EXHIBIT 4-C-7
EXECUTION
HARTMARX CORPORATION
SEVENTH AMENDMENT TO CREDIT AGREEMENT
This SEVENTH AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is dated as
of December 21, 1998 and entered into by and among HARTMARX CORPORATION, a
Delaware corporation ("Borrower"), the LENDERS LISTED ON THE SIGNATURE PAGES
HEREOF (each individually referred to as a "Lender" and collectively as
"Lenders"), GENERAL ELECTRIC CAPITAL CORPORATION as Managing Agent and
Collateral Agent for Lenders ("Managing Agent") and THE BANK OF NEW YORK and
BANKAMERICA BUSINESS CREDIT, INC. as co-agents ("Co-Agents") and, for purposes
of Section 3 hereof, the GUARANTORS IDENTIFIED ON THE SIGNATURE PAGES HEREOF
(collectively the "Guarantors"), and is made with reference to that certain
Credit Agreement dated as of March 23, 1994, among Borrower, Lenders, Managing
Agent and Co-Agents, as amended by the First Amendment to Credit Agreement dated
as of August 26, 1994 among Borrower, Lenders, Managing Agent and Co-Agents, by
the Second Amendment to Credit Agreement dated as of March 20, 1995 among
Borrower, Lenders, Managing Agent and Co-Agents, by the Third Amendment to
Credit Agreement dated as of June 30, 1995 among Borrower, Lenders, Managing
Agent, Co-Agents and consented to by Guarantors, by the Fourth Amendment to
Credit Agreement dated as of November 30, 1995 by and among Borrower, Lenders,
Managing Agent, Co-Agents and consented to by Guarantors, by the Fifth Amendment
to Credit Agreement dated as of January 30, 1996 by and among Borrower, Lenders,
Managing Agent, Co-Agents and consented to by Guarantors and by the Sixth
Amendment to Credit Agreement dated as of October 15, 1997 by and among
Borrower, Lenders, Managing Agent, Co-Agents and consented to by Guarantors (the
"Credit Agreement"; capitalized terms used herein without definition shall have
the same meanings herein as set forth in the Credit Agreement). Unless otherwise
indicated, Section and subsection references contained herein shall be to the
corresponding Sections and subsections of the Credit Agreement.
RECITALS
WHEREAS, Borrower has informed Managing Agent and Lenders that, (x)
pursuant to that certain Agreement (the "Coppley Acquisition Agreement") made as
of November 29, 1998 by and among Keithmoor Limited, a corporation incorporated
under the laws of the Province of Ontario ("Keithmoor"), Xxxx XxXxxxxxx, an
individual residing in the City of Xxxxxxxx ("XxXxxxxxx"), 1315751 Ontario Inc.,
a corporation incorporated under the laws of the Province of Ontario and a
direct wholly-owned subsidiary of Borrower ("Ontario Inc.") and The Xxxxxxx,
Xxxxx and Xxxxxxx
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Limited, a corporation incorporated under the laws of the Province of Ontario
("Coppley"), Ontario Inc. intends to acquire from Keithmoor and XxXxxxxxx on the
date hereof (the "Coppley Closing Date") all of the issued and outstanding
shares of Coppley (the "Coppley Acquisition") and (y) immediately after the
consummation of such acquisition, Coppley shall, pursuant to applicable law, be
amalgamated with and into Ontario Inc., with Ontario Inc. the surviving
corporation;
WHEREAS, pursuant to the terms of the Coppley Acquisition Agreement, (a)
the total consideration payable by Ontario Inc. in respect of the Coppley
Acquisition shall be (i) an amount equal to the sum of $525,800 (Canadian), to
be payable by Ontario Inc. to XxXxxxxxx and Keithmoor on the Coppley Closing
Date and (y) $7,724,200.00 (Canadian), to be provided by Ontario Inc. to Coppley
to pay Keithmoor in respect of the Keithmoor Debt (as defined in the Coppley
Acquisition Agreement) (the sum of the amounts payable pursuant to the preceding
clauses (x) and (y), the "Initial Coppley Consideration") and (ii) the delivery
of a promissory note (which shall be subordinated to the Obligations) issued by
Coppley (x) to Keithmoor in the aggregate amount of $2,103,200.00 (Canadian) and
(y) to Keithmoor in the aggregate amount of $6,146,800.00 (Canadian), subject to
adjustment as provided in Section 3.3 of the Coppley Acquisition Agreement (the
promissory notes referred to in the preceding clauses (x) and (y), the "Coppley
Seller Notes") and (b) the Coppley Seller Notes shall be guaranteed by Borrower
(the "Coppley Guaranty").
