<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM 10-Q
---------------
(Mark One)
/X/ Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1999.
OR
/ / Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
FOR THE TRANSITION PERIOD FROM ________ TO ________.
COMMISSION FILE NUMBER: 0-20850
HAGGAR CORP.
(Exact name of the registrant as specified in the charter)
NEVADA 75-2187001
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
6113 LEMMON AVENUE
DALLAS, TEXAS 75209
(Address of principal executive offices)
TELEPHONE NUMBER (214) 352-8481
(Registrant's telephone number including area code)
Indicate by a check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes /X/ No / /
As of February 14, 2000, there were 6,659,460 shares of the Registrant's
Common Stock outstanding.
<PAGE>
HAGGAR CORP. AND SUBSIDIARIES
INDEX
<TABLE>
<S> <C>
Part I. Financial Information
Item 1. Financial Statements
Consolidated Statements of Operations
(Three months ended December 31, 1999 and 1998) 3
Consolidated Balance Sheets
(As of December 31, 1999 and September 30, 1999) 4
Consolidated Statements of Cash Flows
(Three months ended December 31, 1999 and 1998) 5
Notes to Consolidated Financial Statements 6-10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11-14
Part II. Other Information.
Item 6. Exhibits and Reports on Form 8-K 14
Signature 14
</TABLE>
2
<PAGE>
HAGGAR CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three Months Ended
December 31,
-------------------------
1999 1998
---------- ----------
<S> <C> <C>
Net sales $ 98,682 $ 84,795
Cost of goods sold 64,381 55,139
----------- -----------
Gross profit 34,301 29,656
Selling, general and administrative expenses (32,954) (28,773)
Royalty income, net 44 341
----------- -----------
Operating income 1,391 1,224
Other income, net 344 356
Interest expense (799) (773)
------------ ------------
Income from operations before provision
for income taxes 936 807
Provision for income taxes 379 313
----------- -----------
Net income $ 557 $ 494
=========== ===========
Net income per share on a basic and diluted basis $ 0.08 $ 0.06
=========== ===========
Weighted average number of common shares
outstanding - Basic 7,081 7,716
=========== ===========
Weighted average number of common shares
and common share-equivalents outstanding - Diluted 7,136 7,732
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
3
<PAGE>
HAGGAR CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
December 31,
1999 September 30,
(Unaudited) 1999
------------ -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 13,546 $ 6,380
Accounts receivable, net 43,130 59,488
Due from factor 2,383 4,034
Inventories 90,199 85,985
Deferred tax benefit 11,805 12,100
Other current assets 3,623 1,639
----------- -----------
Total current assets 164,686 169,626
Property, plant, and equipment, net 60,848 61,897
Goodwill, net 28,389 28,751
Other assets 2,950 3,257
----------- -----------
Total assets $ 256,873 $ 263,531
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 26,968 $ 33,030
Accrued liabilities 24,367 27,954
Accrued wages and other employee compensation 1,315 7,014
Accrued workers' compensation 4,600 4,775
Current portion of long-term debt 4,069 4,069
----------- -------------
Total current liabilities 61,319 76,842
Deferred income taxes 867 867
Long-term debt 33,564 21,374
----------- -----------
Total liabilities 95,750 99,083
Commitments and contingencies
Stockholders' equity:
Common stock - par value $0.10 per share; 25,000,000 shares authorized and
8,578,665 and 8,576,998 shares issued at
December 31, 1999 and September 30, 1999, respectively. 857 857
Additional paid-in capital 41,876 41,860
Retained earnings 136,482 136,267
----------- -----------
179,215 178,984
Less - Treasury stock, 1,685,605 and 1,391,605 shares at cost at
December 31, 1999 and September 30, 1999, respectively. (18,092) (14,536)
----------- -----------
Total stockholders' equity 161,123 164,448
----------- -----------
Total liabilities and stockholders' equity $ 256,873 $ 263,531
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
4
<PAGE>
HAGGAR CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended
December 31,
----------------------------
1999 1998
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 557 $ 494
Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
Depreciation and amortization 3,375 3,203
Gain on disposal of property, plant, and equipment (561) (117)
Changes in assets and liabilities:
Accounts receivable, net 16,358 23,779
Due from factor 1,651 -
Inventories, net (4,214) (3,461)
Current deferred tax benefit 295 (1,323)
Other current assets (1,984) (140)
Accounts payable (6,062) (9,439)
Accrued liabilities (3,587) 1,561
Accrued wages, workers compensation and other employee benefits (5,874) (4,702)
----------- -----------
Net cash (used in) provided by operating activities (46) 9,855
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant, and equipment, net (2,557) (2,050)
Proceeds from sale of property, plant, and equipment, net 1,180 285
Decrease (increase) in other assets 281 (154)
----------- -----------
Net cash used in investing activities (1,096) (1,919)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from short-term borrowings - 679
Purchase of treasury stock at cost (3,556) (4,352)
Proceeds from issuance of long-term debt 57,000 -
Proceeds from issuance of common stock 16 -
Payments on long-term debt (44,810) (3,671)
Payments of cash dividends (342) (381)
----------- -----------
Net cash provided by (used in) financing activities 8,308 (7,725)
Increase in cash and cash equivalents 7,166 211
Cash and cash equivalents, beginning of period 6,380 20,280
----------- -----------
Cash and cash equivalents, end of period $ 13,546 $ 20,491
=========== ===========
Supplemental disclosure of cash flow information
Cash paid for:
Interest $ 1,094 $ 1,247
Income taxes $ 2,653 $ 19
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
5
<PAGE>
HAGGAR CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED FINANCIAL STATEMENTS.
The consolidated balance sheet as of December 31, 1999, and the consolidated
statements of operations and cash flows for the three months ended December
31, 1999 and 1998, have been prepared by Haggar Corp. (the "Company") without
audit. In the opinion of management, all adjustments necessary (which include
only normal recurring adjustments) to present fairly the consolidated
financial position, results of operations, and cash flows of the Company at
December 31, 1999, and for all other periods presented, have been made.
Certain information and footnote disclosures normally included in the
financial statements prepared in accordance with generally accepted
accounting principles have been omitted. These financial statements should be
read in conjunction with the financial statements and accompanying footnotes
in the Company's Annual Report on Form 10-K for the year ended September 30,
1999.
ACQUISITION
On January 13, 1999, the Company, through its main operating subsidiary,
Haggar Clothing Co., acquired Jerell, Inc. ("Jerell"), a company engaged in
the design and marketing of women's apparel, for an aggregate acquisition
cost of $43.6 million. The acquisition cost consists of $36.9 million paid to
the shareholders of Jerell, $0.4 million as consideration for a covenant not
to compete to an executive officer, $4.7 million paid to a third party
factor, and $1.6 million in expenses attributable to the acquisition. In
conjunction with the acquisition, the Company received payments of notes
receivable due from former stockholders of Jerell, Inc. of $2.8 million and
payments of $0.7 million from former stockholders of Jerell for tax
withholdings, resulting in a net acquisition cost of $40.1 million. The
acquisition was accounted for under the purchase method. Based on current
estimates, which may be revised at a later date, the excess consideration
paid over the estimated fair value of net assets acquired of approximately
$29.8 million was recorded as goodwill and is being amortized on a
straight-line basis over its estimated useful life of 20 years. The Company's
consolidated financial statements have incorporated Jerell's operating
results from the effective date of the acquisition. The following unaudited
pro forma financial information combines the results of operations of the
Company and Jerell as if the acquisition had taken place at the beginning of
fiscal 1998. These results are not intended to be a projection of future
results.
<TABLE>
<CAPTION>
Three Months Ended
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) December 31,
-------------------------
1999 1998
---- ----
<S> <C> <C>
Net sales $ 98,682 $ 98,979
Net income 557 (76)
Net Income per share - Basic and Diluted $ 0.08 $ (0.01)
</TABLE>
In conjunction with the acquisition, liabilities were assumed as follows (in
thousands):
<TABLE>
<S> <C>
Fair value of assets acquired $ 46,665
Net cash paid for Jerell Inc. 39,317
--------
Liabilities assumed $ 7,348
========
</TABLE>
6
<PAGE>
CONCENTRATIONS OF CREDIT RISK.
Financial instruments which potentially expose the Company to concentrations
of credit risk, as defined by Statement of Financial Accounting Standards
("SFAS") No. 105, "Disclosure of Information about Financial Instruments with
Off-Balance Sheet Risk and Financial Instruments with Concentrations of
Credit Risk," consist primarily of trade accounts receivable. The Company's
customers are not concentrated in any specific geographic region but are
concentrated in the apparel industry. The Company's largest current customer,
J.C. Penney Company, Inc., accounted for 24.0% and 29.3% of the Company's net
sales for the three months ended December 31, 1999 and 1998, respectively.
The Company's second largest current customer, Kohl's Department Stores,
Inc., accounted for 11.7% and 10.8% of the Company's net sales for the three
months ended December 31, 1999 and 1998, respectively. No other customer
accounted for more than 10% of the Company's net sales. The Company performs
ongoing credit evaluations of its customers' financial condition and
establishes an allowance for doubtful accounts based upon factors surrounding
the credit risk of specific customers, historical trends, and other
information.
DUE FROM FACTOR
The Company has a factoring agreement with Bank of America for the purposes
of providing credit administration for the Company. Under the terms of the
factoring agreement, Bank of America purchases substantially all of Jerell's
specialty store accounts receivable without recourse.
INVENTORIES.
Inventories are stated at the lower of cost (first-in, first-out) or market
and consisted of the following at December 31, 1999, and September 30, 1999
(in thousands):
<TABLE>
<CAPTION>
December 31, September 30,
1999 1999
---------------- ---------------
<S> <C> <C>
Piece goods $ 9,466 $ 10,001
Trimmings & supplies 3,141 2,651
Work-in-process 17,109 17,443
Finished garments 60,483 55,890
---------------- ---------------
$ 90,199 $ 85,985
================ ===============
</TABLE>
Work-in-process and finished garments inventories consisted of materials,
labor and manufacturing overhead.
7
<PAGE>
LONG-TERM DEBT
Long-term debt consisted of the following at December 31, 1999, and September
30, 1999 (in thousands):
<TABLE>
<CAPTION>
December 31, September 30,
1999 1999
-------------- -------------
<S> <C> <C>
Borrowings under revolving credit line $ 16,000 $ -
Industrial Development Revenue
Bonds with interest at a rate equal
to that of high-quality, short-term,
tax-exempt obligations, as defined
(5.60% and 3.85% at December 31, 1999
and September 30, 1999, respectively),
payable in annual installments of $100
to $200 and a final payment of $2,000
in 2005, secured by certain buildings
and equipment 2,500 2,600
Allstate notes 17,857 21,429
Other 1,276 1,414
-------------- --------------
37,633 25,443
Less - Current portion 4,069 4,069
-------------- -------------
$ 33,564 $ 21,374
============== =============
</TABLE>
Net assets mortgaged or subject to lien under the Industrial Development
Revenue Bonds totaled approximately $1,169,495 at December 31, 1999.
As of December 31, 1999, the Company had a revolving credit line agreement
(the "Agreement") with certain banks subject to certain borrowing base
limitations. The Company had additional available borrowing capacity of
approximately $63,000,000 under this Agreement at December 31, 1999. The
Company incurred approximately $40,932 in commitment fees related to the
available borrowing capacity during the quarter ended December 31, 1999. The
interest rates for the quarter ended December 31, 1999, ranged from 6.25% to
8.50%. The facility will mature June 30, 2002, unless renewed and is
unsecured. The Agreement prohibits the Company from pledging its account
receivables and inventories, contains limitations on incurring additional
indebtedness and requires the maintenance of certain financial ratios. In
addition, the agreement requires the Company and Haggar Clothing Co., the
Company's main operating subsidiary, to maintain net worth, as defined, in
excess of $149,494,000 and $55,000,000, respectively, as of December 31,
1999. The Agreement requires the Company to maintain a net worth in excess of
the net worth of the preceding fiscal year plus 50% of the Company's
consolidated net income. The Agreement prohibits the payment of any dividend
if a default exists after giving effect to such dividend.
In 1995, the Company completed the sale and issuance of $25,000,000 in senior
notes (the "Allstate notes"). Proceeds from the Allstate notes were used to
partially fund the construction of the Company's Customer Service Center
("CSC"). Significant terms of the Allstate notes include a maturity date of
ten years from the date of issuance, interest payable semi-annually and
annual principal payments beginning in the fourth year. The interest rate on
the Allstate notes is fixed at 8.49%. The terms and conditions of the note
purchase agreement governing the Allstate notes include restriction on the
sale of assets, limitations on additional indebtedness, and the maintenance
of certain net worth requirements.
8
<PAGE>
CONTINGENCIES
LAWSUIT
On April 12, 1999, a jury returned an approximate $3.6 million verdict
against Haggar Clothing Co. and in favor of a former employee relating to
claims for wrongful discharge and common law tort. The Company believes the
verdict in this lawsuit was both legally and factually incorrect. The Company
presently intends to appeal the judgment. The Company does not believe that
the outcome of this verdict will have a material impact on its financial
statements.
NET INCOME PER COMMON SHARE - BASIC AND DILUTED
Basic earnings per share excludes dilution and is computed by dividing net
income by the weighted-average number of common shares outstanding for the
period. Diluted earnings per share is computed by dividing net income by the
sum of the weighted-average number of common shares outstanding for the
period and the number of equivalent shares assumed outstanding under the
Company's stock based compensation plans.
Options to purchase 826,865 common shares at prices ranging from $12.13 to
$23.00 were not dilutive and were outstanding for the three months ended
December 31, 1999. Options to purchase 874,683 common shares at prices
ranging from $12.13 to $23.00 were not dilutive and were outstanding for the
three months ended December 31, 1998. These shares for the aforementioned
periods were not included in the diluted earnings per share calculation
because the options' exercise prices were greater than the average market
price of the common shares. Diluted earnings per share was calculated as
follows (unaudited, in thousands, except per share data):
<TABLE>
<CAPTION>
Three Months Ended
December 31, December 31,
1999 1998
--------------- ----------------
<S> <C> <C>
Net income $557 $494
Weighted average number of common shares outstanding 7,081 7,716
Common share-equivalents, due to stock options 55 16
--------------- ----------------
7,136 7,732
=============== ================
Net income per share on a diluted basis $0.08 $0.06
=============== ================
</TABLE>
9
<PAGE>
EMPLOYEE BENEFIT PLANS
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN AND TRUST ("SERP")
In order to provide supplemental retirement benefits and pre-retirement death
benefits to select members of the Company's senior management, the Company
formed the Haggar Corp. Supplemental Executive Retirement Plan ("SERP")
during the first quarter of fiscal 2000. At retirement age, as defined in the
SERP, each participant will be entitled to a life annuity benefit (if
married, a joint and 50% survivor annuity) equal to 65% of the participant's
average total compensation during the three prior fiscal years, reduced by
any Company-provided benefit under the existing deferred annuity program. If
a participant dies before retirement, the surviving spouse or other
beneficiary will receive a death benefit equal to $400,000 per year payable
annually for 10 years.
