Exhibit
10(a)


 


THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT
AGREEMENT


 


THIS THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT
(the “Amendment”), dated as of May 27, 2004, is among HAGGAR
CLOTHING CO. (“Company”), HAGGAR CORP. (“Haggar”), the Banks
which are party hereto and JPMORGAN CHASE BANK, (formerly The Chase Manhattan
Bank) individually as a Bank and as Agent for itself and the other Banks (in
such capacity as Agent, together with its successors in such capacity, “Agent”).


 


RECITALS:


 


A.                                   Pursuant
to that certain Second Amended and Restated Credit Agreement dated
June 13, 2002 among Company, Haggar, each of the banks which are parties
thereto (individually a “Bank” and collectively, the “Banks”) and
the Agent (as the same has been amended by that certain First Amendment to
Second Amended and Restated Credit Agreement dated December 11, 2002, that
certain Second Amendment to Second Amended and Restated Credit Agreement dated
June 6, 2003, and as the same may be further amended, restated or otherwise
modified from time to time, the “Agreement”), the banks party thereto
agreed to make Loans to Company as set forth therein.


 


B.                                     Company
formed two new Domestic Subsidiaries, Phlox Acquisitions LLC, a Delaware
limited liability company, and Phlox Acquisitions Trust, a Delaware statutory
trust, which have joined the Subsidiary Guaranty as Guarantors.


 


C.                                     Company
and Haggar have requested that the Banks agree to modify the Agreement as
herein set forth.  The Banks party hereto
are willing to do so upon the terms and provisions of this Amendment.


 


NOW, THEREFORE, in consideration of the premises herein contained and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:


 


ARTICLE
1.



Definitions


 


1.1.                              Definitions.  Capitalized terms used in this Amendment, to
the extent not otherwise defined herein, shall have the same meanings as in the
Agreement, as amended hereby.


 


ARTICLE
2.



Amendment


 


2.1.                              Additions
to Section 1.1.  The following
definitions are added to Section 1.1 of the Agreement in proper
alphabetical order.


 


“Aircraft Indebtedness” means purchase money Indebtedness (including
any Indebtedness refinancing an Advance) in a principal amount not to exceed
$4,150,000 which is: (a) incurred in connection with Company’s acquisition
of the aircraft it leases as of May 27, 2004 upon the termination of the
lease thereof and (b) is secured only by a Lien on such aircraft.


 


“Base Margin” shall have the meaning set forth in Section 2.7(c).


 


1
















 


“Commitment Fee Rate” shall have the meaning set forth in
Section 2.7(c).


 


“Life Insurance Indebtedness” means any Indebtedness (including any
Indebtedness refinancing an Advance) that is secured only by the cash value of
the key man life insurance policies which are owned by Company and issued by
National Life of Vermont; provided that the aggregate principal amount of such
Indebtedness does not exceed the lesser of: 
(i) $9,100,000 or (ii) the aggregate amount of such cash
value.


 


2.2.                              Amendment
to Section 1.1.  The following
definitions contained in Section 1.1 of the Agreement are amended
in their respective entireties to read as follows:


 


“CD Margin” shall be determined in accordance with the terms of
Section 2.7(c).


 


“Eurodollar Margin” shall be determined in accordance with the terms of
Section 2.7(c).


 


“Funded Debt” means, for Company Group on a consolidated basis for any
date, all amounts advanced and outstanding with respect to any Indebtedness of
any member of Company Group, including, without limitation, the Obligations but
specifically excluding: 
(a) obligations under any Guarantee; (b) obligations under any
Swap Agreement; (c) Aircraft Indebtedness, and (d) Life Insurance
Indebtedness.


 


“Termination Date” means June 30, 2007, unless the Commitments are
terminated prior to such date pursuant to Sections 2.4 or 9.1.


 


2.3.                              Amendment
to “Permitted Indebtedness”.  The
definition of “Permitted Indebtedness” contained in Section 1.1 of
the Agreement is amended to: 
(a) delete the “and” at the end of clause (j) thereto;
(b) replace the “.” at the end of clause (k) with “; and” and
(c) add the following clause (l) to the end of such definition.


 


(l) the Aircraft Indebtedness, the Life Insurance Indebtedness and
any extensions, renewals and replacements thereof.


 


2.4.                              Amendment
to “Permitted Liens”.  The definition
of “Permitted Liens” contained in Section 1.1 of the Agreement is
amended to:  (a) delete the “and” at
the end of clause (f) thereto; (b) replace the “.” at the end of
clause (g) with “, and” and (c) add the following clause (h) to
the end of such definition.


 


(h) Liens securing the Aircraft Indebtedness encumbering only the
aircraft financed thereby and Liens securing the Life Insurance Indebtedness
encumbering only the cash value of the key man life insurance policies which
are owned by Company and issued by National Life of Vermont.


 


2.5.                              Amendment
to Section 2.5.  Clause (a)
of Section 2.5 of the Agreement is amended and restated in its
entirety to read as follows:


 


(a)                                  On
the date three Business Days following each Payment Date and on the Termination
Date, a commitment fee equal to the Commitment Fee Rate times
the average daily amount of the Total Commitments minus
the sum of (i) the outstanding principal amount of all Advances and
(ii) the Letter of Credit Exposure during the quarter ending on and
including such Payment Date, or such shorter period ending on and including the
Termination Date, as the case may be.


