
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<PAGE>
(c) amend, modify or change in any manner adverse to the interests of
the Lenders the certificate of incorporation (including, without
limitation, by the filing of any certificate of designation) or by-laws of
the Borrower or any agreement entered into by the Borrower with respect to
its capital stock or enter into any new agreement in any manner adverse to
the interests of the Lenders with respect to the capital stock of the
Borrower.
8.09 Dividends, etc. (a) The Borrower will not, and will not permit
---------------
any of its Subsidiaries to, declare or pay any dividends (other than dividends
payable solely in capital stock of such Person) or return any capital to, its
stockholders or authorize or make any other distribution, payment or delivery of
property or cash to its stockholders as such, or redeem, retire, purchase or
otherwise acquire, directly or indirectly, for a consideration, any shares of
any class of its capital stock now or hereafter outstanding (or any warrants for
or options or stock appreciation rights in respect of any of such shares), or
set aside any funds for any of the foregoing purposes, or permit any of its
Subsidiaries to purchase or otherwise acquire for consideration any shares of
any class of the capital stock of the Borrower or any other Subsidiary, as the
case may be, now or hereafter outstanding (or any options or warrants or stock
appreciation rights issued by such Person with respect to its capital stock)
(all of the foregoing "Dividends"), except that:
(i) any Subsidiary of the Borrower may pay dividends to the Borrower
or to a Subsidiary Guarantor; and
(ii) the Borrower may redeem or repurchase Common Stock (or options to
purchase such Common Stock) from (1) officers, employees and directors (or
their estates) upon the death, permanent disability, retirement or
termination of employment of any such Person or otherwise in accordance
with (x) the Stockholders Agreement and (y) any stock option plan or any
employee stock ownership plan, or (2) other stockholders of the Borrower,
so long as the purpose of such purchase is to acquire Common Stock for
reissuance to new officers, employees and directors (or their estates) of
the Borrower to the extent so reissued within 12 months of any such
purchase, provided that in all such cases (A) no Default or Event of
--------
Default is then in existence or would arise therefrom and (B) the aggregate
amount of all cash paid in respect of all such shares so redeemed or
repurchased in any calendar year does not exceed $2,500,000 plus (I)
----
proceeds of key-man life insurance used for the purposes set forth in
subclause (2) and (II) the Available Excess Cash Flow Amount at the time of
any such redemption and repurchase (before giving effect thereto) and,
provided further, that in the event that the Borrower subsequently resells
----------------
to any member of its, or any Subsidiary Guarantors', management any shares
redeemed or repurchased pursuant to this clause (ii), the amount of
repurchases the Borrower may make from Management Investors pursuant to
this clause (ii) shall be increased by an amount equal to any cash received
by the Borrower upon the resale of such shares.
(b) The Borrower will not, and will not permit any of its
Subsidiaries to, create or otherwise cause or suffer to exist any encumbrance or
restriction which prohibits or otherwise
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restricts (A) the ability of any Subsidiary to (a) pay dividends or make other
distributions or pay any Indebtedness owed to the Borrower or any Subsidiary,
(b) make loans or advances to the Borrower or any Subsidiary, or (c) transfer
any of its properties or assets to the Borrower or any Subsidiary or (B) the
ability of the Borrower or any other Subsidiary of the Borrower to create,
incur, assume or suffer to exist any Lien upon its property or assets to secure
the Obligations, other than prohibitions or restrictions existing under or by
reason of:
(i) this Agreement and the other Credit Documents;
(ii) applicable law;
(iii) customary non-assignment provisions entered into in the
ordinary course of business and consistent with past practices;
(iv) any restriction or encumbrance with respect to a Subsidiary of
the Borrower imposed pursuant to an agreement which has been entered into
for the sale or disposition of all or substantially all of the capital
stock or assets of such Subsidiary, so long as such sale or disposition is
permitted under this Agreement; and
(v) Liens permitted under Section 8.03 and any documents or
instruments governing the terms of any Indebtedness or other obligations
secured by any such Liens, provided that such prohibitions or restrictions
apply only to the assets subject to such Liens.
8.10 Transactions with Affiliates. The Borrower will not, and will
----------------------------
not permit any Subsidiary to, enter into any transaction or series of
transactions after the Restatement Effective Date whether or not in the ordinary
course of business, with any Affiliate other than on terms and conditions
substantially as favorable to the Borrower or such Subsidiary as would be
obtainable by the Borrower or such Subsidiary at the time in a comparable arm's-
length transaction with a Person other than an Affiliate, provided that the
foregoing restrictions shall not apply to (i) transactions with its Affiliates
set forth in [Annex X] hereto, (ii) employment arrangements entered into in the
ordinary course of business with officers of the Borrower and its Subsidiaries,
and (iii) customary fees paid to members of the Board of Directors of the
Borrower and of its Subsidiaries.
8.11 Fixed Charge Coverage Ratio. The Borrower will not permit the
---------------------------
ratio of (i) Consolidated EBITDA to (ii) Consolidated Fixed Charges for any Test
Period ending at the end of any fiscal quarter set forth below to be less than
the ratio set forth opposite such fiscal quarter:
Fiscal Quarter Ratio
-------------- -----
________________________ _______
________________________ _______
Each fiscal quarter ended thereafter _______
8.12 Senior Leverage Ratio. The Borrower will not permit the Senior
---------------------
Leverage
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Ratio as of the end of any fiscal quarter set forth below to be more than the
ratio set forth opposite such fiscal quarter:
Fiscal Quarter Ratio
-------------- -----
________________________ ________
________________________ ________
Each fiscal quarter ended thereafter ________
8.13 Issuance of Stock. The Borrower will not permit any of its
-----------------
Subsidiaries directly or indirectly to issue, sell, assign, pledge or otherwise
encumber or dispose of any shares of its capital stock or other securities (or
warrants, rights or options to acquire shares or other equity securities) of
such Subsidiary, except, to the extent permitted by Section 8.06, to the
Borrower or to qualify directors if required by applicable law.
SECTION 9. Events of Default. Upon the occurrence of any of the
-----------------
following specified events (each, an "Event of Default"):
9.01 Payments. The Borrower shall (i) default in the payment when
--------
due of any principal of the Loans or (ii) default, and such default shall
continue for five or more days, in the payment when due of any Unpaid Drawing,
any interest on the Loans or any Fees or any other amounts owing hereunder or
under any other Credit Document; or
9.02 Representations, etc. Any representation, warranty or statement
---------------------
made by any Credit Party herein or in any other Credit Document or in any
statement or certificate delivered or required to be delivered pursuant hereto
or thereto shall prove to be untrue in any material respect on the date as of
which made or deemed made; or
9.03 Covenants. Any Credit Party shall (a) default in the due
---------
performance or observance by it of any term, covenant or agreement contained in
Section 7.11 or 8, or (b) default in the due performance or observance by it of
any term, covenant or agreement (other than those referred to in Section 9.01,
9.02 or clause (a) of this Section 9.03) contained in this Agreement and such
default shall continue unremedied for a period of at least 30 days after notice
to the defaulting party by the Administrative Agent or the Required Lenders; or
9.04 Default Under Other Agreements. (a) The Borrower or any of its
------------------------------
Subsidiaries shall (i) default in any payment with respect to any Indebtedness
(other than the Obligations) beyond the period of grace, if any, applicable
thereto or (ii) default in the observance or performance of any agreement or
condition relating to any such Indebtedness or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such Indebtedness
(or a trustee or Administrative
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Agent on behalf of such holder or holders) to cause any such Indebtedness to
become due prior to its stated maturity; or (b) any such Indebtedness of the
Borrower or any of its Subsidiaries shall be declared to be due and payable, or
required to be prepaid other than by a regularly scheduled required prepayment,
prior to the stated maturity thereof, provided that it shall not constitute an
--------
Event of Default pursuant to this Section 9.04 unless the principal amount of
any one issue of such Indebtedness exceeds [$3,500,000] or the aggregate amount
of all Indebtedness referred to in clauses (a) and (b) above exceeds
[$4,500,000] at any one time; or
9.05 Bankruptcy, etc. The Borrower or any of its Material
----------------
Subsidiaries shall commence a voluntary case concerning itself under Title 11 of
the United States Code entitled "Bankruptcy", as now or hereafter in effect, or
any successor thereto (the "Bankruptcy Code"); or an involuntary case is
commenced against the Borrower or any of its Material Subsidiaries and the
petition is not controverted within 10 days, or is not dismissed within 60 days,
after commencement of the case; or a custodian (as defined in the Bankruptcy
Code) is appointed for, or takes charge of, all or substantially all of the
property of the Borrower or any of its Material Subsidiaries; or the Borrower or
any of its Material Subsidiaries commences any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction whether now or
hereafter in effect relating to or any of its Material Subsidiaries; or there is
commenced against the Borrower or any of its Material Subsidiaries any such
proceeding which remains undismissed for a period of 60 days; or the Borrower or
any of its Material Subsidiaries is adjudicated insolvent or bankrupt; or any
order of relief or other order approving any such case or proceeding is entered;
the Borrower or any of its Material Subsidiaries suffers any appointment of any
custodian or the like for it or any substantial part of its property to continue
undischarged or unstayed for a period of 60 days; or the Borrower or any of its
Material Subsidiaries makes a general assignment for the benefit of creditors;
or any corporate action is taken by the Borrower or any of its Material
Subsidiaries for the purpose of effecting any of the foregoing; or
9.06 ERISA. (a) A single-employer plan (as defined in Section 4001
-----
of ERISA) established by the Borrower, any of its Subsidiaries or any ERISA
Affiliate shall fail to maintain the minimum funding standard required by
Section 412 of the Code for any plan year or a waiver of such standard or
extension of any amortization period is sought or granted under Section 412 of
the Code or shall provide security to induce the issuance of such waiver or
extension, (b) any Plan is or shall have been or is likely to be terminated or
the subject of termination proceedings under ERISA or an event has occurred
entitling the PBGC to terminate a Plan under Section 4042(a) of ERISA, (c) any
Plan shall have an Unfunded Current Liability or (d) the Borrower or a
Subsidiary or any ERISA Affiliate has incurred or is likely to incur a material
liability to or on account of a termination of or a withdrawal from a Plan under
Section 515, 4062, 4063, 4064, 4201 or 4204 of ERISA; and there shall result
from any such event or events described in the preceding clauses of this Section
9.06 the imposition of a Lien upon the assets of the Borrower or any Subsidiary,
the granting of a security interest, or a liability or a material risk of
incurring a liability to the PBGC or a Plan or a trustee appointed under ERISA
or a penalty under Section 4971 of the Code, in each case which would have, in
the opinion of the Required Lenders a Material Adverse Effect; or
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9.07 Security Documents. Any Security Document shall cease to be in
------------------
full force and effect, or shall cease to give the Collateral Agent any Lien
encumbering assets with an aggregate fair market value in excess of $1,000,000
(and, if encumbering assets with a fair market value of less than $5,000,000,
for a period greater than thirty or more days), or any material rights, powers
and privileges purported to be created thereby in favor of the Collateral Agent
or any Credit Party shall default in any material respect in the due performance
or observance of any term, covenant or agreement on its part to be performed or
observed pursuant to any such Security Document; or
9.08 Subsidiary Guaranty. The Subsidiary Guaranty or any provision
-------------------
thereof shall cease to be in full force or effect, or any Subsidiary Guarantor
or any Person acting by or on behalf of any such Subsidiary Guarantor shall deny
or disaffirm such guarantor's obligations under such Subsidiary Guaranty or any
such Subsidiary Guarantor shall default in the due performance or observance of
any material term, covenant or agreement on its part to be performed or observed
by it pursuant to the Subsidiary Guaranty; or
9.09 Judgments. One or more judgments or decrees shall be entered
---------
against the Borrower or any of its Subsidiaries involving a liability of
[$3,500,000] or more in the case of any one such judgment or decree and
[$4,500,000] or more in the aggregate for all such judgments and decrees for the
Borrower and its Subsidiaries (not paid or to the extent not covered by
insurance) and any such judgments or decrees shall not have been vacated,
discharged or stayed or bonded pending appeal within 60 days from the entry
thereof;
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Administrative Agent shall, upon the written
request of the Required Lenders, by written notice to the Borrower, take any or
all of the following actions, without prejudice to the rights of the
Administrative Agent or any Lender to enforce its claims against the Borrower,
except as otherwise specifically provided for in this Agreement (provided that,
if an Event of Default specified in Section 9.05 shall occur with respect to the
Borrower, the result which would occur upon the giving of written notice by the
Administrative Agent as specified in clauses (i) and (ii) below shall occur
automatically without the giving of any such notice): (i) declare the Total
Commitment terminated, whereupon the Commitment of each Lender shall forthwith
terminate immediately and any Commitment Commission shall forthwith become due
and payable without any other notice of any kind; (ii) declare the principal of
and any accrued interest in respect of all Loans and all obligations owing
hereunder (including Unpaid Drawings) and thereunder to be, whereupon the same
shall become, forthwith due and payable without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Borrower; (iii)
enforce, as Collateral Agent (or direct the Collateral Agent to enforce), any or
all of the Liens and security interests created pursuant to the Security
Documents; (iv) terminate any Letter of Credit which may be terminated in
accordance with its terms; and (v) direct the Borrower to pay (and the Borrower
hereby agrees upon receipt of such notice, or upon the occurrence of any Event
of Default specified in Section 9.05 in respect of the Borrower, it will pay) to
the Collateral Agent at the Payment Office such additional amounts of cash, to
be held as security for the Borrower's reimbursement obligations in respect of
Letters of Credit then outstanding equal to the aggregate Stated Amount of all
Letters of Credit then outstanding.