WHEREAS, Ontario Inc. intends to finance the Initial Coppley Consideration
by (i) obtaining an intercompany loan from Borrower in the aggregate principal
amount of $12,000,000 and (ii) selling 100% of the issued and outstanding stock
of Ontario Inc. to Borrower.
WHEREAS, immediately prior to the Coppley Closing Date, Coppley financed a
portion of its working capital needs pursuant to that certain Letter Agreement
by and among Canadian Imperial Bank of Commerce ("CIBC") and Coppley dated as of
August 17, 1998 (the "Existing Coppley Credit Facility").
WHEREAS, following the consummation of the amalgamation of Coppley with and
into Ontario Inc., Ontario Inc. will finance a portion of its working capital
needs pursuant to the Existing Coppley Credit Facility; and
WHEREAS, Borrower and Lenders desire, subject to the terms and conditions
set forth herein, to (i) amend the Credit Agreement to permit the Coppley
Acquisition, and (ii) to make certain other amendments to the Credit Agreement
as set forth below.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
SECTION 1. AMENDMENTS TO THE CREDIT AGREEMENT
1.1 Amendments to Section 1: Definitions
A. Subsection 1.1 of the Credit Agreement is hereby amended by adding
thereto the
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following definitions, which shall be inserted in proper alphabetical order:
"CIBC" has the meaning assigned that term in the Seventh Amendment.
"Coppley" has the meaning assigned that term in the Seventh Amendment.
"Coppley Acquisition" has the meaning assigned that term in the
Seventh Amendment.
"Coppley Acquisition Agreement" has the meaning assigned that term in
the Seventh Amendment.
"Coppley Closing Date" has the meaning assigned that term in the
Seventh Amendment.
"Coppley Documents" means the Coppley Acquisition Agreement, Coppley
Seller Notes, Coppley Guaranty and Existing Coppley Credit Facility and all
material agreements delivered with or in connection with the foregoing,
collectively.
"Coppley Guaranty" has the meaning assigned that term in the Seventh
Amendment.
"Coppley Seller Notes" has the meaning assigned that term in the
Seventh Amendment.
"Existing Coppley Credit Facility" has the meaning assigned that term
in the Seventh Amendment.
"Ontario Inc." has the meaning assigned to that term in the Seventh
Amendment.
"Seventh Amendment" means that certain Seventh Amendment to this
Agreement.
B. Subsection 1.1 of the Credit Agreement is hereby amended by adding the
following sentence to the definition of "Borrowing Base" immediately after the
last sentence contained therein:
"Notwithstanding anything to the contrary contained herein, from and
after the Coppley Closing Date the Borrowing Base shall be reduced in an
amount equal to the sum of (i) the aggregate outstanding principal amount
of the intercompany loans made by Borrower to Ontario Inc. from time to
time plus (ii) the aggregate amount of the equity Investment made by
Borrower in Ontario Inc. on or before the Coppley Closing Date plus (iii)
the sum of the aggregate principal amount of each other loan, advance,
capital contribution, investment or other transfer made by Borrower or any
of its Subsidiaries in, to or with respect to
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Ontario Inc. plus (iv) the aggregate outstanding amount principal of the
Coppley Seller Notes.
