THIRD AMENDMENT TO
FIRST AMENDED AND RESTATED CREDIT AGREEMENT
This THIRD AMENDMENT TO FIRST AMENDED AND RESTATED CREDIT AGREEMENT
(this "AGREEMENT") is entered into as of December 15, 1997, by and among
Haggar Clothing Co., a Nevada corporation, f/k/a Haggar Apparel Company (the
"COMPANY"), Haggar Corp., a Nevada corporation ("HAGGAR"), the banks listed
on the signature pages of this Agreement (collectively, the "BANKS"), Texas
Commerce Bank National Association, a national banking association,
individually and as agent (the "AGENT") for the Banks, and is consented to by
Haggar and the domestic subsidiaries of the Company listed on the signature
pages of this Agreement (collectively, the "SUBSIDIARIES").
R E C I T A L S:
WHEREAS, pursuant to that certain First Amended and Restated Credit
Agreement (as heretofore and herein amended, the "CREDIT AGREEMENT") dated as
of September 18, 1996, executed by and among the Company, Haggar, the Banks
and the Agent, the Banks agreed to make advances to the Company on certain
terms and conditions set forth therein (each capitalized term used but not
defined herein shall have the meaning given to such term in the Credit
Agreement as amended); and
WHEREAS, the Credit Agreement was amended by First Amendment to First
Amended and Restated Credit Agreement dated as of December 31, 1996, and
pursuant to Article I thereof, the Termination Date was extended to December
31, 1999, by notice from the Company dated April 25, 1997, and written
concurrence by the Banks dated April 30, 1997; and
WHEREAS, the Credit Agreement was further amended by Second Amendment to
First Amended and Restated Credit Agreement dated as of June 30, 1997;
WHEREAS, the Company has requested that certain financial covenants be
modified as set forth below; and
WHEREAS, the Agent and the Banks are agreeable to such request under the
present circumstances and in consideration of certain additional amendments
to the Credit Agreement as set forth below.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and confessed, the Company,
Haggar, the Banks and the Agent hereby agree as follows:
THIRD AMENDMENT TO FIRST AMENDED AND RESTATED CREDIT AGREEMENT
Page 1
A G R E E M E N T:
1. NEW DEFINITION. The following definition is hereby added to SECTION
1.1 of the Credit Agreement:
"Maintenance Capital Expenditures" means, for the twelve (12) month
period immediately preceding the date of determination, the aggregate
capital expenditures of the Company Group on a consolidated basis for
maintenance of existing property, equipment and facilities which shall, for
the purposes of this definition, be deemed to be $5,000,000 for each twelve
(12) month reporting period."
2. AMENDMENT TO DEFINITIONS. The following definitions are hereby amended
in their entirety to read as follows:
"CD Margin" means (a) at any time when the Funded Debt Ratio is equal
to or less than 1.50 to 1, five-eighths of one percent (5/8%) per annum,
(b) at any time when the Funded Debt Ratio is greater than 1.50 to 1 but
less than or equal to 2.00 to 1, three-quarters of one percent (3/4%) per
annum, (c) at any time when the Funded Debt Ratio is greater than 2.00 to 1
but less than or equal to 2.50 to 1, seven-eighths of one percent (7/8%)
per annum, (d) at any time when the Funded Debt Ratio is greater than 2.50
to 1 but less than or equal to 3.00 to 1, one percent (1%) per annum, and
(e) at any time when the Funded Debt Ratio is greater than 3.00 to 1, one
and one-quarter percent (1 1/4%) per annum. Each adjustment to the
previously calculated CD Margin shall be effective five (5) Business Days
following the Agent's receipt of the reports to be delivered by the Company
pursuant to Sections 6.1(a), (b)and (c).
"Eurodollar Margin" means (a) at any time when the Funded Debt Ratio
is equal to or less than 1.50 to 1, one-half of one percent (1/2%) per
annum, (b) at any time when the Funded Debt Ratio is greater than 1.50 to 1
but less than or equal to 2.00 to 1, five-eighths of one percent (5/8%) per
annum, (c) at any time when the Funded Debt Ratio is greater than 2.00 to 1
but less than or equal to 2.50 to 1, three-quarters of one percent (3/4%)
per annum, (d) at any time when the Funded Debt Ratio is greater than 2.50
to 1 but less than or equal to 3.00 to 1, seven-eighths of one percent
(7/8%) per annum, and (e) at any time when the Funded Debt Ratio is greater
than 3.00 to 1, one and one-eighth percent (1 1/8%) per annum. Each
adjustment to the previously calculated Eurodollar Margin shall be
effective five (5) Business Days following Agent's receipt of the reports
to be delivered by the Company pursuant to Sections 6.1(a), (b) and (c).