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SECTION 10. Definitions. As used herein, the following terms shall
-----------
have the meanings herein specified unless the context otherwise requires.
Defined terms in this Agreement shall include in the singular number the plural
and in the plural the singular:
"Additional Mortgages" shall have the meaning provided in Section
7.11.
"Adjusted Cash Flow" for any fiscal year shall mean Consolidated Net
Income for such fiscal year (after provision for taxes) plus the amount of all
----
net non-cash charges (including, without limitation, depreciation, deferred tax
expense, non-cash interest expense, amortization of deferred customer
acquisition costs, write-downs of inventory and other non-cash charges) that
were deducted in arriving at Consolidated Net Income for such fiscal year minus
-----
the total amount of deferred customer acquisition costs capitalized during such
period, minus the amount of all non-cash gains and gains from sales of assets
-----
(other than sales of inventory and equipment in the normal course of business)
that were added in arriving at Consolidated Net Income for such fiscal year.
"Adjusted RC Percentage" shall mean (x) at a time when no Lender
Default exists, for each RC Lender such RC Lender's Revolving Percentage and (y)
at a time when a Lender Default exists (i) for each RC Lender that is a
Defaulting Lender, zero and (ii) for each RC Lender that is a Non-Defaulting
Lender, the percentage determined by dividing such RC Lender's Revolving
Commitment at such time by the Adjusted Total Revolving Commitment at such time,
it being understood that all references herein to Revolving Commitments and the
Adjusted Total Revolving Commitment at a time when the Total Revolving
Commitment or Adjusted Total Revolving Commitment, as the case may be, has been
terminated shall be references to the Revolving Loan Commitments or Adjusted
Total Revolving Commitment, as the case may be, in effect immediately prior to
such termination, provided that (A) no RC Lender's Adjusted RC Percentage shall
change upon the occurrence of a Lender Default from that in effect immediately
prior to such Lender Default if, after giving effect to such Lender Default and
any repayment of Revolving Loans and Swingline Loans at such time pursuant to
Section 4.02(A)(a) or otherwise, the sum of (i) the aggregate outstanding
principal amount of Revolving Loans of all Non-Defaulting Lenders plus (ii) the
aggregate outstanding principal amount of Swingline Loans plus (iii) the Letter
of Credit Outstandings, exceeds the Adjusted Total Revolving Loan Commitment;
(B) the changes to the Adjusted RC Percentage that would have become effective
upon the occurrence of a Lender Default but that did not become effective as a
result of the preceding clause (A) shall become effective on the first date
after the occurrence of the relevant Lender Default on which the sum of (i) the
aggregate outstanding principal amount of the Revolving Loans of all Non-
Defaulting Lenders plus (ii) the aggregate outstanding principal amount of the
Swingline Loans plus (iii) the Letter of Credit Outstandings is equal to or less
than the Adjusted Total Revolving Commitment; and (C) if (i) a Non-Defaulting
Lender's Adjusted RC Percentage is changed pursuant to the preceding clause (B)
and (ii) any repayment of such Lender's Revolving Loans, or of Unpaid Drawings
with respect to Letters of Credit or of Swingline Loans, that were made during
the period commencing after the date of the relevant Lender Default and ending
on the date of such change to its Adjusted RC Percentage must be returned to any
Borrower as a preferential or similar payment in any bankruptcy or similar
proceeding of such Borrower, then the change to such Non-Defaulting Lender's
Adjusted RC
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Percentage effected pursuant to said clause (B) shall be reduced to that
positive change, if any, as would have been made to its Adjusted RC Percentage
if (x) such repayments had not been made and (y) the maximum change to its
Adjusted RC Percentage would have resulted in the sum of the outstanding
principal of Revolving Loans made by such Lender plus such Lender's new Adjusted
RC Percentage of the outstanding principal amount of Swingline Loans and of
Letter of Credit Outstandings equalling such Lender's Revolving Commitment at
such time.
"Adjusted Revolving Commitment" for each RC Lender that is a Non-
Defaulting Lender shall mean at any time the product of such RC Lender's
Adjusted RC Percentage and the Adjusted Total Revolving Commitment.
"Adjusted Total Revolving Commitment" shall mean at any time the Total
Revolving Commitment less the aggregate Revolving Commitments of all Defaulting
Lenders.
"Administrative Agent" shall have the meaning provided in the first
paragraph of this Agreement and shall include any successor to the
Administrative Agent appointed pursuant to Section 11.09.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling (including but not limited to all directors
and officers of such Person), controlled by, or under direct or indirect common
control with such Person. A Person shall be deemed to control a corporation if
such Person possesses, directly or indirectly, the power (i) to vote 10% or more
of the securities having ordinary voting power for the election of directors of
such corporation or (ii) to direct or cause the direction of the management and
policies of such corporation, whether through the ownership of voting
securities, by contract or otherwise.
"Agents" shall mean the Administrative Agent and the Documentation
Agent.
"Agreement" shall mean this Credit Agreement, as the same may be from
time to time further modified, amended and/or supplemented.
"Anticipated Reinvestment Amount" shall mean, with respect to any
Reinvestment Election, the amount specified in the Reinvestment Notice delivered
by the Borrower in connection therewith as the amount of the Net Cash Proceeds
from the related Asset Sale that the Borrower intends to use to purchase,
construct or otherwise acquire Reinvestment Assets.
"Applicable Base Rate Margin" shall mean at any time (i) the
Applicable Eurodollar Margin at such time less (ii) 1.00%.
"Applicable CC Fee" shall mean .50% except that the Applicable CC Fee
shall equal .375% at any time when the Applicable Eurodollar Margin equals
1.50%.
"Applicable ECF Percentage" shall mean (i) .75% at any time the
Applicable Eurodollar Margin is ____%, (ii) .50% at any time the Applicable
Eurodollar Margin is ____ [etc].
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"Applicable Eurodollar Margin" shall mean, except as provided below,
the percentage specified in the applicable of clauses (i), (ii), (iii), (iv) and
(v) below while the ratio set forth in such clause has been satisfied as at the
Relevant Determination Date.
(i) 2.50% in the event that at the Relevant Determination Date the
Leverage Ratio is equal to or greater than 3.25 to 1;
(ii) 2.25% in the event that at the Relevant Determination Date the
Leverage Ratio is equal to or greater than 2.75 to 1 but less than 3.25 to
1;
(iii) 2.00% in the event that at the Relevant Determination Date the
Leverage Ratio is equal to or greater than 2.25 to 1 but less than 2.75 to
1;
(iv) 1.75% in the event that at the Relevant Determination Date, the
Leverage Ratio is equal to or greater than 1.75 to 1 but less than 2.25 to
1; or
(v) 1.50% in the event that at the Relevant Determination Date the
Leverage Ratio is less than 1.75 to 1;
provided that the Applicable Eurodollar Margin shall not be less than (x) 2.25%
for any period in the event that the Total Bank Outstandings at the Relevant
Determination Date were $120 million or more, (y) 2.00% for any period in the
event that the Total Bank Outstandings at the Relevant Determination Date were
[$110] million or more and (z) 1.75% for any period in the event that the Total
Bank Outstandings at the Relevant Determination Date were [$100] million or
more. The Leverage Ratio shall be determined for the last day of a fiscal
quarter or year by delivery of an officer's certificate of the Borrower to the
Lenders pursuant to Section 7.01(e), which certificate shall set forth the
calculation of the Leverage Ratio. The Applicable Eurodollar Margin so
determined shall apply, except as set forth below, from five Business Days after
the date on which such officer's certificate is delivered to the Administrative
Agent to the earlier of (x) five Business Days after the date on which the next
certificate is delivered to the Administrative Agent pursuant to Section 7.01(e)
and (y) the 45th day (90th day in the case of year-end) following the end of the
fiscal quarter in which such first certificate was delivered. Notwithstanding
anything to the contrary contained above, the Applicable Eurodollar Margin shall
be (A) 2.50% (x) if no officer's certificate has been delivered to the Lenders
pursuant to Section 7.01(e) which sets forth the Leverage Ratio for the Relevant
Determination Date or the financial statements upon which any such calculations
are based have not been delivered, until such a certificate and/or financial
statements are delivered and (y) at all times while an Event of Default exists
and (B) 2.25% for the period prior to receipt of the officer's certificate of
the Borrower delivered pursuant to Section 7.01(e) with respect to the quarter
ended [March 31,2000].
"Asset Sale" shall mean the sale, transfer or other disposition by the
Borrower or any Subsidiary to any Person other than the Borrower or any
Subsidiary Guarantor of any asset of the Borrower or such Subsidiary (other than
sales, transfers or other dispositions in the ordinary course of business of
inventory and/or obsolete or excess equipment).
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"Authorized Officer" shall mean any senior officer of the Borrower
designated as such in writing to the Administrative Agent by the Borrower in
each case to the extent acceptable to the Administrative Agent.
"Available Excess Cash Flow Amount" shall mean at any time, an amount
equal to 50% of (A) the aggregate Excess Cash Flow determined for each fiscal
year of the Borrower (commencing with the fiscal year ending on December 31,
[1999]) then ended less (B) the sum of (w) the aggregate amount of the Available
----
Excess Cash Flow Amount with which the Borrower has therefore made Permitted
Acquisitions, Permitted Investments and/or investments in Permitted Joint
Ventures in accordance with Section 8.06(g), (x) the aggregate amount of
Consolidated Capital Expenditures theretofore made pursuant to Section 8.05(c)
hereof, (y) the aggregate amount of redemptions and repurchases of the
Borrower's Common Stock theretofore made pursuant to Section 8.09(a)(ii)(B)(II)
and (z) the Available Excess Cash Flow Amount with which the Borrower has
therefore made voluntary prepayments in accordance with Section 4.01 that have
been applied pursuant to the last proviso in such Section.
"BB Determination Date" shall mean for any month, the 15th of such
month, or if not a Business Day, the next succeeding Business Day.
"Bankruptcy Code" shall have the meaning provided in Section 9.05.
"Base Rate" at any time shall mean the higher of (i) the rate which is
1/2 of 1% in excess of the Federal Funds Effective Rate and (ii) the Prime
Lending Rate.
"Base Rate Loan" shall mean each Loan bearing interest at the rates
provided in Section 1.08(a).
"Borrower" shall have the meaning provided in the first paragraph of
this Agreement.
"Borrowing" shall mean the incurrence of (i) Swingline Loans by the
Borrower from BTCo on a given date or (ii) one Type of Loan pursuant to a single
Facility by the Borrower from all of the Lenders having Commitments with respect
to such Facility on a pro rata basis on a given date (or resulting from
--- ----
conversions or the commencement of new Interest Periods on a given date), having
in the case of Eurodollar Loans the same Interest Period; provided that Base
--------
Rate Loans incurred pursuant to Section 1.10(b) shall be considered part of any
related Borrowing of Eurodollar Loans.
"Borrowing Base" shall mean, at any time, the sum of (x) 80% of the
book value of the accounts receivable of the Borrower and the Subsidiary
Guarantors plus (y) 50% of the book value of the inventory of the Borrower and
the Subsidiary Guarantors, in each determined on a consolidated basis in
accordance with GAAP and as set forth in the last Borrowing Base Certificate
delivered by the Borrower pursuant to Section 5.01(g) or 7.01(g) as the case may
be, provided that the Borrowing Base shall be zero at any time when a Default
under 7.01(g) has occurred and is continuing.
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"Borrowing Base Certificate" shall have the meaning provided in
Section 5.01(g).
"BTCo" shall mean Bankers Trust Company in its individual capacity.
