SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Mark One
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended DECEMBER 31, 1994
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 No. 0-13365
OshKosh B'Gosh, Inc.
A DELAWARE Corporation IRS EMPLOYER IDENTIFICATION NO. 39-0519915
112 Otter Avenue
Oshkosh, Wisconsin 54901
Telephone number: (414) 231-8800
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
Class A Common Stock, Par Value $.01 per share
Class B Common Stock, Par Value $.01 per share
Indicate by 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 preceding 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---
[ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definite proxy or information
statements incorporated by reference in Part III of this Form 10-K or
any amendment to this Form 10-K.
As of March 17, 1995, there were outstanding 12,081,587 shares of Class A
Common Stock and 1,267,713 shares of Class B Common Stock, of which
10,905,781 shares and 445,906 shares, respectively, were held by non-
affiliates of the registrant. Based upon the closing sales prices as of
March 17, 1995, the aggregate market value of the Class A Common Stock and
Class B Common Stock held by non-affiliates was $158,133,824.50 and
$6,688,590, respectively.
DOCUMENTS INCORPORATED BY REFERENCE
OshKosh B'Gosh, Inc definitive Proxy Statement for its annual meeting to be held
on May 5, 1995 (or such later date as the directors may determine),
Incorporated into Part III.
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INDEX
PART I PAGE
Item 1. Business 1
(a) General Development of Business 1
(b) Financial Information About Industry Segments 2
(c) Narrative Description of Business 2
Products 2
Raw Materials, Manufacturing and Sourcing 3
Trademarks 4
Seasonality 4
Working Capital 4
Sales and Marketing 5
Backlog 5
Competitive Conditions 6
Environmental Matters 6
Employees 6
Item 2. Properties 7
Item 3. Legal Proceedings 8
Item 4. Submission of Matters to a Vote of Security Holders 8
PART II
Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters 9
Item 6. Selected Financial Data 10
Item 7. Management's Discussion and Analysis of Results
of Operations and Financial Condition 11
Item 8. Financial Statements and Supplementary Data 15
Item 9. Disagreements on Accounting and Financial Disclosure 35
PART III
Item 10. Directors and Executive Officers of the Registrant 35
Item 11. Executive Compensation 35
Item 12. Security Ownership of Certain Beneficial Owners 35
and Management
Item 13. Certain Relationships and Related Transactions 35
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K 35
PART I
ITEM 1. BUSINESS
(a) General Development of Business
OshKosh B'Gosh, Inc.(together with its subsidiaries, the "Company") was
founded in 1895 and was incorporated in the state of Delaware in 1929. The
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Company designs, manufactures, sources and sells apparel for the children's
wear, youth wear, and men's wear markets. While its heritage is in the men's
workwear market, the Company is currently best known for its line of high
quality children's wear. The children's wear and youth wear business
represented approximately 94% of consolidated Company revenues for 1994. The
success of the children's wear business can be attributed to the Company's
core themes: quality, durability, style, trust and Americana. These themes
have propelled the Company to the position of market leader in the branded
children's wear industry. The Company also leverages the economic value of
the OshKosh B'Gosh name via both domestic and international licensing
agreements.
The Company's long-term strategy is to provide high quality, high value
clothing for the entire family. Toward this end the Company continues to
expand its business lines and avenues for marketing its products. In 1990,
the Company acquired Essex Outfitters, Inc. ("Essex"), a vertically integrated
children's and youth wear retailer marketed under the Boston Trader label
through a licensing agreement with Boston Trader Ltd. In 1994, the Company
merged the operations of Essex into OshKosh B'Gosh, Inc. and created a new
brand name, Genuine Kids , for the line of children's and youth wear formerly
marketed under the Boston Trader label. The Genuine Kids line of apparel is
sourced from third party manufacturers, primarily offshore, and sold primarily
through a chain of 77 domestic retail stores.
OshKosh B'Gosh International Sales, Inc. was created in 1985 for the sale
of OshKosh B'Gosh products to foreign distributors. In 1990, the Company
formed OshKosh B'Gosh Europe, S.A. in conjunction with a joint venture with
Poron Diffusion, S.A. to provide further access to European markets. In 1992
the Company acquired Poron's 49% interest in OshKosh B'Gosh Europe, S.A.
During 1993 OshKosh B'Gosh made moves to strategically position itself for
International expansion. OshKosh B'Gosh/Asia Pacific Ltd. was created in Hong
Kong to oversee licensees and distributors in the Pacific Rim, to assist
international licensees with the sourcing of product, and to expand the
Company's presence in that region. OshKosh B'Gosh U.K. Ltd. and OshKosh
B'Gosh Deutschland GmbH, incorporated in the United Kingdom and Germany
respectively, were established to increase sales emphasis in those countries.
The Company's chain of 60 domestic OshKosh B'Gosh factory outlet stores
sells irregular and first quality OshKosh B'Gosh merchandise throughout the
United States. In 1994, the Company opened an OshKosh B'Gosh showcase store
in New York City bringing total domestic stores to 61. In addition, Oshkosh
B'Gosh Europe opened showcase stores in London and Paris during 1994. The
showcase stores are designed to reinforce awareness and demand for OshKosh
B'Gosh as a global brand. In 1993, the Company distributed its first
children's wear mail order catalog, further expanding its channels of
distribution.
The Company has been expanding its utilization of off-shore sourcing as a
cost-effective means to produce its products and to this end leased a
production facility in Honduras in 1990 under its wholly owned subsidiary
Manufacturera International Apparel S.A.
(b) Financial Information About Industry Segments
The Company is engaged in only one line of business, namely, the apparel
industry.
(c) Narrative Description of Business
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Products
The Company designs, manufactures, sources and markets a broad range of
children's clothing as well as lines of youth wear and men's casual and work
wear clothing under the OshKosh , OshKosh B'Gosh , Baby B'Gosh , Genuine Kids
or OshKosh Men's Wear labels. In 1994, the Company created the Our Stuff by
OshKosh B'Gosh brandname (initial sales of the product are scheduled for the
fall 1995 season). The products are distributed primarily through better
quality department and specialty stores, 138 of the Company's own stores,
direct mail catalogs and foreign retailers. The children's wear and youth
wear business, which is the largest segment of the business, accounted for
approximately 94% of 1994 sales compared to approximately 94% and 96% of such
sales in 1993 and 1992, respectively.
The children's wear and youth wear business is targeted to reach the
middle to upper middle segment of the sportswear market. Children's wear is
in size ranges from newborn/infant to girls 6X and boys 7. Youth wear is in
size ranges girls 7 to 14 and boys 8 to 20.