"Fixed Charge Ratio" means the ratio of (i) Operating Cash Flow minus
federal and state income taxes, as determined in accordance with GAAP to
(ii) Fixed Charges, in each case, as measured in accordance with SECTION
7.6 and as measured at the end of each fiscal quarter.
THIRD AMENDMENT TO FIRST AMENDED AND RESTATED CREDIT AGREEMENT
Page 2
"Fixed Charges" means, for the Company Group on a consolidated basis
for any period, in accordance with GAAP, the sum of (a) all interest on and
principal of Indebtedness (not including employee severance payments) that
is paid or required to be paid or accrued during such period, (b)all
dividends paid in cash during such period with respect to the securities of
any member of the Company Group to any recipient other than a member of the
Company Group, and (c) Maintenance Capital Expenditures.
"Highest Lawful Rate" means the maximum nonusurious interest rate, if
any, that at any time or from time to time may be contracted for, taken,
reserved, charged or received on the Loans under the Laws of the United
States and the Laws of the State of Texas as may be applicable thereto that
are presently in effect or, to the extent allowed by Law under such
applicable Laws of the United States and the Laws of the State of Texas,
which may hereafter be in effect and which allow a higher maximum
nonusurious interest rate than applicable Laws now allow. To the extent, if
any, that Chapter 303, Texas Financial Code, as amended (the "Act")
establishes the highest nonusurious rate, the Highest Lawful Rate shall be
the "weekly ceiling," as defined in the Act in effect from time to time,
calculated on the basis of a 365/366 day year; provided, however, that to
the extent permitted by the Act, the Banks at their election may substitute
for the "weekly ceiling" the "annual ceiling" or the "quarterly ceiling,"
as these terms are defined in the Act, upon the giving of the notices
provided for by the Act and effective upon the giving of such notices, such
substitution to have the effect provided for in the Act and to be
automatically renewable for additional periods as therein provided.
"Loan Documents" means this Agreement, each of the Notes, the Parent
Guaranty, the Subsidiary Guaranty, the Applications and all other documents
executed or delivered (or to be executed or delivered) pursuant to any of
the foregoing documents, and any amendments, modifications, supplements or
restatements of any of the foregoing.
3. AMENDMENT TO SECTION 2.5(a). Section 2.5(a) is hereby amended in its
entirety to read as follows:
(a) On each Payment Date and on the Termination Date, a commitment
fee equal to a fluctuating percentage of 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. The percentage
shall be equal to the following: (a) at any time when the Funded Debt Ratio
is equal to or less than 1.50 to 1, three-sixteenths of one percent (3/16%)
per annum, (b) at any time when the Funded Debt Ratio is greater than 1.50
to 1 but less than or equal to 2.00 to 1, one-fifth of one percent (1/5%)
per annum, and (c) at any time when the Funded Debt Ratio is greater than
2.00 to 1, one-quarter of one percent (1/4%) per annum. Each adjustment to
the percentage used to calculate the Commitment Fee shall be effective five
(5) Business Days following Agent's receipt of the reports to be delivered
by the Company pursuant to Sections 6.1(a), (b) and (c);
THIRD AMENDMENT TO FIRST AMENDED AND RESTATED CREDIT AGREEMENT
Page 3
4. AMENDMENT TO SECTION 7.6. Section 7.6 is hereby amended for the
specified periods to read as follows:
7.6 FIXED CHARGE REQUIREMENT. Commencing with the fiscal quarter
ending December 31, 1997, and for each fiscal quarter thereafter, permit
the ratio of (i) Operating Cash Flow minus federal and state income taxes,
as determined in accordance with GAAP to (ii) Fixed Charges, in each case,
for the prior twelve (12) months as measured at the end of each fiscal
quarter to be or become less than 1.25 to 1.00.