"Business Day" shall mean (i) for all purposes other than as covered
by clause (ii) below, any day excluding Saturday, Sunday and any day which shall
be in the City of New York a legal holiday or a day on which banking
institutions are authorized by law or other governmental actions to close and
(ii) with respect to all notices and determinations in connection with, and
payments of principal and interest on, Eurodollar Loans, any day which is a
Business Day described in clause (i) and which is also a day for trading by and
between banks in U.S. dollar deposits in the interbank Eurodollar market.
"Capital Lease" as applied to any Person shall mean any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
"Capitalized Lease Obligations" shall mean all obligations under
Capital Leases of the Borrower or any of its Subsidiaries in each case taken at
the amount thereof accounted for as liabilities in accordance with GAAP.
"Cash Equivalents" shall mean (i) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) having maturities of not more
than six months from the date of acquisition, (ii) U.S. dollar denominated time
deposits, certificates of deposit and bankers' acceptances of (x) any Lender,
(y) any domestic commercial bank of recognized standing having capital and
surplus in excess of $500,000,000 or (z) any bank (or the parent company of such
bank) whose short-term commercial paper rating from Standard & Poor's Ratings
Services, a division of McGraw-Hill, Inc. ("S&P") is at least A-1 or the
equivalent thereof or from Moody's Investors Service, Inc. ("Moody's") is at
least P-1 or the equivalent thereof (any such bank, an "Approved Bank"), in each
case with maturities of not more than six months from the date of acquisition,
(iii) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clause (i) above entered into
with any bank meeting the qualifications specified in clause (ii) above, (iv)
commercial paper issued by any Lender or Approved Bank or by the parent company
of any Lender or Approved Bank and commercial paper issued by, or guaranteed by,
any industrial or financial company with a short-term commercial paper rating of
at least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent
thereof by Moody's (any such company, an "Approved Company"), or guaranteed by
any industrial company with a long term unsecured debt rating of at least A or
A2, or the equivalent of each thereof, from S&P or Moody's, as the case may be,
and in each case maturing within six months after the date of acquisition and
(v) investments in money market funds substantially all of whose assets are
comprised of securities of the type described in clauses (i) through (iv) above.
"Cash Proceeds" shall mean, with respect to any Asset Sale, the
aggregate cash payments (including any cash received by way of deferred payment
pursuant to a note receivable issued in connection with such Asset Sale, other
than the portion of such deferred payment
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constituting interest, but only as and when so received) received by the
Borrower and/or any Subsidiary from such Asset Sale.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, 42 U.S.C. (S) 9601 et seq.
-- ----
"Change of Control" shall mean [(a) any "person" (as such term is used
in Sections 13(d) and 14(d) of the Exchange Act), other than one or more
Permitted Holders, is or becomes the "beneficial owner" (as defined below),
directly or indirectly, of more than 30% of the total voting power of the Voting
Stock of the Borrower unless the Permitted Holders "beneficially own" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act as currently in effect,
it being agreed that for purposes of this clause (a) and clause (b) below, the
Permitted Holders shall be deemed to beneficially own any Voting Stock of a
corporation (the "specified corporation") held by any other corporation (the
"parent corporation") so long as the Permitted Holders beneficially own (as so
defined), directly or indirectly, in the aggregate a majority of the voting
power of the Voting Stock of the parent corporation), directly or indirectly, in
the aggregate a greater percentage of the total voting power of the Voting Stock
of the Borrower than such other person or (b) occupation of a majority of the
seats of the Board of Directors of the Borrower by Persons whose nomination for
election by the stockholders of the Borrower was not approved by either (i) a
majority of the Permitted Holders or (ii) a majority of the directors of the
Borrower whose election or nomination for election was previously so approved.]
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time and the regulations promulgated and the rulings issued thereunder.
Section references to the Code are to the Code, as in effect at the Restatement
Effective Date and any subsequent provisions of the Code, amendatory thereof,
supplemental thereto or substituted therefor.
"Collateral" shall mean all of the Collateral as defined in each of
the Security Documents.
"Collateral Agent" shall mean the Administrative Agent acting as
Collateral Agent for the Lenders.
"Commitment" shall mean, with respect to each Lender, such Lender's
Term Commitment and Revolving Commitment.
"Commitment Commission" shall have the meaning provided in Section
3.01(a).
"Common Stock" shall mean the common stock of the Borrower.
"Consolidated Capital Expenditures" shall mean, for any period, the
aggregate of all expenditures (whether paid in cash or accrued as liabilities
and including in all events all amounts expended or capitalized under Capital
Leases but excluding any amount representing capitalized interest) by the
Borrower and its Subsidiaries during that period that, in conformity with GAAP,
are or are required to be included in the property, plant or equipment reflected
in the consolidated balance sheet of the Borrower and its Subsidiaries, provided
that Consolidated
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Capital Expenditures shall in any event include the purchase price paid in
connection with the acquisition of any Person (including through the purchase of
all of the capital stock or other ownership interests of such Person or through
merger or consolidation) to the extent allocable to property, plant and
equipment, provided further, that Consolidated Capital Expenditures shall only
----------------
include the amount thereof actually paid in cash during such period.
"Consolidated Cash Interest Expense" shall mean, for any period,
Consolidated Interest Expense, but excluding, however, interest expense not
payable in cash and amortization of discount and deferred issuance and financing
costs.
"Consolidated Current Assets" shall mean, as to any Person at any
time, the current assets (other than cash and Cash Equivalents) of such Person
and its Subsidiaries determined on a consolidated basis in accordance with GAAP.
"Consolidated Current Liabilities" shall mean, as to any Person at any
time, the current liabilities of such Person and its Subsidiaries determined on
a consolidated basis in accordance with GAAP, but excluding all short-term
Indebtedness for borrowed money and the current portion of any long-term
Indebtedness of such Person or its Subsidiaries, in each case to the extent
otherwise included therein.
"Consolidated Debt" shall mean, as at any date of determination, the
aggregate stated balance sheet amount of all Indebtedness of the Borrower and
its Subsidiaries on a consolidated basis as determined in accordance with GAAP.
"Consolidated EBIT" shall mean, for any period, (A) the sum of the
amounts for such period of (i) Consolidated Net Income, (ii) provisions for
taxes based on income, (iii) Consolidated Interest Expense, (iv) amortization or
write-off of deferred financing costs to the extent deducted in determining
Consolidated Net Income and (v) losses on sales of assets (excluding sales in
the ordinary course of business) and other extraordinary losses less (B) the
----
amount for such period of gains on sales of assets (excluding sales in the
ordinary course of business) and other extraordinary gains, all as determined on
a consolidated basis in accordance with GAAP.
"Consolidated EBITDA" shall mean, for any period, the sum of the
amounts for such period of (i) Consolidated EBIT, (ii) depreciation expense and
(iii) amortization expense, all as determined on a consolidated basis in
accordance with GAAP.
"Consolidated Fixed Charges" shall mean, for any period, the sum,
without duplication, of the amounts for such period of (i) Consolidated Cash
Interest Expense, (ii) scheduled payments on the Term Loans and Existing
Indebtedness, (iii) Consolidated Capital Expenditures and (iv) if positive (x)
the total amount of deferred customer acquisition costs capitalized during such
period minus (y) the total amount of deferred customer acquisition costs
amortized during such period, all as determined on a consolidated basis for the
Borrower and its Subsidiaries in accordance with GAAP.
"Consolidated Interest Expense" shall mean, for any period, total
interest expense
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(including that attributable to Capital Leases in accordance with GAAP) of the
Borrower and its Subsidiaries on a consolidated basis with respect to all
outstanding Indebtedness of the Borrower and its Subsidiaries, including,
without limitation, all commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers' acceptance financing and net
costs under Interest Rate Agreements.
"Consolidated Net Income" shall mean for any period, the net income
(or loss) of the Borrower and its Subsidiaries on a consolidated basis for such
period taken as a single accounting period determined in conformity with GAAP,
provided that there shall be excluded (i) the income (or loss) of any Person
(other than Subsidiaries of the Borrower) in which any other Person (other than
the Borrower or any of its Subsidiaries) has a joint interest, except to the
extent of the amount of dividends or other distributions actually paid to the
Borrower or any of its Subsidiaries by such Person during such period, (ii) the
income (or loss) of any Person accrued prior to the date it becomes a Subsidiary
of the Borrower or is merged into or consolidated with the Borrower or any of
its Subsidiaries or that Person's assets are acquired by the Borrower or any of
its Subsidiaries, (iii) the income of any Subsidiary of the Borrower to the
extent that the declaration or payment of dividends or similar distributions by
that Subsidiary of that income is not at the time permitted by operation of the
terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Subsidiary, (iv)
Transaction Expenses and (v) compensation expense resulting from the issuance of
capital stock, stock options or stock appreciation rights issued to employees,
including officers, of the Borrower or any Subsidiary, or the exercise of such
options or rights, in each case to the extent the obligation (if any) associated
therewith is not expected to be settled by the payment of cash by the Borrower
or any Affiliate of the Borrower and compensation expense resulting from the
repurchase of any such capital stock, options and rights.
"Consolidated Senior Debt" shall mean Consolidated Debt less, to the
extent included in Consolidated Debt, all indebtedness in respect of the Stub
Senior Subordinated Notes or any Indebtedness ranked pari passu with or
---- -----
subordinated to the Stub Senior Subordinated Notes.
"Contingent Obligations" shall mean as to any Person any obligation of
such Person guaranteeing or intending to guarantee any Indebtedness, leases,
dividends or other obligations ("primary obligations") of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, whether or not contingent,
(a) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (b) to advance or supply funds (i) for the
purchase or payment of any such primary obligation or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (c) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation or (d) otherwise to assure or hold harmless the owner of
such primary obligation against loss in respect thereof, provided however, that
the term Contingent Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
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determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person is
required to perform thereunder) as determined by such Person in good faith.
"Credit Documents" shall mean this Agreement, the Notes, the Security
Documents and the Subsidiary Guaranty and any documents executed in connection
therewith.
"Credit Event" shall mean and include the making of a Loan or the
issuance of a Letter of Credit.
"Credit Party" shall mean the Borrower and the Subsidiary Guarantors.
"Default" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Defaulting Lender" shall mean any Lender with respect to which a
Lender Default is in effect.
["Designated Affiliate" shall mean any Affiliate of Kelso other than
any corporation or other Person (except for any corporation or other Person
engaged in a business similar, complementary or related to the nature or type of
the business of the Borrower and its Subsidiaries) controlled by, or any
investment fund (other than Kelso Investment Associates V, L.P. or any
investment fund that is not solely comprised of current and former professionals
of Kelso) managed by, Kelso.]
"Dividends" shall have the meaning provided in Section 8.09.
"Documentation Agent" shall have the meaning provided in the first
paragraph of this Agreement.
"Domestic Subsidiary" shall mean each Subsidiary of the Borrower
incorporated or organized in the United States or any state or territory
thereof.
"Effective Date" shall have the meaning provided in Section 12.10.
"Environmental Claims" means any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigations (other than internal reports prepared
by the Borrower or any of its Subsidiaries solely in the ordinary course of such
Person's business and not in response to any third party action or request of
any kind) or proceedings relating in any way to any Environmental Law or any
permit issued, or any approval given, under any such Environmental Law
(hereafter, "Claims"), including, without limitation, (a) any and all Claims by
governmental or regulatory authorities for enforcement, cleanup, removal,
response, remedial or other actions or damages pursuant to any applicable
Environmental Law, and (b) any and all Claims by any third party seeking
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief
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resulting from Hazardous Materials arising from alleged injury or threat of
injury to health, safety or the environment.
"Environmental Law" means any applicable Federal, state, foreign or
local statute, law, rule, regulation, ordinance, code, guide, policy and rule of
common law now or hereafter in effect and in each case as amended, and any
judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, relating to the environment,
health, safety or Hazardous Materials, including, without limitation, CERCLA;
RCRA; the Federal Water Pollution Control Act, as amended, 33 U.S.C. (S) 1251 et
--
seq.; the Toxic Substances Control Act, 15 U.S.C. (S) 7401 et seq.; the Clean
- ---- -- ----
Air Act, 42 U.S.C. (S) 7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. (S)
-- ----
3808 et seq.; the Oil Pollution Act of 1990, 33 U.S.C. (S) 2701 et seq. and any
-- ---- -- ----
applicable state and local or foreign counterparts or equivalents.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and rulings
issued thereunder. Section references to ERISA are to ERISA, as in effect as of
the Initial Borrowing Date and any subsequent provisions of ERISA, amendatory
thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9)
of ERISA) which together with the Borrower, a Subsidiary or a Credit Party would
be deemed to be a "single employer" within the meaning of Sections 414(b), (c),
(m) and (o) of the Code.