The Company's children's wear and youth wear business include a broad
range of product categories organized primarily in a collection format whereby
the products in that collection share a primary design theme which is carried
out through fabric design, screenprint, embroidery, and trim applications.
The Company also offers basic denim products with multiple wash treatments.
The product offerings for each season will typically consist of a variety of
clothing items including bib overalls, pants, jeans, shorts, and shortalls
(overalls with short pant legs), shirts, blouses and knit tops, skirts,
jumpers, sweaters, dresses, playwear and fleece.
The men's wear line is the original business that started the Company in
1895. The current line comprises the traditional bib overalls, several styles
of waistband-work, carpenter, and painters-pants, five pocket jeans, work
shirts and flannel shirts as well as coats and jackets. The line is designed
with a full array of sizes up to and including size 60 inch waists and 5x size
shirts.
Most products are designed by an in-house staff. Product design requires
long lead times, with products generally being designed a year in advance of
the time they actually reach the retail market. In general, the Company's
products are traditional in nature and not intended to be "designer" items.
In designing new products and styles, the Company attempts to incorporate
current trends and consumer preferences in its traditional product offerings.
In selecting fabrics and prints for its products, the Company seeks, where
possible, to obtain exclusive rights to the fabric design from its suppliers
in order to provide the Company with some protection from imitation by
competitors for a limited period of time.
Raw Materials, Manufacturing and Sourcing
All raw materials used in the manufacture of Company products are
purchased from unaffiliated suppliers. In 1994, approximately 78% of the
Company's direct expenditures for raw materials (fabric) were from its five
largest suppliers, with the largest such supplier accounting for approximately
29% of total raw material expenditures. Fabric and various non-fabric items,
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such as thread, zippers, rivets, buckles and snaps are purchased from a
variety of independent suppliers. The fabric and accessory market in which
OshKosh B'Gosh purchases its raw materials is composed of a substantial number
of suppliers with similar products and capabilities, and is characterized by a
high degree of competition. As is customary in its industry, the Company has
no long-term contracts with its suppliers. To date, the Company has
experienced little difficulty in satisfying its requirements for raw
materials, considers its sources of supply to be adequate, and believes that
it would be able to obtain sufficient raw materials should any one of its
product suppliers become unavailable.
Production administration is primarily coordinated from the Company's
headquarters facility in Oshkosh with most production taking place in its one
Wisconsin, eight Tennessee, and five Kentucky plants. Overseas labor is also
accessed through a leased sewing plant in Honduras, where cut apparel pieces
are received from the United States and are reimported by OshKosh B'Gosh as
finished goods. In addition, product is produced by contractors in 11
countries and imported into the United States.
The majority of the product engineering and sample making, allocation of
production among plants and independent suppliers, material purchases and
invoice payments is done through the Company's Oshkosh headquarters. All
designs and specifications utilized by independent manufacturers are provided
by the Company. While no long-term, formal arrangements exist with these
manufacturers, the Company considers these relationships to be satisfactory.
The Company believes it could obtain adequate alternative production capacity
if any of its independent manufacturers become unavailable.
Because higher quality apparel manufacturing is generally labor intensive
(sewing, pressing, finishing and quality control), the Company has continually
sought to upgrade its manufacturing and distribution facilities. Economies
are therefore realized by technical advances in areas like computer-assisted
design, computer-controlled fabric cutting, computer evaluation and matching
of fabric colors, automated sewing processes, and computer-assisted inventory
control and shipping. In order to realize economies of operation within the
domestic production facilities, cutting operations are located in three of the
Company's fourteen plants, with all product washing, pressing and finishing
done in one facility in Tennessee and all screenprint and embroidery done in
one facility in Kentucky. Quality control inspections of both semi-finished
and finished products are required at each plant, including those of
independent manufacturers, to assure compliance.
Customer orders for fashion products are booked from three to six months
in advance of shipping. Because most Company production of styled products is
scheduled to fill orders already booked, the Company believes that it is
better able to plan its production and delivery schedules than would be the
case if production were in advance of actual orders. In order to secure
necessary fabrics on a timely basis and to obtain manufacturing capacity from
independent suppliers, the Company must make substantial advance commitments,
sometimes as much as five to seven months prior to receipt of customer orders.
Inventory levels therefore depend on Company judgment of market demand.
Trademarks
The Company utilizes the OshKosh , OshKosh B'Gosh , Baby B'Gosh or
Genuine Kids trademarks on most of its products, either alone or in
conjunction with a white triangular background. In addition, "The Genuine
Article " is embroidered on the small OshKosh B'Gosh patch to signify apparel
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that is classic in design and all-but-indestructible in quality construction.
The Company currently uses approximately 21 registered and unregistered
trademarks in the United States. These trademarks and universal awareness of
the OshKosh B'Gosh name are significant in marketing the products.
Seasonality
Products are designed and marketed primarily for three principal selling
seasons:
RETAIL SALES SEASON PRIMARY BOOKING PERIOD SHIPPING PERIOD
Spring/Summer August-September January-April
Fall/Back-to-School January-February May-August
Winter/Holiday April-May September-December
The Company's business is increasingly seasonal, with highest sales and
income in the third quarter which is the Company's peak retail selling season
at its retail outlet stores. The Company's second quarter sales and income
are the lowest both because of relatively low domestic wholesale unit
shipments and relatively modest retail outlet store sales during this period.
The Company anticipates this seasonality trend to continue to impact 1995
quarterly sales and income.
Working Capital
Working capital needs are affected primarily by inventory levels,
outstanding accounts receivable and trades payable. In June 1994, the Company
entered into a credit agreement with a number of banks which provides a $60
million three year revolving credit facility and a $40 million revocable
demand line of credit for cash borrowings, issuance of commercial paper and
letters of credit. The agreement expires in June 1997. The Company also has
a $12.5 million unsecured credit facility available at December 31, 1994 for
issuance of letters of credit. There were no outstanding borrowings against
these credit arrangements at December 31, 1994. Letters of credit of
approximately $26 million were outstanding at December 31, 1994.
Inventory levels are affected by order backlog and anticipated sales.
Accounts receivable are affected by payment terms offered. It is general
practice in the apparel industry to offer payment terms of ten to sixty days
from date of shipment. The Company offers net 30 days terms only.
The Company believes that its working capital requirements and financing
resources are comparable with those of other major, financially sound apparel
manufacturers.