 


2
















 


2.6.                              Amendment
to Section 2.7(a).  The third
sentence of clause (a) of Section 2.7 of the Agreement
is amended in its entirety to read as follows:


 


Floating Rate
Advances shall bear interest at a rate equal to the sum of the Alternate Base
Rate plus the Base Margin, and the interest rate on any Floating Rate Advances
shall change when and as the Alternate Base Rate changes; provided that in no
event shall the sum of the foregoing exceed the Highest Lawful Rate.


 


2.7.                              Addition
of Section 2.7(c).  The following clause (c)
is added to Section 2.7 immediately following clause (b)
thereto:


 


(c)                                  Determinations
of Margins and Fees.  The Base
Margin, CD Margin and Eurodollar Margin and the fees payable under
Section 2.5(a) shall be defined and determined as follows:


 


“Base Margin” shall mean (i) during the period commencing
on May 27, 2004 and ending on but not including the first Adjustment Date
(as defined below), zero percent (0%) per annum and (ii) during each
period, from and including one Adjustment Date to but excluding the next
Adjustment Date (herein a “Calculation Period”), the percent per annum
set forth in the table below under the heading “Base Margin” and
opposite the Funded Debt Ratio which corresponds to the Funded Debt Ratio set
forth in, and as calculated in accordance with, the applicable Compliance
Certificate.


 


“CD Margin” shall mean (i) during the period commencing on
May 27, 2004 and ending on but not including the first Adjustment Date,
one and one-quarter percent (1.25%) per annum and (ii) during each
Calculation Period, the percent per annum set forth in the table below under
the heading “CD Margin” and opposite the Funded Debt Ratio which
corresponds to the Funded Debt Ratio set forth in, and as calculated in
accordance with, the applicable Compliance Certificate.


 


“Commitment Fee Rate” shall mean (i) during the period
commencing on May 27, 2004 and ending on but not including the first
Adjustment Date, one-quarter of one percent (0.25%) per annum and
(ii) during each Calculation Period, the percent per annum set forth in
the table below under the heading “Commitment Fee” and opposite the
Funded Debt Ratio which corresponds to the Funded Debt Ratio set forth in, and
as calculated in accordance with, the applicable Compliance Certificate.


 


“Eurodollar Margin” shall mean (i) during the period
commencing on May 27, 2004 and ending on but not including the first
Adjustment Date, one and one-eighth percent (1.125%) per annum and
(ii) during each Calculation Period, the percent per annum set forth in
the table below under the heading “Eurodollar Margin” and opposite the
Funded Debt Ratio which corresponds to the Funded Debt Ratio set forth in, and
as calculated in accordance with, the applicable Compliance Certificate.


 


3
















 


	
  Tier

  	
   

  	
  Funded Debt

  Ratio

  	
   

  	
  Commitment

  Fee

  	
   

  	
  Base

  Margin

  	
   

  	
  CD

  Margin

  	
   

  	
  Eurodollar

  Margin

  	
   

  
	
  Tier V

  	
   

  	
  < 1.00 to 1.00

  	
   

  	
  0.25

  	
  %

  	
  0.00

  	
  %

  	
  1.25

  	
  %

  	
  1.125

  	
  %

  
	
  Tier IV

  	
   

  	
  > 1.00 to 1.00

  but

  < 1.50 to 1.00

  	
   

  	
  .30

  	
  %

  	
  0.00

  	
  %

  	
  1.375

  	
  %

  	
  1.25

  	
  %

  
	
  Tier III

  	
   

  	
  > 1.50 to 1.00

  but

  < 2.00 to 1.00

  	
   

  	
  0.375

  	
  %

  	
  0.00

  	
  %

  	
  1.625

  	
  %

  	
  1.50

  	
  %

  
	
  Tier II

  	
   

  	
  > 2.00 to 1.00

  but

  < 2.50 to 1.00

  	
   

  	
  0.375

  	
  %

  	
  0.00

  	
  %

  	
  1.75

  	
  %

  	
  1.625

  	
  %

  
	
  Tier I

  	
   

  	
  > 2.50 to 1.00

  	
   

  	
  0.50

  	
  %

  	
  0.00

  	
  %

  	
  1.875

  	
  %

  	
  1.75

  	
  %

  



 


Upon delivery of the Compliance
Certificate pursuant to Section 6.1(c) in connection with the financial
statements required to be delivered pursuant to Sections 6.1(a) and (b)
commencing with such Compliance Certificate delivered at the end of the fiscal
quarter ending on June 30, 2004, the Base Margin, Eurodollar Margin, CD
Margin and Commitment Fee Rate shall automatically be adjusted in accordance
with the Funded Debt Ratio set forth therein and the table set forth above,
such automatic adjustment to take effect as of the date five (5) Business Days
after the receipt by the Agent of the related Compliance Certificate pursuant
to Section 6.1(c) (each such Business Day when such margins or fees change
pursuant to this sentence or the next following sentence, herein an “Adjustment
Date”).  If Haggar and the Company
fail to deliver such Compliance Certificate which so sets forth the Funded Debt
Ratio within the period of time required by Section 6.1(c), or if an Event
of Default exists and the Agent provides notice to Haggar, the margin and fees
provided for hereunder shall automatically be adjusted to the margin and fees
set forth in the line in the table above labeled Tier I, such automatic
adjustments to take effect as of the first Business Day after the last day on
which Haggar and the Company were required to deliver the applicable Compliance
Certificate in accordance with Section 6.1(c) hereof or, in the case of an
Event of Default, on the date the written notice is given to Haggar and to
remain in effect until subsequently adjusted in accordance herewith upon the
delivery of such Compliance Certificate or, in the case of an Event of Default,
when such Event of Default has been cured to the satisfaction of the Agent or
waived in accordance with this Agreement.