1.2 Amendment to Section 7: Borrower's Negative Covenants
A. Indebtedness. Subsection 7.1 of Credit Agreement is hereby amended by
(i) inserting the phrase "; provided further that, notwithstanding anything to
the contrary contained herein, (x) Ontario Inc. shall not become or remain
liable with respect to Indebtedness to Borrower in an aggregate principal amount
in excess of $12,000,000 at any time outstanding (and it is hereby acknowledged
and agreed that the proceeds of such Indebtedness should not be used for any
purposes other than (i) to finance a portion of the Initial Coppley
Consideration, (ii) to finance Ontario Inc.'s working capital needs and (iii)
for Ontario Inc.'s general corporate purposes)" immediately prior to the second
reference to ";" contained in clause (iv) thereof, (ii) deleting the reference
to "and" contained in clause (x) thereof, deleting the reference to "."
contained in clause (xi) thereof and substituting "; and" therefore and
inserting the phrase "(xii) from and after the Coppley Closing Date and the
amalgamation of Coppley with and into Ontario Inc., Ontario Inc. may become and
remain liable with respect to the Indebtedness outstanding (x) under the
Existing Coppley Credit Facility; provided that the aggregate principal amount
of such Indebtedness shall not exceed $5,000,000 (Canadian) at any time
outstanding (and it is hereby acknowledged and agreed that the proceeds of such
Indebtedness should not be used for any purposes other than (i) to finance a
portion of the Initial Coppley Consideration, (ii) to finance Ontario Inc.'s
working capital needs and (iii) for Ontario Inc.'s general corporate purposes)
and (y) under the Coppley Seller Notes; provided (i) the Coppley Seller Notes
shall be subordinated to the Obligations in form and substance satisfactory to
Managing Agent and (ii) the aggregate principal amount of such Indebtedness
shall not exceed $8,250,000 (Canadian) (as such amount may be adjusted pursuant
to Section 3.3 of the Coppley Acquisition Agreement) at any time outstanding "
therein.
B. Liens and Related Matters. Subsection 7.2(A) of the Credit Agreement is
amended by (i) deleting the reference to "; and" contained in clause (v) thereof
and substituting ";" therefor, (ii) inserting the phrase ": provided further
that, from and after the Coppley Acquisition Date and the amalgamation of
Coppley with and into Ontario Inc., the property of Ontario Inc. may be
encumbered by the Liens set forth on Schedule 1 annexed to the Seventh Amendment
and by this reference incorporated herein" immediately prior to the reference to
"." contained in clause (vi) thereof, (iii) deleting the reference to "."
contained in clause (vi) thereof and substituting "; and (vii) Liens on the
property of Ontario Inc. securing the Coppley Seller Notes; provided that such
Liens shall be subject to (x) the Liens in favor of Collateral Agent securing
Ontario Inc.'s obligations under the Guaranty and (y) the Lien in favor of
Borrower (which shall have been assigned to Collateral Agent) securing Ontario
Inc.'s obligations to Borrower with respect to any intercompany loan made by
Borrower to Ontario pursuant to subsection 7.1(iv)" therefor.
C. Investments; Joint Ventures. Subsection 7.3 of the Credit Agreement is
amended
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by (i) inserting the phrase "; provided that (x) the aggregate principal amount
of intercompany loans made by Borrower to Ontario Inc. shall not exceed
$12,000,000 at any time outstanding (and it is hereby acknowledged and agreed
that the proceeds of such Indebtedness should not be used for any purposes other
than (i) to finance a portion of the Initial Coppley Consideration, (ii) to
finance Ontario Inc.'s working capital needs and (iii) for Ontario Inc.'s
general corporate purposes) and (y) Subsidiaries of Borrower shall not make any
intercompany loans to Ontario Inc. or any of its Subsidiaries" immediately prior
to the reference to ";" contained in clause (ii) thereof and (ii) inserting the
phrase "; provided that the aggregate amount of Borrower's equity Investment in
Ontario Inc. shall not exceed $4,000,000" immediately prior to the reference to
"." contained in clause (xi) thereof.