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Sales and Marketing
Company products are sold primarily through better quality department and
specialty stores, although sales are also made through direct mail catalog
companies, foreign retailers and other outlets, including 137 Company operated
domestic retail factory stores and one retail showcase store, and the
Company's proprietary mail order catalog. No one customer accounted for more
than 10% of the Company's 1994 sales. The Company's largest ten and largest
100 customers accounted for approximately 43% and 68% of 1994 sales,
respectively. In 1994, the Company's products were sold to approximately
3,300 wholesale customers (approximately 10,600 stores) throughout the United
States, and a sizeable number of international accounts.
Product sales to better quality department and specialty stores are
primarily by an employee sales force with the balance of sales made through
manufacturer's representatives or to in-house accounts. In addition to the
central sales office in Oshkosh, the Company maintains regional sales offices
and product showrooms in Dallas and New York. Most members of the Company's
sales force are assigned to defined geographic territories, with some assigned
to specific large national accounts. In sparsely populated areas and new
markets, manufacturer's representatives represent the Company on a non-
exclusive basis.
Direct advertising in consumer and trade publications is the primary
method of advertising used. The Company also offers a cooperative advertising
program, paying half of its customers' advertising expenditures for their
products, generally up to two percent of the higher of the customer's prior or
current year's gross purchases from the Company.
Backlog
The dollar amount of backlog of orders believed to be firm as of the end
of the Company's fiscal year and as of the preceding fiscal year is not
material for an understanding of the business of the Company taken as a whole.
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Competitive Conditions
The apparel industry is highly competitive and consists of a number of
domestic and foreign companies. Some competitors have assets and sales
greater than those of the Company. In addition, the Company competes with a
number of firms that produce and distribute only a limited number of products
similar to those sold by the Company or sell only in certain geographic areas
being supplied by the Company.
A characteristic of the apparel industry is the requirement that a
marketer recognize fashion trends and adequately provide products to meet such
trends. Competition within the apparel industry is generally in terms of
quality, price, service, style and, with respect to branded product lines,
consumer recognition and preference. The Company believes that it competes
primarily on the basis of quality, style, and consumer recognition and to a
lesser extent on the basis of service and price. The Company is focusing
attention on the issue of price and service and has taken and will continue to
take steps to reduce costs, become more competitive in the eyes of value
conscious consumers and deliver the service expected by its customers.
The Company's share of the overall children's wear market is quite small.
This is due to the diverse structure of the market where there is no truly
dominant producer of children's garments across all size ranges and garment
types. In the Company's channel of distribution, department and specialty
stores, it holds the largest share of the branded children's wear market.
Environmental Matters
The Company's compliance with Federal, State, and local environmental laws
and regulations had no material effect upon its capital expenditures,
earnings, or competitive position. The Company does not anticipate any
material capital expenditures for environmental control in either the current
or succeeding fiscal years.
Employees
At December 31, 1994, the Company employed approximately 6,600 persons.
Approximately 52% of the Company's personnel are covered by collective
bargaining agreements with the United Garment Workers of America.
The Company considers its relations with its personnel to be good.
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ITEM 2. PROPERTIES
The Company's principal executive and administrative offices are located
in Oshkosh, Wisconsin. Its principal office, manufacturing and distribution
operations are conducted at the following locations:
Approximate
Location Floor Area in Principal
Square Feet Use
Albany, KY 20,000 Manufacturing
Byrdstown, TN 32,000 Manufacturing
Celina, TN 100,000 Manufacturing
Celina, TN 90,000 Laundering/Pressing
Columbia, KY 78,000 Manufacturing
Columbia, KY 23,000 Manufacturing
Dallas, TX (1) 1,995 Sales Offices/Showroom
Gainesboro, TN 61,000 Manufacturing
Gainesboro, TN 29,000 Warehousing
Hermitage Springs, TN 52,000 Manufacturing
Jamestown, TN 43,000 Manufacturing
Liberty, KY 218,000 Manufacturing/Warehousing
Liberty, KY (2) 32,000 Warehousing
Los Angeles, CA (3) 667 Sales Offices/Showroom
Marrowbone, KY 27,000 Manufacturing
McEwen, TN (4) 29,000 Manufacturing
New York City, NY (5) 18,255 Sales Offices/Showrooms
Oshkosh, WI 99,000 Exec. & Operating Co. Offices
Oshkosh, WI 88,000 Manufacturing
Oshkosh, WI 128,000 Distribution/Warehousing
Red Boiling Springs,TN 41,000 Manufacturing
White House, TN 284,000 Distribution/Warehousing
All properties are owned by the Registrant with the exception of:
(1) Lease expiration date - 1995, (2) Lease expiration date - 1999, (3) Lease
expiration date -1997, (4) Lease expiration date - 1997, (5) Lease expiration
date - 2007. The Company believes that its properties are well maintained and
its manufacturing equipment is in good operating condition and sufficient for
current production.
Substantially all of the Company's retail stores occupy leased premises. For
information regarding the terms of the leases and rental payments thereunder,
refer to the "Leases" note to the consolidated financial statements on page 26
of this Form 10-K.
ITEM 3. LEGAL PROCEEDINGS
The Company and its subsidiaries are not parties to any material pending legal
proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS.
Quarterly Common Stock Data
1994 1993
Stock Price Dividends Stock Price Dividends
High Low Per Share High Low Per Share
Class A common stock
1st 21-3/4 14-1/2 $0.1025 22-1/2 14-1/2 $0.1025
2nd 15 12-1/4 0.1025 19 14-1/2 0.1025
3rd 15-1/2 13-1/2 0.1025 18-1/4 13-1/2 0.1025
4th 15-1/4 13 0.07 20-1/2 16-1/4 0.205
Class B common stock
1st 22 16-3/4 $0.09 18 12 $0.09
2nd 17 13-3/4 0.09 18-1/4 15-1/4 0.09
3rd 15-1/2 14 0.09 18 13-3/4 0.09
4th 15-1/4 13-1/2 0.06 20-3/4 17 0.18
The Company's Class A common stock and Class B common stock trade on the
Over-The-Counter market and is quoted on NASDAQ under the symbols GOSHA and
GOSHB, respectively. The table reflects the last price quotation on the
NASDAQ National Market System and does not reflect mark-ups, mark-downs, or
commissions and may not represent actual transactions.
The Company has paid cash dividends on its common stock each year since
1936. The Company's Certificate of Incorporation requires that when any
dividend (other than a dividend payable solely in shares of the Company's
stock) is paid on the Company's Class B Common Stock, a dividend equal to 115%
of such amount per share must concurrently be paid on each outstanding share
of Class A Common Stock.
As of March 17, 1995, there were 1,939 Class A common stock shareholders of
record and 194 Class B common stock shareholders of record.