5. AMENDMENT TO SECTION 7.7. Section 7.7 is hereby amended for the
specified periods to read as follows:
7.7 FUNDED DEBT LIMITATION. Commencing with the fiscal quarter
ending December 31, 1997, and for each fiscal quarter thereafter, permit
the Funded Debt Ratio, as measured at the end of each fiscal quarter, to be
or become greater than 3.5 to 1.0.
6. CAPITAL EXPENDITURES LIMITATION. The following SECTION 7.15 is hereby
added to the Credit Agreement:
7.15 CAPITAL EXPENDITURES LIMITATION. Make or agree to make Capital
Expenditures in excess of (i) during the Company's fiscal year commencing
on October 1, 1997, $18,000,000.00 and (ii) during each fiscal year
thereafter, an amount equal to ten percent (10%) of the Company's Net
Worth; provided that (i) expenditures for remodeling and refurbishment of
and additions to its existing corporate headquarters situated at ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ (to the extent such expenditures in the
aggregate do not exceed the sum of (A) $2,721,000 and (B) the net cash
amount realized by the Company from any sale of the "G.M." and "Cedar
Springs" buildings situated, respectively, at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇) and (ii) expenditures for the repair or
replacement of property with insurance proceeds (to the extent such
expenditures do not exceed the net cash amount of such insurance proceeds)
shall not be included in Capital Expenditures for purposes of the foregoing
calculation.
7. AMENDMENT TO SECTION 10.14. Section 10.14 is hereby amended in its
entirety to read as follows:
10.14. REVOLVING CREDIT. Pursuant to Section 346.004 of Chapter 346
of the Texas Finance Code, the provisions of Chapter 346 shall not govern
or in any manner apply to this Agreement or the Loan.
8. ASSIGNMENT. Pursuant to Section 10.2 of the Credit Agreement and to
the same effect as if an assignment agreement had been executed complying with
Section 10.3 of the Credit Agreement, NBD Bank hereby assigns its interests,
rights and obligations of a Bank under the Credit Agreement to its affiliate,
The First National Bank of Chicago, which shall from and after
THIRD AMENDMENT TO FIRST AMENDED AND RESTATED CREDIT AGREEMENT
Page 4
the date hereof be a party to the Credit Agreement and have the rights and
obligations of a Bank thereunder.
9. AMENDMENT FEE. On or before the date hereof, the Company shall pay to
each of the Banks which consent to the amendments contained herein, which
consent shall be evidenced by such Bank's execution of this Agreement, an
amendment fee in the amount one-tenth of one percent (.01%) of such Bank's
Commitment under the Credit Agreement.
10. CERTIFICATES. This Agreement shall be effective as of the date first
above written when executed by all parties hereto and consented to by the
Guarantors as provided on the signature pages hereto, and upon receipt by the
Agent of the following, each in form, substance and bearing a date satisfactory
to the Agent and its counsel:
a. A certificate of the Secretary or Assistant Secretary of the
Company and the Guarantors, respectively, certifying (i) that, except as
indicated therein, there has been no change to the articles of
incorporation or bylaws of the Company or the Guarantors since the same
were furnished to the Agent in connection with the execution of the Credit
Agreement, and (ii) as to the name and title of the officers of the Company
and the Guarantors and the authority of such officers to execute this
Agreement.
b. A certificate, signed by the Treasurer of the Company or the
Chief Financial Officer of the Company, stating that as of the date of this
Agreement and after giving effect to this Agreement the statements set
forth in Sections 4.2(a), (b) and (g) of the Credit Agreement are true and
correct.
11. EFFECTIVENESS OF DOCUMENTS. Except as expressly modified hereby, all
terms, provisions, representations, warranties, covenants and agreements of the
Company and Haggar related to the Loans, whether contained in the Notes, the
Credit Agreement and/or any of the other Loan Documents, are hereby ratified and
confirmed by the Company and Haggar, and all such agreements shall be and shall
remain in full force and effect, enforceable in accordance with their terms.
12. NO CLAIMS OR DEFENSES. Each of the Company and Haggar, by the
execution of this Agreement, hereby declares that it has no offsets, claims,
counterclaims, defenses or other causes of action against the Agent or the Banks
related to any Loan, the Credit Agreement, any of the other Loan Documents or
the modification of the Credit Agreement pursuant to this Agreement.
13. AUTHORITY. Each of the Company and Haggar represents and warrants that
all requisite corporate action necessary for it to enter into this Agreement has
been taken.