 


2.8.                              Amendment
to Section 7.8.  Section 7.8
of the Agreement is amended in its entirety to read as follows:


 


7.8.                              Net
Worth.  Permit the Net Worth of
Company Group to be or become less than an amount equal to the sum of:  (1) $133,100,000, plus (2) fifty
percent (50%) of the cumulative net income of Company Group, on a consolidated
basis, for each of the fiscal quarters to have completely elapsed since
December 31, 2003, as of the date of determination, plus (3) in the
event Haggar or Company shall make a registered public offering of its capital
stock after the Effective Date, 66 2/3% of that portion of the net proceeds
from such offering attributable to the primary issuance of new shares (but not
the secondary issuance of existing shares). 
Notwithstanding the foregoing, in the event that Net Worth is less than
the amount required hereby, Company shall have a period of ten (10) days from
the earlier of the date on which Net Worth is disclosed to the Agent or is to
be disclosed to the Agent under Section 6.1 in which to cause Net Worth to
be in compliance with the terms hereof. 
Cumulative net income shall be determined by reference to the statements
of income described in Section 6.1(a) and shall not be decreased by any
losses occurring during any fiscal quarter.


 


4
















 


2.9.                              Amendment
to Schedule 4; Pro Rata Adjustment. 
Schedule 4 to the Agreement is amended in its entirety to
read as Schedule 4 attached hereto. 
On the effective date of this Amendment, the Commitment of certain Banks
are being modified.  As a result, if any
Loans are outstanding under the Agreement on the effective date, such Loans
will not be held by the Banks in accordance with each Bank’s Ratable Share as
determined after giving effect to this Amendment.  To remedy the foregoing, if any Loans are
outstanding on the effective date of this Amendment, the Banks shall make
advances among themselves (either directly or through the Agent) so that after
giving effect thereto the Loans will be held by the Banks in accordance with
each Bank’s Ratable Share determined after giving effect to this
Amendment.  The advances made on the
effective date by each Bank whose Ratable Share has increased shall be deemed
to be a purchase of a corresponding amount of the Loans of the Bank or Banks
whose Ratable Share has decreased.


 


2.10.                        Amendment
to Exhibit A (Borrowing Base Certificate) and Exhibit C (Compliance
Certificate).  Exhibits A
and C to the Agreement are amended in their respective entireties to
read as Exhibits A and C attached hereto.


 


ARTICLE
3.



Conditions


 


3.1.                              Conditions.  The effectiveness of Article 2 of this
Amendment subject to the satisfaction of the following conditions precedent on
or before May 31, 2004:


 


(a)                                  Agent
shall have received all of the following, each dated (unless otherwise
indicated) a current date, in form and substance satisfactory to the Agent:


 


(i)                                     Amendment.  This Amendment fully executed by Haggar and
the Company and the attached Consent of Domestic Subsidiaries executed by the
Domestic Subsidiaries of the Company;


 


(ii)                                  Notes.  Amended and restated promissory notes
executed by the Company;


 


(iii)                               Authorization.  Such evidence of Haggar’s, the Company’s and
each Guarantor’s authority to enter into this Amendment as the Agent may
request;


 


(iv)                              Governmental
Certificates.  Certificates of the
appropriate government officials of the state of incorporation (or the other
appropriate governmental officials of its jurisdiction of organization) of
Haggar, the Company and each Guarantor as to its existence and good standing;
and


 


(v)                                 Additional
Information.  The Agent shall have
received such additional documentation and information as the Agent or its
legal counsel, Jenkens & Gilchrist, a Professional Corporation, may
request; and


 


(b)                                 The
representations and warranties contained herein and in all other Loan
Documents, as amended hereby, shall be true and correct in all material
respects as of the date hereof as if made on the date hereof, except for such
representations and warranties limited by their terms to a specific date;


 


(c)                                  No
Default shall exist; and


 


5
















 


(d)                                 All
proceedings taken in connection with the transactions contemplated by this
Amendment and all documentation and other legal matters incident thereto shall
be satisfactory to the Agent and its legal counsel, Jenkens & Gilchrist, a
Professional Corporation.


 


ARTICLE
4.



Miscellaneous


 


4.1.                              Ratifications.  The terms and provisions set forth in this
Amendment shall modify and supersede all inconsistent terms and provisions set
forth in the Agreement and except as expressly modified and superseded by this
Amendment, the terms and provisions of the Agreement and the other Loan
Documents are ratified and confirmed and shall continue in full force and effect.
Company, Haggar, the Agent and Banks party hereto agree that the Agreement as
amended hereby and the other Loan Documents shall continue to be legal, valid,
binding and enforceable in accordance with their respective terms. For all
matters arising prior to the effective date of this Amendment, the Agreement
(as unmodified by this Amendment) shall control.