The Company has established a trust to which the Company will contribute cash
to purchase variable life insurance policies insuring each participant.
Annual premiums for the current participants are approximately $878,000.
The SERP is operating as an unfunded compensation arrangement that is not
subject to the annual reporting and disclosure requirements of the Employee
Retirement Income Security Act of 1974 ("ERISA").
SUBSEQUENT EVENTS
DIVIDEND DECLARED
On January 25, 2000, the Company declared a cash dividend of $0.05 per share
payable to the stockholders of record on February 7, 2000. The dividend of
approximately $333,800 will be paid on February 18, 2000.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the attached
consolidated financial statements and the notes thereto and with the
Company's Annual Report on Form 10-K for the fiscal year ended September 30,
1999.
RESULTS OF OPERATIONS
The Company's first quarter fiscal 2000 net income of $0.6 million was
relatively consistent compared to a net income of $0.5 million in the first
quarter fiscal 1999.
Net sales for the first quarter of fiscal 2000 increased 16.4% to $98.7
million from $84.8 million for the first quarter of fiscal 1999. Net sales
increased for the first quarter of fiscal 2000 primarily due to our improved
sportswear lines and the addition of our new women's division. Excluding the
impact of the women's division, unit sales increased 6.0% and the average
sales price decreased 10.8%. The 10.8% decrease in average sales price is
primarily attributable to certain markdowns on sportcoats and shirts.
The 34.8% gross profit as a percentage of net sales in the first quarter of
fiscal 2000 was comparable to the 35.0% in the first quarter of the prior
fiscal year. The gross profit has remained comparable by maintaining the same
strategic sourcing mix.
Selling, general and administrative expenses as a percentage of net sales
decreased to 33.4% in the first quarter of fiscal 2000 compared to 33.9% in
the first quarter of fiscal 1999. However, actual selling, general and
administrative expenses increased $4.2 million to $33.0 million for the first
quarter of fiscal 2000 compared to $28.8 million for first quarter of fiscal
1999. The overall increase in selling, general and administrative expenses
includes additional expenses of $0.5 million related to the opening and
operating of new retail stores, a $0.6 million increase from starting Haggar
Japan operations in February 1999, $0.3 million attributable to new executive
compensation arrangements which will continue in subsequent periods, and the
inclusion of the women's division expenses of $3.4 million. These increases
are offset by a decrease of $0.4 million in sales and marketing expenses. At
the end of the first quarter of fiscal 2000, 66 retail stores were open and
operational, as compared to 60 retail stores at the end of the same period
one year ago.
Royalty income for the first quarter of fiscal 2000 decreased $0.3 million
from the first quarter of fiscal 1999, primarily due to slow licensee sales
and the Company's assumption of a licensee's business.
LIQUIDITY AND CAPITAL RESOURCES
The Company's trade accounts receivable potentially expose the Company to
concentrations of credit risks as most of its customers are in the retail
apparel industry. The Company performs ongoing credit evaluations of its
customers' financial condition and establishes an allowance for doubtful
accounts based upon the factors related to the credit risk of specific
customers, historical trends and other information. The Company's trade
accounts receivable decreased approximately $16.4 million to $43.1 million at
December 31, 1999, from $59.5 million at September 30, 1999. In addition, the
Company's due from factor decreased from $4.0 million at September 30, 1999,
to $2.4 million at December 31, 1999. The decreases in trade accounts
receivable and due from factor are primarily the result of reduced retail
sales for the Company's customers.
Inventories as of December 31, 1999, increased to $90.2 million from $86.0
million at September 30, 1999. The increase in inventory levels during the
first quarter of fiscal 1999 is mainly due to the timing of certain
deliveries of seasonal products.
11
<PAGE>
The Company has a revolving credit line facility with certain banks. As of
December 31, 1999, the Company had additional available borrowing capacity of
approximately $63.0 million under that facility. The Company incurred
approximately $40,932 in commitment fees related to the available borrowing
capacity during the first quarter of fiscal 2000. The interest rates during
the first quarter of fiscal 2000 ranged from 6.25% to 8.50%. The facility
will mature June 30, 2002, with a one year renewal at the option of the banks.
The Company remained unchanged in cash from operating activities for the
three months ended December 31, 1999, primarily as a result of an increase in
inventories of $4.2 million offset by a reduction in accounts receivable and
due from factor of $18.0 million and reductions in (i) accounts payable, (ii)
accrued liabilities and (iii) accrued wages, worker's compensation and other
employee benefits of $6.1, $3.6, and $5.9, respectively. The Company used
cash in investing activities of $1.1 million during the first three months of
fiscal 2000, primarily as the result of purchasing property, plant, and
equipment for the opening of retail stores and building in-store customer
shops, which were offset by the proceeds from the sale of machinery and
equipment. Cash flows provided by financing activities of $8.3 million for
the three months ended December 31, 1999, were primarily the result of a net
increase in long-term debt of $12.2 million to fund ongoing operations which
was offset by the purchase of $3.6 million in treasury stock.
By comparison, the Company provided cash from operating activities for the
three months ended December 31, 1998, of $9.9 million, primarily as a result
of the reduction in accounts receivable of $23.8 million, offset by
reductions in accounts payable of $9.4 million and an increase in inventories
of $3.5 million. The Company used cash in investing activities of $1.9
million during the first three months of fiscal 1999, the result of purchases
of property, plant, and equipment of $2.1 million, primarily in conjunction
with the opening of retail stores in the first quarter of fiscal 1999. Cash
flows used in financing activities of $7.7 million for the three months ended
December 31, 1998, were primarily the result of a net reduction in long-term
debt of $3.7 million and the purchase of $4.4 million in treasury stock.
The Company believes that the cash flows generated from operations and the
funds available under the foregoing credit facilities will be adequate to
meet its working capital and related financing needs for the foreseeable
future.
YEAR 2000 CONSIDERATIONS
GENERAL. The Year 2000 issue concerns the inability of some computerized
systems to properly process date-sensitive information on and after January
1, 2000, because of the use of only the last two digits to identify a year.
The Company has a full-time project manager coordinating the assessment and
remediation of Year 2000 issues affecting the Company. The project manager
and team leaders from various areas within the Company implemented the
remediation necessary to prepare the Company for the Year 2000. The Year 2000
steering committee, composed of members from various functional groups,
provided oversight by reviewing and evaluating the progress of the Year 2000
program. In addition to its internal Year 2000 compliance program, the
Company requested information from a majority of its customers and vendors
concerning their Year 2000 compliance.
STATE OF READINESS. The Company had completed the assessment, remediation and
testing of all its computerized systems by November 30, 1999. Subsequent to
December 31, 1999, the Company has not experienced any significant systems
failures related to the Year 2000 issue. Similarly, no customers or suppliers
have reported any significant Year 2000 problems to the Company. Nonetheless,
the Company intends to continue monitoring its computerized systems and
communicate with its customers and suppliers to identify any Year 2000 issues
which may arise or be discovered during the 2000 calendar year.
COSTS TO ADDRESS YEAR 2000 ISSUES. The Company executed its Year 2000 program
primarily with existing internal resources. The principal costs associated
with these internal resources were payroll and employee benefits
12
<PAGE>
of the information systems group. The Company did not separately track the
internal costs attributable to the Year 2000 program.
The Company also incurred costs for contract programmers and systems upgrades
in connection with its Year 2000 program. As a result of Year 2000 issues,
the Company elected to upgrade its accounting, order processing,
manufacturing, and electronic data interchange software; retail store
systems; distribution conveyor systems; and most PC hardware and software
systems. No other significant projects were accelerated or deferred due to
Year 2000 issues. The costs of these programmers and upgrades were not
material to the results of operations or the financial condition of the
Company. All costs of Year 2000 compliance were recorded in the period
incurred.
RISKS OF YEAR 2000 ISSUES. Although the Company believes that it has
adequately addressed the Year 2000 issue, there can be no assurance that Year
2000 problems will not have a material adverse affect on its business,
financial condition or results of operations. In addition, disruptions in the
economy generally resulting from Year 2000 failures or the public's
perceptions of failures could have a material adverse effect on the Company.
CONTINGENCY PLANS. The Company has developed contingency plans for potential
risks such as interruptions in supply chain, transportation delays and
communications breakdowns with foreign vendors. The Company generated risk
analysis reports from the testing of systems and the responses received from
customers and vendors. The reports were divided between internal and external
risks.
The internal risks relate to the Company's systems and facilities. The
Company conducted extensive testing to assure the Company that date changes
would not affect its systems before, during or after January 1, 2000. In
addition, the Company increased MIS staff coverage from December 30, 1999, to
January 15, 2000. Also, facilities staff were on site during the January 1
weekend to confirm that building and mechanical systems operated as expected.
The external risk categories covered in the reports are customers, importers,
piece goods and trim suppliers, manufacturing contractors, licensees,
transportation and utility vendors. The Company's senior managers used risk
analysis reports to develop contingency plans where necessary. In light of
the lack of any significant Year 2000 problems reported to date, the Company
does not believe such contingency plans will be utilized.
FORWARD LOOKING STATEMENTS
This report contains certain forward-looking statements. In addition, from
time to time the Company may issue press releases and other written
communications, and representatives of the Company may make oral statements,
which contain forward-looking information. Except for historical information,
matters discussed in such oral and written communications are forward-looking
statements that involve risks and uncertainties which could cause actual
results to differ materially from those in such forward-looking statements.
Risks and uncertainties inherent to the Company's line of business include
such factors as natural disasters, general economic conditions, the
performance of the retail sector in general and the apparel industry in
particular, the competitive environment, consumer acceptance of new products,
and the success of advertising, marketing and promotional campaigns.
Additional risks and uncertainties which could cause the Company's actual
results to differ from those contained in any forward-looking statements are
discussed elsewhere herein.
13
<PAGE>
SUBSEQUENT EVENT
DIVIDEND DECLARED
On January 25, 2000, the Company declared a cash dividend of $0.05 per share
payable to the stockholders of record on February 7, 2000. The dividend of
approximately $333,800 will be paid on February 18, 2000.
PART II. OTHER INFORMATION.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) 10(a) Supplemental Executive Retirement Plan (SERP) and related Participant
Agreements.
10(b) Split-Dollar Life Insurance Plan, related Collateral Assignments
and Participant Insurance Agreements.
10(c) Wage Continuation Plan.
27.1 Financial Data Schedule.
(b) No reports on Form 8-K have been filed during the quarter for which this
report is filed.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Haggar Corp.,
Date: February 14, 2000 By: /S/ DAVID M. TEHLE
-------------------------
David M. Tehle
Sr. Vice President
Chief Financial Officer
Signed on behalf of the
registrant and as principal
financial officer.
14
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HAGGAR CORP.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
EFFECTIVE OCTOBER 1, 1999
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C> <C>
ARTICLE I Plan Definitions ................................................ 3
1.1 "Actuarial Assumptions" ......................................... 3
1.2 "Affiliated Employer" ........................................... 3
1.3 "Benefit Offset Amount" ......................................... 3
1.4 "Board" ......................................................... 4
1.5 "Change of Control" ............................................. 4
1.6 "Corporation" ................................................... 4
1.7 "Final Annual Earnings" ......................................... 4
1.8 "Normal Retirement Age .......................................... 4
1.9 "Participant" ................................................... 5
1.10 "Participating Employer" ........................................ 5
1.11 "Participation Agreement" ....................................... 5
1.12 "Plan ........................................................... 5
1.13 "Service" ....................................................... 5
1.14 "Subsidiary" .................................................... 5
1.15 "Termination of Service" ........................................ 5
ARTICLE II Effective Date .................................................. 5
ARTICLE III Eligibility and Participation ................................... 5
3.1 Designation of Participants ..................................... 5
3.2 Eligibility for Benefits ........................................ 5
ARTICLE IV Retirement Benefits ............................................. 6
4.1 Retirement Benefit Under this Plan .............................. 6
(a) Retirement Benefit .......................................... 6
(b) Forfeiture Events ........................................... 6
(c) Pre-Retirement Death Benefit ................................ 7
(d) Lump Sum Payment Election and Penalty ....................... 7
4.2 Change of Control Vesting ....................................... 7
4.3 Withholding and Employment Taxes ................................ 7
ARTICLE V Source of Benefits .............................................. 7
5.1 Benefits Payable from General Assets ............................ 7
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TABLE OF CONTENTS
(CONTINUED)
PAGE
5.2 Investments to Facilitate Payment of Benefits ................... 8
5.3 Unfunded Plan ................................................... 8
ARTICLE VI Amendment and Termination ....................................... 8
6.1 Amendment and Termination ....................................... 8
ARTICLE VII Adoption by Other Employers ..................................... 9
7.1 Participating Employers ......................................... 9
7.2 Amendment ....................................................... 9
ARTICLE VIII Administration of Plan .......................................... 9
8.1 Plan Administration ............................................. 9
8.2 Plan Administrator's Rules and Powers ........................... 9
8.3 Liability of Plan Administrator ................................. 9
8.4 Interpretation of Plan ..........................................10
8.5 Determination of Benefits .......................................10
ARTICLE IX Claims for Benefits .............................................10
9.1 Claims Procedures ...............................................10
9.2 Review Procedure ................................................10
ARTICLE X Covenants Applicable to Participants in the Plan ................11
10.1 Confidential Information ........................................11
10.2 Non-Solicitation ................................................11
10.3 Covenant Not to Compete .........................................12
ARTICLE XI Miscellaneous Provisions ........................................12
11.1 No Guarantee of Employment ......................................12
11.2 Non-Alienation of Benefits ......................................12
11.3 Payment to Representatives ......................................12
11.4 Timing of Payments ..............................................12
11.5 Governing Law ...................................................13
11.6 Arbitration .....................................................13
11.7 Gender and Number ...............................................13
11.8 Titles and Headings .............................................13
11.9 Successors ......................................................13
</TABLE>
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HAGGAR CORP.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
WHEREAS, Haggar Corp., a Nevada corporation having its principal
place of business in Dallas, Texas, desires to implement the Haggar Corp.