14. BINDING AGREEMENT. This Agreement shall be binding upon, and shall
inure to the benefit of, each party hereto and such party's legal
representatives, successors and assigns.
THIRD AMENDMENT TO FIRST AMENDED AND RESTATED CREDIT AGREEMENT
Page 5
15. ENTIRE AGREEMENT. THIS WRITTEN AGREEMENT AND THE LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES HERETO AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS AMONG THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
AMONG THE PARTIES HERETO.
16. CHOICE OF LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF TEXAS, BUT
GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
17. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement, and
any of the parties hereto may execute this Agreement by signing any such
counterpart.
[SEE SIGNATURES ON ATTACHED PAGES]
THIRD AMENDMENT TO FIRST AMENDED AND RESTATED CREDIT AGREEMENT
Page 6
EXECUTED as of the date first above written.
HAGGAR CLOTHING CO., a Nevada corporation, f/k/a
Haggar Apparel Company
By: /s/ ▇.▇. ▇▇▇▇▇▇, III
-------------------------------------
▇.▇. ▇▇▇▇▇▇, III
Chief Executive Officer
HAGGAR CORP., a Nevada corporation
By: /s/ ▇.▇. ▇▇▇▇▇▇, III
-------------------------------------
▇.▇. ▇▇▇▇▇▇, III
Chief Executive Officer
TEXAS COMMERCE BANK National Association,
successor by merger to Texas Commerce Bank,
National Association, Individually, as the Agent
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇ ▇▇▇▇▇▇▇▇▇
Vice President
NATIONSBANK OF TEXAS, N.A.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Vice President
THIRD AMENDMENT TO FIRST AMENDED AND RESTATED CREDIT AGREEMENT
Page 7
COMERICA BANK - TEXAS
By: /s/ G. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
G. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Senior Vice President
NBD BANK
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
THE BANK OF TOKYO-MITSUBISHI, LTD.,
DALLAS OFFICE
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President/Manager
BANK OF SCOTLAND
By: /s/ ▇▇▇▇▇ ▇▇▇▇-Tac
-------------------------------------
▇▇▇▇▇ ▇▇▇▇-Tac
Vice President
THIRD AMENDMENT TO FIRST AMENDED AND RESTATED CREDIT AGREEMENT
Page 8
NATIONAL CITY BANK, KENTUCKY,
f/k/a First National Bank of Louisville
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
-------------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Vice President
THIRD AMENDMENT TO FIRST AMENDED AND RESTATED CREDIT AGREEMENT
Page 9
CONSENT OF HAGGAR
Haggar hereby (a) acknowledges its consent to this Agreement, (b) ratifies and
confirms all terms and provisions of the Parent Guaranty, (c) agrees that the
Parent Guaranty is and shall remain in full force and effect, (d) acknowledges
that there are no claims or offsets against, or defenses or counterclaims to,
the terms and provisions of and the obligations created and evidenced by the
Parent Guaranty, (e) reaffirms all agreements and obligations under the Parent
Guaranty with respect to the Loans, the Notes, the Credit Agreement and all
other documents, instruments or agreements governing, securing or pertaining to
the Loans, as the same may be modified by this Agreement, and (f) represents
and warrants that all requisite corporate action necessary for it to execute
this Agreement has been taken.
HAGGAR CORP.,
a Nevada corporation
By: /s/ ▇.▇. ▇▇▇▇▇▇, III
----------------------------------
▇.▇. ▇▇▇▇▇▇, III
Chief Executive Officer
Dated as of December 15, 1997.
THIRD AMENDMENT TO FIRST AMENDED AND RESTATED CREDIT AGREEMENT
Page 10
CONSENT OF DOMESTIC SUBSIDIARIES
Each of the undersigned Subsidiaries hereby (a) acknowledges its consent to this
Agreement, (b) ratifies and confirms all terms and provisions of the Subsidiary
Guaranty to which it is a signatory, (c) agrees that the Subsidiary Guaranty to
which it is a signatory is and shall remain in full force and effect, (d)
acknowledges that there are no claims or offsets against, or defenses or
counterclaims to, the terms and provisions of and the obligations created and
evidenced by the Subsidiary Guaranty to which it is a signatory, (e) reaffirms
all agreements and obligations under the Subsidiary Guaranty to which it is a
signatory with respect to the Loans, the Notes, the Credit Agreement and all
other documents, instruments or agreements governing, securing or pertaining to
the Loans, as the same may be modified by this Agreement, and (f) represents and
warrants that all requisite corporate action necessary for it to execute this
Agreement has been taken.