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ITEM 6. SELECTED FINANCIAL DATA
Financial Highlights
(Dollars in thousands, except per share amounts)
Year Ended December 31,
1994 1993 1992 1991 1990
Financial Results
Net sales $363,363 $340,186 $346,206 $365,173 $323,377
Net income 7,039 4,523 15,135* 23,576 29,552
Return on sales 1.9% 1.3% 4.4% 6.5% 9.1%
Financial Condition
Working capital $102,463 $111,794 $111,075 $106,803 $103,063
Total assets 217,211 229,131 226,195 214,963 192,196
Long-term debt (less
current maturities) 517 757 1,293 2,379 3,459
Shareholders equity 158,814 171,998 175,153 167,380 151,166
Data Per Common Share
Net income $ .50 $ .31 $ 1.04* $ 1.62 $ 2.03
Cash dividends declared
Class A .3775 .5125 .5125 .5125 .49
Class B .33 .45 .45 .45 .43
Shareholders equity 11.76 11.79 12.01 11.48 10.36
* After a charge of $601 or $.04 per share to reflect cumulative effect of
change in accounting for nonpension postretirement benefits. See Note 10 to
consolidated financial statements.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
YEAR ENDED DECEMBER 31, 1994
COMPARED TO YEAR ENDED DECEMBER 31, 1993
Net sales in 1994 were $363.4 million, an increase of $23.2
million (6.8%) over 1993 sales of $340.2 million. The Company's 1994
domestic wholesale business of approximately $234 million was 9% less
than 1993 sales of approximately $257 million, with a corresponding
decline in unit shipments of approximately 6.7%. The decrease in
domestic wholesale unit shipments related primarily to the effects of
the competitive environment in the children's wear business combined
with the effects of prior years poor shipping performance and
perceived weakness in product design. The Company's Spring, 1995
children s fashion offering has been well received. Company
initiatives undertaken during 1994 resulted in significantly improved
shipping performance to customers. In addition, improved product
design contributed to better sell-thrus and margins for a majority
of our wholesale customers. The Company currently anticipates that
unit shipments of its Spring, 1995 wholesale product offering will
exceed Spring, 1994 by over 10%. Early indications of acceptance of
the Company's Fall, 1995 children's fashion offering have also been
promising.
Company retail sales at its OshKosh B'Gosh branded outlet stores
and Genuine Kids stores were approximately $99.4 million for 1994, a
52.5% increase over 1993 retail sales of approximately $65.2 million.
This retail sales increase was primarily driven by the opening of an
additional 46 retail stores during 1994. In addition, the Company's
comparable store sales for 1994 were up approximately 3.6%. At year
end the Company operated 61 OshKosh B'Gosh branded stores and 77
Genuine Kids stores. The Company anticipates continued expansion of
its retail business through the opening of approximately 35
additional retail stores during 1995.
The Company's gross profit margin as a percent of sales improved
to 28.6% in 1994, compared with 28.0% in 1993. This gross profit
margin improvement was due primarily to the impact of the Company's
increased retail sales at higher gross margins relative to its
domestic wholesale business. The favorable impact of the Company's
retail gross margins was offset in part by the domestic wholesale
gross margin, which was down in 1994 primarily as a result of the
adverse impact of reduced unit volume on our manufacturing operations
and slightly lower pricing to wholesale customers. As a result of
capacity reduction initiatives implemented during 1994 and early
1995, along with increased utilization of contracted manufacturing
resources outside of the United States, the Company anticipates
further improvement in its gross profit margins during 1995.
Selling, general and administrative expenses for 1994 increased
$16.5 million over 1993. As a percent of net sales, selling, general
and administrative expenses were 26.1% in 1994, up from 23.1% in
1993. The primary reason for the increased selling, general and
administrative expenses is the Company's aggressive expansion of its
retail business. In addition, the Company's increasing focus on its
international operations resulted in an increase in 1994's selling,
general and administrative expenses of approximately $2.7 million.
Also, the Company's catalog division, initiated in the second half of
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1993, added approximately $1.6 million to selling, general and
administrative expenses in 1994. Continued expansion of the
Company's retail business, along with further development of its
foreign business and catalog division, will result in higher selling,
general and administrative expenses in relation to its net sales in
1995.
During the fourth quarter of 1993, the Company recorded a pretax
restructuring charge of $10.8 million. Restructuring costs (net of
income tax benefit) reduced net income by $7.1 million ($.49 per
share) in 1993. The restructuring charge included approximately $3.3
million for facility closings, write-down of the related assets and
severance costs pertaining to work force reductions. The
restructuring charge also reflected the Company's decision to market
its Trader Kids line of children's apparel under the new name Genuine
Kids and the resulting costs of the Company's decision not to renew
its Boston Trader license arrangement beyond 1994, as well as
expenses to consolidate its retail operations. Accordingly, the
restructuring charge also included approximately $7.5 million for
write-off of unamortized trademark rights and expenses relating to
consolidating the Company's retail operations.
During 1994, the Company implemented its restructuring plan. The
Company closed its McKenzie, Tennessee facility and announced plans
to close its Dover, Tennessee facility, which was completed in early
1995. Closing of the Dover facility in 1995 will reduce the
Company's work force by approximately 270 employees. The Company was
able to sell both operating facilities, and reached satisfactory
agreements with all affected employees concerning severance
arrangements. The Company began to market a portion of its
children's wear line under the Genuine Kids label, discontinuing the
Trader Kids line of children's apparel. The Company also
consolidated the operations of its retail business into its Oshkosh
office. As of December 31, 1994, the Company estimates that
remaining restructuring costs are sufficiently provided for in the
residual restructuring liability. Remaining costs include charges
for facility closings, including disposal of the real estate and
severance costs pertaining to work force reductions. This plan
should be substantially completed during 1995.
The Company's effective tax rate for 1994 was 45.7% compared to
51.3% in 1993. The relatively high effective tax rates for both
years result primarily from the Company's foreign operating losses,
which provide no tax benefit. In addition, the high 1993 effective
tax rate was the result of substantially lower income before income
taxes in 1993 (which resulted in part from the restructuring charge).
Company management believes that the $11.5 million deferred tax asset
at December 31, 1994 can be fully realized through reversals of
existing taxable temporary differences and the Company's history of
substantial taxable income which allows the opportunity for
carrybacks of current or future losses.
In November of 1992, the Financial Accounting Standards Board
issued its Statement No. 112 entitled Employers Accounting for Post
Employment Benefits. This standard had no significant impact on the
Company's 1994 financial statements.