Supplemental Executive Retirement Plan for the purpose of attracting and
retaining key management employees; and
WHEREAS, Haggar Corp. desires to permit any Subsidiary or Affiliated
Employer of Haggar Corp. to become a Participating Employer in the Plan; and
WHEREAS, the Plan is intended to provide a select group of key
management or highly compensated employees with nonqualified supplemental
retirement income; and
WHEREAS, the Compensation Committee of the Board of Directors of
Haggar Corp. has authorized the execution and adoption of the Plan;
NOW, THEREFORE, the Plan is hereby adopted to provide as follows:
ARTICLE I
PLAN DEFINITIONS
1.1 "Actuarial Assumptions" means the interest rate and mortality
assumptions used by the Corporation's actuaries on a consistent basis in
determining the Corporation's accrued liabilities under the Plan for
financial accounting purposes.
1.2 "Affiliated Employer" means any trade or business (whether or
not incorporated) which is under common control, as that term is defined in
Section 414(c) of the Internal Revenue Code of 1986, with the Corporation;
any organization (whether or not incorporated) which is a member of an
affiliated service group, as that term is defined in Section 414(m) of the
Internal Revenue Code of 1986, which includes the Corporation; and any other
entity required to be aggregated with the Corporation pursuant to Regulations
under Section 414(o) of the Internal Revenue Code of 1986.
1.3 "Benefit Offset Amount" means the annual payment that would be
made to a Participant by annuitizing one-third (1/3) of the accumulated
account balance(s) of any annuity contracts purchased for his benefit under
the Corporation's Bonus Savings Plan as of the earlier of (i) his attainment
of Normal Retirement Age, or (ii) his Termination of Service, assuming an
annuity payment in the same form and for the same period of time as the
annuity payment described in Section 4.1(a) of the Plan. On an annual basis,
on a date to be determined by the Corporation, the Participant or his
beneficiary shall provide the Corporation with the accumulated account
balance of the annuity contract and any other information necessary to
calculate the Benefit Offset Amount, provided that the Participant shall not
be required to provide such information following the commencement of payment
of benefits under this Plan. The Corporation's actuaries shall provide the
calculations necessary to determine the Benefit Offset Amount using the
Actuarial Assumptions as defined herein.
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1.4 "Board" means the Board of Directors of the Corporation.
1.5 "Change of Control" means (i) a merger or consolidation of the
Corporation or a Participating Employer with or into another corporation in
which the Corporation or the Participating Employer shall not be the
surviving corporation (other than a merger undertaken solely in order to
reincorporate in another state) (for purposes hereof the Corporation or the
Participating Employer shall not be deemed the surviving corporation in any
such transaction if as the result thereof it becomes a wholly-owned
subsidiary of another corporation), (ii) a dissolution of the Corporation or
a Participating Employer, (iii) a transfer of all or substantially all of the
assets of the Corporation or a Participating Employer in one transaction or a
series of related transactions to one or more other persons or entities, (iv)
a transaction or series of transactions that results in any entity, "Person"
or "Group" (as defined below), becoming the beneficial owner, directly or
indirectly, of securities of the Corporation or a Participating Employer
representing more than 50% of the combined voting power of the Corporation's
or the Participating Employer's then outstanding securities, or (v) during
any period of two (2) consecutive years commencing on or after October 1,
1999, individuals who at the beginning of the period constituted the
Corporation' s Board of Directors cease for any reason to constitute at least
a majority, unless the election of each director who was not a director at
the beginning of the period has been approved in advance by directors
representing at least two-thirds (2/3) of the directors then in office who
were directors at the beginning of the period; PROVIDED, HOWEVER, that a
"Change of Control" shall not be deemed to have occurred if the ownership of
50% or more of the combined voting power of the surviving corporation, asset
transferee or Corporation or Participating Employer (as the case may be),
after giving effect to the transaction or series of transactions, is directly
or indirectly held by (A) a trustee or other fiduciary under an employee
benefit plan maintained by the Corporation, a Participating Employer, or any
Subsidiary, (B) one or more of the "executive officers" of the Corporation
that held such positions prior to the transaction or series of transactions,
or any entity, Person or Group under their control, (C) one or more of the
children of J.M. Haggar, Sr. or their lineal descendants, or any entity,
Person or Group under their control, or (D) one or more members of the
"senior management" of the Corporation or a Participating Employer as
designated by the Chief Executive Officer from time to time, that held such
positions prior to the transaction or series of transactions, or any entity,
Person or Group under their control. As used herein, "Person" and "Group"
shall have the meanings set forth in Sections 13(d)(3) and/or 14(d)(2) of the
Securities Exchange Act of 1934, as amended ("1934 Act"), and "executive
officer" shall have the meaning set forth in Rule 3b-7 promulgated under the
1934 Act.
1.6 "Corporation" means Haggar Corp., a Nevada corporation with its
principal place of business in Dallas, Texas.
1.7 "Final Annual Earnings" means the average base salary and annual
incentive bonus paid to the Participant by the Participating Employer during
the three (3) consecutive fiscal years preceding the earlier of (1) the
Participant's Normal Retirement Age, or (2) the Participant's Termination of
Service.
1.8 "Normal Retirement Age" means the attainment of a specified age,
as determined by the Compensation Committee of the Board, which may be
different for each Participant and shall be provided in the Participant's
Participation Agreement entered into pursuant to this Plan.
4
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1.9 "Participant" means any key management or highly compensated
employee of the Participating Employer who is designated as a Participant by
the Compensation Committee of the Board as provided in Article III. A
Participant shall also mean a retired or terminated Participant who continues
to be entitled to retirement benefits under this Plan after his Termination
of Service.
1.10 "Participating Employer" means the Corporation and/or any
Subsidiary or Affiliated Employer that adopts this Plan in accordance with
Article VII.
1.11 "Participation Agreement" means the agreement entered into
between the Participating Employer and the Participant in accordance with the
terms of this Plan.
1.12 "Plan" means the Haggar Corp. Supplemental Executive Retirement
Plan, and any amendments thereto.
1.13 "Service" means the period of full time employment of a
Participant with a Participating Employer (but not counting any period during
which such employer was not a Participating Employer, unless the
Participation Agreement expressly provides otherwise).
1.14 "Subsidiary" means any corporation that is part of a controlled
group of corporations, within the meaning of Section 414(b) of the Internal
Revenue Code of 1986, in which the Corporation is a member.
1.15 "Termination of Service" means the first day of the month
following termination of a Participant's Service whether by voluntary or
involuntary separation, retirement, disability or death.
ARTICLE II
EFFECTIVE DATE
2.1 This Plan shall be effective on October 1, 1999.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.1 DESIGNATION OF PARTICIPANTS. The Participants shall be those key
management or highly compensated employees of the Participating Employer
designated from time to time by the Compensation Committee of the Board as
Participants of the Plan. Each Participant shall enter into a Participation
Agreement setting forth the terms of his benefits hereunder, which may, with
the consent of the Compensation Committee of the Board, contain provisions
inconsistent with, and applying in lieu of the Plan's terms.
3.2 ELIGIBILITY FOR BENEFITS. Benefits under this Plan shall be
payable in respect of a Participant if:
(a) the Participant dies while in active Service and is
survived by his or her spouse; or
5
<PAGE>
(b) the Participant (1) experiences a Termination of Service;
(2) his Retirement Benefit at such time is either fully or partially
vested based on the Participant's Vested Benefit Schedule; and (3) the
Participant does not engage in, and continues to refrain from engaging
in, activities that violate any of the non-compete, non-solicitation
or confidential information covenants set forth in Article X of this
Plan.
Except as otherwise provided above, no benefits shall be payable
hereunder with respect to any Participant whose Termination of Service occurs
prior to his having been partially vested in Retirement Benefits.
ARTICLE IV
RETIREMENT BENEFITS
4.1 RETIREMENT BENEFIT UNDER THIS PLAN.
(a) RETIREMENT BENEFIT. The Participant's Retirement Benefit
payable for life under this Plan shall be an annual amount equal to
(i) a Participant's Final Annual Earnings multiplied by the Benefit
Percentage determined by the Compensation Committee of the Board and
set forth in the Participation Agreement, reduced by (ii) the Benefit
Offset Amount, and then multiplied by (iii) the Participant's Vested
Benefit Percentage. The Participant's Vested Benefit Percentage shall
be determined in accordance with Section 4.2 hereof if applicable, and
the Participant's vesting schedule, which shall be determined by the
Compensation Committee of the Board, may be different for each
Participant, and shall be provided in the Participant's Participation
Agreement entered into pursuant to this Plan. Payment of benefits
shall be made in the form of (i) a single life annuity, or (ii), if
married, a joint and survivor annuity payable for life to the
Participant and his spouse with fifty percent (50%) of the benefit
continuing to the spouse on the death of the Participant. The joint
and survivor annuity shall be the actuarial equivalent of the single
life annuity otherwise payable under this subsection (i). Benefits
shall commence as soon as administratively feasible following the
Participant's Termination of Service.
Notwithstanding the above, a retirement benefit that is paid
prior to a Participant's Normal Retirement Age shall be reduced for
each year or fraction thereof by which the commencement date precedes
such Age, using the Actuarial Assumptions as defined herein. The early
retirement benefit shall be equal to the actuarial value of the
retirement benefit if such benefit were paid at the Participant's
Normal Retirement Age.
There shall be no additional accrual of benefit following a
Participant's Normal Retirement Age.
(b) FORFEITURE EVENTS. A Participant's Retirement Benefit
payments are expressly subject to forfeiture, and shall be terminated
and forfeited if the Participant engages in activities that violate
any of the non-compete, non-solicitation or confidential information
covenants set forth in Article X of this Plan.
6
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(c) PRE-RETIREMENT DEATH BENEFIT. If a Participant dies while
in Service prior to commencing payment of his Retirement Benefit, a
Pre-Retirement Death Benefit under this Plan shall be paid to the
Participant's surviving spouse or his contingent beneficiary, in ten
(10) annual installments in an amount to be determined by the
Compensation Committee of the Board, which may be different for each
Participant, and shall be provided in the Participation Agreement
entered into pursuant to this Plan. The Pre-Retirement Death Benefit
shall be paid as soon as administratively feasible following the
Participant's date of death.
The Participant may from time to time designate a contingent
beneficiary, to whom Pre-Retirement Death Benefit shall be paid in the
event the Participant's spouse should die prior to receipt of the
final payment of such benefit. If a beneficiary is not so designated
or if the beneficiary predeceases the Participant's spouse, then
benefits are payable to the Participant's estate. Designation of a
beneficiary hereunder must be made in writing in a manner and form
acceptable to the Corporation.
(d) LUMP SUM PAYMENT ELECTION AND PENALTY. The following
election shall be available (i) only with the written approval of the
Compensation Committee of the Board of Directors, or (ii) absent such
approval, only following a date that is one (1) year after a Change of
Control of the Corporation. A Participant or a Participant's surviving
spouse who has commenced receiving a Retirement Benefit or a
Pre-Retirement Death Benefit, or is eligible to do so, may make an
irrevocable election to receive, in lieu of continued annuity
payments, a lump sum payment with an actuarial present value of the
then remaining Retirement Benefit or Pre-Retirement Death Benefit,
as the case may be, reduced by 10%. The Corporation's actuaries
shall provide the calculation of such lump sum amount based on the
Actuarial Assumptions (as defined herein). This election must be in
writing, and will be effective as soon as administratively feasible
following the date the election is received by the Corporation, but
in no event later than thirty (30) days following the date the
election is received by the Corporation.
4.2 CHANGE OF CONTROL VESTING. The Retirement Benefit payable under
this Plan shall be fully vested (100%) upon a Change of Control of the
Corporation.
4.3 WITHHOLDING AND EMPLOYMENT TAXES. All payments of retirement
benefits shall be reduced by the amount of applicable federal, state and
local withholding for income and employment taxes.
ARTICLE V
SOURCE OF BENEFITS
5.1 BENEFITS PAYABLE FROM GENERAL ASSETS. Benefits payable under
this Plan shall be paid exclusively from the general assets of the
Participating Employer, and no person entitled to payment under the Plan
shall have any claim, right, priority, security interest, or other interest
in any fund, trust, account, or other asset of the Participating Employers
that may be looked to for such payment. The liability for the payment of
benefits hereunder shall be evidenced only by this Plan and by the existence
of a book reserve established and maintained by the Participating Employer
for purposes of this Plan.
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5.2 INVESTMENTS TO FACILITATE PAYMENT OF BENEFITS. Although the
Participating Employers are not obligated to invest in any specific asset or
fund in order to provide the means for the payment of any liabilities under
this Plan, they may elect to do so. In such event, the Participant shall not
have any interest whatever in such asset or fund. The Participant also
understands and agrees that his cooperation or participation, in any manner,
in the acquisition of any insurance policy or any other general asset by the
Participating Employer for purposes of this Plan shall not constitute a
representation to the Participant, his beneficiary, or any person claiming
through the Participant that any of them has a special, identified, or
beneficial interest in such general asset or that any such asset will be used
only to provide benefits under the Plan. Although the Participating Employer
may earmark, invest or segregate assets representing its commitment to the
Participant under this Plan, no such action shall give the Participant or any
person claiming through him any claim to any such earmarked or segregated
account or investment asset at any time or any security for the payment of
benefits. All such investments and accounts shall remain the general assets
of the Participating Employer. Similarly, no investment earnings, increases
or gains realized or unrealized upon any such earmarked or segregated account
or investment shall inure to the benefit of the Participant directly or
indirectly, but all shall remain the property of the Participating Employer.
In addition, benefits payable under the terms of this Plan shall not be
limited or governed in any way by the value or proceeds of any such asset or
its earnings. All Participants shall in all events have the status of general
unsecured creditors of the Participating Employer, and this Plan shall
constitute a mere unsecured promise to make benefit payments in the future.
To the extent that funds are actually invested, earmarked and/or
segregated for the purpose of performing a Participating Employer's
obligations under this Plan, (1) no trust or secured arrangement shall be
deemed to have been created because of such investment, earmarking or
segregation, (2) all earnings, gains, losses and expenses experienced on such
investments shall remain the property of the Participating Employer and shall
have no effect on the Participating Employer's obligations to the
Participant, and (3) all such assets or funds shall remain subject to the
claims of the Participating Employer's general creditors.
5.3 UNFUNDED PLAN. It is the intention of the Corporation that this
Plan and the benefits provided hereunder be administered as an unfunded
pension benefit plan for federal income tax purposes and established and
maintained for members of a select group of management or highly compensated
employees as described in Section 201(2) of the Employee Retirement Income
Security Act of 1974 ("ERISA"). The Corporation and Plan Administrator shall
comply in all respects with the requirements imposed by ERISA upon such plans.
ARTICLE VI
AMENDMENT AND TERMINATION
6.1 AMENDMENT AND TERMINATION. The Board or the Compensation
Committee thereof may at any time, or from time to time, amend this Plan in
any respect or terminate this Plan, provided that any such amendment or
termination shall have no affect on the rights of a Participant or a
beneficiary under an existing Participation Agreement unless the Participant
or beneficiary consents in writing to the termination or amendment. The
Participation Agreement may not be amended, altered or modified, except by a
written instrument signed by the parties, or
8
<PAGE>
their respective successors or assigns, and may not be otherwise terminated
except as provided herein.