D. Contingent Obligations. Subsection 7.4 of the Credit Agreement is
amended by deleting the reference to "." contained in clause (viii) thereof and
substituting the phrase "; and (ix) Borrower may become and remain liable with
respect to the Coppley Guaranty; provided that notwithstanding anything to the
contrary contained in this Agreement, the aggregate principal amount of such
Contingent Obligations shall not at any time exceed the aggregate amount of the
Coppley Seller Notes as permitted hereunder.
E. Restriction on Fundamental Changes; Asset Sales. Subsection 7.7 of the
Credit Agreement is amended by inserting the following after the last paragraph
thereof:
"Notwithstanding anything to the contrary contained herein, Ontario
Inc. may consummate the Coppley Acquisition; provided that (v) immediately
after the consummation of the Coppley Acquisition, Coppley shall be
amalgamated with and into Ontario Inc., (w) the condition precedent set
forth in clause (vii) of this subsection 7.7 shall be satisfied with
respect to the Coppley Acquisition on or before December 31, 1998 (it being
understood and agreed that (x) the first priority security interest of
Collateral Agent in the Collateral of Ontario Inc. shall be subject to the
Liens to the extent set forth on Schedule 1 annexed to the Seventh
Amendment and incorporated herein by this reference and (y) Ontario Inc.
shall not be subject to the requirement of subsection 6.11 of the Credit
Agreement relating to (i) Collateral Access Agreements until 60 days after
the Coppley Closing Date and (ii) Cash Management Letters), (x) the Coppley
Documents (including, without limitation, the subordination provisions
thereof) shall be in form and substance satisfactory to Managing Agent, (y)
Borrower and its Subsidiaries (excluding Ontario, Inc. and its
Subsidiaries) shall not make loans, advances, investments, capital
contributions or other transfers to Ontario Inc. or its Subsidiaries other
than the intercompany loan permitted by subsection 7.1(iv) and the equity
Investment permitted by subsection 7.3(xi)) and (z) solely for purposes of
subsection 7.12 of the Credit Agreement, Ontario Inc. and its Subsidiaries
shall be deemed to be Affiliates of Borrower and not Subsidiaries of
Borrower. Each of Borrower and each other Credit Party hereby acknowledges
and agrees that from and after the Coppley Closing Date, the Coppley
Documents
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shall be "Related Documents" hereunder."
F. Events of Default. Subsection 8.2 of the Credit Agreement is hereby
amended by adding the following proviso at the end of thereof:
"; provided that for purposes of the Coppley Documents only, each of
the references to "3,000,000" contained in clause (i) or (ii) of this
subsection 8.2 shall be deemed to be a reference to "4,000,000".