"Eurodollar Loans" shall mean each Loan bearing interest at the rates
provided in Section 1.08(b).
"Eurodollar Rate" shall mean with respect to each day during each
Interest Period for a Eurodollar Loan, (i) the offered rate for deposits in U.S.
dollars in the London interbank market for the relevant Interest Period which is
published by the British Bankers' Association and currently appears on Telerate
page 3750 as of 11:00 A.M. (London time) on the day which is two Business Days
prior to the first day of such Interest Period for a term comparable to such
Interest Period provided that if, for any reason, such a rate is not published
by the British Bankers' Association, the Eurodollar Rate shall be equal to a
rate per annum equal to the average rate (rounded upwards, if necessary, to the
nearest 1/100 of 1%) at which the Administrative Agent determines that U.S.
dollars in an amount comparable to the amount of the applicable Loans are being
offered to prime banks at approximately 11:00 A.M. (London time) on the day
which is two Business Days prior to the first day of such Interest Period for a
term comparable to such Interest Period for settlement in immediately available
funds by leading banks in the London interbank market selected by the
Administrative Agent divided (and rounded upward to the next whole multiple of
1/16 of 1%) by (ii) a percentage equal to 100% minus the then stated maximum
rate of all reserve requirements (including without limitation any marginal,
emergency, supplemental, special or other reserves) applicable to any member
bank of the Federal Reserve System in respect of Eurocurrency liabilities as
defined in Regulation D (or any successor category of liabilities under
Regulation D).
"Event of Default" shall have the meaning provided in Section 9.
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"Excess Cash Flow" shall mean, for any fiscal year, the remainder of
(i) the sum of (x) Adjusted Cash Flow for such fiscal year and (y)(I) the
decrease, if any, in Working Capital less (II) the decrease, if any, in the
principal amount of Revolving Loans, in each case from the first day to the last
day of such fiscal year, plus (ii) to the extent not included in (i) above, any
amounts received by the Borrower and its Subsidiaries in settlement of, or in
payment of any judgments resulting from, actions, suits or proceedings with
respect to the Borrower and/or its Subsidiaries from the first day to the last
day of such fiscal year, plus (iii) to the extent not included in (i) above, any
amounts received by the Borrower and/or its Subsidiaries in connection with the
repayment or redemption of any long-term promissory notes and/or preferred stock
of other Persons held by them, minus (iv) the sum of (w) the amount of
Consolidated Capital Expenditures (except to the extent financed through the
incurrence of Indebtedness) made during such fiscal year, (x) the capitalized
software costs and capitalized cost for mailing list rights, (y)(I) the
increase, if any, in Working Capital less (II) the increase, if any, in the
principal amount of Revolving Loans, in each case from the first day to the last
day of such fiscal year and (z) any repayments or prepayments of the principal
amount of Term Loans, except prepayments of the principal amount of Term Loans
made pursuant to Sections 4.02(A)(c), (d), (e), (f), (g) and/or (i).
"Existing Credit Agreement" shall mean the Amended and Restated Credit
Agreement dated as of November 20, 1997 among the Borrower, the lenders party
thereto and BTCo as agent, as such agreement is in effect immediately prior to
the Initial Borrowing Date.
"Existing Indebtedness" shall have the meaning provided in Section
6.20.
"Existing Letter of Credit" shall have the meaning provided in Section
2.01(d).
"Facility" shall mean any of the credit facilities established under
this Agreement, i.e., the Term Facility or the Revolving Facility.
----
"Facing Fee" shall have the meaning provided in Section 3.01(c).
"Federal Funds Effective Rate" shall mean for any period, a
fluctuating interest rate equal for each day during such period to the weighted
average of the rates on overnight Federal Funds transactions with members of the
Federal Reserve System arranged by Federal Funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for such day
on such transactions received by the Administrative Agent from three Federal
Funds brokers of recognized standing selected by the Administrative Agent.
"Fees" shall mean all amounts payable pursuant to, or referred to in,
Section 3.01.
"Final Maturity Date" shall mean September 30, 2005.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect on the date of this Agreement; it being
understood and agreed that
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determinations in accordance with GAAP for purposes of Section 8, including
defined terms as used therein, are subject (to the extent provided therein) to
Section 12.07(a).
"Hazardous Materials" means (a) any petroleum or petroleum products,
radioactive materials, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation, transformers or other equipment that
contained, electric fluid containing levels of polychlorinated biphenyls, and
radon gas; (b) any chemicals, materials or substances defined as or included in
the definition of "hazardous substances", "hazardous waste", "hazardous
materials", "extremely hazardous waste", "restricted hazardous waste", "toxic
substances", "toxic pollutants", "contaminants", or "pollutants", or words of
similar import, under any applicable Environmental Law; and (c) any other
chemical, material or substance, exposure to which is prohibited, limited or
regulated by any governmental authority.
"HCE" shall mean Hosiery Corporation Enterprises, a Delaware
corporation.
"Indebtedness" of any Person shall mean, without duplication, (i) all
indebtedness of such Person for borrowed money, (ii) the deferred purchase price
of assets or services which in accordance with GAAP would be shown on the
liability side of the balance sheet of such Person, (iii) the face amount of all
letters of credit issued for the account of such Person and, without
duplication, all drafts drawn thereunder, (iv) all Indebtedness of a second
Person secured by any Lien on any property owned by such first Person, whether
or not such indebtedness has been assumed, (v) all Capitalized Lease Obligations
of such Person, (vi) all obligations of such Person to pay a specified purchase
price for goods or services whether or not delivered or accepted, i.e., take-or-
----
pay and similar obligations, (vii) all net obligations of such Person under
Interest Rate Agreements and (viii) all Contingent Obligations of such Person,
(other than Contingent Obligations arising from the guaranty by such Person of
the obligations of the Borrower and/or its Subsidiaries to the extent such
guaranteed obligations do not constitute Indebtedness and are otherwise
permitted hereunder), provided that Indebtedness shall not include trade
payables and accrued expenses, in each case arising in the ordinary course of
business.
"Initial Borrowing Date" shall mean the first date on which Loans are
made hereunder.
"Interest Period" with respect to any Loan shall mean the interest
period applicable thereto, as determined pursuant to Section 1.09.
"Interest Rate Agreement" shall mean any interest rate swap agreement,
any interest rate cap agreement, any interest rate collar agreement or other
similar agreement or arrangement designed to protect the Borrower or any
Subsidiary against fluctuations in interest rates.
"Kelso" shall mean Kelso & Company, L.P., a Delaware limited
partnership doing business as Kelso & Company, Inc.
"Leasehold" of any Person means all of the right, title and interest
of such Person
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as lessee or licensee in, to and under leases or licenses of land, improvements
and/or fixtures.
"Lender" shall have the meaning provided in the first paragraph of
this Agreement.
"Lender Default" shall mean (i) the refusal (which has not been
retracted) of a Lender to make available its portion of any incurrence of Loans
or to fund its portion of any unreimbursed payment under Section 2.05(c) or (ii)
a Lender having notified the Administrative Agent and/or the Borrower that it
does not intend to comply with the obligations under Section 1.01 or under
Section 2.05(c), in the case of either clause (i) or (ii) as a result of the
appointment of a receiver or conservator with respect to such Lender at the
direction or request of any regulatory agency or authority.
"Letter of Credit" shall have the meaning provided in Section 2.01(a).
"Letter of Credit Fee" shall have the meaning provided in Section
3.01(b).
"Letter of Credit Issuer" shall mean BTCo or any Lender which at the
request of the Borrower and with the consent of the Administrative Agent agrees,
in such Lender's sole discretion, to become a Letter of Credit Issuer for
purposes of issuing Letters of Credit pursuant to Section 2.
"Letter of Credit Outstandings" shall mean, at any time, the sum of,
without duplication, (i) the aggregate Stated Amount of all outstanding Letters
of Credit and (ii) the aggregate amount of all Unpaid Drawings in respect of all
Letters of Credit.
"Letter of Credit Request" shall have the meaning provided in Section
2.03(a).
"Leverage Ratio" shall mean, at any date of determination, the ratio
of Consolidated Debt on such date to Consolidated EBITDA for the Test Period
(taken as one accounting period) ending on such date.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any agreement to give any of
the foregoing, any conditional sale or other title retention agreement or any
lease in the nature thereof).
"Loan" shall have the meaning provided in Section 1.01.
["Management Investor" means the executive officers of the Borrower
(i) on the Initial Borrowing Date and any persons who become executive officers
of the Borrower at a time when Kelso and its Affiliates "beneficially own" (as
defined in clause (a) of the definition of ("Change of Control"), directly or
indirectly, more than a majority of the capital stock of the Borrower and (ii)
who own capital stock of the Borrower.]
"Mandatory Borrowing" shall have the meaning provided in Section
1.01(d).
"Margin Stock" shall have the meaning provided in Regulation U.
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"Material Adverse Effect" shall mean a material adverse effect on the
business, property, assets, liabilities, operations, condition (financial or
otherwise) or prospects of the Borrower and its Subsidiaries taken as a whole.
"Material Subsidiary" shall mean, at any time, any Subsidiary of the
Borrower that (x) has assets at such time comprising 5% or more of the
consolidated assets of the Borrower and its Subsidiaries or (y) had net income
in the most recently ended fiscal year of the Borrower comprising 5% or more of
the consolidated net income of the Borrower and its Subsidiaries for such fiscal
year.
"Maximum Swingline Amount" shall mean $5,000,000.
"Minimum Borrowing Amount" shall mean (i) for Term Loans and Revolving
Loans maintained as Base Rate Loans, $500,000, (ii) for Term Loans and Revolving
Loans maintained as Eurodollar Loans, $1,000,000 and (iii) for Swingline Loans,
$100,000.
"Mortgage Policies" shall have the meaning provided in Section
5.01(j)(iii).
"Mortgaged Properties" shall mean all Real Property designated as
Mortgaged Properties on Annex VI.
"Mortgages" shall have the meaning provided in Section 5.01(j)(iii).
["Murphy" shall mean Mr. Joseph A. Murphy.]
"Net Cash Proceeds" shall mean, with respect to any Asset Sale, the
Cash Proceeds resulting therefrom net of expenses of sale (including payment of
principal, premium and interest of Indebtedness secured by the assets the
subject of the Asset Sale and required to be, and which is, repaid under the
terms thereof as a result of such Asset Sale), and incremental taxes paid or
payable as a result thereof.
"Non-Defaulting Lender" shall mean each Lender other than a Defaulting
Lender.
"Note" shall have the meaning provided in Section 1.05.
"Notice of Borrowing" shall have the meaning provided in Section 1.03.
"Notice of Conversion" shall have the meaning provided in Section
1.06.
"Notice Office" shall mean the office of the Administrative Agent at
130 Liberty Street, New York, New York or such other office as the
Administrative Agent may designate to the Borrower from time to time.
"Obligations" shall mean all amounts, direct or indirect, contingent
or absolute, of every type or description, and at any time existing, owing to
the Administrative Agent, the Collateral Agent or any Lender pursuant to the
terms of this Agreement or any other Credit Document.
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"Participant" shall have the meaning provided in Section 2.05(a).
"Payment Office" shall mean the office of the Administrative Agent at
130 Liberty Street, New York, New York or such other office as the
Administrative Agent may designate to the Borrower from time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA, or any successor thereto.
"Permitted Acquisition" shall mean any acquisition of property or
assets of a nature or type or which will be used in a business similar,
complementary or related to the nature or type of the property and assets of, or
the business of, the Borrower and its Subsidiaries existing on the date of such
investment (as determined in good faith by the Board of Directors of the
Borrower).
"Permitted Encumbrances" shall mean, with respect to the Mortgaged
Property, such exceptions to title as are set forth in the title insurance
policy or title commitment delivered with respect thereto, all of which
exceptions must be reasonably acceptable to the Administrative Agent.
["Permitted Holders" means Kelso, the Designated Affiliates, the
Management Investors, Murphy, any employee stock ownership plan established by
the Borrower for the benefit of the employees of the Borrower or any Subsidiary
and their Permitted Transferees.]
"Permitted Investment" shall mean any investment in a Person having
property and assets of a nature or type, or engaged in a business, similar,
complementary or related to the nature or type of the property and assets of, or
the business of, the Borrower and its Subsidiaries existing on the date of such
investment (as determined in good faith by the Board of Directors of the
Borrower), if as result of such investment (i) such Person becomes a Subsidiary
of the Borrower in which case such Subsidiary shall become a Subsidiary
Guarantor and shall deliver and become party to all Security Documents pursuant
to the requirements set forth in Section 7.11(b) or (ii) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys substantially
all of its assets to, or is liquidated into, the Borrower or a Subsidiary
Guarantor.