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YEAR ENDED DECEMBER 31, 1993
COMPARED TO YEAR ENDED DECEMBER 31, 1992
Net sales in 1993 were $340.2 million, down 1.7% from 1992 sales
of $346.2 million. The Company's domestic wholesale business of
approximately $257 million in 1993 was 9.3% less than 1992 sales, due
primarily to a decline in unit shipments of approximately 10% in 1993
from 1992. The decrease in domestic wholesale unit shipments related
primarily to the effects of the competitive pricing environment in
the children's wear business, the Company's difficulty in meeting the
delivery requirements of its wholesale customers as well as perceived
weakness in its product design.
Company retail sales at its OshKosh B'Gosh branded outlet stores
and its Trader Kids stores (now marketed under the Genuine Kids name)
expanded to approximately $65.2 million in 1993, a 49.9% increase
over 1992 retail sales of approximately $43.5 million. Retail sales
increases resulted primarily from the opening of an additional 38
retail stores during 1993.
Gross profit margin as a percent of sales improved to 28.0% in
1993, compared with 25.1% in 1992. During 1993, the Company
experienced a slight improvement in its domestic wholesale gross
margins. Increased retail store sales, at higher gross profit
margins, had a significant impact on improved overall gross margin
performance. Gross margins for 1992 were unfavorably impacted by
manufacturing inefficiencies resulting from the restructuring of
production lines and increasing workers compensation insurance and
employee health care costs.
Selling, general and administrative expenses increased $12.1
million in 1993 from 1992. As a percent of net sales, selling,
general and administrative expenses were 23.1% in 1993, up from 19.2%
in 1992. The primary reason for the increased selling, general and
administrative expenses was the Company's increased focus on its
retail business. In addition, the Company initiated a catalog
division in the second half of 1993 which added approximately $1.2
million to its selling, general and administrative expenses.
Increased emphasis on foreign sales opportunities, including the
start-up cost associated with the opening of sales offices, also
added to the Company's selling, general and administrative expenses
during 1993.
During the fourth quarter of 1993, the Company recorded a pretax
restructuring charge of $10.8 million. Restructuring costs (net of
income tax benefit) reduced net income by $7.1 million ($.49 per
share) in 1993.
During 1992, the Company reduced its estimate of the Absorba line
restructuring costs originally recorded in 1991 by $2.8 million, due
to the efficient and orderly wind down of operations and favorable
settlement of lease obligations. This adjustment to restructuring
costs (net of income taxes) increased 1992 net income by $1.8 million
($.12 per share).
Royalty income, net of expenses, was $3.4 million in 1993, as
compared to $2.6 million in 1992. The increase in net royalty income
resulted primarily from additional foreign license agreements.
The effective tax rate for 1993 was 51.3% compared to 39.8% in
1992. The higher 1993 effective tax rate resulted from the Company's
foreign operating losses, which provide no tax benefit, combined with
13
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the Company's substantially lower income before income taxes in 1993
(which resulted in part from the restructuring charge). The
Company's early adoption of Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes, in 1992 had no
material impact on 1992's results of operations.
The Company elected early adoption of the Statement of Financial
Accounting Standards No. 106, Employers Accounting for Post
Retirement Benefits Other Than Pensions, in 1992. The Company
elected to record the entire transition obligation in 1992, which
resulted in a net $.6 million after tax ($.04 per share) reduction in
net income.
SEASONALITY
The Company's business is increasingly seasonal, with highest
sales and income in the third quarter which is the Company's peak
retail selling season at its retail outlet stores. The Company's
second quarter sales and income are the lowest both because of
relatively low domestic wholesale unit shipments and relatively
modest retail outlet store sales during this period. The Company
anticipates this seasonality trend to continue to impact 1995
quarterly sales and income.
FINANCIAL POSITION, CAPITAL RESOURCES AND LIQUIDITY
The Company's financial position remained strong throughout 1994.
At December 31, 1994, the Company's cash and cash equivalents were
$10.5 million, compared to $17.9 million at the end of 1993 and $21.1
million at the end of 1992. Net working capital at the end of 1994
was $102.5 million, compared to $111.8 million at 1993 year end and
$111.1 million at 1992 year end. Cash provided by operations was
approximately $22.1 million in 1994, compared to $21.6 million in
1993 and $22.9 million in 1992.
Accounts receivable at December 31, 1994 were $23.9 million
compared to $19.5 million at December 31, 1993. Inventories at the
end of 1994 were $93.9 million, down $6.1 million from 1993.
Management believes that year end 1994 inventory levels are generally
appropriate for anticipated 1995 business activity.
Capital expenditures were approximately $9.9 million in 1994 and
$9 million in 1993. Capital expenditures for 1995 are currently
budgeted at approximately $12 million.
On June 14, 1994, the Company announced a stock repurchase
program for up to 1,500,000 shares of its Class A common stock in
open market transactions at prevailing prices. Through December 31,
1994, the Company has repurchased approximately 1,084,000 shares of
its Class A common stock for approximately $15 million.
In June 1994, the Company finalized a credit agreement with
participating banks. This arrangement provides a $60 million, three
year revolving credit facility and a $40 million revocable demand
line of credit for cash borrowings, issuance of commercial paper and
letters of credit. The agreement expires in June 1997. The Company
believes that these credit facilities, along with cash generated from
operations, will be sufficient to finance the Company's stock
repurchase program as well as its capital expenditure, seasonal
14
<PAGE>
working capital, remaining restructuring and business development
needs.
Dividends on the Company's Class A and Class B common stock
totaled $.3775 per share and $.33 per share, respectively, in 1994,
compared to $.5125 per share and $.45 per share on the Company's
Class A and Class B common stock, respectively, in 1993. The
dividend payout rate was 75% of net income in 1994 and 163% in 1993.
The Company's lower earnings from operations in 1993 combined with
the fourth quarter 1993 restructuring charge resulted in the
unusually high 1993 payout rate.
INFLATION
The effects of inflation on the Company's operating results and
financial condition were not significant.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Page
Financial Statements:
Reports of Independent Auditors 16
Consolidated Balance Sheets - December 31, 1994 and 1993 18
Consolidated Statement of Income - years ended
December 31, 1994, 1993, and 1992 19
Consolidated Statements of Changes in Shareholders Equity -
years ended December 31, 1994, 1993, and 1992 20
Consolidated Statements of Cash Flows - years ended
December 31, 1994, 1993, and 1992 21
Notes to Consolidated Financial Statements 22
15
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors
OshKosh B'Gosh, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheets of OshKosh
B'Gosh, Inc. and subsidiaries (the Company) as of December 31, 1994 and 1993,
and the related consolidated statements of income, changes in shareholders'
equity and cash flows for the years then ended. Our audit also included the
1994 and 1993 financial statement schedules listed in the Index at Item 14(a).