 


4.2.                              Representations
and Warranties.  Company and Haggar
hereby represent and warrant to Agent and the Banks as follows:  (a) no Default exists, (b) the
representations and warranties set forth in the Loan Documents are true and
correct in all material respects on and as of the date hereof with the same
effect as though made on and as of such date except with respect to any
representations and warranties limited by their terms to a specific date, and
(c) the articles of incorporation, certificates of limited partnership
(other than the certificate of limited partnership of Haggar Women’s Wear, Ltd.
(formerly Jerell Ltd.), articles of organization, regulations, operating
agreements, partnership agreements, bylaws, consents and resolutions of
Company, Haggar and each Guarantor attached to the respective Certificates of
Secretary of Company, Haggar and the Guarantors most recently delivered to the
Agent have not been modified or rescinded and remain in full force and effect
and that officers identified in such Certificates of Secretary continue to hold
the office or offices reflected therein. 
IN ADDITION, TO INDUCE THE AGENT AND THE BANKS TO AGREE TO THE TERMS OF
THIS AMENDMENT, THE COMPANY, HAGGAR AND EACH GUARANTOR (BY ITS EXECUTION BELOW)
REPRESENTS AND WARRANTS THAT AS OF THE DATE OF ITS EXECUTION OF THIS AMENDMENT
THERE ARE NO CLAIMS OR OFFSETS AGAINST OR RIGHTS OF RECOUPMENT WITH RESPECT TO
OR DEFENSES OR COUNTERCLAIMS TO ITS OBLIGATIONS UNDER THE LOAN DOCUMENTS AND IN
ACCORDANCE THEREWITH IT:


 


(A)                              WAIVER.  WAIVES ANY AND ALL SUCH CLAIMS, OFFSETS,
RIGHTS OF RECOUPMENT, DEFENSES OR COUNTERCLAIMS, WHETHER KNOWN OR UNKNOWN,
ARISING PRIOR TO THE DATE OF ITS EXECUTION OF THIS AMENDMENT AND


 


(B)                                RELEASE.  RELEASES AND DISCHARGES THE AGENT AND THE
BANKS, AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
SHAREHOLDERS, AFFILIATES AND ATTORNEYS (COLLECTIVELY THE “RELEASED PARTIES”)
FROM ANY AND ALL OBLIGATIONS, INDEBTEDNESS, LIABILITIES, CLAIMS, RIGHTS, CAUSES
OF ACTION OR DEMANDS WHATSOEVER, WHETHER KNOWN OR UNKNOWN, SUSPECTED OR
UNSUSPECTED, IN LAW OR EQUITY, WHICH COMPANY, HAGGAR OR ANY GUARANTOR EVER HAD,
NOW HAS, CLAIMS TO HAVE OR MAY HAVE AGAINST ANY RELEASED PARTY ARISING PRIOR TO
THE DATE HEREOF AND FROM OR IN CONNECTION WITH THE LOAN DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED THEREBY.


 


6
















 


4.3.                              Survival
of Representations and Warranties. 
All representations and warranties made in this Amendment shall survive
the execution and delivery of this Amendment, and no investigation by Agent or
any Bank or any closing shall affect the representations and warranties or the
right of Agent or any Bank to rely upon them.


 


4.4.                              Reference
to Agreement.  Each of the Loan
Documents, including the Agreement, are hereby amended so that any reference in
such Loan Documents to the Agreement shall mean a reference to the Agreement as
amended hereby.


 


4.5.                              Expenses
of Agent.  As provided in the
Agreement, Company agrees to pay on demand all costs and expenses incurred by
Agent or any Bank in connection with the preparation, negotiation, and
execution of this Amendment, including without limitation, the costs and fees
of Agent’s and each Bank’s legal counsel.


 


4.6.                              Severability.  Any provision of this Amendment held by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.


 


4.7.                              Applicable
Law.  This Amendment and all other
Loan Documents shall be governed by and construed in accordance with the laws
of the State of Texas and the applicable laws of the United States of America.


 


4.8.                              Successors
and Assigns.  This Amendment is
binding upon and shall inure to the benefit of Agent, each Bank, Company and
Haggar and their respective successors and assigns, except that neither Company
or Haggar may assign or transfer any of its rights or obligations hereunder
without the prior written consent of the Banks.


 


4.9.                              Counterparts.  This Amendment may be executed in one or more
counterparts and on telecopy counterparts, each of which when so executed shall
be deemed to be an original, but all of which when taken together shall
constitute one and the same agreement.


 


4.10.                        Effect
of Waiver.  No consent or waiver,
express or implied, by Agent or any Bank to or for any breach of or deviation
from any covenant, condition or duty by Haggar, the Company or any Guarantor
shall be deemed a consent or waiver to or of any other breach of the same or
any other covenant, condition or duty.


 


4.11.                        Headings.  The headings, captions, and arrangements used
in this Amendment are for convenience only and shall not affect the
interpretation of this Amendment.


 


4.12.                        ENTIRE
AGREEMENT.  THIS AMENDMENT EMBODIES
THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO WITH RESPECT TO THE
SUBJECT MATTER HEREOF AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THIS
AMENDMENT, AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES
HERETO.  THERE ARE NO ORAL AGREEMENTS
AMONG THE PARTIES HERETO.


