EXHIBIT 4.0
AMENDMENT
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AMENDMENT (this "Amendment"), dated as of September 19, 2000,
among HCI DIRECT, INC. (formerly known as Hosiery Corporation of America, Inc.),
a Delaware corporation (the "Borrower", the lending institutions party to the
Credit Agreement referred to below (the "Banks") and BANKERS TRUST COMPANY, as
Agent (in such capacity, the "Agent"). Unless otherwise indicated, all
capitalized terms used herin and not otherwise defined shall have the respective
meanings provided such terms in the Credit Agreement referrred to below.
W I T N E S S E T H
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WHEREAS, the Borrower, the Banks and the Agent are parties to
a Credit Agreement, dated as of October 17, 1994 and amended and restated as of
November 20, 1997 (as amended, amended and restated, modified and/or
supplemented through but not including the Amendment Date referred to below, the
"Credit Agreement"); and
WHEREAS, subject to and on the terms and conditions set forth
herein, the parties hereto wish to amend the Credit Agreement, as provided
below;
NOW, THEREFORE, it is agreed:
I. Amendments to Credit Agreement
1. Section 7.01(d) of the Credit Agreement is hereby amended by (x)
inserting after the phrase "60 days" therein the phrase "(30 days after the
commencement of the fiscal year commencing January 1, 2001)" and (y) inserting
at the end of the first sentence thereof the phrase "which, budget shall include
in any event quarterly balance sheets and cash flow statements".
2. Section 8.11 of the Credit Agreement is hereby amended by deleting the
table appearing in said Section in its entirety and inserting in lieu thereof
the following new table:
"Fiscal Quarter Ratio
--------------- -----
Fiscal quarter ended in September, 2000 0.55 to 1.00
Fiscal quarter ended in December, 2000
through March 30, 2001 0.85 to 1.00
Each fiscal quarter thereafter 1.15 to 1.00"
3. Section 8.12 of the Credit Agreement is hereby amended by deleting the
table appearing in said Section in its entirety and inserting in lieu thereof
the following new table:
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"Fiscal Quarter Amount
--------------- ------
Fiscal quarter ended in September, 2000 $18,000,000
Fiscal quarter ended in December, 2000
Through March 30, 2001 26,500,000
Fiscal quarter ended in March, 2001 38,000,000
Fiscal quarter ended in June, 2001 and
September, 2001 45,000,000
Each fiscal quarter ended thereafter 50,000,000"
4. Section 8.13 of the Credit Agreement is hereby amended by deleting the
table appearing in said Section in its entirety and inserting in lieu thereof
the following new table:
"Fiscal Quarter Ratio
--------------- -----
Fiscal quarter ended in September, 2000 3.80 to 1.00
Fiscal quarter ended in December, 2000
through March 30, 2001 2.55 to 1.00
Each fiscal quarter thereafter 2.00 to 1.00"
5. The definitions of Applicable Base Rate Margin and Applicable Eurodollar
Margin in Section 10 of the Credit Agreement are hereby deleted and the
following definitions added in lieu thereof:
"Applicable Base Rate Margin" shall mean 2.00% less the Margin
Reduction Discount, if any.
"Applicable Eurodollar Margin" shall mean 3.00% less the
Margin Reduction Discount, if any.
6. The definition of Margin Reduction Discount in Section 10 of the Credit
Agreement is hereby amended by (x) deleting the first sentence thereof and
replacing it with the following sentence:
"Margin Reduction Discount" shall mean zero, provided that the
Margin Reduction Discount shall be increased to .50%, 1.00%, 1.25% and
1.50%, as the case may be, as specified in clauses (i), (ii), (iii) or
(iv) below, at any time on or after the Specified Amendment Date, when,
and for so long as, the ratio set forth in such clause has been
satisfied as at the end of the then Relevant Test Period:
(i) the Margin Reduction Discount shall be .50% in the event
that as at the end of the Relevant Test Period the Leverage Ratio is
greater than 2.00 to 1 but less than or equal to 2.25 to 1;
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(ii) the Margin Reduction Discount shall be 1.00% in the event
that as at the end of the Relevant Test Period the Leverage Ratio is
greater than 1.75 to 1 but less than or equal to 2.00 to 1;
(iii) the Margin Reduction Discount shall be 1.25% in the
event that as of the end of the Relevant Test Period the Leverage Ratio
is greater than 1.25 to 1 but less than or equal to 1.75 to 1; or
(iv) the Margin Reduction Discount shall be 1.50% in the event
that as of the end of the Relevant Test Period the Leverage Ratio is
less than or equal to 1.25 to 1."
and (y) changing the reference to "clause (i) or (ii)" in the last sentence
thereof to read "clause (i), (ii), (iii) or (iv)".