"Permitted Joint Venture" shall mean any Person (other than a
Subsidiary) in which the Borrower or any Subsidiary Guarantor shall invest for
the purpose of engaging in the direct marketing of products other than those
currently offered by the Borrower and its Subsidiaries.
"Permitted Liens" shall mean Liens described in clauses (a), (b), (d),
(f), (h), (j) and (l) of Section 8.03.
["Permitted Transferees" means (i) in the case of Kelso, (A) any
Designated Affiliate, (B) any managing director, general partner, limited
partner, director, officer or employee of Kelso or any Designated Affiliate
(collectively, "Kelso Associates"), (C) the heirs,
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executors, administrators, testamentary trustees, legatees or beneficiaries of
any Kelso Associate and (D) any trust, the beneficiaries of which, or a
corporation or partnership, the stockholders or partners of which, include only
a Kelso Associate, his or her spouse, parents, siblings, direct lineal
descendants or adopted children, and (ii) in the case of any Management
Investors and Murphy, (A) his or her executor, administrator, testamentary
trustee, legatee or beneficiaries, (B) his or her spouse, parents, siblings,
direct lineal descendants or adopted children or (C) a trust, the beneficiaries
of which, or a corporation or partnership, the stockholders or partners of
which, include only the Management Investor or Murphy, as the case may be, and
his or her spouse, parents, siblings, direct lineal descendants and/or adopted
children.]
"Person" shall mean any individual, partnership, joint venture, firm,
corporation, association, trust or other enterprise or any government or
political subdivision or any agency, department or instrumentality thereof.
"PIK Preferred Stock" shall mean the Borrower's pay-in-kind preferred
stock issued pursuant to the Certificate of the Designation Powers, Preferences
and Rights of Pay-In-Kind Preferred Stock, dated October 17, 1994.
"Plan" shall mean any multi-employer or single-employer plan as
defined in Section 4001 of ERISA, which is maintained or contributed to by (or
to which there is an obligation to contribute of) the Borrower, a Subsidiary or
an ERISA Affiliate, and each such plan for the five year period immediately
following the latest date on which the Borrower, a Subsidiary, or an ERISA
Affiliate maintained, contributed to or had an obligation to contribute to such
plan.
"Pledge Agreements" shall have the meaning provided in Section
5.01(j)(i).
"Pledged Securities" shall mean all the Pledged Securities as defined
in the relevant Pledge Agreement.
"Prime Lending Rate" shall mean the rate which BTCo announces from
time to time as its prime lending rate, the Prime Lending Rate to change when
and as such prime lending rate changes. The Prime Lending Rate is a reference
rate and does not necessarily represent the lowest or best rate actually charged
to any customer. BTCo may make commercial loans or other loans at rates of
interest at, above or below the Prime Lending Rate.
"PSD Interest Period" shall mean an Interest Period commenced prior to
the Syndication Date, each of which Interest Periods must satisfy the
requirements of Section 1.09(iv).
"Quarter End Date" shall mean December 31 of each year and (i) March
27, June 26 and September 25 in 1999; (ii) April 1, July 1 and September 30 in
2000; (iii) March 31, June 30 and September 29 in 2001; (iv) ______, ________
and _______ in 2002; (v) .______, ________ and _______ in 2003; and (vi) ______,
________ and _______ in 2004;
"RCRA" shall mean the Resource Conservation and Recovery Act, as
amended,
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42 U.S.C. (S) 6901 et seq.
-- ----
"Real Property" of any Person shall mean all of the right, title and
interest of such Person in and to land, improvements and fixtures, including
Leaseholds.
"RC Lenders" shall mean each Lender with Revolving Commitment.
"Register" shall have the meaning provided in Section 12.16.
"Regulation D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing reserve requirements.
"Regulation U" shall mean Regulation U of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing margin requirements.
"Reinvestment Assets" shall mean any assets to be employed in the
business of the Borrower and its Subsidiaries as described in Section 8.01,
provided all such assets may be acquired pursuant to Section 4.10 of the Senior
Subordinated Note Indenture so long as such Section is in effect.
"Reinvestment Election" shall have the meaning provided in Section
4.02(A)(c).
"Reinvestment Notice" shall mean a written notice signed by an
Authorized Officer of the Borrower stating that the Borrower, in good faith,
intends and expects to use all or a specified portion of the Net Cash Proceeds
of an Asset Sale to purchase, construct or otherwise acquire Reinvestment
Assets.
"Reinvestment Prepayment Amount" shall mean, with respect to any
Reinvestment Election, the amount, if any, on the Reinvestment Prepayment Date
relating thereto by which (a) the Anticipated Reinvestment Amount in respect of
such Reinvestment Election exceeds (b) the aggregate amount thereof expended by
the Borrower and its Subsidiaries to acquire Reinvestment Assets.
"Reinvestment Prepayment Date" shall mean, with respect to any
Reinvestment Election, the earliest of (i) the date, if any, upon which the
Administrative Agent, on behalf of the Required Lenders, shall have delivered a
written termination notice to the Borrower, provided that such notice may only
be given while an Event of Default exists, (ii) the date occurring one year
after such Reinvestment Election and (iii) the date on which the Borrower shall
have determined not to, or shall have otherwise ceased to, proceed with the
purchase, construction or other acquisition of Reinvestment Assets with the
related Anticipated Reinvestment Amount.
"Relevant Determination Date" shall mean, at any time, the last day of
the then most recently ended fiscal quarter of the Borrower with respect to
which an officer's certificate
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has been delivered to the Lenders pursuant to Section 7.01(e).
"Reportable Event" shall mean an event described in Section 4043(b) of
ERISA with respect to a Plan as to which the 30-day notice requirement has not
been waived by the PBGC.
"Required Lenders" shall mean Non-Defaulting Lenders whose outstanding
Term Loans and Revolving Commitments (or, if after the Total Revolving
Commitment has been terminated, Revolving Loans and Adjusted RC Percentages of
Letter of Credit Outstandings) constitute greater than 50% of the sum of (i) the
total outstanding Term Loans of Non-Defaulting Lenders and (ii) the Adjusted
Total Revolving Commitment (or, if after the Total Revolving Commitment has been
terminated, the aggregate outstanding Revolving Loans and Letter of Credit
Outstandings).
"Revolving Commitment" shall mean, with respect to each Lender, the
amount set forth opposite such Lender's name in Annex I hereto directly below
the column entitled "Revolving Commitment", as the same may be reduced from time
to time pursuant to Section 3.02, 3.03 and/or 9 or (y) adjusted from time to
time as a result of assignments to or from such Lender pursuant to Section
12.04.
"Revolving Facility" shall mean the Facility evidenced by the Total
Revolving Commitment.
"Revolving Loan" shall have the meaning provided in Section 1.01(b).
"Revolving Maturity Date" shall mean September 30, 2004.
"Revolving Percentage" shall mean at any time for each Lender with a
Revolving Commitment, the percentage obtained by dividing such Lender's
Revolving Commitment by the Total Revolving Commitment, provided that if the
Total Revolving Commitment has been terminated, the Revolving Percentage of each
Lender shall be determined by dividing such Lender's Revolving Commitment
immediately prior to such termination by the Total Revolving Commitment
immediately prior to such termination.
"Scheduled Repayment" shall have the meaning provided in Section
4.02(A)(b).
"SEC" shall have the meaning provided in Section 7.01(j).
"SEC Regulation D" shall mean Regulation D as promulgated under the
Securities Act of 1933, as amended, as the same may be in effect from time to
time.
"Security Agreement Collateral" shall mean all "Collateral" as defined
in the relevant Security Agreement.
"Security Agreement" shall have the meaning provided in Section
5.01(j)(ii).
"Security Documents" shall mean each Pledge Agreement, each Security
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Agreement, each Mortgage and each Additional Mortgage, if any.
"Senior Leverage Ratio" shall mean, at any date for the determination
thereof, the ratio of Consolidated Senior Debt on such date to Consolidated
EBITDA for the Test Period (taken as one accounting period) ending on such date.
"Senior Subordinated Note Documents" shall mean and include each of
the documents, instruments (including the Stub Senior Subordinated Notes) and
other agreements entered into by the Borrower (including, without limitation,
the Senior Subordinated Note Indenture) relating to the issuance by the Borrower
of the Senior Subordinated Notes as in effect on the Initial Borrowing Date and
as the same may be supplemented, amended or modified from time to time in
accordance with the terms hereof and thereof.
"Senior Subordinated Note Indenture" shall mean the Indenture entered
into by and between the Borrower and United States Trust Company of New York, as
trustee thereunder, with respect to the Senior Subordinated Notes, as amended
pursuant to the Tender, and as in effect on the Initial Borrowing Date and as
the same may be modified, amended or supplemented from time to time in
accordance with the terms hereof and thereof.
"Senior Subordinated Notes" shall mean the Senior Subordinated Notes
due 2002 issued by the Borrower under the Senior Subordinated Note Indenture.
"Standby Letter of Credit" shall have the meaning provided in Section
2.01(a).
"Stated Amount" of each Letter of Credit shall mean the maximum
available to be drawn thereunder (regardless of whether any conditions for
drawing could then be met).
"Stub Senior Subordinated Notes" shall mean the Senior Subordinated
Notes that are outstanding immediately prior to the Initial Borrowing Date and
that are not redeemed pursuant to the Tender.
"Subsidiary" of any Person shall mean and include (i) any corporation
more than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person directly or
indirectly through Subsidiaries and (ii) any partnership, association, joint
venture or other entity in which such Person directly or indirectly through
Subsidiaries, has more than a 50% equity interest at the time. Unless otherwise
expressly provided, all references herein to "Subsidiary" shall mean a
Subsidiary of the Borrower.
"Subsidiary Guarantors" shall mean (i) each Domestic Subsidiary of the
Borrower on the Initial Borrowing Date other than HCE and (ii) each Person that
becomes a Subsidiary Guarantor as required by the definition of Permitted
Investments.
"Subsidiary Guaranty" shall have the meaning provided in Section
5.01(i).
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"Swingline Expiry Date" shall mean the date which is five Business
Days prior to the Revolving Maturity Date.
"Swingline Loan" shall have the meaning provided in Section 1.01(c).
"Syndication Date" shall mean the earlier of (x) the date which is 90
days after the Initial Borrowing Date and (y) the date upon which the
Administrative Agent determines in its sole discretion (and notifies the
Borrower) that the primary syndication has been completed.
"Tax Forms" shall have the meaning provided in Section 4.04(b).
"Taxes" shall have the meaning provided in Section 4.04(a).
"Tender" shall have the meaning provided in Section 5.01(n).
"Term Commitment" shall mean, with respect to each Lender, (i) the
amount, if any, set forth opposite such Lender's name on Annex I hereto directly
below the column entitled "Term Commitment" less (ii) the amount equal to such
Lender's TF Percentage times the outstanding principal amount of the Stub Senior
Subordinated Notes on the Initial Borrowing Date, as the same may be terminated
pursuant to Section 3.03.
"Term Facility" shall mean the Facility evidenced by the Total Term
Commitment.
"Term Loan" shall have the meaning provided in Section 1.01(a).
"Test Period" shall mean for any determination the four consecutive
fiscal quarters of the Borrower then last ended (taken as one accounting
period).
"TF Lender" shall mean at any time each Lender with a Term Commitment
(or if the Total Term Commitment has been terminated, outstanding Term Loans) at
such time.
["TF Percentage" shall mean with respect to each Lender, the
percentage obtained by dividing (i) the amount, if any, set forth opposite such
Lender's name on Annex I hereto directly below the column entitled "Term
Commitment" by (ii) $110 million.]
"Total Bank Outstandings" shall mean, as at any date, the sum of (i)
the outstanding principal amount of Term Loans on such date plus (ii) the daily
average of the sum of (x) the outstanding principal amount of Revolving Loans
plus (y) Letter of Credit Outstanding during the 12 months ended on such date
(or if less during the period from the Initial Borrowing Date to such date).
"Total Term Commitment" shall mean the sum of the Term Commitments of
each of the Lenders.
"Total Commitment" shall mean the sum of the Total Term Commitment and
the Total Revolving Commitment.
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"Total Revolving Commitment" shall mean the sum of the Revolving
Commitments of each of the Lenders.