 


7
















 


EXECUTED as of the date first written above.


 


	
   

  	
  Company and Haggar:

  
	
   

  	
   

  	
   

  
	
   

  	
  HAGGAR CLOTHING CO., a
  Nevada corporation

  
	
   

  	
  HAGGAR CORP., a Nevada
  corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ J. M Haggar, III

  
	
   

  	
   

  	
  J. M Haggar, III

  
	
   

  	
   

  	
  Chief Executive Officer
  for both

  
	
   

  	
   

  	
   

  
	
   

  	
  Agent:

  
	
   

  	
   

  	
   

  
	
   

  	
  JPMORGAN CHASE BANK
  (formerly The Chase Manhattan Bank who was successor in interest by merger to
  Chase Bank of Texas, National Association who was formerly Texas Commerce
  Bank National Association), Individually and as Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ D. Scott Harvey

  
	
   

  	
   

  	
  Name:

  	
  D. Scott Harvey

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  Banks:

  
	
   

  	
   

  	
   

  
	
   

  	
  GUARANTY BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert S. Hays

  
	
   

  	
   

  	
  Name:

  	
  Robert S. Hays

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  COMERICA BANK,
  successor in interest by merger to

  Comerica Bank - Texas

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Margareth Fanini

  
	
   

  	
   

  	
  Name:

  	
  Margareth K. Fanini

  
	
   

  	
   

  	
  Title:

  	
  Vice President - Tax
  Division

  
	
   

  	
   

  	
   

  
	
   

  	
  BANK OF AMERICA, N.A.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Douglas J. Bolt

  
	
   

  	
   

  	
  Name:

  	
  Douglas J. Bolt

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  



 


8
















 


	
   

  	
  SOUTHWEST BANK OF
  TEXAS, N.A.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Melinda Jackson

  
	
   

  	
   

  	
  Name:

  	
  Melinda N. Jackson

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  U.S. BANK NATIONAL
  ASSOCIATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John Holland

  
	
   

  	
   

  	
  Name:

  	
  John Holland

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  THE BANK OF NOVA SCOTIA

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William E. Zarrett

  
	
   

  	
   

  	
  Name:

  	
  William E. Zarrett

  
	
   

  	
   

  	
  Title:

  	
  Managing Director

  



 


9
















 


CONSENT OF DOMESTIC SUBSIDIARIES


 


Each of the undersigned Subsidiaries hereby (a) agrees that the
Subsidiary Guaranty to which it is a signatory is and shall remain in full
force and effect; (b) ratifies and confirms all terms and provisions of
the Subsidiary Guaranty to which it is a signatory, (c) acknowledges its
consent and agreement to the Amendment including, without limitation Section
4.2 thereof, (d) reaffirms all agreements and obligations under the
Subsidiary Guaranty to which it is a signatory, with respect to the Loans, the
Notes, the Agreement and all other documents, instruments or agreements
governing, securing or pertaining to the Loans, and (f) represents and
warrants that all requisite corporate action necessary for it to execute this
Consent of Domestic Subsidiaries has been taken.


 


	
   

  	
  BOWIE MANUFACTURING
  COMPANY, a Nevada corporation

  
	
   

  	
  CORSICANA COMPANY, a
  Nevada corporation

  
	
   

  	
  DALLAS PANT
  MANUFACTURING COMPANY, a Nevada corporation

  
	
   

  	
  GREENVILLE PANT
  MANUFACTURING COMPANY, a Nevada corporation

  
	
   

  	
  MCKINNEY PANT
  MANUFACTURING COMPANY, a Nevada corporation

  
	
   

  	
  OLNEY MANUFACTURING
  COMPANY, a Nevada corporation

  
	
   

  	
  WAXAHACHIE GARMENT
  COMPANY, a Nevada corporation

  
	
   

  	
  LA ROMANA MANUFACTURING
  CORPORATION, a Nevada corporation

  
	
   

  	
  HAGGAR SERVICES, INC.,
  a Texas corporation

  
	
   

  	
  DUNCAN MANUFACTURING
  COMPANY, an Oklahoma corporation

  
	
   

  	
  WESLACO CUTTING, INC.,
  a Nevada corporation

  
	
   

  	
  WESLACO SEWING, INC., a
  Nevada corporation

  
	
   

  	
  HAGGAR DIRECT, INC., a
  Nevada corporation

  
	
   

  	
  SAN GABRIEL ENTERPRISES,
  INC., a Texas corporation

  
	
   

  	
  MULTIPLES, U.S.A.,
  INC., a Texas corporation

  
	
   

  	
  EDINBURG DIRECT GARMENT
  COMPANY, INC., a Texas corporation

  
	
   

  	
  WESLACO DIRECT CUTTING
  COMPANY, INC., a Texas corporation

  
	
   

  	
  HAGGAR.COM, INC., a
  Texas corporation

  
	
   

  	
  JERELL CLOTHING
  MANAGEMENT, INC., a Texas corporation

  
	
   

  	
  HAGGAR WOMEN’S WEAR,
  LTD. (formerly Jerell, Ltd.), a Texas limited
  partnership

  
	
   

  	
  HAGGAR CANADA, INC, a
  Nevada corporation

  
	
   

  	
  PHLOX ACQUISITIONS LLC,
  a Delaware limited liability company

  
	
   

  	
  PHLOX ACQUISITIONS
  TRUST, a Delaware statutory trust

  
	
   

  	
   

  	
  By: Phlox Acquisitions LLC, its sole trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ J. M. Haggar, III

  
	
   

  	
   

  	
  J. M. Haggar, III

  
	
   

  	
   

  	
  Chairman/Chief
  Executive Officer of each Subsidiary

  
				



 


10
















 


SCHEDULE 4


to


HAGGAR CORP.


