EXHIBIT 3.7

296178.02-New York S2A
                      RESTATED CERTIFICATE OF INCORPORATION

                                       OF

                                HCI Direct, Inc.

                    (pursuant to Sections 242 and 245 of the
                        Delaware General Corporation Law)

                  HCI Direct,  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 1/8.6976942 or 0.114973 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  1/8.6976942 or 0.114973
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 1/8.6976942 or 0.114973 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
1/8.6976942  or  0.114973  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.


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296178.02-New York S2A

                  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.

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          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.

          4 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.

          5 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.

          6 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

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(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 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

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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  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 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

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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  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

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296178.02-New York S2A

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 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

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296178.02-New York S2A

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.

                           7  Tag-Along and Drag-Along Rights.  So long as the
Stockholders Agreement, dated as of October 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

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296178.02-New York S2A

         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 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

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296178.02-New York S2A

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 PREFFERED 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  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

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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.

                  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

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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").

                  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

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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, 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

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296178.02-New York S2A

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 sufficient 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

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296178.02-New York S2A

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 (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

                                       15
<PAGE>


296178.02-New York S2A

         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."

                  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

                                       16
<PAGE>



296178.02-New York S2A

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
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.

                                       17
<PAGE>



                                       18
296178.02-New York S2A

          (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.


                                       18

<PAGE>





                  IN  WITNESS   WHEREOF,   the   Corporation   has  caused  this
Certificate of Amendment to be executed this th day of October, 1999.


                                            HCI Direct, Inc.



                                            By:
                                               --------------------------------
                                               Name:  John F. Biagini
                                               Title: Chairman and Chief
                                                      Executive Officer