"Total Unutilized Revolving Commitment" shall mean, at any time, (i)
the Total Revolving Commitment at such time less (ii) the sum of the aggregate
principal amount of all Revolving Loans and Swingline Loans at such time plus
the Letter of Credit Outstandings at such time.
"Trade Letter of Credit" shall have the meaning provided in Section
2.01(a).
"Transaction" shall mean the initial public offering of the Borrower's
common stock referred to in Section 5.01(l), the redemption of the PIK Preferred
Stock referred to in Section 5.01(m) and the Tender for and redemption of the
Senior Subordinated Notes referred to in Section 5.01(n).
"Transaction Expenses" shall mean (i) the write-off of finance costs
incurred in connection with the 1997 reorganization of the Borrower and (ii) all
fees and expenses incurred in connection with, and payable prior to or
substantially concurrently with the consummation of the Transaction, and
including all fees paid to any of the Lenders and the Administrative Agent
hereunder, [all fees paid to Kelso & Company, Inc. or its Affiliates] and all
attorney's fees, accountants' fees and consultant fees, paid in connection with
the transactions contemplated by this Agreement. Transaction Expenses shall
include the amortization of any such fees and expenses that are capitalized and
not classified as an expense on the date incurred.
"Type" shall mean any type of Loan determined with respect to the
interest option applicable thereto, i.e., a Base Rate Loan or Eurodollar Loan.
----
"UCC" shall mean the Uniform Commercial Code.
"Unfunded Current Liability" of any Plan shall mean the amount, if
any, by which the actuarial present value of the accumulated plan benefits under
the Plan as of the close of its most recent plan year determined in accordance
with Statement of Financial Accounting Standards No. 35, based upon the
actuarial assumptions used by the Plan's actuary in the most recent annual
valuation of the Plan, exceeds the fair market value of the assets thereof,
determined in accordance with Section 412 of the Code.
"Unpaid Drawing" shall have the meaning provided in Section 2.04(a).
"Unutilized Revolving Commitment" for any Lender with a Revolving
Commitment at any time shall mean the excess of (i) the Revolving Commitment of
such Lender over (ii) the sum of (x) the aggregate outstanding principal amount
of Revolving Loans made by such Lender plus (y) an amount equal to such Lender's
Revolving Percentage of the Letter of Credit Outstandings at such time.
"Voting Stock" shall mean, with respect to any corporation, the
outstanding stock of all classes (or equivalent interests) which ordinarily, in
the absence of contingencies, entitles
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holders thereof to vote for the election of directors (or Persons performing
similar functions) of such corporation, even though the right so to vote has
been suspended by the happening of such a contingency.
"Wholly-Owned Subsidiary" of any Person shall mean any Subsidiary of
such Person to the extent all of the capital stock or other ownership interests
in such Subsidiary, other than directors' qualifying shares, is owned directly
or indirectly by such Person.
"Working Capital" shall mean the excess of Consolidated Current Assets
over Consolidated Current Liabilities.
"Written" or "in writing" shall mean any form of written communication
or a communication by means of telex, facsimile transmission, telegraph or
cable.
SECTION 11. The Agents.
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11.01 Appointment. The Lenders hereby designate BTCo as
-----------
Administrative Agent (for purposes of this Section 11, the term "Administrative
Agent" shall include BTCo in its capacity as Collateral Agent pursuant to the
Security Documents) and First Union as Documentation Agent, in each case to act
as specified herein and in the other Credit Documents. Each Lender hereby
irrevocably authorizes, and each holder of any Note by the acceptance of such
Note shall be deemed irrevocably to authorize, the Administrative Agent to take
such action on its behalf under the provisions of this Agreement, the other
Credit Documents and any other instruments and agreements referred to herein or
therein and to exercise such powers and to perform such duties hereunder and
thereunder as are specifically delegated to or required of the Administrative
Agent by the terms hereof and thereof and such other powers as are reasonably
incidental thereto. The Administrative Agent may perform any of its duties
hereunder by or through its respective officers, directors, agents, employees or
affiliates.
11.02 Nature of Duties. The Administrative Agent shall not have any
----------------
duties or responsibilities except those expressly set forth in this Agreement
and the Security Documents. Neither the Administrative Agent nor any of its
respective officers, directors, agents, employees or affiliates shall be liable
for any action taken or omitted by it or them hereunder or under any other
Credit Document or in connection herewith or therewith, unless caused by its or
their gross negligence or willful misconduct. The duties of the Administrative
Agent shall be mechanical and administrative in nature; the Administrative Agent
shall not have by reason of this Agreement or any other Credit Document a
fiduciary relationship in respect of any Lender or the holder of any Note; and
nothing in this Agreement or any other Credit Document, expressed or implied, is
intended to or shall be so construed as to impose upon the Administrative Agent
any obligations in respect of this Agreement or any other Credit Document except
as expressly set forth herein or therein.
11.03 Lack of Reliance on an Agent. Independently and without
----------------------------
reliance upon an Agent, each Lender and the holder of each Note, to the extent
it deems appropriate, has made and shall continue to make (i) its own
independent investigation of the financial condition and affairs of the Borrower
and its Subsidiaries in connection with the making and the continuance of the
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<PAGE>
Loans and the taking or not taking of any action in connection herewith and (ii)
its own appraisal of the creditworthiness of the Borrower and its Subsidiaries
and, except as expressly provided in this Agreement, neither Agent shall have
any duty or responsibility, either initially or on a continuing basis, to
provide any Lender or the holder of any Note with any credit or other
information with respect thereto, whether coming into its possession before the
making of the Loans or at any time or times thereafter. Neither Agent shall be
responsible to any Lender or the holder of any Note for any recitals,
statements, information, representations or warranties herein or in any
document, certificate or other writing delivered in connection herewith or for
the execution, effectiveness, genuineness, validity, enforceability, perfection,
collectibility, priority or sufficiency of this Agreement or any other Credit
Document or the financial condition of the Borrower and its Subsidiaries or be
required to make any inquiry concerning either the performance or observance of
any of the terms, provisions or conditions of this Agreement or any other Credit
Document, or the financial condition of the Borrower and its Subsidiaries or the
existence or possible existence of any Default or Event of Default.
11.04 Certain Rights of the Administrative Agent. If the
------------------------------------------
Administrative Agent shall request instructions from the Required Lenders with
respect to any act or action (including failure to act) in connection with this
Agreement or any other Credit Document, the Administrative Agent shall be
entitled to refrain from such act or taking such action unless and until the
Administrative Agent shall have received instructions from the Required Lenders;
and the Administrative Agent shall not incur liability to any Person by reason
of so refraining. Without limiting the foregoing, neither any Lender nor the
holder of any Note shall have any right of action whatsoever against the
Administrative Agent as a result of the Administrative Agent acting or
refraining from acting hereunder or under any other Credit Document in
accordance with the instructions of the Required Lenders.
11.05 Reliance. The Administrative Agent shall be entitled to rely,
--------
and shall be fully protected in relying, upon any note, writing, resolution,
notice, statement, certificate, telex, teletype or telecopier message,
cablegram, radiogram, order or other document or telephone message signed, sent
or made by any Person that the Administrative Agent believed to be the proper
Person, and, with respect to all legal matters pertaining to this Agreement and
any other Credit Document and its duties hereunder and thereunder, upon advice
of counsel selected by the Administrative Agent.
11.06 Indemnification. To the extent an Agent is not reimbursed and
---------------
indemnified by the Borrower, the Lenders will reimburse and indemnify such
Agent, in proportion to their respective "percentages" as used in determining
the Required Lenders, for and against any and all liabilities, obligations,
losses, damages, penalties, claims, actions, judgments, costs, expenses or
disbursements of whatsoever kind or nature which may be imposed on, asserted
against or incurred by such Agent in performing its respective duties hereunder
or under any other Credit Document, in any way relating to or arising out of
this Agreement or any other Credit Document; provided that no Lender shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from an Agent's gross negligence or willful misconduct.
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<PAGE>
11.07 Each Agent in Its Individual Capacity. With respect to its
-------------------------------------
obligation to make Loans under this Agreement, each Agent shall have the rights
and powers specified herein for a "Lender" and may exercise the same rights and
powers as though it were not performing the duties specified herein; and the
term "Lenders", "Required Lenders", "holders of Notes" or any similar terms
shall, unless the context clearly otherwise indicates, include such Agent in its
individual capacity. The Agents may accept deposits from, lend money to, and
generally engage in any kind of banking, trust or other business with any Credit
Party or any Affiliate of any Credit Party as if it were not performing the
duties specified herein, and may accept fees and other consideration from the
Borrower or any other Credit Party for services in connection with this
Agreement and otherwise without having to account for the same to the Lenders.
11.08 Holders. The Administrative Agent may deem and treat the payee
-------
of any Note as the owner thereof for all purposes hereof unless and until a
written notice of the assignment, transfer or endorsement thereof, as the case
may be, shall have been filed with the Administrative Agent. Any request,
authority or consent of any Person who, at the time of making such request or
giving such authority or consent, is the holder of any Note shall be conclusive
and binding on any subsequent holder, transferee, assignee or indorsee, as the
case may be, of such Note or of any Note or Notes issued in exchange therefor.
11.09 Resignation. (a) The Administrative Agent may resign from the
-----------
performance of all its functions and duties hereunder and/or under the other
Credit Documents at any time by giving 15 Business Days' prior written notice to
the Borrower and the Lenders. Such resignation shall take effect upon the
appointment of a successor Administrative Agent pursuant to clauses (b) and (c)
below or as otherwise provided below.
(b) Upon any such notice of resignation, the Required Lenders shall
appoint a successor Administrative Agent hereunder or thereunder who shall be a
commercial bank or trust company reasonably acceptable to the Borrower.
(c) If a successor Administrative Agent shall not have been so
appointed within such 15 Business Day period, the Administrative Agent, with the
consent of the Borrower, shall then appoint a successor Administrative Agent who
shall serve as Administrative Agent hereunder or thereunder until such time, if
any, as the Required Lenders appoint a successor Administrative Agent as
provided above.
(d) If no successor Administrative Agent has been appointed pursuant
to clause (b) or (c) above by the 20th Business Day after the date such notice
of resignation was given by the Administrative Agent, the Administrative Agent's
resignation shall become effective and the Required Lenders shall thereafter
perform all the duties of the Administrative Agent hereunder and/or under any
other Credit Document until such time, if any, as the Required Lenders appoint a
successor Administrative Agent as provided above.
(e) The Documentation Agent may resign at any time by giving written
notice thereof to the Borrower and the Administrative Agent.
SECTION 12. Miscellaneous.
-------------
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<PAGE>
12.01 Payment of Expenses, etc. The Borrower agrees to: (i) whether
-------------------------
or not the transactions herein contemplated are consummated, pay all reasonable
out-of-pocket costs and expenses of the Administrative Agent in connection with
the negotiation, preparation, execution and delivery of the Credit Documents and
the documents and instruments referred to therein and any amendment, waiver or
consent relating thereto (including, without limitation, the reasonable fees and
disbursements of White & Case LLP) and of each Agent and each of the Lenders in
connection with the enforcement of the Credit Documents and the documents and
instruments referred to therein (including, without limitation, the reasonable
fees and disbursements of counsel for each Agent and for each of the Lenders);
(ii) pay and hold each of the Lenders harmless from and against any and all
present and future stamp and other similar taxes with respect to the foregoing
matters and save each of the Lenders harmless from and against any and all
liabilities with respect to or resulting from any delay or omission (other than
to the extent attributable to such Lender) to pay such taxes; and (iii)
indemnify each Lender (including in its capacity as an Agent or a Letter of
Credit Issuer), its officers, directors, employees, representatives and
administrative agents from and hold each of them harmless against any and all
losses, liabilities, claims, damages or expenses incurred by any of them as a
result of, or arising out of, or in any way related to, or by reason of, (a) any
investigation, litigation or other proceeding (whether or not any Agent or any
Lender is a party thereto and whether or not any such investigation, litigation
or other proceeding is between or among any Agent, any Lender, any Credit Party
or any third Person or otherwise) related to the entering into and/or
performance of any Document or the use of the proceeds of any Loans hereunder or
the consummation of any transactions contemplated in any Credit Document, and
(b) any such investigation, litigation or other proceeding relating to the
violation of, noncompliance with or liability under, any Environmental Law
applicable to the operations of the Borrower, any of its Subsidiaries or any
Real Property owned or operated by them, or the actual or alleged presence or
release of Hazardous Materials on, under or from any Real Property at any time
owned or operated by Holdings or any of its Subsidiaries, and in each case
including, without limitation, the reasonable fees and disbursements of counsel
incurred in connection with any such investigation, litigation or other
proceeding (but excluding any such losses, liabilities, claims, damages or
expenses to the extent incurred by reason of the gross negligence or willful
misconduct of the Person to be indemnified).