 


THIRD AMENDMENT TO SECOND
AMENDED AND RESTATED CREDIT AGREEMENT


 


COMMITMENTS


 


	
  Bank

  	
   

  	
  Commitment

  	
   

  
	
  JPMorgan Chase Bank

  	
   

  	
  $

  	
  17,000,000.00

  	
   

  
	
  Comerica Bank

  	
   

  	
  $

  	
  17,000,000.00

  	
   

  
	
  Guaranty Bank

  	
   

  	
  $

  	
  17,000,000.00

  	
   

  
	
  Bank of America, N.A.

  	
   

  	
  $

  	
  15,000,000.00

  	
   

  
	
  Southwest Bank of Texas, N.A.

  	
   

  	
  $

  	
  15,000,000.00

  	
   

  
	
  U.S. Bank National Association

  	
   

  	
  $

  	
  15,000,000.00

  	
   

  
	
  The Bank of Nova Scotia

  	
   

  	
  $

  	
  15,000,000.00

  	
   

  
	
   

  	
   

  	
  $

  	
  111,000,000.00

  	
   

  



 
















 


EXHIBIT A


to


HAGGAR CORP.


 


SECOND AMENDED AND
RESTATED CREDIT AGREEMENT


 


BORROWING BASE
CERTIFICATE


 
















 


BORROWING BASE
CERTIFICATE


 


(for the month ending
                      
or as of
                      )


 


HAGGAR CLOTHING CO.


 


TO:                            JPMORGAN
CHASE BANK


2200 Ross Avenue


Third Floor


Dallas, Texas
75266


Attention:  Scott Harvey


 


DATE:                        ,
200  


 


RE:                              Second
Amended and Restated Credit Agreement dated as of June 13, 2002 (as amended,
the “Agreement”), by and among Haggar Clothing Co., Haggar Corp., JPMorgan
Chase Bank and the Banks listed in the Agreement.


 


	
  1.

  	
  Receivables

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  A.

  	
  Total Receivables

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  B.

  	
  Less:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)

  	
  affiliate and employee
  Receivables

  	
   

  	
  $

  	
  (             

  	
  )

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)

  	
  Receivables unpaid
  after 90 days after date of invoice (or the effective date of Dated Invoices)

  	
   

  	
  $

  	
  (             

  	
  )

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iii)

  	
  Receivables subject to
  Lien

  	
   

  	
  $

  	
  (             

  	
  )

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iv)

  	
  Receivables with
  respect to which goods are placed on consignment, guaranteed sale or other
  terms by reason of which the payment obligation of the account debtor may be
  conditional, but only to the extent that such Receivables equal or exceed
  $500,000 in the aggregate.

  	
   

  	
  $

  	
  (             

  	
  )

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (v)

  	
  all uncollectible
  Receivables

  	
   

  	
  $

  	
  (             

  	
  )

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (vi)

  	
  reserve for “discounts”

  	
   

  	
  $

  	
  (             

  	
  )

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (vii)

  	
  reserve for “build-ups”

  	
   

  	
  $

  	
  (             

  	
  )

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (viii)

  	
  reserve for
  “deductions”

  	
   

  	
  $

  	
  (             

  	
  )

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ix)

  	
  other reserves

  	
   

  	
  $

  	
  (             

  	
  )

  	
   

  	
   

  
											



 


1
















 


	
   

  	
  C.

  	
  Preliminary Total of
  Eligible Receivables

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  D.

  	
  5% of line C

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  E.

  	
  Total Dated Invoices
  included in line C.

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  F.

  	
  If line E greater than
  line D, Line E minus line D =

  	
   

  	
   

  	
   

  	
  $

  	
  (             

  	
  )

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  G.

  	
  Total of Eligible
  Receivables (line C minus line F)

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  H.

  	
  80% of Total Eligible
  Receivables (i.e., line G)

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  Inventory

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  A.

  	
  Total Inventory per
  attached summary schedule

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  B.

  	
  Less: ineligible
  Inventory (i.e., subject to Liens)

  	
   

  	
  $

  	
  (             

  	
  )

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  C.

  	
  Total Eligible
  Inventory

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  D.

  	
  50% of Eligible
  Inventory

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  Borrowing Base

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  A.

  	
  (i)

  	
  80% of Eligible
  Receivables (from line H)

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)

  	
  50% of Eligible
  Inventory (from line D)

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  B.

  	
  Borrowing Base Formula
  Sum

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  C.

  	
  Less: amount by which
  (A)(ii) is greater than 60% of the Total Commitments (i.e., $66,600,000)

  	
   

  	
  $

  	
  (             

  	
  )

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  D.