SECTION 2. REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Amendment, Borrower
represents and warrants to Lenders that after giving effect to this Amendment in
the manner contemplated by Section 4.6 of this Amendment, each of the following
is true and correct:
no event has occurred and is continuing which constitutes an Event of
Default or Potential Event of Default;
the representations and warranties of Borrower and the other Credit
Parties (including, without limitation, Ontario Inc.) contained in the
Credit Agreement and the other Loan Documents are true and correct on and
as of the date hereof and as of the Effective Date (as defined below) to
the same extent as though made on and as of the date hereof and as of the
Effective Date except to the extent such representations and warranties
specifically relate to an earlier date, in which case they are true and
correct in all material respects as of such earlier date;
each of Borrower and the other Credit Parties (including, without
limitation, Ontario Inc.) has performed all agreements on its part to be
performed prior to the date hereof as set forth in the Credit Agreement and
the other Loan Documents;
Borrower and the Guarantors (including, without limitation, Ontario
Inc.) have all requisite corporate power and authority to enter into this
Amendment, to consummate the transactions contemplated by this Amendment
and the transactions contemplated by, and perform its obligations under,
the Credit Agreement;
the execution of this Amendment, and the consummation of the
transactions contemplated by this Amendment, have been duly authorized by
all necessary corporate action on the part of Borrower and the Guarantors
(including, without limitation, Ontario Inc.); and
(f) the execution and delivery by Borrower and the Guarantors
(including, without limitation, Ontario Inc.) of this Amendment, and the
consummation of the transactions contemplated by this Amendment by Borrower
and the Guarantor (including, without limitation, Ontario Inc.), does not
and will not (i) violate any provision of any
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law or any governmental rule or regulation applicable to Borrower, the
Guarantors (including, without limitation, Ontario Inc.) or any of their
respective Subsidiaries, any constating documents of Borrower, the
Guarantors (including, without limitation, Ontario Inc.) or any order,
judgment or decree of any court or other agency of government binding on
Borrower, the Guarantors (including, without limitation, Ontario Inc.) or
any or their respective Subsidiaries, (ii) conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a
default under any Contractual Obligation of Borrower, the Guarantors
(including, without limitation, Ontario Inc.) or any of their respective
Subsidiaries, (iii) result in or require the creation or imposition of any
Lien upon any of the properties or assets of Borrower, the Guarantors
(including, without limitation, Ontario Inc.) or any of their respective
Subsidiaries (other than any Liens created under any of the Loan Documents
in favor of Collateral Agent on behalf of Lenders), or (iv) require any
approval of stockholders or any approval or consent of any Person under any
Contractual Obligation of Borrower, the Guarantors (including, without
limitation, Ontario Inc.) or any of their respective Subsidiaries.
SECTION 3. GUARANTORS
Each of the Guarantors hereby consents to this Amendment and agrees that
each Loan Document to which it is a party shall continue in full force and
effect and shall be valid and enforceable and shall not be impaired or affected
by the execution of this Amendment and is hereby ratified and confirmed.
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SECTION 4. MISCELLANEOUS
4.1 References to and Effect on the Credit Agreement and Other Loan Documents.
(i) On and after the Effective Date, each reference in the Credit Agreement
to "this Agreement", "hereunder", "hereof" , "herein" or words of like import
referring to the Credit Agreement, and each reference in the other Loan
Documents to the "Credit Agreement", "thereunder", "thereof", or words of like
import referring to the Credit Agreement, shall mean and be a reference to the
Credit Agreement as amended hereby;
(ii) Except as specifically amended by this Amendment, the Credit Agreement
and the other Loan Documents shall remain in full force and effect and are
hereby ratified and confirmed; and
(iii) The execution, delivery and performance of this Amendment shall not,
except as expressly provided herein, constitute a waiver of any provision of, or
operate as a waiver of any right, power or remedy of any Agent or any Lender
under, the Credit Agreement or any of the other Loan Documents.
4.2 Fees and Expense.
Borrower acknowledges that all costs, fees and expenses as described in
subsection 10.2 of the Credit Agreement incurred by Managing Agent and its
counsel with respect to this Amendment and the documents and transactions
contemplated hereby shall be for the account of Borrower.
4.3 Headings.
Section and subsection headings in this Amendment are included herein for
convenience of reference only and shall not constitute a part of this Amendment
for any other purpose or be given any substantive effect.
4.4 Applicable Law.
THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION
5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES
4.5 Counterparts.
This Amendment may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument;
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signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
4.6 Effectiveness.
This Amendment shall become effective (such date being the "Effective
Date") upon the execution of a counterpart hereof by the Requisite Lenders, the
Borrower and the Guarantors and receipt by Borrower and Managing Agent of
written or telephone notification of such execution and authorization of
delivery thereof.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
BORROWER:
HARTMARX CORPORATION
By:
Xxxxx X. Xxxxxx, Executive Vice President and
Chief Financial Officer
GUARANTORS:
AMERICAN APPAREL BRANDS, INC.