These financial statements and schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Oshkosh
B'Gosh, Inc. and Subsidiaries at December 31, 1994 and 1993, and the
consolidated results of their operations and their cash flows for the years
then ended in conformity with generally accepted accounting principles. Also,
in our opinion, the related 1994 and 1993 financial statements schedules, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information set forth therein.
As discussed in Notes 1 and 10 to the consolidated financial statements,
effective January 1, 1992, the Company changed its method of accounting for
income taxes and nonpension postretirement benefits.
Milwaukee, Wisconsin ERNST & YOUNG LLP
February 6, 1995
16
<PAGE>
REPORT OF SCHUMAKER, ROMENESKO & ASSOCIATES, S.C.
INDEPENDENT AUDITORS
The Board of Directors
OshKosh B'Gosh, Inc. and Subsidiaries
We have audited the accompanying consolidated statements of income, changes
in shareholders' equity and cash flows of OshKosh B'Gosh, Inc. and
Subsidiaries for the year ended December 31, 1992. Our audit also included
the 1992 financial statement schedules listed in the Index at Item 14(a).
These financial statements and schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and schedules based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated results of operations and cash
flows of OshKosh B'Gosh, Inc. and Subsidiaries for the year ended December 31,
1992 in conformity with generally accepted accounting principles. Also, in
our opinion, the related 1992 financial statement schedules, when considered
in relation to the basic financial statements taken as a whole, present fairly
in all material respects the information set forth therein.
As discussed in Notes 1 and 10 to the consolidated financial statements,
effective January 1, 1992, the Company changed its method of accounting for
income taxes and nonpension postretirement benefits.
Oshkosh, Wisconsin SCHUMAKER, ROMENESKO & ASSOCIATES, S.C.
February 15, 1993
17
<PAGE>
Consolidated Balance Sheets OshKosh B'Gosh, Inc.
(Dollars in thousands, except share and per share amounts) and Subsidiaries
December 31,
1994 1993
ASSETS
Current assets
Cash and cash equivalents $ 10,514 $ 17,853
Accounts receivable, less allowances of
$3,700 in 1994 and $3,310 in 1993 23,857 19,477
Inventories 93,916 99,999
Prepaid expenses and other current assets 2,510 3,810
Deferred income taxes 11,510 10,716
Total current assets 142,307 151,855
Property, plant and equipment, net 69,829 71,755
Other assets 5,075 5,521
Total assets $217,211 $229,131
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt $ 240 $ 536
Accounts payable 9,436 9,720
Accrued liabilities 30,168 29,805
Total current liabilities 39,844 40,061
Long-term debt 517 757
Deferred income taxes 2,869 3,040
Employee benefit plan liabilities 15,167 13,275
Commitments - -
Shareholders' equity
Preferred stock, par value $.01 per share:
Authorized - 1,000,000 shares;
Issued and outstanding - None - -
Common stock, par value $.01 per share:
Class A, authorized - 30,000,000 shares;
Issued and outstanding - 12,233,787 shares
in 1994, 13,280,572 shares in 1993 122 133
Class B, authorized - 3,750,000 shares;
Issued and outstanding - 1,267,713 shares
in 1994, 1,305,228 shares in 1993 13 13
Additional paid-in capital - 2,971
Retained earnings 158,933 169,182
Cumulative foreign currency translation adjustments (254) (301)
Total shareholders' equity 158,814 171,998
Total liabilities and shareholders' equity $217,211 $229,131
See notes to consolidated financial statements.
18
<PAGE>
Consolidated Statements of Income OshKosh B'Gosh, Inc.
(Dollars and shares in thousands, except per share amounts) and Subsidiaries
Year Ended December 31,
1994 1993 1992
Net sales $363,363 $340,186 $346,206
Cost of products sold 259,416 244,926 259,344
Gross profit 103,947 95,260 86,862
Selling, general and administrative expenses 94,988 78,492 66,414
Restructuring - 10,836 (2,800)
Operating income 8,959 5,932 23,248
Other income (expense):
Interest expense (1,034) (626) (797)
Interest income 1,048 1,114 1,022
Royalty income, net of expenses 3,442 3,417 2,562
Miscellaneous 543 (545) 91
Other income - net 3,999 3,360 2,878
Income before income taxes and cumulative
effect of accounting change 12,958 9,292 26,126
Income taxes 5,919 4,769 10,390
Income before cumulative effect of
accounting change 7,039 4,523 15,736
Cumulative effect of change in accounting
for nonpension postretirement benefits - - (601)
Net income $ 7,039 $ 4,523 $ 15,135
Weighted average common shares outstanding 14,144 14,586 14,586
Income per share before cumulative
effect of accounting change $.50 $.31 $1.08
Change in accounting for nonpension
postretirement benefits - - (.04)
Net income per common share $.50 $.31 $1.04
See notes to consolidated financial statements.
19
<PAGE>
Consolidated Statements of Changes in Shareholders' Equity Oshkosh B'Gosh, Inc.
(Dollars and shares in thousands, except per share amounts) and Subsidiaries
Cumulative
Foreign
Common Stock Additional Currency
Class A Class B Paid-In Retained Translation
Shares Amount Shares Amount Capital Earnings Adjustments
Balance -
December 31, 1991 12,777 $128 1,809 $18 $2,971 $164,263 $ -
Net income - - - - - 15,135 -
Dividends
- Class A ($.5125
per share) - - - - - (6,548) -
- Class B ($.45
per share) - - - - - (814) -
Balance -
December 31, 1992 12,777 128 1,809 18 2,971 172,036 -
Net income - - - - - 4,523 -
Dividends
- Class A ($.5125
per share) - - - - - (6,667) -
- Class B ($.45
per share) - - - - - (710) -
Foreign currency
translation
adjustments - - - - - - (301)
Conversions of
common shares 504 5 (504) (5) - - -
Balance -
December 31, 1993 13,281 133 1,305 13 2,971 169,182 (301)
Net income - - - - - 7,039 -
Dividends
- Class A ($.3775
per share) - - - - - (4,886) -
- Class B ($.33
per share) - - - - - (425) -
Foreign currency
translation
adjustments - - - - - - 47
Conversions of
common shares 37 - (37) - - - -
Repurchase of
common shares (1,084) (11) - - (2,971) (11,977) -
Balance -
December 31, 1994 12,234 $122 1,268 $13 $ - $158,933 $(254)
See notes to consolidated financial statements.