  	
  Borrowing Base

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Borrowing Base
  Availability

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  A.

  	
  Borrowing Base

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  B.

  	
  Less:                    Principal
  amount outstanding under the Agreement

  	
   

  	
  $

  	
  (             

  	
  )

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  C.

  	
  Borrowing Base
  Availability

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  Available Commitment

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  A.

  	
  Total Commitments

  	
   

  	
   

  	
   

  	
  $

  	
  111,000,000

  	
   

  



 


2
















 


	
   

  	
  B.

  	
  Less:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)

  	
  Principal amount
  outstanding under the Agreement

  	
   

  	
  $

  	
  (             

  	
  )

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)

  	
  aggregate amount of all
  issued and outstanding Letters of Credit

  	
   

  	
  $

  	
  (             

  	
  )

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  C.

  	
  Available Commitment

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  Availability

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  A.

  	
  Borrowing Base
  Availability

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  B.

  	
  Available Commitment

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  C.

  	
  Lesser of A or B

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  



 


I hereby certify
that, to the best of my knowledge after appropriate inquiry, the foregoing is
true and correct as of the last day of the month indicated.


 


	
   

  	
  HAGGAR CLOTHING CO.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  



 


3
















 


EXHIBIT C


to


HAGGAR CORP.


 


SECOND AMENDED AND
RESTATED CREDIT AGREEMENT


 


COMPLIANCE CERTIFICATE


 
















 


COMPLIANCE CERTIFICATE


 


As of the date indicated below, the undersigned hereby certifies that
(i) no Default or Unmatured Default (as defined in the Credit Agreement)
has occurred and is continuing under that certain Second Amended and Restated
Credit Agreement (as amended, the “Credit Agreement”) among Haggar Clothing
Co., Haggar Corp., JPMorgan Chase Bank and the Banks listed therein,
(ii) the value of all Inventory (as defined in the Credit Agreement) as
reflected in the Company’s financial statements does not exceed its net
realizable value and (iii) the information contained on the Annexes hereto
is true, correct and complete.


 


	
   

  	
  HAGGAR CLOTHING CO.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
  Dated:

  	
   

  



 
















 


ANNEX A TO COMPLIANCE CERTIFICATE


 


Summary


 


	
  Requirement

  	
   

  	
  Required Level

  	
   

  	
  Current Status

  	
   

  	
  Compliance

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (I)

  	
  Fixed Charge

  	
   

  	
  1.25 to 1.00

  	
   

  	
  to 1.00

  	
   

  	
  Yes    No

  	
   

  
	
   

  	
  (detail on Annex B)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (II)

  	
  Funded Debt Ratio

  	
   

  	
  3.00 to 1.00

  	
   

  	
  to 1.00

  	
   

  	
  Yes    No

  	
   

  
	
   

  	
  (detail on Annex C)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (III)

  	
  Net Worth Company Group:

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10% of the Net
  Worth of the Company Group

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Net Worth
  attributable to non–guarantor subsidiaries (not to exceed 10% of the Net
  Worth of the Company Group)

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  Yes    No

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)     $133,100,000;

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)    Plus 50% of the cumulative net income of the Company
  Group, on a consolidated basis for each fiscal quarter to have completely
  elapsed since December 31, 2003 (with no reduction for negative quarters);
  and

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)     Plus (66–2/3%) of the net proceeds from any
  registered public offering of the capital stock of Haggar or the Company (if
  any).

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (d)    Required Net Worth of the Company Group (sum of
  (a),(b) and (c)):

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Is line (III) greater than line (d)?

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Yes    No

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (IV)

  	
  Inventory Turns

  	
   

  	
  2.0

  	
   

  	
   

  	
   

  	
  Yes    No

  	
   

  
	
   

  	
  (detail on Annex D)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (V)

  	
  Actual Capital
  Expenditures for current fiscal year

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


1
















 


	
   

  	
  (a)     less any expenditures for repair or replacement
  of property made with insurance proceeds (to the extent such expenditures do
  not exceed the net cash amount of such insurance proceeds)

  	
   

  	
  $

  	
  (                  

  	
  )

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)    less any expenditures for purchase of the
  Company’s headquarters at 11511 Luna Road (to the extent such expenditures do
  not exceed proceeds from the sale of the prior headquarters at 6113 Lemmon
  Avenue)

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)     SUBTOTAL

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Does 10% of the
  Net Worth of the Company Group as set forth above exceed line (c)?

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Yes    No

  	
   

  
											



 


2
















 


ANNEX B TO COMPLIANCE CERTIFICATE


 


HAGGAR CORP.


FIXED CHARGE RATIO


12 MONTHS ENDED
            ,
200  


($000’S)


 


	
   

  	
   

  	
  Qtr.

  	
   

  	
  Qtr.

  	
   

  	
  Qtr.

  	
   

  	
  Qtr.