ANNISTON SPORTSWEAR CORPORATION
BlLTWELL COMPANY, INC.
BRIAR, INC.
C.M. CLOTHING, INC.
C.M. OUTLET CORP.
CHICAGO TROUSER COMPANY, LTD.
COUNTRY MISS, INC.
COUNTRY SUBURBANS, INC.
DIRECT ROUTE MARKETING CORPORATION
E-TOWN SPORTSWEAR CORPORATION
XXXXXXXX-XXXXX, INC.
GLENEAGLES, INC.
XXXXXX'X OF THE WEST INDIES APPAREL COMPANY
(formerly known as TAG APPAREL, INC.)
HANDMACHER FASHIONS FACTORY OUTLET, INC.
XXXXXXXXXX-XXXXX, INC.
HARTMARX INTERNATIONAL, INC.
XXXX XXXXXXXXX & XXXX
XXXX SERVICES, INC.
XXXX. XXXXX CLOTHES, INC.
TAG LICENSING, INC. (formerly known as HGA
LICENSING, INC.)
XXXXXX-XXXXXXX CO., INC.
XXXXXXX, XXXXX & XXXX, INC.
S-1
NOVAPPAREL, INC. (formerly known as HMXUS,
INC.)
HOOSIER FACTORIES, INCORPORATED
HSM UNIVERSITY, INC.
INTERCONTINENTAL APPAREL, INC.
INTERNATIONAL WOMEN'S APPAREL, INC.
XXXXXX-XXXX, INC.
JRSS, INC.
KUPPENHEIMER MEN'S CLOTHIERS DADEVILLE, INC.
MEN'S QUALITY BRANDS, INC.
NATIONAL CLOTHING COMPANY, INC.
106 REAL ESTATE CORP.
PLAID CLOTHING COMPANY, INC. (formerly known
as HMX/PBP COMPANY)
XXXXXX SPORTSWEAR CORPORATION
XXXXXXX INTERNATIONAL CORPORATION
SALHOLD, INC.
SEAFORD CLOTHING CO.
SOCIETY BRAND, LTD.
XXXXXX SURREY, INC.
TAILORED TREND, INC.
THORNGATE UNIFORMS, INC.
TRADE FINANCE INTERNATIONAL LIMITED
UNIVERSAL DESIGN GROUP, LTD.
X. XXXX & COMPANY, INC.
WINCHESTER CLOTHING COMPANY
YORKE SHIRT CORPORATION
By:
----------------------------------------------
Xxxxx X. Xxxxxx
Vice President of each of the foregoing
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LENDERS:
GENERAL ELECTRIC CAPITAL CORPORATION,
individually, as Managing Agent and as Collateral
Agent
By:
----------------------------------------------
Name:
Title:
S-3
THE BANK OF NEW YORK,
individually, as Co-Agent and as Issuing Lender
for the Letters of Credit (other than the Existing
Letters of Credit)
By:
Name:
Title:
S-4
BANKAMERICA BUSINESS CREDIT, INC.,
individually and as Co-Agent
By:
------------------------------
Name:
Title:
S-5
THE FIRST NATIONAL BANK OF CHICAGO, individually and as Issuing Lender for
Existing Letters of Credit
By:
------------------------------
Name:
Title:
S-6
MANUFACTURERS AND TRADERS TRUST COMPANY
By:
Name:
Title:
S-7
XXXXXX TRUST AND SAVINGS BANK
By:
Name:
Title:
S-8
THE NORTHERN TRUST COMPANY
By:
Name:
Title:
S-9
THE CHASE MANHATTAN BANK (formerly known as
Chemical Bank)
By:
Name: Xxxxxxxx X. Xxxxxxxx
Title: Vice President
S-10
SANWA BUSINESS CREDIT CORPORATION
By:
Name:
Title:
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