7. Section 10 of the Credit Agreement is hereby amended by adding in
appropriate alphabetical order the new definition below:
"Specified Amendment Date" shall mean the Amendment Date under
and as defined in the Amendment to this Agreement dated as of September
19, 2000."
II. Miscellaneous.
----------------------
1. In order to induce the Banks to enter into this Amendment,
the Borrower hereby (i) makes each of the representations, warranties and
agreements contained in Section 6 of the Credit Agreement and (ii) represents
and warrants that there exists no Default or Event of Default, in each case on
the Amendment Date, both before and after giving effect to this Amendment.
2. This Amendment is limited as specified and shall not
constitute a modification, acceptance or waiver of any other provision of the
Credit Agreement or any other Credit Document.
3. This Amendment may be executed in any number of
counterparts and by the different parties hereto on spearate counterparts, each
of which counterparts when executed and delivered shall be an original, but all
of which shall together constitute one and the same instrument. A complete set
of counterparts shall be lodged with the Borrower and the Agent.
4. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW
OF THE STATE OF NEW YORK.
5. This Amendment shall become effective on the first date
(the "Amendment Date") on which (i) each of the Borrower and the Required Banks
shall have signed a counterpart hereof (whether the same or different
counterparts) and shall have delivered (including by way of facsimile
transmission) the same to White & Case LLP, 1155 Avenue of the Americas, New
York, NY 10036 Attention: Joseph Mudho (facsimile number 212-354-8113) and (ii)
Kelso (or a Designated Affiliate) shall have purchased for $5 million in cash
additional pay in kind preferred stock of the Borrower, with the portion of the
proceeds thereof equal to the amount of the Scheduled Repayment due on September
30, 2000 to have been applied to the repayment of theTerm Loans and the
remaineder to have been applied to repay, at the Borrower's option, Revolving
Loans and/or Incremental Revolving Loans (without, in each case reducing any
Commitments).
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6. It is agreed that anything in the Credit Agreement
notwithstanding, (x) the proceeds of the equity purchase by Kelso described in
clause 5 above do not have to be applied to repay the Term Loans in excess of
the amount of the Scheduled Repayment due September 30, 2000 and (y) the
repayment of Term Loans with the proceeds of such equity purchase by Kelso shall
be applied to satisfy the Scheduled Repayment due September 30, 2000.
7. From and after the Amendment Date, all references to the
Credit Agreement in the Credit Agreement and the other Credit Documents shall be
deemed to be references to the Credit Agreement as modified hereby.
* * *
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IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Amendment to be duly executed and delivered as of the date
first above written.
HCI DIRECT, INC.
By: /s/ Michael D. Rowley
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Name: Michael D. Rowley
Title: Chief Financial Officer
BANKERS TRUST COMPANY,
Individually and as Agent
By: /s/ Scottye D. Lindsey
------------------------------
Name: Scottye D. Lindsey
Title: Vice President
BANK POLSKA KASA OPIEKI, S.A.
By: /s/ William Reynolds
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Name: William Reynolds
Title: Vice President
EUROPEAN AMERICAN BANK
By: /s/ Kristen Burke
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Name: Kristen Burke
Title: Vice President
FIRST UNION NATIONAL BANK
By: /s/ Joan Anderson
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Name: Joan Anderson
Title: Vice President
<PAGE>
NATIONAL WESTMINSTER BANK PLC
NEW YORK and/or NASSAU BRANCH
By: /s/ Andrew S. Weinberg
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Name: Andrew S. Weinberg
Title: Vice President
BANK OF AMERICA, N.A.
(formerly, NationsBank, N.A.)
By: /s/ Deirdre B. Doyle
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Name: Deirdre B. Doyle
Title: Principal