  	
   

  	
  12 Months Ended

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Net Income

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  - Gains + Losses Cap assets Extr Event

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  + Depreciation and Amortization

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  + Interest Expense

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  + Taxes (exclusive of the tax effects relating to
  the closing of the Edinburg facility, the operations in Japan, and the
  Weslaco facility)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  + Japan, Edinburg and Weslaco Charges (not to exceed
  $14,915,000 after tax or $21,800,000 before tax) or minus the reversal
  thereof

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total = Operating Cash Flow

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  - Taxes (exclusive of the tax effects relating to
  the closing of the Edinburg facility, the operations in Japan and the Weslaco
  facility)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total Operating Cash Flow minus tax

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Interest Expense

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Req. Principal Payments

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cash Dividends

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Maintenance
  Capital Expenditure ($2,000,000)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total Fixed Charges

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fixed Charge Ratio

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fixed Charges/Cash Flow

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  to 1.0

  	
   

  



 
















 


ANNEX C TO COMPLIANCE CERTIFICATE


 


HAGGAR CORP.


FUNDED DEBT RATIO


12 MONTHS ENDED
                        


($000’S)


 


	
  Funded Debt

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Revolver

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
  Industrial Revenue Bonds +

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
  other notes

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
  other long term indebtedness

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
  indebtedness secured by Liens

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
  Capital Lease Obligations

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
  less: obligations under any
  Guarantee

  	
   

  	
  $

  	
  (                  

  	
  )

  	
   

  	
   

  
	
  less: obligations under any
  Swap Agreement

  	
   

  	
  $

  	
  (                  

  	
  )

  	
   

  	
   

  
	
  less: Aircraft Indebtedness

  	
   

  	
  $

  	
  (                  

  	
  )

  	
   

  	
   

  
	
  less: Life Insurance
  Indebtedness

  	
   

  	
  $

  	
  (                  

  	
  )

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total Funded Indebtedness

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Operating Cash Flow

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
  (detail on Annex B)

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Funded Debt/Operating Cash Flow

  	
   

  	
   

  	
   

  	
  to 1.00

  	
   

  



 
















 


ANNEX D TO COMPLIANCE CERTIFICATE


 


HAGGAR CORP.


INVENTORY TURNS ANALYSIS


($000’S)


 


	
  PRIOR 12 MONTHS’ COST OF SALES

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3rd  Prior Quarter

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  $

  	
   

  	
   

  
	
  Total

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2nd Prior Quarter

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  $

  	
   

  	
   

  
	
  Total

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Prior Quarter

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  $

  	
   

  	
   

  
	
  Total

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Current Quarter

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  $

  	
   

  	
   

  
	
  Total

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total 12 Months

  	
   

  	
  $

  	
   

  	
   

  
	
  Cost of Sales

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Current Cost of
  Inventory,
                   ,

  200  

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total 12 Months
  Cost of Sales/

  Current Inventory Level

  	
   

  	
  to 1.0

  	
   

  



 
















 


ANNEX E TO COMPLIANCE CERTIFICATE


 


STANDBY


LETTERS OF CREDIT OUTSTANDING


           ,
200  


 


	
  ISSUER

  	
   

  	
  LC#

  	
   

  	
  Maturity

  	
   

  	
  Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Total

  	
   

  	
  $

  	
   

  	
   

  



 
















 


ANNEX F TO COMPLIANCE CERTIFICATE


 


PERMITTED INDEBTEDNESS


 


	
   

  	
   

  	
   

  	
   

  	
   

  	
  Compliance

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (a)

  	
  Commercial Letters of
  Credit ($75,000,000 permitted)

  	
   

  	
  $

  	
   

  	
   

  	
  Yes    No

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (b)

  	
  Standby Letters of
  Credit (other than those issued by the Agent) ($2,000,000 permitted)

  	
   

  	
  $

  	
   

  	
   

  	
  Yes    No

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (c)

  	
  Share Repurchase
  Obligations Severance ($2,500,000 permitted) $10,000,000 total permitted

  	
   

  	
  $

  	
   

  	
   

  	
  Yes    No

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (d)

  	
  Other Indebtedness
  (permitted:  $20,000,000)

  	
   

  	
  $

  	
   

  	
   

  	
  Yes    No

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (e)

  	
  Intercompany
  Indebtedness (no limit on amount)

  	
   

  	
  $

  	
   

  	
   

  	
  N/A

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (f)

  	
  Accounts payable to
  officers, directors (no limit on amount)

  	
   

  	
  $

  	
   

  	
   

  	
  N/A

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (g)

  	
  Guarantees (no limit on
  amount)

  	
   

  	
  $

  	
   

  	
   

  	
  N/A

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (h)

  	
  Guarantees (Haggar
  Direct less than one years rental) (no limit on amount)

  	
   

  	
  $

  	
   

  	
   

  	
  N/A

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (i)

  	
  Guarantees (Haggar
  Direct exceeding one years rental) not to exceed $6,000,000 in the aggregate

  	
   

  	
  $

  	
   

  	
   

  	
  Yes    No

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (j)

  	
  Additional senior
  unsecured promissory notes with maturities after the Termination Date
  ($35,000,000 permitted)

  	
   

  	
  $

  	
   

  	
   

  	
  Yes    No

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (k)

  	
  Aircraft Indebtedness
  (not to exceed $4,150,000)

  	
   

  	
  $

  	
   

  	
   

  	
  Yes    No

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (l)

  	
  Life Insurance Indebtedness
  (not to exceed the lesser of (a) $9,100,000 or (b) cash value of insurance
  policies)

  	
   

  	
  $

  	
   

  	
   

  	
  Yes    No