12.02 Right of Setoff. In addition to any rights now or hereafter
---------------
granted under applicable law or otherwise, and not by way of limitation of any
such rights, if an Event of Default then exists, each Lender is hereby
authorized at any time or from time to time, without presentment, demand,
protest or other notice of any kind to any Credit Party or to any other Person,
any such notice being hereby expressly waived, to set off and to appropriate and
apply any and all deposits (general or special) and any other Indebtedness at
any time held or owing by such Lender (including, without limitation, by
branches and agencies of such Lender wherever located) to or for the credit or
the account of any Credit Party against and on account of the Obligations and
liabilities of such Credit Party to such Lender under this Agreement or under
any of the other Credit Documents, including, without limitation, all interests
in Obligations of such Credit Party purchased by such Lender pursuant to Section
12.06(b), and all other claims of any nature or description arising out of or
connected with this Agreement or any other Credit Document, irrespective of
whether or not such Lender shall have made any demand hereunder
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<PAGE>
and although said Obligations, liabilities or claims, or any of them, shall be
contingent or unmatured.
12.03 Notices. Except as otherwise expressly provided herein, all
-------
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, telecopier or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered, if to a Credit Party, at
the address specified opposite its signature below or in the other relevant
Credit Documents, as the case may be; if to any Lender, at its address specified
for such Lender on Annex II hereto; or, at such other address as shall be
designated by any party in a written notice to the other parties hereto. All
such notices and communications shall be mailed, telegraphed, telexed,
telecopied, or cabled or sent by overnight courier, and shall be effective when
received.
12.04 Benefit of Agreement. (a) This Agreement shall be binding
--------------------
upon and inure to the benefit of and be enforceable by the respective successors
and assigns of the parties hereto, provided that the Borrower may not assign or
transfer any of its rights or obligations hereunder without the prior written
consent of the Lenders. Each Lender may at any time grant participations in any
of its rights hereunder or under any of the Notes to another financial
institution, provided that in the case of any such participation, the
participant shall not have any rights under this Agreement or any of the other
Credit Documents (the participant's rights against such Lender in respect of
such participation to be those set forth in the agreement executed by such
Lender in favor of the participant relating thereto) and all amounts payable by
the Borrower hereunder shall be determined as if such Lender had not sold such
participation, except that the participant shall be entitled to the benefits of
Sections 1.10 and 4.04 of this Agreement to the extent that such Lender would be
entitled to such benefits if the participation had not been entered into or
sold, and, provided further that no Lender shall transfer, grant or assign any
participation under which the participant shall have rights to approve any
amendment to or waiver of this Agreement or any other Credit Document except to
the extent such amendment or waiver would (i) extend the final scheduled
maturity of any Loan or Letter of Credit (unless such Letter of Credit is not
extended beyond the Final Maturity Date) in which such participant is
participating (it being understood that any waiver of the application of any
prepayment or the method of any application of any prepayment to, the
amortization of the Term Loans shall not constitute an extension of the final
maturity date), or reduce the rate or extend the time of payment of interest or
Fees thereon (except in connection with a waiver of the applicability of any
post-default increase in interest rates), or reduce the principal amount
thereof, or increase such participant's participating interest in any Commitment
over the amount thereof then in effect (it being understood that a waiver of any
Default or Event of Default or of a mandatory reduction in the Total Commitment,
or a mandatory prepayment, shall not constitute a change in the terms of any
Commitment), (ii) release any Subsidiary Guarantor from its obligations under
the Subsidiary Guaranty except in accordance with the terms thereof, (iii)
release all or substantially all of the Collateral or (iv) consent to the
assignment or transfer by any Credit Party of any of its rights and obligations
under this Agreement or any other Credit Document.
(b) Notwithstanding the foregoing, (x) any Lender may assign all or a
portion of its outstanding Term Loans and/or Revolving Commitment and its rights
and obligations
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<PAGE>
hereunder to another Lender, and (y) with the consent of the Administrative
Agent (which consent shall not be unreasonably withheld), any Lender may assign
all or a portion of its outstanding Term Loans and/or Revolving Commitment and
its rights and obligations hereunder to one or more commercial Lenders or other
financial institutions (including one or more Lenders). No assignment pursuant
to the immediately preceding sentence shall to the extent such assignment
represents an assignment to an institution other than one or more Lenders
hereunder, be in an aggregate amount less than $5,000,000 unless the entire
Commitment of the assigning Lender is so assigned. If any Lender so sells or
assigns all or a part of its rights hereunder or under the Notes, any reference
in this Agreement or the Notes to such assigning Lender shall thereafter refer
to such Lender and to the respective assignee to the extent of their respective
interests and the respective assignee shall have, to the extent of such
assignment (unless otherwise provided therein), the same rights and benefits as
it would if it were such assigning Lender. Each assignment pursuant to this
Section 12.04(b) shall be effected by the assigning Lender and the assignee
Lender executing an Assignment Agreement substantially in the form of Exhibit L
(appropriately completed). At the time of any such assignment, (i) either the
assigning or the assignee Lender shall pay to the Administrative Agent a
nonrefundable assignment fee of $3,500, (ii) Annex I shall be deemed to be
amended to reflect the Commitment of the respective assignee (which shall result
in a direct reduction to the Commitment of the assigning Lender) and of the
other Lenders, and (iii) upon the request of the assignee and/or assigning
Lender, the Borrower will issue Notes to the respective assignee and/or to the
assigning Lender in conformity with the requirements of Section 1.05. Each
Lender and the Borrower agree to execute such documents (including without
limitation amendments to this Agreement and the other Credit Documents) as shall
be necessary to effect the foregoing. Nothing in this clause (b) shall prevent
or prohibit any Lender from pledging its Notes or Loans to a Federal Reserve
Bank in support of borrowings made by such Lender from such Federal Reserve
Bank.
(c) Notwithstanding any other provisions of this Section 12.04, no
transfer or assignment of the interests or obligations of any Lender hereunder
or any grant of participation therein shall be permitted if such transfer,
assignment or grant would require the Borrower to file a registration statement
with the SEC or to qualify the Loans under the "Blue Sky" laws of any State.
(d) Each Lender initially party to this Agreement hereby represents,
and each Person that became a Lender pursuant to an assignment permitted by this
Section 12 will, upon its becoming party to this Agreement, represent that it is
a commercial lender, other financial institution or other "accredited" investor
(as defined in SEC Regulation D) which makes loans in the ordinary course of its
business and that it will make or acquire Loans for its own account in the
ordinary course of such business, provided that subject to the preceding clauses
(a) and (b), the disposition of any promissory notes or other evidences of or
interests in Indebtedness held by such Lender shall at all times be within its
exclusive control.
12.05 No Waiver; Remedies Cumulative. No failure or delay on the
------------------------------
part of any Agent or any Lender in exercising any right, power or privilege
hereunder or under any other Credit Document and no course of dealing between
any Credit Party and any Agent or any Lender shall operate as a waiver thereof;
nor shall any single or partial exercise of any right,
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<PAGE>
power or privilege hereunder or under any other Credit Document preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege hereunder or thereunder. The rights and remedies herein expressly
provided are cumulative and not exclusive of any rights or remedies which any
Agent or any Lender would otherwise have. No notice to or demand on any Credit
Party in any case shall entitle any Credit Party to any other or further notice
or demand in similar or other circumstances or constitute a waiver of the rights
of the Agents or the Lenders to any other or further action in any circumstances
without notice or demand.
12.06 Payments Pro Rata. (a) The Administrative Agent agrees that
-----------------
promptly after its receipt of each payment from or on behalf of any Credit Party
in respect of any Obligations of such Credit Party hereunder, it shall
distribute such payment to the Lenders (other than any Lender that has expressly
waived its right to receive its pro rata share thereof) pro rata based upon
--- ----
their respective shares, if any, of the Obligations with respect to which such
payment was received.
(b) Each of the Lenders agrees that, if it should receive any amount
hereunder (whether by voluntary payment, by realization upon security, by the
exercise of the right of setoff or Lender's lien, by counterclaim or cross
action, by the enforcement of any right under the Credit Documents, or
otherwise) which is applicable to the payment of the principal of, or interest
on, the Loans or Fees, of a sum which with respect to the related sum or sums
received by other Lenders is in a greater proportion than the total of such
Obligation then owed and due to such Lender bears to the total of such
Obligation then owed and due to all of the Lenders immediately prior to such
receipt, then such Lender receiving such excess payment shall purchase for cash
without recourse or warranty from the other Lenders an interest in the
Obligations of the respective Credit Party to such Lenders in such amount as
shall result in a proportional participation by all of the Lenders in such
amount, provided that if all or any portion of such excess amount is thereafter
recovered from such Lender, such purchase shall be rescinded and the purchase
price restored to the extent of such recovery, but without interest.
(c) Notwithstanding anything to the contrary contained herein, the
provisions of the preceding Sections 12.06(a) and (b) shall be subject to the
express provisions of this Agreement which require, or permit, differing
payments to be made to Non-Defaulting Lenders as opposed to Defaulting Lenders.
12.07 Calculations; Computations. (a) The financial statements to
--------------------------
be furnished to the Lenders pursuant hereto shall be made and prepared in
accordance with GAAP consistently applied throughout the periods involved
(except as set forth in the notes thereto or as otherwise disclosed in writing
by the Borrower to the Lenders), provided that (x) except as otherwise
specifically provided herein, all computations determining compliance with
Section 8, including definitions used therein, shall utilize accounting
principles and policies in effect at the time of the preparation of, and in
conformity with those used to prepare, the December 31, 1998 historical
financial statements of the Borrower delivered to the Lenders pursuant to
Section 6.10(b) and (y) that if at any time the computations determining
compliance with Section 8 utilize accounting principles different from those
utilized in the financial statements furnished to the Lenders, such financial
statements shall be accompanied by reconciliation work-sheets.
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(b) All computations of interest and Fees hereunder shall be made on
the actual number of days elapsed over a year of 360 days.
12.08 Governing Law; Submission to Jurisdiction; Venue; Waiver of
-----------------------------------------------------------
Jury Trial. (a) This Agreement and the other Credit Documents and the rights
- ----------
and obligations of the parties hereunder and thereunder shall be construed in
accordance with and be governed by the law of the state of New York. Any legal
action or proceeding with respect to this Agreement or any other Credit Document
may be brought in the courts of the State of New York or of the United States
for the Southern District of New York, and, by execution and delivery of this
Agreement, each Credit Party hereby irrevocably accepts for itself and in
respect of its property, generally and unconditionally, the jurisdiction of the
aforesaid courts. Each Credit Party further irrevocably consents to the service
of process out of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to each Credit Party located outside New York City and by hand
delivery to each Credit Party located within New York City, at its address for
notices pursuant to Section 12.03, such service to become effective 30 days
after such mailing. Each Credit Party hereby irrevocably designates appoints
and empowers CT Corporation System, with offices on the date hereof located at
1633 Broadway, New York, New York 10019, as its agent for service of process in
respect of any such action or proceeding. Nothing herein shall affect the right
of any Agent, any Lender to serve process in any other manner permitted by law
or to commence legal proceedings or otherwise proceed against any Credit Party
in any other jurisdiction.
(b) Each Credit Party hereby irrevocably waives any objection which
it may now or hereafter have to the laying of venue of any of the aforesaid
actions or proceedings arising out of or in connection with this Agreement or
any other Credit Document brought in the courts referred to in clause (a) above
and hereby further irrevocably waives and agrees not to plead or claim in any
such court that any such action or proceeding brought in any such court has been
brought in an inconvenient forum.
(c) Each of the parties to this agreement hereby irrevocably waives
all right to a trial by jury in any action, proceeding or counterclaim arising
out of or relating to this agreement, the other credit documents or the
transactions contemplated hereby or thereby.
12.09 Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Borrower and the
Administrative Agent.
12.10 Effectiveness. This Agreement shall become effective on the
-------------
date (the "Effective Date") on which the Borrower, each Agent and each of the
Lenders shall have signed a copy hereof (whether the same or different copies)
and shall have delivered the same to the Administrative Agent at the Notice
Office of the Administrative Agent or, in the case of the Lenders, shall have
given to the Administrative Agent telephonic (confirmed in writing), written,
telex or facsimile transmission notice (actually received) at such office that
the same has been
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signed and mailed to it.