20
<PAGE>
Consolidated Statements of Cash Flows OshKosh B'Gosh, Inc.
(Dollars in thousands) and Subsidiaries
Year Ended December 31,
1994 1993 1992
Cash flows from operating activities
Net income $ 7,039 $ 4,523 $15,135
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 10,692 9,233 8,375
(Gain) loss on disposal of assets (185) 63 85
Minority interest in loss of
consolidated subsidiary - - (108)
Provision for deferred income taxes (965) (5,537) 35
Pension expense, net of contributions 979 1,852 1,753
Cumulative effect of accounting change - - 1,001
Restructuring - 10,836 (2,800)
Changes in operating assets and liabilities:
Accounts receivable (4,380) 4,948 (643)
Inventories 6,083 (7,247) 1,478
Prepaid expenses and other current assets1,300 (1,624) (252)
Accounts payable (284) (1,376) (2,522)
Accrued liabilities 1,863 5,940 1,313
Net cash provided by operating activities 22,142 21,611 22,850
Cash flows from investing activities
Additions to property, plant and equipment (9,914) (8,990) (12,563)
Proceeds from disposal of assets 1,425 1,159 625
Investments in subsidiaries - - (900)
Additions to other assets (186) (1,783) (1,602)
Net cash used in investing activities (8,675) (9,614) (14,440)
Cash flows from financing activities
Proceeds from long-term borrowings - - 7,000
Payments of long-term debt (536) (7,896) (1,270)
Dividends paid (5,311) (7,377) (7,362)
Repurchase of common stock (14,959) - -
Net cash used in financing activities (20,806) (15,273) (1,632)
Net increase (decrease) in cash
and cash equivalents (7,339) (3,276) 6,778
Cash and cash equivalents at
beginning of year 17,853 21,129 14,351
Cash and cash equivalents at end of year $10,514 $17,853 $21,129
Supplementary disclosures
Cash paid for interest $ 638 $ 1,030 $ 823
Cash paid for income taxes $ 3,937 $12,194 $ 9,877
See notes to consolidated financial statements.
21
<PAGE>
OSHKOSH B'GOSH, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollars in thousands, except share and per share amounts)
Note 1. Significant accounting policies
Business - OshKosh B'Gosh, Inc. and its wholly-owned subsidiaries (the
Company) are engaged primarily in the design, manufacture and marketing of
apparel to wholesale customers and through Company owned retail stores.
Principles of consolidation - The consolidated financial statements include
the accounts of all wholly-owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated in consolidation.
Cash equivalents - Cash equivalents consist of highly liquid debt
instruments such as money market accounts and commercial paper with original
maturities of three months or less. The Company's policy is to invest cash in
conservative instruments as part of its cash management program and to
evaluate the credit exposure of any investment. Cash and cash equivalents are
stated at cost, which approximates market value.
Inventories - Inventories are stated at the lower of cost or market.
Inventories stated on the last-in, first-out (LIFO) basis represent 95.7% of
total 1994 and 90.6% of total 1993 inventories. Remaining inventories are
valued using the first-in, first-out (FIFO) method.
Property, plant and equipment - Property, plant and equipment are carried
at cost. Depreciation and amortization for financial reporting purposes is
calculated using the straight line method based on the following useful lives:
Years
Land improvements 10 to 15
Buildings 10 to 40
Leasehold improvements 5 to 10
Machinery and equipment 5 to 10
Income taxes - Effective January 1, 1992, the Company accounts for income
taxes under the provisions of Statement of Financial Accounting Standards
(SFAS) No. 109, "Accounting for Income Taxes". This Statement requires
recognition of deferred tax assets and liabilities for all temporary
differences between the financial reporting and income tax basis of the
Company's assets and liabilities. The effect of this accounting change at
January 1, 1992 was not material.
Foreign currency translation - The functional currency for certain foreign
subsidiaries is the local currency. Accordingly, assets and liabilities are
translated at year end exchange rates, and income statement items are
translated at average exchange rates prevailing during the year. Such
translation adjustments are recorded as a separate component of shareholders'
equity.
Revenue recognition - Revenue within wholesale operations is recognized at
the time merchandise is shipped to customers. Retail store revenues are
recognized at the time of sale.
22
Income per common share - Income per common share amounts are computed by
dividing income by the weighted average number of shares of common stock
outstanding. There are no common stock equivalents.
Advertising - Advertising costs are expensed as incurred and totaled
$9,858, $11,209, and $10,180 in 1994, 1993, and 1992, respectively.
Note 2. Restructuring
During 1993, the Company recorded a pretax restructuring charge of $10,836.
The restructuring charge included approximately $3,300 for facility closings,
write-down of the related assets and severance costs pertaining to work force
reductions. The restructuring charge also reflected the Company's decision to
market its Trader Kids line of children's apparel under the new name Genuine
Kids and the resulting costs of the Company's decision not to renew its Boston
Trader license arrangement beyond 1994, as well as expenses to consolidate its
retail operations. Accordingly, the restructuring charge included
approximately $7,500 for write-off of unamortized trademark rights and
expenses related to consolidating the Company's retail operations.
Restructuring costs (net of income tax benefit) reduced net income by $7,100
($.49 per share) in 1993.
During 1994, the Company implemented its restructuring plan. The Company
closed its McKenzie, Tennessee facility, and announced plans to close its
Dover, Tennessee facility, which was completed in early 1995. The Company was
able to sell both operating facilities, and reached satisfactory agreements
with all affected workforce concerning severance arrangements. The Company
also began to market a portion of its childrenswear line under the Genuine
Kids label, discontinuing the Trader Kids line of childrens' apparel. The
Company also successfully consolidated the operations of its retail business
into its OshKosh office. As of December 31, 1994, the Company estimates that
remaining restructuring costs are sufficiently provided for in the residual
restructuring liability. Remaining costs include charges for facility
closings, including disposal of the real estate and severance costs pertaining
to workforce reductions. This plan should be substantially completed in early
1995.
During 1992, the Company reduced its estimate of the Absorba line
restructuring costs originally recorded in 1991 by $2,800, due to the
efficient and orderly wind down of operations and favorable settlement of
lease obligations. This adjustment to restructuring costs (net of income
taxes) increased 1992 net income by $1,800 ($.12 per share).
Note 3. Inventories
A summary of inventories follows:
December 31,
1994 1993
Finished goods $75,187 $82,737
Work in process 7,410 5,008
Raw materials 11,319 12,254
Total $93,916 $99,999
The replacement cost of inventory exceeds the above LIFO costs by $16,122
and $14,716 at December 31, 1994 and 1993, respectively.