ARTICLE VII
ADOPTION BY OTHER EMPLOYERS
7.1 PARTICIPATING EMPLOYERS. Notwithstanding anything herein to the
contrary, any Subsidiary or Affiliated Employer of the Corporation may adopt
this Plan and all the provisions hereof and participate herein and be known
as a Participating Employer, by execution of a Participation Agreement.
7.2 AMENDMENT. Each Participating Employer who adopts the Plan shall
be deemed to have authorized the Corporation, through its Board or the
Compensation Committee thereof to amend the Plan.
ARTICLE VIII
ADMINISTRATION OF PLAN
8.1 PLAN ADMINISTRATION. The general administration of this Plan
shall be the responsibility of the Corporation, which is hereby authorized,
in its discretion, to delegate said responsibilities to an administrator or
administrative committee. The person or groups discharging such duties shall
be referred to in this Article as the Plan Administrator. The Corporation
shall appoint a qualified actuary or actuaries to perform all actuarial
calculations. The good faith determination of the Corporation in reliance
upon such actuary or actuaries shall be final and conclusive.
8.2 PLAN ADMINISTRATOR'S RULES AND POWERS. Subject to the provisions
of this Plan, the Plan Administrator shall from time to time establish rules,
forms, and procedures for the administration of this Plan. The Plan
Administrator's decisions as to entitlement to Benefits, amount of benefits,
and other matters shall be based upon the Corporation records, the Plan
Administrator's records, and all other relevant information, as interpreted
by the Plan Administrator in its sole discretion. Such decisions, actions,
and records of the Plan Administrator shall be conclusive and binding upon
the Participating Employers and all persons having or claiming to have any
right or interest in or under the Plan.
8.3 LIABILITY OF PLAN ADMINISTRATOR. No members of the Plan
Administrator shall be liable for any act or omission of any other member of
the Administrator except as required by applicable law. The Corporation shall
indemnify and save harmless each Plan Administrator against any and all
expenses and liabilities arising out of his service as Plan Administrator,
excepting only expenses and liabilities arising out of his own willful
misconduct. Expenses against which a Plan Administrator shall be indemnified
hereunder shall include, without limitation, the amount of any settlement or
judgment, costs, counsel fees, and related charges reasonably incurred in
connection with a claim asserted, or a proceeding brought, or settlement
thereof The foregoing right of indemnification shall be in addition to any
other rights to which any such person may be entitled as a matter of law.
9
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8.4 INTERPRETATION OF PLAN. The Plan Administrator shall have full
discretionary authority to interpret the Plan; such interpretations and all
other decisions and determinations made by the Plan Administrator shall be
final and binding upon all parties. In the event that a Participant is a
member of the Plan Administrator, however, said Administrator shall not make
decisions and determinations affecting his own benefits.
8.5 DETERMINATION OF BENEFITS. In addition to the powers hereinabove
specified, the Plan Administrator shall have the power to compute and certify
under this Plan the amount and kind of benefits from time to time payable to
the Participant and his beneficiary and to authorize all disbursements for
such purposes.
ARTICLE IX
CLAIMS FOR BENEFITS
9.1 CLAIMS PROCEDURES. The Plan Administrator shall make all
determinations as to the right of the Participant or beneficiary to a benefit
under the Plan. If any person does not receive the benefit to which he
believes he is entitled under this Plan, said person may file a claim for
benefits in writing which shall be signed by the Participant, beneficiary or
legal representative of the Participant or beneficiary. Claims shall be
granted or denied within 90 days after receipt unless additional time is
required because of special circumstances. If additional time is required,
the claimant will be notified in writing before the expiration of 90 days
from the receipt of the claim. In no event shall the time for reaching a
decision with respect to a claim be extended beyond 120 days after receipt of
the claim.
In the event that the Plan Administrator denies a claim for
benefits, the claimant will be notified in writing. Such notice shall set
forth the specific reasons for the denial, the specific provisions of this
Plan on which the denial is based, a description of any additional materials
or information necessary to perfect the claim along with an explanation of
why such material or information is necessary, and an explanation of the
claim review procedure.
If no action is taken by the Plan Administrator on a claim within 90
days after its receipt, or, if the period for considering the claim has been
extended, then if no action is taken within 120 days after receipt of the
claim, the claim shall be deemed to be denied for purposes of the following
review procedure.
9.2 REVIEW PROCEDURE. If a claim is denied in whole or in part, the
claimant may request the Plan Administrator to review its decision. This
request must be made in writing within 60 days after the claim has been
denied or is deemed to be denied under Section 9.1 and must set forth all of
the grounds upon which the request is based, any facts in support of the
request, and any issues or comments which the claimant considers relevant to
the review. In preparing a request for review, the claimant will be entitled
to review any documents which are pertinent to his claim at the office of the
Corporation during regular business hours.
The Plan Administrator shall act upon each request for review as
soon as possible but not later than 60 days after the request for review is
received unless additional time is required because of special circumstances.
If additional time is required, the claimant will be notified in
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writing before the expiration of 60 days from receipt of the appeal. In no
event shall the time for reaching a decision upon appeal be extended beyond
120 days after receipt of the notice of appeal.
The Plan Administrator shall make an independent determination
concerning the claim for benefits and shall give written notice of its
decision to the claimant. The decision of the Plan Administrator on any claim
review shall be final.
If the Plan Administrator fails to deliver a decision within 60 days
after receipt of the request for review, the claim shall be deemed denied on
review.
ARTICLE X
COVENANTS APPLICABLE TO PARTICIPANTS IN THE PLAN
10.1 CONFIDENTIAL INFORMATION. Plan Participants will, in the course
of performing and fulfilling their duties, have access to and be entrusted
with confidential information concerning the present and contemplated
activities of the techniques and modes of business operations evolved and
used or to be evolved and used by the Corporation and its Subsidiaries and
their respective customers and clients, which information is not generally
known in the industry in which the Corporation does business, the disclosure
of any of which confidential information to competitors of the Corporation
and its Subsidiaries or Affiliated Employers or to other persons would be
highly detrimental to the interests of the Corporation, its Subsidiaries and
Affiliated Employers (the "Confidential Information"). As a condition to
receipt of Retirement Benefits under the Plan, each Participant (i) will not,
during the continuance of his employment, directly or indirectly disclose any
of such Confidential Information to any Person, nor shall he use the same,
except as required in the normal course of his employment; and (ii) after the
termination of his employment, will not directly or indirectly disclose or
make any use of the Confidential Information without the written consent of
the Corporation for himself or any third parties; and (iii) after the
termination of his employment, will return the originals and all copies of
any documents or other media containing Confidential Information in his
possession or under his control to the Corporation; provided, however that
the Participant shall not be prohibited from using the personal skills and
know-how developed by him prior to the execution of his Participation
Agreement and during the term of his employment, and subject to the
provisions of Section 11.3, the Participant shall be allowed to pursue a
career and earn his livelihood through the use of such general skills and
know-how he has obtained (but not any Confidential Information, systems or
techniques of the Corporation) before and during his employment after the
termination of his employment without the express consent of or any liability
to, the Corporation. In the event of any actual or threatened violation of
the provisions of this Article X, the Corporation and/or any Subsidiary or
Affiliated Employer may commence proceedings in any court of competent
jurisdiction for, and shall be entitled to obtain, preliminary and permanent
injunctive relief or other appropriate equitable remedies (without any bond
or other security being required) and an accounting of all profits and
benefits arising out of such violation, which rights and remedies shall be in
addition to any other rights or remedies to which the Corporation may be
entitled at law.
10.2 NON-SOLICITATION. As a condition to receipt of Retirement
Benefits under the Plan, each Participant shall not, without the prior
written consent of the Corporation, engage in
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any of the conduct described in subsections (1) and (2) below, either
directly or indirectly or in any capacity for any person, firm, partnership,
corporation or other entity:
1. Directly or indirectly hire, attempt to hire, or assist
any other person or entity in hiring or attempting to hire any current
associate of the Corporation or any Affiliated Employer or any person who was
such an associate within the 12-month period prior to the termination of the
Participant's employment; or
2. directly or indirectly solicit, divert or take away, in
competition with the Corporation, the business or patronage of any current
customer of the Corporation or any Affiliated Employer.
10.3 COVENANT NOT TO COMPETE. As an ancillary covenant to the terms
and conditions set forth in Sections 10.1 and 10.2, and in consideration of
the access to confidential information as described in Section 10.1, and as
a condition to receipt of Retirement Benefits under the Plan, each
Participant will not (without the prior written consent of the Corporation)
either individually or in partnership or in conjunction with any other person
or entity, as principal, agent, shareholder, guarantor, creditor, employee,
consultant or in any other manner whatsoever, carry on any business of or be
engaged in, consult or advise, lend money to, guarantee the debts or
obligations of or permit his name or any part thereof to be used by, any
person or entity engaged in or concerned with or interested in any business
carried on, within the United States or the provinces of Canada in which the
Corporation carries on business, which competes with the products
manufactured and sold or services provided by the Corporation (the
"Business").
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 NO GUARANTEE OF EMPLOYMENT. Nothing contained herein shall be
construed as a contract of employment or deemed to give any Participant the
right to be retained in the employ of a Participating Employer, or to
interfere with the rights of any such employer to discharge any individual at
any time, or with or without cause, except as may be otherwise agreed in
writing or provided by applicable law.
11.2 NON-ALIENATION OF BENEFITS. A Participant's or beneficiary's
rights to benefit payments under the Plan shall not be subject in any manner
to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
attachment or garnishment by creditors of the Participant or beneficiary.
11.3 PAYMENT TO REPRESENTATIVES. If an individual entitled to
receive any benefits hereunder is determined by the Corporation or is
adjudged to be legally incapable of giving valid receipt of discharge for
such benefits, benefits shall be paid to the duly appointed and acting
guardian, if any, and if no such guardian is appointed and acting, to such
persons as the Corporation may designate. Such payment shall, to the extent
made, be deemed a complete discharge for such payments under this Plan.
11.4 TIMING OF PAYMENTS. If a Participating Employer is unable to
make the determinations required under this Plan in sufficient time for
payments to be made when due, the
12
<PAGE>
Participating Employer shall make the payments upon completion of such
determinations with interest at a reasonable rate from the due date and may,
at its option, make provisional payments, subject to adjustment, pending such
determinations.
11.5 GOVERNING LAW. The provisions of this Plan shall be construed
according to the law of the State of Texas excluding the provisions of any
such laws that would require the application of the laws of another
jurisdiction.
11.6 ARBITRATION. ANY DISPUTE BETWEEN THE PARTIES WHICH RELATES TO
THE VALIDITY, CONSTRUCTION, MEANING, PERFORMANCE OR EFFECT OF THIS PLAN OR A
PARTICIPATION AGREEMENT ENTERED INTO PURSUANT TO THIS PLAN, OR THE RIGHTS AND
OBLIGATIONS OF THE PARTIES SHALL BE DETERMINED BY ARBITRATION PURSUANT TO THE
ARBITRATION RULES FOR EMPLOYMENT DISPUTES OF THE AMERICAN ARBITRATION
ASSOCIATION IN DALLAS, TEXAS. THE DECISION OF THE ARBITRATORS PURSUANT TO
SUCH PROCEDURES SHALL BE FINAL AND BINDING UPON THE PARTIES AND SHALL NOT BE
SUBJECT TO APPEAL AND MAY BE ENFORCEABLE IN ANY COURT OF COMPETENT
JURISDICTION LOCATED IN DALLAS COUNTY, TEXAS.
11.7 GENDER AND NUMBER. The masculine pronoun wherever used shall
include the feminine. Wherever any words are used herein in the singular,
they shall be construed as though they were also used in the plural in all
cases where they shall so apply.
11.8 TITLES AND HEADINGS. The titles to articles and headings of
sections of this Plan are for convenience of reference and in case of any
conflict, the text of the Plan, rather than such titles and headings, shall
control.
11.9 SUCCESSORS. This agreement shall be binding upon and shall
inure to the benefit of the parties and their permitted successors, assigns,
heirs, and legal representatives.
HAGGAR CORP.
By: /s/ David Tehle
------------------------------------
DAVID TEHLE, CHIEF FINANCIAL OFFICER
13
<PAGE>
THIS AGREEMENT IS SUBJECT TO ARBITRATION
AS PROVIDED IN SECTION 11.6 OF THE PLAN
PARTICIPATION AGREEMENT UNDER THE
HAGGAR CORP.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
This Participation Agreement is made between JOSEPH M. HAGGAR, III,
(the "Participant") and HAGGAR CLOTHING CO., a Nevada corporation (the
"Participating Employer"), under the Haggar Corp. Supplemental Executive
Retirement Plan (the "Plan").
RECITALS
A. Haggar Corp. (the "Corporation") previously established the
Plan as a deferred compensation plan to provide Participants
with reasonable and sufficient retirement benefits;
B. Haggar Clothing Co. desires to adopt the Plan and become a
Participating Employer in the Plan;
C. The Corporation desires to provide a select group of its key
management or highly compensated employees nonqualified
supplemental retirement income; and
D. The terms and conditions of this Agreement, to the extent not
controlled by the terms and conditions contained in the Plan,
are as follows:
TERMS AND CONDITIONS
1. The amount of the Participant's Benefit Percentage under this
Agreement shall be 65%.
2. The amount of the Participant's Pre-Retirement Death Benefit
shall be annual installments equal to $400,000 each. The Participant's
Pre-Retirement Death Benefit shall otherwise be paid in accordance with the
terms of the Plan.
3. The Participant's Normal Retirement Age is age 60.
4. The Participant's Vested Benefit Schedule shall be as follows:
1
<PAGE>
<TABLE>
<CAPTION>
PERCENT VESTED CONTINUED SERVICE UNTIL ATTAINMENT OF AGE
-------------- -----------------------------------------
<S> <C>
50% 55
60% 56
70% 57
80% 58
90% 59
100% 60
</TABLE>
5. The Participant's spouse shall be the beneficiary of the
Pre-Retirement Death Benefit. If the Participant's spouse should die prior to
receipt of the final payment of such benefit, the Participant designates the
following contingent beneficiary:
Name of Contingent Beneficiary:
-------------------------
Relationship to the Participant:
-------------------------
If a beneficiary is not designated, such amounts shall be paid to the estate
of the Participant.