12.11 Headings Descriptive. The headings of the several sections and
--------------------
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
12.12 Amendment or Waiver. Neither this Agreement nor any other
-------------------
Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination is
in writing signed by the Borrower and the Required Lenders, provided that no
such change, waiver, discharge or termination shall, without the consent of each
Lender (other than a Defaulting Lender) directly affected thereby, (i) extend
the Final Maturity Date, (it being understood that any waiver of the application
of any prepayment of or the method of application of any prepayment to the
amortization of, the Loans shall not constitute any such extension), or reduce
the rate or extend the time of payment of interest (other than as a result of
waiving the applicability of any post-default increase in interest rates) or
Fees thereon, or reduce the principal amount thereof, or increase the Commitment
of any Lender over the amount thereof then in effect (it being understood that a
waiver of any Default or Event of Default or of a mandatory reduction in the
Total Commitment shall not constitute a change in the terms of any Commitment of
any Lender), (ii) release or permit the release of all or substantially all of
the Collateral or release any Subsidiary Guarantor from the Subsidiary Guaranty
(in each case except as expressly provided in the Credit Documents), (iii)
amend, modify or waive any provision of this Section, (iv) reduce the percentage
specified in, or otherwise modify, the definition of Required Lenders or (v)
consent to the assignment or transfer by the Borrower of any of its rights and
obligations under this Agreement. No provision of Section 2 or 11 may be
amended without the consent of the Letter of Credit Issuer or the Administrative
Agent, respectively.
12.13 Survival. All indemnities set forth herein including, without
--------
limitation, in Section 1.10, 1.11, 4.04, 11.07 or 12.01 shall survive the
execution and delivery of this Agreement and the making and repayment of the
Loans.
12.14 Domicile of Loans. Each Lender may transfer and carry its
-----------------
Loans at, to or for the account of any branch office, subsidiary or affiliate of
such Lender, provided that the Borrower shall not be responsible for costs
arising under Section 1.10 or 4.04 resulting from any such transfer (other than
a transfer pursuant to Section 1.12) to the extent not otherwise applicable to
such Lender prior to such transfer.
12.15 Confidentiality. Subject to Section 12.04, the Lenders shall
---------------
hold all non-public information obtained pursuant to the requirements of this
Agreement which has been identified as such by the Borrower in accordance with
its customary procedure for handling confidential information of this nature and
in accordance with safe and sound banking practices and in any event may make
disclosure reasonably required by any bona fide transferee or participant in
---- ----
connection with the contemplated transfer of any Loans or participation therein
(so long as such transferee or participant agrees to be bound by the provisions
of this Section 12.15) or as required or requested by any governmental agency or
representative thereof or pursuant to
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legal process, provided that, unless specifically prohibited by applicable law
--------
or court order, each Lender shall notify the Borrower of any request by any
governmental agency or representative thereof (other than any such request in
connection with an examination of the financial condition of such Lender by such
governmental agency) for disclosure of any such non-public information prior to
disclosure of such information, and provided further that in no event shall any
----------------
Lender be obligated or required to return any materials furnished by the
Borrower or any Subsidiary.
12.16 Register. The Borrower hereby designates the Administrative
--------
Agent to serve as its agent, solely for purposes of this Section 12.16, to
maintain a register (the "Register") on which it will record the Commitments
from time to time of each of the Lenders, the Loans made by each of the Lenders
and each repayment in respect of the principal amount of the Loans of each
Lender. Failure to make any such recordation, or any error in such recordation,
shall not affect the Borrower's obligations in respect of such Loans. With
respect to any Lender, the transfer of any Term Loan or the Revolving Commitment
of such Lender and the rights to the principal of, and interest on, any Loan
made pursuant to such Revolving Commitment shall not be effective until such
transfer is recorded on the Register maintained by the Administrative Agent with
respect to ownership of such Commitment and/or Loans and prior to such
recordation all amounts owing to the transferor with respect to such Commitment
and/or Loans shall remain owing to the transferor. The registration of
assignment or transfer of all or part of any Commitment and/or Loans shall be
recorded by the Administrative Agent on the Lender Register only upon the
acceptance by the Administrative Agent of a properly executed and delivered
Assignment Agreement pursuant to Section 12.04(b). The Borrower agrees to
indemnify the Administrative Agent from and against any and all losses, claims,
damages and liabilities of whatsoever nature which may be imposed on, asserted
against or incurred by the Administrative Agent in performing its duties under
this Section 12.16 other than those resulting from the Administrative Agent's
willful misconduct or gross negligence.
* * *
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<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Agreement to be duly executed and delivered as of the date
first above written.
3369 Progress Drive HCI DIRECT, INC.
Bensalem, Pennsylvania 19020 as Borrower
Attention: Arthur Hughes
Telephone: (215) 244-9600 By________________________________
Facsimile: (215) 244-9355 Name:
Title:
BANKERS TRUST COMPANY,
Individually and as Administrative
Agent
By________________________________
Name:
Title:
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<PAGE>
Annex I
-------
COMMITMENTS
-----------
<TABLE>
<CAPTION>
Term Revolving
Lender Commitment Commitment
------ ---------- ----------
<S> <C> <C>
Bankers Trust Company
Total: [$110,000,000] $ 25,000,000
============ ============
</TABLE>
<PAGE>
Annex II
--------
LENDER ADDRESSES
----------------
Bankers Trust Company 130 Liberty Street
New York, New York 10006
Attention: Mary Kay Coyle
Tel. No.:212-250-9094
Fax No.:212-250-7318
<PAGE>
Annex III
Page 86
EXISTING LETTERS OF CREDIT
--------------------------
[TO BE COMPLETED BY BORROWER]
<PAGE>
Annex IV
Page 87
GOVERNMENT APPROVALS
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[TO BE COMPLETED BY BORROWER]
<PAGE>
Annex V
Page 88
SUBSIDIARIES
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[TO BE COMPLETED BY BORROWER]
<PAGE>
Annex VI
Page 89
PROPERTIES
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[TO BE COMPLETED BY BORROWER]
<PAGE>
Annex VII
Page 90
EXISTING INDEBTEDNESS
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[TO BE COMPLETED BY BORROWER]
<PAGE>
Annex VIII
Page 91
INSURANCE POLICIES
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[TO BE COMPLETED BY BORROWER]
<PAGE>
Annex IX
Page 92
EXISTING LIENS
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[TO BE COMPLETED BY BORROWER]
<PAGE>
MANAGEMENT FEES
---------------
[TO BE COMPLETED BY BORROWER]
<PAGE>
TABLE OF CONTENTS
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<S> <C>
SECTION 1. Amount and Terms of Credit 1
1.01 Commitment 1
1.02 Minimum Borrowing Amounts, etc 3
1.03 Notice of Borrowing 3
1.04 Disbursement of Funds 4
1.05 Register 4
1.06 Conversions 5
1.07 Pro Rata Borrowings 5
1.08 Interest 5
1.09 Interest Periods 6
1.10 Increased Costs, Illegality, etc 7
1.11 Compensation 9
1.12 Change of Lending Office 10
1.13 Replacement of Lenders 10
SECTION 2. Letters of Credit 11
2.01 Letters of Credit 11
2.02 Minimum Stated Amount 12
2.03 Letter of Credit Requests; Notices of Issuance 12
2.04 Agreement to Repay Letter of Credit Drawings 12
2.05 Letter of Credit Participations 13
2.06 Increased Costs 15
SECTION 3. Fees; Commitments 16
3.01 Fees 16
3.02 Voluntary Reduction of Commitments 16
3.03 Mandatory Adjustments of Commitments, etc. 17
SECTION 4. Payments 17
4.01 Voluntary Prepayments 17
4.02 Mandatory Prepayments 18
4.03 Method and Place of Payment 21
4.04 Net Payments 21
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SECTION 5. Conditions Precedent 23
5.01 Conditions Precedent to Loans on the Initial Borrowing
Date 23
5.02 Conditions Precedent to All Credit Events 27
SECTION 6. Representations, Warranties and Agreements 27
6.01 Corporate Status 28
6.02 Corporate Power and Authority 28
6.03 No Violation 28
6.04 Litigation . 28
6.05 Use of Proceeds; Margin Regulations 28
6.06 Governmental Approvals 29
6.07 Investment Company Act 29
6.08 Public Utility Holding Company Act 29
6.09 True and Complete Disclosure 29
6.10 Financial Condition; Financial Statements 30
6.11 Security Interests 30
6.12 Tax Returns and Payments 31
6.13 Compliance with ERISA 31
6.14 Subsidiaries 32
6.15 Patents, etc 32
6.16 Pollution and Other Regulations 32
6.17 Properties 33
6.18 Labor Relations 33
6.19 Senior Subordinated Notes 33
6.20 Existing Indebtedness 33
SECTION 7. Affirmative Covenants 34
7.01 Information Covenants 34
7.02 Books, Records and Inspections 36
7.03 Insurance 37
7.04 Payment of Taxes 37
7.05 Consolidated Corporate Franchises 37
7.06 Compliance with Statutes, etc 37
7.07 ERISA 37
7.08 Good Repair 38
7.09 End of Fiscal Years; Fiscal Quarters 38
7.10 Use of Proceeds 38
7.11 Additional Security; Further Assurances 38
7.12 Compliance with Environmental Laws 39
7.13 Interest Rate Agreements 39
SECTION 8. Negative Covenants 40
8.01 Changes in Business 40
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8.02 Consolidation, Merger, Sale or Purchase of Assets, etc 40
8.03 Liens 41
8.04 Indebtedness 43
8.05 Capital Expenditures 43
8.06 Advances, Investments and Loans 44
8.07 Leases 45
8.08 Prepayments of Indebtedness, etc. 45
8.09 Dividends, etc 45
8.10 Transactions with Affiliates 47
8.11 Fixed Charge Coverage Ratio 47
8.12 Senior Leverage Ratio 47
8.13 Issuance of Stock 47
SECTION 9. Events of Default 48
9.01 Payments 48
9.02 Representations, etc. 48
9.03 Covenants 48
9.04 Default Under Other Agreements 48
9.05 Bankruptcy, etc 48
9.06 ERISA 49
9.07 Security Documents 49
9.08 Subsidiary Guaranty 49
9.09 Judgments 49
SECTION 10. Definitions 50
SECTION 11. The Agents 71
11.01 Appointment 71
11.02 Nature of Duties 71
11.03 Lack of Reliance on an Agent 72
11.04 Certain Rights of the Administrative Agent 72
11.05 Reliance 72
11.06 Indemnification 73
11.07 Each Agent in Its Individual Capacity 73
11.08 Holders 73
11.09 Resignation 73
SECTION 12. Miscellanoes
12.01 Payment of Expenses, etc. 74
12.02 Right of Setoff 74
12.03 Notices 75
12.04 Benefit of Agreement 75
12.05 No Waiver; Remedies Cumulative 77
12.06 Payments Pro Rata 77
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12.07 Calculations; Computations 77
12.08 Governing Law; Submission to Jurisdiction; Venue;
Waiver of Jury Trial 78
12.09 Counterparts 78
12.10 Effectiveness 79
12.11 Headings Descriptive 79
12.12 Amendment or Waiver 79
12.13 Survival 79
12.14 Domicile of Loans 79
12.15 Confidentiality 79
12.16 Register 80
ANNEX I - Commitments
ANNEX II - Lender Addresses
ANNEX III - Existing Letters of Credit
ANNEX IV - Government Approvals
ANNEX V - Subsidiaries
ANNEX VI - Properties
ANNEX VII - Existing Indebtedness
ANNEX VIII - Insurance Policies
ANNEX IX - Existing Liens
[ANNEX X - Management Fees]
EXHIBIT A - Form of Notice of Borrowing
EXHIBIT B-1 - Form of Term Note
EXHIBIT B-2 - Form of Revolving Note
EXHIBIT B-3 - Form of Swingline Note
EXHIBIT C - Form of Letter of Credit Request
EXHIBIT D-1 - Form of Opinion of Skadden, Arps, Slate, Meagher & Flom LLP
EXHIBIT D-2 - Form of Opinion of White & Case LLP
EXHIBIT E - Form of Officers' Certificate
[EXHIBIT F - Form of Borrowing Base Certificate]
EXHIBIT G - Form of Subsidiary Guaranty
EXHIBIT H-1 - Form of Borrower Pledge Agreement
EXHIBIT H-2 - Form of Subsidiary Guarantor Pledge Agreement
EXHIBIT I-1 - Form of Borrower Security Agreement
EXHIBIT I-2 - Form of Subsidiary Guarantor Security Agreement
EXHIBIT J - Form of Solvency Certificate
EXHIBIT K - Form of Consent Letter
EXHIBIT L - Form of Assignment Agreement
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