BOWIE MANUFACTURING COMPANY,
a Nevada corporation
By: /s/ ▇.▇. ▇▇▇▇▇▇, III
----------------------------------
▇.▇. ▇▇▇▇▇▇, III
Chairman/Chief Executive Officer
CORSICANA COMPANY,
a Nevada corporation
By: /s/ ▇.▇. ▇▇▇▇▇▇, III
----------------------------------
▇.▇. ▇▇▇▇▇▇, III
Chairman/Chief Executive Officer
DALLAS PANT MANUFACTURING COMPANY,
a Nevada corporation
By: /s/ ▇.▇. ▇▇▇▇▇▇, III
----------------------------------
▇.▇. ▇▇▇▇▇▇, III
Chairman/Chief Executive Officer
THIRD AMENDMENT TO FIRST AMENDED AND RESTATED CREDIT AGREEMENT
Page 11
GREENVILLE PANT MANUFACTURING
COMPANY, a Nevada corporation
By: /s/ ▇.▇. ▇▇▇▇▇▇, III
----------------------------------
▇.▇. ▇▇▇▇▇▇, III
Chairman/Chief Executive Officer
▇▇▇▇▇▇▇▇ PANT MANUFACTURING COMPANY,
a Nevada corporation
By: /s/ ▇.▇. ▇▇▇▇▇▇, III
----------------------------------
▇.▇. ▇▇▇▇▇▇, III
Chairman/Chief Executive Officer
OLNEY MANUFACTURING COMPANY,
a Nevada corporation
By: /s/ ▇.▇. ▇▇▇▇▇▇, III
----------------------------------
▇.▇. ▇▇▇▇▇▇, III
Chairman/Chief Executive Officer
WAXAHACHIE GARMENT COMPANY,
a Nevada corporation
By: /s/ ▇.▇. ▇▇▇▇▇▇, III
----------------------------------
▇.▇. ▇▇▇▇▇▇, III
Chairman/Chief Executive Officer
THIRD AMENDMENT TO FIRST AMENDED AND RESTATED CREDIT AGREEMENT
Page 12
LA ROMANA MANUFACTURING CORPORATION, a
Nevada corporation
By: /s/ ▇.▇. ▇▇▇▇▇▇, III
----------------------------------
▇.▇. ▇▇▇▇▇▇, III
Chairman/Chief Executive Officer
HAGGAR SERVICES, INC.,
a Texas corporation
By: /s/ ▇.▇. ▇▇▇▇▇▇, III
----------------------------------
▇.▇. ▇▇▇▇▇▇, III
Chairman/Chief Executive Officer
AIRHAGGAR, INC., f/k/a HAGAIR, INC.,
a Texas corporation
By: /s/ ▇.▇. ▇▇▇▇▇▇, III
----------------------------------
▇.▇. ▇▇▇▇▇▇, III
Chairman/Chief Executive Officer
DUNCAN MANUFACTURING COMPANY,
an Oklahoma corporation
By: /s/ ▇.▇. ▇▇▇▇▇▇, III
----------------------------------
▇.▇. ▇▇▇▇▇▇, III
Chairman/Chief Executive Officer
THIRD AMENDMENT TO FIRST AMENDED AND RESTATED CREDIT AGREEMENT
Page 13
WESLACO CUTTING, INC.,
a Nevada corporation
By: /s/ ▇.▇. ▇▇▇▇▇▇, III
----------------------------------
▇.▇. ▇▇▇▇▇▇, III
Chairman/Chief Executive Officer
WESLACO SEWING, INC.,
a Nevada corporation
By: /s/ ▇.▇. ▇▇▇▇▇▇, III
----------------------------------
▇.▇. ▇▇▇▇▇▇, III
Chairman/Chief Executive Officer
HAGGAR DIRECT, INC.,
a Nevada corporation
By: /s/ ▇.▇. ▇▇▇▇▇▇, III
----------------------------------
▇.▇. ▇▇▇▇▇▇, III
Chairman/Chief Executive Officer
Dated as of December 15, 1997.
THIRD AMENDMENT TO FIRST AMENDED AND RESTATED CREDIT AGREEMENT
Page 14