6. By his execution of this Agreement, the Participant acknowledges
and agrees that the right to maintain confidential information constitutes a
proprietary right that the Haggar Corp. and its Affiliated Employers are
entitled to protect. As a condition to his receipt of Retirement Benefits
under the Plan, the Participant acknowledges that he will comply with the
covenants set forth in Article X of the Plan, regarding maintaining
Confidential Information, non-solicitation of associates, and not engaging in
activities that are competitive with the Business of Haggar Corp. and its
Affiliated Employers. The Participant acknowledges and agrees that in the
event of any actual or threatened violation of the covenants set forth in
Article X of the Plan, Haggar Corp. and/or any Affiliated Employer may
commence proceedings in any court of competent jurisdiction for, and shall be
entitled to obtain, preliminary and permanent injunctive relief or other
appropriate equitable remedies (without any bond or other security being
required) and an accounting of all profits and benefits arising out of such
violation, which rights and remedies shall be in addition to any other rights
or remedies to which Haggar Corp. may be entitled at law.
7. The terms and conditions herein set forth are subject in all
respects to the terms and conditions of the Plan, which shall be controlling
and are incorporated herein by reference. Capitalized terms used but not
otherwise defined herein shall have the meanings ascribed to such terms in
the Plan. All interpretations or determinations of Haggar Corp.'s Board of
Directors and the Plan Administrator with respect to the Plan and this
Agreement shall be binding and conclusive upon the Participant and his legal
representatives with respect to any question arising hereunder.
8. The Plan and this Agreement shall be governed by and construed in
accordance with the laws of the State of Texas without application of the
conflict of laws principles thereof except to the extent preempted by federal
law, which shall govern to such extent.
2
<PAGE>
9. To facilitate the execution of this Participation Agreement, it
may be executed in numerous counterparts, all of which shall constitute one
and the same document. Execution by one part of any counterpart hereof shall
be sufficient execution by such party, irrespective of whether the same
counterpart has been executed by any other party. This document shall become
effective at such time as each party hereto has executed at least one
counterpart hereof.
AGREEMENT
This Agreement evidences the Participant's acceptance of the
benefits, terms, and conditions of this Agreement and the Plan. The
Participant acknowledges that he has been encouraged to consult with legal
counsel regarding the terms for his participation in the Plan, and has
consulted with his own legal counsel.
Date of Execution: PARTICIPANT:
/s/ J. M. Haggar, III
- ---------------------- ------------------------------------------
J. M. HAGGAR, III
Date of Acceptance HAGGAR CLOTHING CO.
By: /s/ David Tehle
- ---------------------- -------------------------------------
Its: Senior V.P. & Chief Financial Officer
-------------------------------------
3
<PAGE>
THIS AGREEMENT IS SUBJECT TO ARBITRATION
AS PROVIDED IN SECTION 11.6 OF ThE PLAN
PARTICIPATION AGREEMENT UNDER THE
HAGGAR CORP.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
This Participation Agreement is made between FRANK D. BRACKEN (the
"Participant") and HAGGAR CLOTHING CO., a Nevada corporation (the
"Participating Employer"), under the Haggar Corp. Supplemental Executive
Retirement Plan (the "Plan").
RECITALS
A. Haggar Corp. (the "Corporation") previously established the
Plan as a deferred compensation plan to provide Participants
with reasonable and sufficient retirement benefits;
B. Haggar Clothing Co. desires to adopt the Plan and become a
Participating Employer in the Plan;
C. The Corporation desires to provide a select group of its key
management or highly compensated employees nonqualified supplemental
retirement income; and
D. The terms and conditions of this Agreement, to the extent not
controlled by the terms and conditions contained in the Plan, are as
follows:
TERMS AND CONDITIONS
1. The amount of the Participant's Benefit Percentage under this
Agreement shall be 65%.
2. The amount of the Participant's Pre-Retirement Death Benefit
shall be annual installments equal to $400,000 each. The Participant's
Pre-Retirement Death Benefit shall otherwise be paid in accordance with the
terms of the Plan.
3. The Participant's Normal Retirement Age is age 65.
1
<PAGE>
4. The Participant's Vested Benefit Schedule shall be as
follows:
<TABLE>
<CAPTION>
PERCENT VESTED CONTINUED SERVICE UNTIL ATTAINMENT OF AGE
-------------- -----------------------------------------
<S> <C>
50% 60
60% 61
70% 62
80% 63
90% 64
100% 65
</TABLE>
5. The Participant's spouse shall be the beneficiary of the
Pre-Retirement Death Benefit. If the Participant's spouse should die prior to
receipt of the final payment of such benefit, the Participant designates the
following contingent beneficiary:
Name of Contingent Beneficiary:
-------------------------
Relationship to the Participant:
-------------------------
If a beneficiary is not designated, such amounts shall be paid to the estate
of the Participant.
6. By his execution of this Agreement, the Participant acknowledges
and agrees that the right to maintain confidential information constitutes a
proprietary right that the Haggar Corp. and its Affiliated Employers are
entitled to protect. As a condition to his receipt of Retirement Benefits
under the Plan, the Participant acknowledges that he will comply with the
covenants set forth in Article X of the Plan, regarding maintaining
Confidential Information, non-solicitation of associates, and not engaging in
activities that are competitive with the Business of Haggar Corp. and its
Affiliated Employers. The Participant acknowledges and agrees that in the
event of any actual or threatened violation of the covenants set forth in
Article X of the Plan, Haggar Corp. and/or any Affiliated Employer may
commence proceedings in any court of competent jurisdiction for, and shall be
entitled to obtain, preliminary and permanent injunctive relief or other
appropriate equitable remedies (without any bond or other security being
required) and an accounting of all profits and benefits arising out of such
violation, which rights and remedies shall be in addition to any other rights
or remedies to which Haggar Corp. may be entitled at law.
7. The terms and conditions herein set forth are subject in all
respects to the terms and conditions of the Plan, which shall be controlling
and are incorporated herein by reference. Capitalized terms used but not
otherwise defined herein shall have the meanings ascribed to such terms in
the Plan. All interpretations or determinations of Haggar Corp.'s Board of
Directors and the Plan Administrator with respect to the Plan and this
Agreement shall be binding and conclusive upon the Participant and his legal
representatives with respect to any question arising hereunder.
8. The Plan and this Agreement shall be governed by and construed in
accordance with the laws of the State of Texas without application of the
conflict of laws principles thereof except to the extent preempted by federal
law, which shall govern to such extent.
2
<PAGE>
9. To facilitate the execution of this Participation Agreement, it
may be executed in numerous counterparts, all of which shall constitute one
and the same document. Execution by one part of any counterpart hereof shall
be sufficient execution by such party, irrespective of whether the same
counterpart has been executed by any other party. This document shall become
effective at such time as each party hereto has executed at least one
counterpart hereof.
AGREEMENT
This Agreement evidences the Participant's acceptance of the
benefits, terms, and conditions of this Agreement and the Plan. The
Participant acknowledges that he has been encouraged to consult with legal
counsel regarding the terms for his participation in the Plan, and has
consulted with his own legal counsel.
Date of Execution: PARTICIPANT:
/s/ Frank D. Bracken
- ---------------------- ------------------------------------------
FRANK D. BRACKEN
Date of Acceptance HAGGAR CLOTHING CO.
By: /s/ David Tehle
- ---------------------- --------------------------------------
Its: Sr. V.P. and Chief Financial Officer
--------------------------------------
3
<PAGE>
HAGGAR CORP.
SPLIT-DOLLAR INSURANCE PLAN
WHEREAS, HAGGAR CORP., a Nevada Corporation with its principal place
of business in Dallas, Texas, (hereinafter referred to as the "Corporation"),
desires to implement the Haggar Corp. Split-Dollar Insurance Plan; and
WHEREAS, the Corporation desires to recognize the valued service of
certain of its employees; and
WHEREAS, the Corporation is willing to pay the premiums due on
employee life insurance protection as an additional employment benefit for
such employees on the terms and conditions set forth in this plan document
and any split-dollar life insurance agreement issued hereunder; and
WHEREAS, the following shall constitute the provisions of the Haggar
Corp. Split-Dollar Insurance Plan, effective as of October 1, 1999.
1. DEFINITIONS.
a. CHANGE OF CONTROL. Change of Control means (i) a merger or
consolidation of the Corporation with or into another
corporation in which the Corporation shall not be the
surviving corporation (other than a merger undertaken
solely in order to reincorporate in another state) (for
purposes hereof, the Corporation shall not be deemed the
surviving corporation in any such transaction if, as the
result thereof, it becomes a wholly-owned subsidiary of
another corporation), (ii) a dissolution of the Corporation,
(iii) a transfer of all or substantially all of the assets
of the Corporation in one transaction or a series of
related transactions to one or more other persons or
entities, (iv) a transaction or series of transactions that
result in any entity, person or Group, other than J.M.
Haggar III, any person, entity or Group under his control,
or a trustee or other fiduciary holding securities under an
employee benefit plan maintained by the Corporation or any
Subsidiary, becoming the beneficial owner, directly or
indirectly, of securities of the Corporation representing
more than 50% of the combined voting power of the
Corporation's then outstanding securities, or (v) during
any period of two (2) consecutive years commencing on or
after October 1, 1999, individuals who at the beginning of
the period constituted the Board cease for any reason to
constitute at least a majority, unless the election of each
director who was not a director at the beginning of the
period has been approved in advance by directors representing
at least two-thirds (2/3) of the directors then in office
who were directors at the beginning of the period. As used
herein, "Group" means persons who act in concert as described
described in Sections 13(d)(3) and/or 14(d)(2) of the
Securities Exchange Act of 1934, as amended, or any successor
statute.
b. CORPORATION. Corporation means Haggar Corp.
- -------------------------------------------------------------------------------
SPLIT-DOLLAR INSURANCE PLAN 1
<PAGE>
c. DISABILITY. A Participant's Disability shall mean a physical,
mental or emotional injury, illness or disorder that renders
him unable to capably perform substantially all of his usual
and customary duties for the Corporation with the degree of
decorum and dignity normally associated with employment in a
similar capacity. If there is a disagreement between the
Corporation and the Participant concerning the existence of
a Disability, it shall be resolved by the majority opinion
of three physicians, one appointed by the Corporation, one
appointed by the Participant, and the third appointed by the
first two physicians. The Corporation shall pay the cost of
assessment and determination by the physicians
d. EFFECTIVE DATE. The Plan shall be effective as of October 1,
1999.
e. ELIGIBLE EMPLOYEE. An Eligible Employee shall be any
employee who is a member of a select group of management and
highly compensated employees of the Corporation or any
Subsidiary, who is designated as such by the Corporation in
accordance with Section 3 of this Plan, and who satisfies
the insurability requirements established by the Corporation
under Section 7 of this Plan.
f. INSURER. Insurer means the insurance company issuing the
policy of life insurance protection for the life of an
Eligible Employee that is duly identified in a Split-Dollar
Insurance Agreement entered into by the Corporation and the
Eligible Employee.
g. OWNER. Owner means the Participant or the person or entity
designated as the Owner in the Split-Dollar Insurance
Agreement. If the Policy is a Participant-owned Policy, on
the death of a Participant or the Participant and his spouse
which results in the payment of a death benefit from the
Policy, Owner may also refer to the beneficiary or
beneficiaries designated by the Participant to receive the
death benefit thereunder.
h. PARTICIPANT. Participant means an Eligible Employee of the
the Corporation that has entered into a Split-Dollar
Insurance Agreement with the Corporation.
i. PLAN. Plan means the Haggar Corp. Split-Dollar Insurance
Plan.
j. POLICY. Policy means the policy of life insurance purchased
pursuant to and duly identified in a Split-Dollar Insurance
Agreement entered into between the Corporation and a
Participant.
k. SPLIT-DOLLAR INSURANCE AGREEMENT. Split-Dollar Insurance
Agreement means the agreement entered into by the
Corporation and a Participant pursuant to the terms of this
Plan.
l. SUBSIDIARY. Subsidiary means any corporation in which the
Corporation owns stock possessing 80 per cent or more of the
total combined voting power of all classes of stock.
- -------------------------------------------------------------------------------
SPLIT-DOLLAR INSURANCE PLAN 2
<PAGE>
2. ADMINISTRATION OF THE PLAN. The Plan shall be administered by and in
the sole discretion of the Corporation. The Corporation may, subject
to the provisions of the Plan, enter into Split-Dollar Insurance
Agreements under the Plan and shall have the power to construe the
Plan, to determine all questions thereunder, to adopt and amend such
rules and regulations for the administration of the Plan as it may
deem desirable and it shall be responsible for establishing and
carrying out a funding policy and method consistent with the
objectives of this Plan. The decisions of the Corporation shall be
final, conclusive, and binding upon all parties whomsoever. In
administering the Plan, the Corporation may employ accountants and
counsel (who may be the independent auditors and outside counsel for
the Corporation) and other persons to assist or render advice to it.
3. DESIGNATION OF ELIGIBLE EMPLOYEE. The Corporation shall, from time to
time and in its sole discretion, designate certain employees or
officers of the Corporation or the Corporation's Subsidiary as
Eligible Employees, subject to their satisfaction of the insurance
underwriting process in accordance with Section 7 of this Plan.
4. PARTICIPATION. An Eligible Employee may become a Participant in the
Plan by entering into a Split-Dollar Insurance Agreement with the
Corporation.
5. PURCHASE OF POLICY. Contemporaneous with the execution of the Split-
Dollar Insurance Agreement, the Owner will purchase a policy of life
insurance insuring the life of the Participant or the Participant and
his spouse (the "Policy"). The terms of the Policy, including the
identity of the Insurer issuing such Policy and the total face amount
of the Policy, are subject to the approval of the Corporation. The
Policy shall conform to and is subject to the terms and conditions of
this Plan, the Split-Dollar Insurance Agreement and the collateral
assignment filed with the Insurer relating to the Policy.
6. OWNERSHIP OF POLICY. The Owner shall be the sole and absolute owner of
the Policy, and may exercise all ownership rights granted to the owner
thereof by the terms of the Policy, except as may otherwise be
provided herein or in the Split-Dollar Insurance Agreement and the
collateral assignment of the Policy.
7. INSURABILITY STANDARDS. Each employee designated as an Eligible
Employee and his spouse, if applicable, must comply with underwriting
procedures, as established by the Corporation, to determine that the
Insurer's underwriting requirements are met, including a requirement
that the employee and/or his spouse undergo a physical examination.
An employee of the Corporation will not be an Eligible Employee
unless the Insurer's underwriting requirements are met. The
Corporation shall have no obligation to an employee, nor shall an
employee enter into any Split-Dollar Insurance Agreement, absent
satisfaction of the Insurer's underwriting requirements.
8. POLICY DIVIDENDS. Unless otherwise provided in the Split-Dollar
Insurance Agreement, any dividend declared on the Policy shall be
applied to purchase paid-up additional insurance on the life of the
Participant. If the Policy does not permit the use of dividends to
purchase paid-up additional insurance, the dividends shall be applied
as mutually
- -------------------------------------------------------------------------------
SPLIT-DOLLAR INSURANCE PLAN 3
<PAGE>
agreed by the Corporation and the Participant at the time the
Split-Dollar Insurance Agreement is entered into by the Corporation
and the Participant.
9. PAYMENT OF PREMIUMS. The Corporation shall pay the full amount of the
premium to the Insurer within the period permitted for such payments,
and shall, upon request, furnish the Participant with evidence of such
premium payments. The Corporation shall annually Furnish the
Participant with a statement of the amount of income reportable by the
Participant for federal income tax purposes as a result of the life
insurance protection provided the Participant.
10. COLLATERAL ASSIGNMENT. To secure the repayment to the Corporation of
the amount of premiums on the Policy paid by the Corporation, the
Owner shall assign the Policy to the Corporation as collateral. In
addition to those rights in the Policy granted to the Corporation by
this Plan, the Split-Dollar Insurance Agreement or the collateral
assignment, the Corporation shall have the absolute right to be
repaid the amounts it has paid toward premiums on the Policy in
accordance with the Split-Dollar Insurance Agreement. The collateral
assignment of the Policy to the Corporation shall not be terminated,
altered, or amended by the Owner without the express written consent
of the Corporation. The collateral assignment shall conform to and is
subject to the terms and conditions of this Plan and the Split-Dollar
Insurance Agreement.
11. LOANS. The Corporation shall have the right to obtain one or more
loans or advances on the Policy, either from the Insurer, or, at any
time, from other persons, and to pledge or assign the Policy as
security for such loans or advances, but only up to the amount of
premiums paid by the Corporation on the Policy at the time of the
loan or advance, less the amount of any loans or advances theretofore
obtained upon the security of the Policy. The Participant shall have
no right to obtain a loan or advance on the Policy prior to the
termination of the Split-Dollar Insurance Agreement.
12. LIMITATION ON OWNER'S RIGHTS IN POLICY.
a. The Owner shall take no action with respect to the Policy
which would in any way compromise or jeopardize the
Corporation's right to be repaid the amounts it has paid
toward premiums on the Policy while the Split-Dollar
Insurance Agreement is in effect. Except as otherwise
provided herein, the Owner shall not sell, assign, transfer,
or borrow against, surrender or cancel the Policy without
the express written consent of the Corporation.
b. Notwithstanding any provision hereof to the contrary, the
Owner shall have the right to absolutely and irrevocably
give to a donee all of his right, title and interest in and
to the Policy, subject to the Split-Dollar Insurance
Agreement and the collateral assignment of the Policy to the
Corporation. The Owner may exercise this right by executing
a written transfer of ownership and delivering such document
to the Corporation. Upon receipt of such form, executed by
the Owner and duly accepted by the donee thereof, the
Corporation shall consent thereto in writing, and shall
thereafter treat the Owner's donee as the sole owner of all
of the employee's right, title and interest in and to the
Policy, subject to the Split-Dollar
- -------------------------------------------------------------------------------
SPLIT-DOLLAR INSURANCE PLAN 4
<PAGE>
Insurance Agreement and the collateral assignment of the
Policy to the Corporation. Thereafter, the Owner shall have
no right, title or interest in and to the Policy, all such
rights being vested in and exercisable only by such donee.
13. COLLECTION OF DEATH PROCEEDS.
a. Upon the death of the Participant or the Participant and his
spouse, as applicable, which results in the payment of a
death benefit under the Policy, the Corporation shall have
the unqualified right to receive a portion of such death
benefit equal to the total amount of the premiums paid by
the Corporation reduced by any outstanding loans or advances
obtained by the Corporation from the Insurer and secured by
the Policy, including any interest due on such indebtedness.
The balance of the death benefit provided under the Policy,
if any, shall be paid directly to the Owner in the manner
and in the amount or amounts provided in the Policy. In no
event shall the amount payable to the Corporation hereunder
exceed the Policy proceeds payable at the death of the
employee. No amount shall be paid from such death benefit to
the Owner until the full amount due the Corporation
hereunder has been paid. The beneficiary designation
provision of the Policy shall conform to the provisions of
this Plan and the Split-Dollar Insurance Agreement.
b. Upon the death of the Participant or the Participant and his
spouse as provided above, when such benefit has been
collected and paid to the Corporation as provided above, the
Split-Dollar Insurance Agreement shall terminate.
c. Notwithstanding any provision hereof to the contrary, in the
event that, for any reason whatsoever, no death benefit is
payable under the Policy upon the death of the Participant
or his spouse, if applicable, and in lieu thereof the
Insurer refunds all or any part of the premiums paid for the
Policy, the Corporation shall have the unqualified right to
such premiums. Any amounts paid by the Insurer in excess of
the total amount of premiums paid by the Corporation shall
be paid to the Owner.
14. TERMINATION OF THE SPLIT-DOLLAR INSURANCE AGREEMENT PRIOR TO PAYMENT OF
DEATH BENEFIT.
a. The Split-Dollar Insurance Agreement shall terminate prior to
the payment of a death benefit from the Policy, without
notice, upon the occurrence of any of the following events:
(i) total cessation of the Corporation's business;
(ii) bankruptcy, receivership or dissolution of the
Corporation;
(iii) termination of the Participant's employment by the
Corporation (other than by reason of his death or
Disability); or
(iv) as mutually agreed in writing by the Corporation and
the Participant or by the Corporation and the
Participant's spouse, if applicable, either in the
Split-Dollar Insurance Agreement or a separate
written agreement.
- -------------------------------------------------------------------------------
SPLIT-DOLLAR INSURANCE PLAN 5
<PAGE>
Notwithstanding the above, the Split-Dollar Insurance
Agreement shall not terminate following the termination of a
Participant's employment by the Corporation if such
termination of employment occurs within ninety (90) days
prior to, or within one (1) year following, a Change of
Control of the Corporation unless the Owner consents in
writing to the termination of the Split-Dollar Insurance
Agreement.
b. In addition, the Participant, or his spouse if applicable,
may terminate this Agreement by written notice to the
Corporation. Such termination shall be effective as of the
date of such notice.
c. Except following a Change of Control, the Corporation has the
sole right to surrender the Policy and enforce its right to
be repaid the amount of the premiums on the Policy paid by
it from the cash surrender value of the Policy under the
collateral assignment of the Policy. Following a Change of
Control, the Corporation may surrender the Policy only with
the consent of the Owner. When the surrender proceeds have
been received and the amount of premiums paid by the
Corporation have been repaid to the Corporation, the
Split-Dollar Insurance Agreement shall terminate.
15. DISPOSITION OF THE POLICY ON TERMINATION OF THE SPLIT-DOLLAR INSURANCE
AGREEMENT PRIOR TO PAYMENT OF DEATH BENEFIT.
a. For sixty (60) days after the date of the termination of the
Split-Dollar Life Insurance Agreement prior to the time a
death benefit is payable under the Policy, the Owner shall
have the option of obtaining the release of the collateral
assignment of the Policy to the Corporation. To obtain such
release, the Owner shall repay to the Corporation the total
amount of the premium payments made by the Corporation
hereunder, less any indebtedness secured by the Policy which
was incurred by the Corporation and remains outstanding as
of the date of such termination including any interest due
on such indebtedness. Upon receipt of such amount, the
Corporation shall release the collateral assignment of the
Policy, by the execution and delivery of an appropriate
instrument of release.
b. If the Owner fails to exercise such option within such
sixty (60) day period, then, at the request of the
Corporation, the Owner shall execute any document or
documents required by the Insurer to transfer the interest
of the Owner in the Policy to the Corporation. Alternatively,
the Corporation has the right to surrender the Policy and
enforce its right to be repaid the amount of the premiums on
the Policy paid by it from the cash surrender value of the
Policy under the collateral assignment of the Policy;
provided that in the event the cash surrender value of the
Policy exceeds the amount due the Corporation, such excess
shall be paid to the Owner. Thereafter, neither the Owner
nor his respective heirs, assigns or beneficiaries shall
have any further interest in and to the Policy, either under
the terms thereof or under the Split-Dollar Insurance
Agreement.
- -------------------------------------------------------------------------------
SPLIT-DOLLAR INSURANCE PLAN 6
<PAGE>
16. NAMED FIDUCIARY, DETERMINATION OF BENEFITS, CLAIMS PROCEDURE
AND ADMINISTRATION.
a. The Corporation is hereby designated as the named fiduciary
under this Plan.
b. (1) CLAIM. A person who believes that he or she is being
denied a benefit to which he or she is entitled
under the Split-Dollar Insurance Agreement
(hereinafter referred to as a "Claimant") may file
a written request for such benefit with the
Corporation, setting forth his or her claim. The
request must be addressed to the Corporation at its
then principal place of business.
(2) CLAIM DECISION. Upon receipt of a claim, the
Corporation shall advise the Claimant that a reply
will be forthcoming within ninety (90) days and
shall, in fact, deliver such reply within such
period. The Corporation may, however, extend the
reply period for an additional ninety (90) days
for reasonable cause.
If the claim is denied in whole or in part, the
Corporation shall adopt a written opinion, using
language calculated to be understood by the
Claimant, setting forth: (a) the specific reason or
reasons for such denial; (b) the specific reference
to pertinent provisions of the Split-Dollar
Insurance Agreement or this Plan on which such
denial is based; (c) a description of any additional
material or information necessary for the Claimant
to perfect his or her claim and an explanation why
such material or such information is necessary; (d)
appropriate information as to the steps to be taken
if the Claimant wishes to submit the claim for
review; and (e) the time limits for requesting a
review under subsection (3) and for review under
subsection (4) hereof.
(3) REQUEST FOR REVIEW. Within sixty (60) days after
the receipt by the Claimant of the written opinion
described above, the Claimant may request in
writing that the Secretary of the Corporation
review the determination of the Corporation. Such
request must be addressed to the Secretary of the
Corporation, at its then principal place of
business. The Claimant or his or her duly authorized
representative may, but need not, review the
pertinent documents and submit issues and comments
in writing for consideration by the Corporation.
If the Claimant does not request a review of the
Corporation's determination by the Secretary of the
Corporation within such sixty (60) day period, he
or she shall be barred and estopped from
challenging the Corporation's determination.
(4) REVIEW OF DECISION. Within sixty (60) days after
the Secretary's receipt of a request for review,
he or she will review the Corporation's
determination. After considering all materials
presented by the Claimant, the Secretary will
render a written opinion, written in a manner
calculated to be understood by the Claimant,
setting forth the specific reasons for the
- -------------------------------------------------------------------------------
SPLIT-DOLLAR INSURANCE PLAN 7
<PAGE>
decision and containing specific references to the
pertinent provisions of the Split-Dollar Insurance
Agreement or this Plan on which the decision is
based.
17. AMENDMENT. The Corporation may at any time and for any reason
terminate or amend the Plan. Any termination or amendment to the
Plan by the Corporation shall have no affect on the rights of a
Participant under an existing Split-Dollar Insurance Agreement unless
the Participant consents in writing to the termination or amendment.
The Split-Dollar Insurance Agreement may not be amended, altered or
modified, except by a written instrument signed by the parties, or
their respective successors or assigns, and may not be otherwise
terminated except as provided herein.
18. NO GUARANTEE OF EMPLOYMENT. Nothing contained herein shall be
construed as a contract of employment or deemed to give any
Participant the right to be retained in the employ of the Corporation,
or to interfere with the rights of any such employer to discharge any
individual at any time, with or without cause, except as may be
otherwise agreed in writing and or provided by applicable law.
19. NOTICES. Any notice, consent or demand required or permitted to be
given under the provisions of this Plan shall be in writing, and
shall be signed by the party giving or making the same. If such
notice, consent or demand is mailed to a party hereto, it shall be
sent by United States certified mail, postage prepaid, addressed to
such party's last known address as shown on the records of the
Corporation. The date of such mailing shall be deemed the date of
notice, consent or demand.
20. TITLES AND HEADINGS. The titles and headings of sections of this Plan
are for convenience of reference and, in case of any conflict, the
text of the Plan shall control.
21. GOVERNING LAW. This Plan and any Split-Dollar Insurance Agreement
entered into hereunder shall be governed by and construed in
accordance with the laws of the State of Texas.
Executed this _________ day of ________________, 1999.
HAGGAR CORP.
By: /s/ David Tehle
-------------------------------------
Its: Senior V.P. & Chief Financial Officer
-------------------------------------
- -------------------------------------------------------------------------------
SPLIT-DOLLAR INSURANCE PLAN 8
<PAGE>
SPLIT-DOLLAR INSURANCE AGREEMENT
THIS AGREEMENT is entered into this ______________ day of
________________, 1999, by and between HAGGAR CORP., a Nevada Corporation with
its principal place of business in Dallas, Texas, (hereinafter referred to as
the "Corporation"), FRANK D. BRACKEN, an individual residing in the State of
Texas (hereinafter referred to as the "Employee"), and BRADLEY D. BRACKEN,
TRUSTEE OF THE FRANK D. BRACKEN 1999 INSURANCE TRUST (hereinafter referred to as
"Owner").
WHEREAS, the Corporation has established the Haggar Corp.
Split-Dollar Insurance Plan (the "Plan") for the benefit of its
valued employees; and
WHEREAS, the Corporation and the Employee desire to enter into this
Split-Dollar Insurance Agreement (the "Agreement") in accordance with the terms
of the Plan; and
WHEREAS, the Owner is the holder of all rights associated with the
policy of life insurance insuring the life of the Employee as set forth on
Exhibit A.
NOW THEREFORE, in consideration of the premises contained herein, the
parties hereto agree as follows:
1. The Owner will, contemporaneously with the execution of this
Agreement, purchase the policy of life insurance coverage
identified on Exhibit A hereto (the "Policy"). The terms of
the Policy, including the beneficiary designation provision
thereof, shall conform to the terms of the Plan and this
Agreement.
2. The Owner shall be the sole owner of the Policy, subject to
the terms of the Plan and the collateral assignment filed with
the Insurer with respect to the Policy.
3. This Agreement shall be governed by and shall conform to the
terms and provisions of the Plan.
- --------------------------------------------------------------------------------
SPLIT-DOLLAR INSURANCE AGREEMENT Page 1
<PAGE>
4. The Corporation shall pay the full amount of the premium to
the Insurer within the period permitted for such payments as
required by the Plan and the Policy.
5. To secure the repayment to the Corporation of the
amount of premiums paid by the Corporation, the Owner
shall assign the Policy to the Corporation as
collateral. In accordance with the Plan and the
collateral assignment, the parties hereto agree that no
amount paid by the Insurer pursuant to the Policy shall
be paid to the Owner until the full amount due the
Corporation under the Plan and this Agreement has been
paid. The collateral assignment shall conform to and is
subject to the terms and conditions of the Plan and
this Split-Dollar Insurance Agreement.
6. This Agreement shall terminate prior to the payment of
a death benefit from the Policy in accordance with
Section 14 of the Plan. Disposition of the Policy
following the termination of this Agreement prior to
the payment of a death benefit from the Policy shall be
governed by Section 15 of the Plan. For sixty (60) days
after the date of the termination of this Agreement,
the Owner shall have the option of obtaining the
release of the collateral assignment of the Policy to
the Corporation by repaying to the Corporation the
total amount of the premium payments made by the
Corporation hereunder, less any indebtedness secured by
the Policy which was incurred by the Corporation and
remains outstanding as of the date of such termination
including any interest due on such indebtedness. If the
Owner fails to exercise this option within the 60-day
period, then, in accordance with the terms of the Plan,
the Corporation may (a) request that, and the Owner
shall execute any document or documents required by the
Insurer to transfer the interest of the Owner in the
Policy to the Corporation, or (b) surrender the Policy
and enforce its right to be repaid the amount of the
premiums on the Policy paid by it from the cash
surrender value of the Policy under the collateral
assignment of the Policy.
7. The Insurer is not a party to this Agreement. No
provision of this Agreement, nor of any modification or
amendment hereof, shall in any way be construed as
enlarging, changing, varying, or in any other way
affecting the obligations of the Insurer as expressly
provided in the Policy and by the collateral assignment
executed by the Owner and filed with the Insurer in
connection herewith.
8. Notwithstanding anything to the contrary in this Agreement,
the Employee will not have the power to change the beneficiary
of the Policy, to borrow against the Policy, to increase or
reduce the death benefit of the Policy, or to possess any
other incidents of ownership with respect to the Policy by
virtue of his becoming a party to this Agreement.
- --------------------------------------------------------------------------------
SPLIT-DOLLAR INSURANCE AGREEMENT Page 2
<PAGE>
9. This Agreement may not be amended, altered or modified, except
by a written instrument signed by the parties hereto, or their
respective successors or assigns, and may not be otherwise
terminated except as provided herein.
10. This Agreement, and the rights of the parties hereunder, shall
be governed by and construed in accordance with the laws of
the State of Texas.
11. To facilitate the execution of this Split-Dollar
Insurance Agreement, it may be executed in numerous
counterparts, all of which shall constitute one and the
same document. Execution by one party of any
counterpart hereof shall be sufficient execution by
such party, irrespective of whether the same
counterpart has been executed by any other party. This
document shall become effective at such time as each
party hereto has executed at least one counterpart
hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement,
in duplicate, as of the day and year first above written.
HAGGAR CORP.
By: /s/ David Tehle
----------------------------------------
Its: Senior V.P. & Chief Financial Officer
---------------------------------------
FRANK D. BRACKEN
/s/ Frank D. Bracken
-------------------------------------------
THE FRANK D. BRACKEN 1999
INSURANCE TRUST
By: /s/ Bradley D. Bracken
----------------------------------------
Bradley D. Bracken, Trustee
- --------------------------------------------------------------------------------
SPLIT-DOLLAR INSURANCE AGREEMENT Page 3
<PAGE>
EXHIBIT A
The following life insurance policy is subject to the attached Split-Dollar
Agreement:
Insurer:
-----------------------------------------------
Insured:
-----------------------------------------------
Policy Number:
-----------------------------------------------
Face Amount:
-----------------------------------------------
Date of Issue:
-----------------------------------------------
- --------------------------------------------------------------------------------
SPLIT-DOLLAR INSURANCE AGREEMENT Page 4
<PAGE>
COLLATERAL ASSIGNMENT
OF SPLIT-DOLLAR INSURANCE
THIS ASSIGNMENT is made by Bradley D. Bracken, Trustee of the Frank D.
Bracken 1999 Insurance Trust (the "Owner") effective this _____ day of
__________________, 1999.
WHEREAS, Haggar Corp. (the "Assignee") has established the
Haggar Corp. Split-Dollar Insurance Plan (the "Plan") for the
benefit of certain of its valued employees; and
WHEREAS, in accordance with the terms of the Plan and any split-dollar
life insurance agreement (a "Split-Dollar Insurance Agreement") issued
thereunder, the Assignee is willing to assist the Owner in payment of premiums
due on employee life insurance protection (the "Policy") as an additional
employment benefit; and
WHEREAS, in consideration of such premium payments by the Assignee, the
Owner hereby intends to grant the Assignee certain limited interests in the
Policy (this document hereinafter to be referred to as the "Assignment"); and
THEREFORE, for value received, it is agreed:
1. DEFINITIONS.
A. ASSIGNEE: Haggar Cow.
B. INSURER: John Hancock Variable Life Insurance Company.
C. INSURED: Frank D. Bracken.
D. OWNER: Bradley D. Bracken, Trustee of the Frank D. Bracken
1999 Insurance Trust.
E. POLICY: The policy of life insurance issued by the Insurer on
the life of the Insured(s) as identified on Exhibit A hereto,
together with any supplementary contracts issued in
conjunction therewith.
F. POLICY INTEREST: The Assignee's Policy Interest shall be the
total amount of premiums paid by the Assignee on the Policy.
The Insurer shall be entitled to rely on the Assignee's
certification of the amount of its Policy Interest.
G. SPLIT-DOLLAR INSURANCE AGREEMENT: That agreement
entered into by and between the Owner and the Assignee
pursuant to the terms of the Plan which sets forth the terms
by which (1) the Assignee agrees to pay the premiums due on
the Policy, and (2) the Owner agrees to collaterally assign
the Policy to the Assignee in order to secure the repayment of
such premiums. The terms of this Assignment shall be subject
to the terms and provisions of the Plan and the Split-Dollar
Insurance Agreement.
Page No. 1
<PAGE>
2. ASSIGNMENT. The Owner hereby assigns, transfers and sets over to the
Assignee, its successors and assigns the following specific rights in
the Policy, subject to the following terms and conditions:
a. The right to obtain one or more loans or advances at any time
from the Insurer or other person and to pledge or assign the
Policy as security for such loans or advances, but only up to
the amount of the Assignee's Policy Interest in the Policy
less the amount of any loans or advances theretofore obtained
by the Assignee upon the security of the Policy.
b. The right to obtain, upon termination or surrender of
the Policy by the Owner in accordance with the terms of
the Plan and the Split-Dollar Insurance Agreement, an
amount of the cash surrender proceeds up to the amount
of the Assignee's Policy Interest less the amount of
any loans or advances theretofore obtained by the
Assignee from the Insurer upon the security of the
Policy.
c. The right to collect the net proceeds of the Policy upon the
death of the Insured(s) equal to the Assignee's Policy
Interest less the amount of any loans or advances theretofore
obtained by the Assignee from the Insurer upon the security of
the Policy.
d. The right to surrender the Policy in accordance with the terms
of the Plan and the Split-Dollar Insurance Agreement.
3. RETAINED RIGHTS. Except as expressly provided in Section 2
of this collateral assignment, the Owner retains all rights
under the Policy; provided, however, the Owner shall take no
action with respect to the Policy that would in any way
compromise or jeopardize the Assignee's right to be repaid
the amounts it has paid toward premiums on the Policy.
Except as otherwise provided in the Plan, the Split-Dollar
Insurance Agreement or this Assignment, the Owner shall not
sell, assign, transfer, or borrow against, surrender or
cancel the Policy without the express written consent of the
Assignee.
4. INSURER. The Insurer is hereby authorized to recognize, and is Fully
protected in recognizing, the claims of the Assignee to rights in the
Policy, as established by this Assignment, the Split-Dollar Insurance
Agreement and the Plan, without investigating the reasons for such
action by the Assignee, or the validity or the amount of such claims.
The sole signature of the Assignee shall be a Full discharge and
release therefore to the Insurer. While this Assignment is in Full
force, the Owner directs that all premium notices be sent to the
Assignee at the address Furnished by the Assignee. Checks for all or
any part of the sums payable under the Policy and assigned herein,
shall be drawn to the exclusive order of the Assignee if, when, and in
such amounts as may be requested by the Assignee.
5. RELEASE OF ASSIGNMENT. Upon payment to the Assignee of its
Policy Interest, the Assignee shall execute a written
release of this Assignment.
Page No. 2
<PAGE>
IN WITNESS WHEREOF the Owner has executed this Assignment on the date
first above written.
FRANK D. BRACKEN 1999 INSURANCE TRUST:
By: /s/ Bradley D. Bracken
----------------------------------
Bradley D. Bracken, Trustee
Page No. 3
<PAGE>
EXHIBIT A
The following life insurance policy is subject to the attached
Collateral Assignment of Split-Dollar Life Insurance:
Insurer:
-------------------------------------------------------
Insured(s):
-------------------------------------------------------
Policy Number:
-------------------------------------------------------
Face Amount:
-------------------------------------------------------
Date of Issue:
-------------------------------------------------------
Page No. 4
<PAGE>
SPLIT-DOLLAR INSURANCE AGREEMENT
THIS AGREEMENT is entered into this 22 day of October 1999, by and
between HAGGAR CORP., a Nevada Corporation with its principal place of
business in Dallas, Texas, (hereinafter referred to as the "Corporation"),
J.M. HAGGAR III an individual residing in the State of Texas (hereinafter
referred to as the "Employee"), and R. KEVIN CHISHOLM, TRUSTEE OF THE J.M.
HAGGAR III FAMILY INSURANCE TRUST (hereinafter referred to as "Owner").
WHEREAS, the Corporation has established the Haggar Corp. Split-Dollar
Insurance Plan (the "Plan") for the benefit of its valued employees; and
WHEREAS, the Corporation and the Employee desire to enter into this
Split-Dollar Insurance Agreement (the "Agreement") in accordance with the terms
of the Plan; and
WHEREAS, the Owner is the holder of all rights associated with the
policy of life insurance insuring the life of the Employee as set forth on
Exhibit A.
NOW THEREFORE, in consideration of the premises contained herein, the
parties hereto agree as follows:
1. The Owner will, contemporaneously with the execution of this
Agreement, purchase the policy of life insurance coverage
identified on Exhibit A hereto (the "Policy"). The terms of
the Policy, including the beneficiary designation provision
thereof, shall conform to the terms of the Plan and this
Agreement.
2. The Owner shall be the sole owner of the Policy, subject to
the terms of the Plan and the collateral assignment filed with
the Insurer with respect to the Policy.
3. This Agreement shall be governed by and shall conform to the
terms and provisions of the Plan.
- --------------------------------------------------------------------------------
SPLIT-DOLLAR INSURANCE AGREEMENT Page 1
<PAGE>
4. The Corporation shall pay the full amount of the premium to
the Insurer within the period permitted for such payments as
required by the Plan and the Policy.
5. To secure the repayment to the Corporation of the
amount of premiums paid by the Corporation, the Owner
shall assign the Policy to the Corporation as
collateral. In accordance with the Plan and the
collateral assignment, the parties hereto agree that no
amount paid by the Insurer pursuant to the Policy shall
be paid to the Owner until the Full amount due the
Corporation under the Plan and this Agreement has been
paid. The collateral assignment shall conform to and is
subject to the terms and conditions of the Plan and
this Split-Dollar Insurance Agreement.
6. This Agreement shall terminate prior to the payment of
a death benefit from the Policy in accordance with
Section 14 of the Plan. Disposition of the Policy
following the termination of this Agreement prior to
the payment of a death benefit from the Policy shall be
governed by Section 15 of the Plan. For sixty (60) days
after the date of the termination of this Agreement,
the Owner shall have the option of obtaining the
release of the collateral assignment of the Policy to
the Corporation by repaying to the Corporation the
total amount of the premium payments made by the
Corporation hereunder, less any indebtedness secured by
the Policy which was incurred by the Corporation and
remains outstanding as of the date of such termination
including any interest due on such indebtedness. If the
Owner fails to exercise this option within the 60-day
period, then, in accordance with the terms of the Plan,
the Corporation may (a) request that, and the Owner
shall execute any document or documents required by the
Insurer to transfer the interest of the Owner in the
Policy to the Corporation, or (b) surrender the Policy
and enforce its right to be repaid the amount of the
premiums on the Policy paid by it from the cash
surrender value of the Policy under the collateral
assignment of the Policy.
7. The Insurer is not a party to this Agreement. No
provision of this Agreement, nor of any modification or
amendment hereof, shall in any way be construed as
enlarging, changing, varying, or in any other way
affecting the obligations of the Insurer as expressly
provided in the Policy and by the collateral assignment
executed by the Owner and filed with the Insurer in
connection herewith.
8. Notwithstanding anything to the contrary in this Agreement,
the Employee wilt not have the power to change the beneficiary
of the Policy, to borrow against the Policy, to increase or
reduce the death benefit of the Policy, or to possess any
other incidents of ownership with respect to the Policy by
virtue of his becoming a party to this Agreement.
- --------------------------------------------------------------------------------
SPLIT-DOLLAR INSURANCE AGREEMENT Page 2
<PAGE>
9. This Agreement may not be amended, altered or modified, except
by a written instrument signed by the parties hereto, or their
respective successors or assigns, and may not be otherwise
terminated except as provided herein.
10. This Agreement, and the rights of the parties hereunder, shall
be governed by and construed in accordance with the laws of
the State of Texas.
11. To facilitate the execution of this Split-Dollar
Insurance Agreement, it may be executed in numerous
counterparts, all of which shall constitute one and the
same document. Execution by one party of any
counterpart hereof shall be sufficient execution by
such party, irrespective of whether the same
counterpart has been executed by any other party. This
document shall become effective at such time as each
party hereto has executed at least one counterpart
hereof
IN WITNESS WHEREOF, the parties hereto have executed this Agreement,
in duplicate, as of the day and year first above written.
HAGGAR CORP.
By: /s/ David Tehle
----------------------------------------
Its: Senior V.P. & Chief Financial Officer
---------------------------------------
J. M. HAGGAR III
/s/ J. M. Haggar III
-------------------------------------------
J. M. HAGGAR III FAMILY
INSURANCE TRUST
By: /s/ R. Kevin Chisholm
----------------------------------------
R. Kevin Chisholm, Trustee
- --------------------------------------------------------------------------------
SPLIT-DOLLAR INSURANCE AGREEMENT Page 3
<PAGE>
EXHIBIT A
The following life insurance policy is subject to the attached Split-Dollar
Agreement:
Insurer:
-------------------------------------------------------
Insured:
-------------------------------------------------------
Policy Number:
-------------------------------------------------------
Face Amount:
-------------------------------------------------------
Date of Issue:
-------------------------------------------------------
- --------------------------------------------------------------------------------
SPLIT-DOLLAR INSURANCE AGREEMENT Page 4
<PAGE>
COLLATERAL ASSIGNMENT
OF SPLIT-DOLLAR INSURANCE
THIS ASSIGNMENT is made by R. Kevin Chisholm, Trustee of the J.M.
Haggar III Family Insurance Trust (the "Owner") effective this ______ day of
__________________, 1999.
WHEREAS, Haggar Corp. (the "Assignee") has established the
Haggar Corp. Split-Dollar Insurance Plan (the "Plan") for the
benefit of certain of its valued employees; and
WHEREAS, in accordance with the terms of the Plan and any split-dollar
life insurance agreement (a "Split-Dollar Insurance Agreement") issued
thereunder, the Assignee is willing to assist the Owner in payment of premiums
due on employee life insurance protection (the "Policy") as an additional
employment benefit; and
WHEREAS, in consideration of such premium payments by the Assignee, the
Owner hereby intends to grant the Assignee certain limited interests in the
Policy (this document hereinafter to be referred to as the "Assignment"); and
THEREFORE, for value received, it is agreed:
1. DEFINITIONS.
A. ASSIGNEE: Haggar Corp.
B. INSURER: John Hancock Variable Life Insurance Company.
C. INSURED: J.M. Haggar III and Jayne F. Haggar.
D. OWNER: R. Kevin Chisholm, Trustee of the J.M. Haggar
III Family Insurance Trust.
E. POLICY: The policy of life insurance issued by the Insurer on
the life of the Insured(s) as identified on Exhibit A hereto,
together with any supplementary contracts issued in
conjunction therewith.
F. POLICY INTEREST: The Assignee's Policy Interest shall be the
total amount of premiums paid by the Assignee on the Policy.
The Insurer shall be entitled to rely on the Assignee's
certification of the amount of its Policy Interest.
G. SPLIT-DOLLAR INSURANCE AGREEMENT: That agreement
entered into by and between the Owner and the Assignee
pursuant to the terms of the Plan which sets forth the terms
by which (1) the Assignee agrees to pay the premiums due on
the Policy, and (2) the Owner agrees to collaterally assign
the Policy to the Assignee in order to secure the repayment of
such premiums. The terms of this Assignment shall be subject
to the terms and provisions of the Plan and the Split-Dollar
Insurance Agreement.
Page No. 1
<PAGE>
2. ASSIGNMENT. The Owner hereby assigns, transfers and sets over to the
Assignee, its successors and assigns the following specific rights in
the Policy, subject to the following terms and conditions:
a. The right to obtain one or more loans or advances at any time
from the Insurer or other person and to pledge or assign the
Policy as security for such loans or advances, but only up to
the amount of the Assignee's Policy Interest in the Policy
less the amount of any loans or advances theretofore obtained
by the Assignee upon the security of the Policy.
b. The right to obtain, upon termination or surrender of the Policy
by the Owner in accordance with the terms of the Plan and the
Split-Dollar Insurance Agreement, an amount of the cash surrender
proceeds up to the amount of the Assignee's Policy Interest less
the amount of any loans or advances theretofore obtained by the
Assignee from the Insurer upon the security of the Policy.
c. The right to collect the net proceeds of the Policy upon the
death of the Insured(s) equal to the Assignee's Policy
Interest less the amount of any loans or advances theretofore
obtained by the Assignee from the Insurer upon the security of
the Policy.
d. The right to surrender the Policy in accordance with the terms
of the Plan and the Split-Dollar Insurance Agreement.
3. RETAINED RIGHTS. Except as expressly provided in Section 2 of this
collateral assignment, the Owner retains all rights under the Policy;
provided, however, the Owner shall take no action with respect to
the Policy that would in any way compromise or jeopardize the
Assignee's right to be repaid the amounts it has paid toward
premiums on the Policy. Except as otherwise provided in the Plan,
the Split-Dollar Insurance Agreement or this Assignment, the Owner
shall not sell, assign, transfer, or borrow against, surrender or
cancel the Policy without the express written consent of the Assignee.
4. INSURER. The Insurer is hereby authorized to recognize, and is fully
protected in recognizing, the claims of the Assignee to rights in the
Policy, as established by this Assignment, the Split-Dollar Insurance
Agreement and the Plan, without investigating the reasons for such
action by the Assignee, or the validity or the amount of such claims.
The sole signature of the Assignee shall be a Full discharge and
release therefore to the Insurer. While this Assignment is in full
force, the Owner directs that all premium notices be sent to the
Assignee at the address furnished by the Assignee. Checks for all or
any part of the sums payable under the Policy and assigned herein,
shall be drawn to the exclusive order of the Assignee if, when, and in
such amounts as may be requested by the Assignee.
5. RELEASE OF ASSIGNMENT. Upon payment to the Assignee of its Policy
Interest, the Assignee shall execute a written release of this
Assignment.
Page No. 2
<PAGE>
IN WITNESS WHEREOF the Owner has executed this Assignment on the date
first above written.
J. M. HAGGAR III FAMILY INSURANCE TRUST:
By: /s/ R. Kevin Chisholm
-------------------------------------
R. Kevin Chisholm, Trustee
Page No. 3
<PAGE>
EXHIBIT A
The following life insurance policy is subject to the attached
Collateral Assignment of Split-Dollar Life Insurance:
Insurer:
---------------------------------------------------
Insured(s):
---------------------------------------------------
Policy Number:
---------------------------------------------------
Face Amount:
---------------------------------------------------
Date of Issue:
---------------------------------------------------
Page No. 4
<PAGE>
HAGGAR CORP.
WAGE CONTINUATION PLAN
WHEREAS, HAGGAR CORP., a Nevada Corporation with its principal place
of business in Dallas, Texas, (hereinafter referred to as the "Corporation"),
desires to implement the Haggar Corp. Wage Continuation Plan; and
WHEREAS, the Corporation wishes to provide security and protection
for certain of its valuable employee in the event they are disabled; and
WHEREAS, the Corporation desires to provide this protection through
payments under a disability income policy issued by the Insurer on each
eligible employee; and
WHEREAS, the Internal Revenue Code of 1986 (the "Code") and Treasury
Regulations issued thereunder offer certain incentives for providing such
protection; and
WHEREAS, the following shall constitute the provisions of the Haggar
Corp. Wage Continuation Plan, effective as of October 1, 1999.
ARTICLE 1 - DEFINITIONS
A. PLAN. The Plan is the Haggar Corp. Wage Continuation Plan.
B. EFFECTIVE DATE. The effective date of the Plan is October 1,
1999.
C. ENTRY DATE. The Entry Date is either the Effective Date of
the Plan or the first day of any month following the
Effective Date.
D. CORPORATION. The Corporation is Haggar Corp. and any
successor thereto.
E. EMPLOYEE. An Employee is a person regularly employed by the
Corporation.
F. PARTICIPANT. A Participant is an Employee who is designated as an
Eligible Employee by the Corporation and who has a Policy issued and in
force on his or her life by an Insurer in accordance with the terms of
the Plan.
G. COMPENSATION. Compensation means the Employee's annual base
salary or wage, plus bonuses, commissions, and overtime
payments.
H. INSURER. Insurer means the life insurance company or any other company
which shall issue a Policy as defined in the Plan.
I. POLICY. Policy means an individual disability income policy.
J. DISABILITY. Disability shall have the same meaning or
meanings contained in the Policy.
WAGE CONTINUATION PLAN 1
<PAGE>
ARTICLE II - PARTICIPATION
An Employee is eligible to participate in the Plan on the Entry Date
specified by the Corporation.
ARTICLE III - EMPLOYER CONTRIBUTIONS
The Corporation shall contribute on behalf of each Participant an
amount necessary to purchase a Policy providing the benefits to which he or
she is entitled under Article V.
ARTICLE IV - ELIGIBLE EMPLOYEES
For purposes of this Plan, an Eligible Employee shall be any
employee who is a member of a select group of management or highly
compensated employees of the Corporation or any Subsidiary, who is designated
as such by the Corporation in its sole discretion, and who satisfies the
insurability requirements established by the Corporation under Article VI of
this Plan.
ARTICLE V - BENEFITS
The form and amount of monthly benefit for each Participant shall be
subject to the Insurer's issue and participation limits.
Benefits under this Plan shall be independent of, and in addition
to, those under any other plan, agreement or program maintained by the
Corporation for its employees.
ARTICLE VI - SATISFACTORY HEALTH REQUIREMENTS
Participation in this Plan requires evidence of insurability as
determined by the Insurer. Employees who do not satisfy all requirements of
the Insurer may be issued limited coverage if available in lieu of complete
exclusion from the Plan. An otherwise Eligible Employee who does not meet the
Insurer's requirements for a Policy will not be a Participant in the Plan.
ARTICLE VII - OWNERSHIP OF POLICIES
A. Each Participant shall be the applicant, owner and holder of his or her
Policy. As the insured-owner, the Participant is responsible for
submitting any claims directly to the Insurer and will receive claim
payments directly from the Insurer. The Corporation is in no way
responsible for the processing of claims or the payment thereof and
the determination of claim payments rests solely and wholly with the
Insurer. The insured-owner may request the Corporation to withhold
income tax from any sick pay payments to which a Participant may be
entitled. Should such a request be made, the Insurer is required to
deduct and withhold the appropriate amount from claim payments. The
Corporation will Furnish the insured-owner with the necessary forms
for income tax purposes.
WAGE CONTINUATION PLAN 2
<PAGE>
B. The Corporation shall pay its share of the premiums while the Plan is
in effect and while the Employee continues as a Participant in the
Plan.
ARTICLE VIII - POLICY CONTINUATION
When a Participant ceases active full-time employment with the
Corporation, he or she has the right as policy-owner to assume premium
payments for his or her Policy and maintain it in force subject to the terms
of this Policy.
ARTICLE IX - TERMINATION OF EMPLOYMENT OR PLAN
A. In the event of termination of employment of a Participant, the
Corporation shall reduce the total premium paid under the Plan by the
amount of the terminated Participant's premium and inform the Insurer
of such termination.
B. The Corporation may terminate or amend this Wage Continuation Plan by
an express declaration in writing and by notifying the Insurer of such
action. At termination, each Participant may take over payment of
premiums for his or her Policy.
ARTICLE X - ADMINISTRATION
A. This Plan shall be administered by the Corporation or an administrative
committee (the "Committee") appointed by the Corporation. The
committee, if any, shall represent the Corporation in all matters
concerning the administration of this Plan.
B. The Corporation or the Committee shall have the primary responsibility
for the administration and operation of the Plan and shall have all
powers necessary to carry out the provisions of the Plan including the
power to determine all questions arising in the administration,
interpretation and application of the Plan; the power to determine the
eligibility of each Employee for participation in the Plan; the power
to set down uniform and nondiscriminatory rules of interpretation and
administration of the Plan which may be modified from time to time in
light of the Corporation's experience.
C. The Corporation or the Committee shall keep a record of all its
proceedings and acts and shall keep all such books of accounts, records
and other data as may be necessary for the proper administration of the
Plan.
D. The Corporation shall indemnify the Committee, if any, and each member
of the Committee against any and all claims, loss, damages, expense or
liability arising from any action or failure to act, except when the
same is determined to be due to the gross negligence or willful
misconduct of the Committee or the Committee member(s).
E. Except where there has been an agreed allocation and delegation of
administrative authority, the Committee shall act by majority of its
number and may authorize one or more members of the Committee to sign
all documents on behalf of the Committee.
WAGE CONTINUATION PLAN 3
<PAGE>
F. The Corporation or the Committee, if any, shall be the agent for
service of legal process for the Plan.
ARTICLE XI - MISCELLANEOUS
A. The terms of this Plan anticipate addition of new Participants and
changes in coverage for existing Participants from time to time.
However, the Corporation is in no way responsible for providing
benefits for which an employee may have become eligible but for which
no Policy has been issued.
B. The Corporation's liability for wage continuation payments is
discharged by the payment of premiums for each individual Policy.
Failure of the Insurer to approve or otherwise honor claim for payment
shall in no way obligate the Corporation.
C. Nothing contained herein shall be construed as a contract of employment
or deemed to give any Participant the right to be retained in the
employ of the Corporation, or to interfere with the rights of any such
employer to discharge any individual at any time, with or without
cause, except as may be otherwise agreed in writing and or provided by
applicable law.
D. Any notice, consent or demand required or permitted to be given under
the provisions of this Plan shall be in writing, and shall be signed by
the party giving or making the same. If such notice, consent or demand
is mailed to a party hereto, it shall be sent by United States
certified mail, postage prepaid, addressed to such party's last known
address as shown on the records of the Corporation. The date of such
mailing shall be deemed the date of notice, consent or demand.
E. This Plan shall be governed by and construed in accordance with the
laws of the State of Texas.
Executed this _________ day of _____________________, 1999.
HAGGAR CORP.
By: /s/ David Tehle
---------------------------------------
Its: Senior V.P. & Chief Financial Officer
---------------------------------------
WAGE CONTINUATION PLAN 4
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENT OF INCOME FILE AS PART OF
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-START> OCT-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 13,546
<SECURITIES> 0
<RECEIVABLES> 48,920
<ALLOWANCES> 3,407
<INVENTORY> 90,199
<CURRENT-ASSETS> 164,686
<PP&E> 145,589
<DEPRECIATION> 84,741
<TOTAL-ASSETS> 256,873
<CURRENT-LIABILITIES> 61,319
<BONDS> 0
0
0
<COMMON> 857
<OTHER-SE> 160,265
<TOTAL-LIABILITY-AND-EQUITY> 256,873
<SALES> 98,682
<TOTAL-REVENUES> 98,682
<CGS> 64,381
<TOTAL-COSTS> 32,910
<OTHER-EXPENSES> (344)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 799
<INCOME-PRETAX> 936
<INCOME-TAX> 379
<INCOME-CONTINUING> 557
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 557
<EPS-BASIC> 0.08<F1>
<EPS-DILUTED> 0.08<F2>
<FN>
<F1>THE EARNINGS PER SHARE INFORMATION HAS BEEN PREPARED IN ACCORDANCE WITH SFAS
NO. 128, AND BASIC AND DILUTED EARNINGS PER SHARE HAVE BEEN ENTERED IN PLACE OF
PRIMARY AND FULLY DILUTED RESPECTIVELY.
<F2>THE EARNINGS PER SHARE INFORMATION HAS BEEN PREPARED IN ACCORDANCE WITH SFAS
NO. 128, AND BASIC AND DILUTED EARNINGS PER SHARE HAVE BEEN ENTERED IN PLACE OF
PRIMARY AND FULLY DILUTED RESPECTIVELY.
</FN>
</TABLE>