Note 4. Property, plant and equipment
A summary of property, plant and equipment follows:
December 31,
1994 1993
Land and improvements $ 4,139 $ 4,172
Buildings 37,442 37,640
Leasehold improvements 7,862 5,268
Machinery and equipment 70,498 67,026
Construction in progress 9 291
Total 119,950 114,397
Less: accumulated depreciation
and amortization 50,121 42,642
Property, plant and equipment, net $69,829 $71,755
Depreciation and amortization expense on property, plant and equipment for
the years ended December 31, 1994, 1993, and 1992 amounted to approximately
$9,972, $8,425, and $7,909, respectively.
Note 5. Lines of Credit
In June 1994, the Company entered into a credit agreement with a number of
banks which provides a $60,000 three year revolving credit facility and a
$40,000 revocable demand line of credit for cash borrowings, issuance of
commercial paper, and letters of credit. The agreement expires in June 1997.
Under the terms of the agreement, interest rates are determined at the time
of borrowing and are based on London Interbank Offered Rates plus .625% or the
prime rate. Commitment fees of .125% are required on the $100,000 credit
facilities. The Company is required to maintain certain financial ratios in
connection with this agreement.
The Company also has a $12,500 unsecured credit facility available at
December 31, 1994 for issuance of letters of credit.
There were no outstanding borrowings against these credit arrangements at
December 31, 1994. Letters of credit of approximately $26,150 were
outstanding at December 31, 1994, with $23,774 of the unused revocable demand
line of credit available for borrowing.
Note 6. Accrued liabilities
A summary of accrued liabilities follows:
December 31,
1994 1993
Compensation $ 8,491 $ 4,701
Group health insurance - 1,700
Worker's compensation 10,800 8,600
Income taxes 1,729 640
Restructuring costs 2,381 8,186
Other 6,767 5,978
Total $30,168 $29,805
Note 7. Long-term debt
The Company's long-term debt is summarized as follows:
December 31,
1994 1993
Obligation under industrial
development revenue bonds $200 $ 666
Other mortgage notes and loans
with interest at varying rates 557 627
Total 757 1,293
Less current maturities 240 536
Total long-term debt $517 $757
The final payment on the industrial development revenue bond is due
October 1, 1995. The interest rate on the bond is approximately 80% of prime
rate (prime rate was 8.5% at December 31, 1994).
Annual total maturities of principal on long-term debt are as follows:
Year ending
December 31,
1995 $240
1996 42
1997 43
1998 45
1999 47
Thereafter 340
Total $757
Note 8. Leases
The Company leases certain property and equipment including retail sales
facilities and regional sales offices under operating leases. Certain leases
provide the Company with renewal options. Leases for retail sales facilities
provide for minimum rentals plus contingent rentals based on sales volume.
Minimum future rental payments under noncancellable operating leases are as
follows:
Year ending
December 31,
1995 $10,202
1996 9,148
1997 8,452
1998 7,608
1999 6,151
Thereafter 17,034
Total minimum lease payments $58,595
Total rent expense charged to operations for all operating leases is as
follows:
Year Ended December 31,
1994 1993 1992
Minimum rentals $11,139 $7,718 $5,921
Contingent rentals 196 167 179
Total rent expense $11,335 $7,885 $6,100
Note 9. Income taxes
Income tax expense (credit) is comprised of the following:
Year Ended December 31,
1994 1993 1992
Current:
Federal $5,653 $ 8,571 $ 8,155
State and local 1,231 1,735 1,800
6,884 10,306 9,955
Deferred (965) (5,537) 435
Total $5,919 $4,769 $10,390
The components of the Company's deferred tax asset and deferred tax
liability include:
December 31,
1994 1993
[Assets (Liabilities)]
Current deferred taxes:
Accounts receivable allowances $ 1,402 $ 1,272
Inventory valuation 2,835 2,129
Accrued liabilities 5,994 3,714
Restructuring costs 834 3,204
Other 445 397
Total net current deferred tax asset $11,510 $10,716
Non-current deferred taxes:
Depreciation $(8,497) $(8,266)
Deferred employee benefits 5,234 4,419
Trademark 394 807
Foreign loss carryforwards 2,418 1,807
Valuation allowance (2,418) (1,807)
Total net long-term deferred tax liability $(2,869) $(3,040)
For financial reporting purposes, income before income taxes and cumulative
effect of accounting change includes the following components:
Year Ended December 31,
1994 1993 1992
Pretax income (loss):
United States $14,319 $11,704 $27,574
Foreign (1,361) (2,412) (1,448)
Total $12,958 $9,292 $26,126
A reconciliation of the federal statutory income tax rate to the effective
tax rates reflected in the consolidated statements of income follows:
Year Ended December 31,
1994 1993 1992
Federal statutory tax rate 35.0% 35.0% 34.0%
Differences resulting from:
State and local income taxes, net
of federal income tax benefit 4.5 4.1 4.2
Foreign losses with no tax benefit 3.7 9.1 1.9
Other 2.5 3.1 (.3)
Total 45.7% 51.3% 39.8%
Note 10. Retirement plans
The Company has defined contribution and defined benefit pension plans
covering substantially all employees. Charges to operations by the Company
for these pension plans totaled $4,309, $4,621, and $4,477 for 1994, 1993 and
1992, respectively.
Defined benefit pension plans - The Company sponsors several qualified
defined benefit pension plans covering certain hourly and salaried employees.
In addition, the Company maintains a supplemental unfunded salaried pension
plan to provide those benefits otherwise due employees under the salaried
plan's benefit formulas, but which are in excess of benefits permitted by the
Internal Revenue Service.
The benefits provided are based primarily on years of service and average
compensation. The pension plans' assets are comprised primarily of listed
securities, bonds, treasury securities, commingled equity and fixed income
investment funds and cash equivalents. Plan assets included 7,000 shares of
OshKosh B'Gosh, Inc. Class A common stock at December 31, 1993 and 9,500 and
5,000 shares of OshKosh B'Gosh, Inc. Class B common stock at December 31, 1994
and 1993, respectively, with a total market value of approximately $128 and
$236 at December 31, 1994 and 1993, respectively.
The Company's funding policy for qualified plans is to contribute amounts
which are actuarially determined to provide the plans with sufficient assets
to meet future benefit payment requirements consistent with the funding
requirements of federal laws and regulations.
The actuarial computations utilized the following assumptions.
December 31,
1994 1993 1992
Discount rate 7.5% 7.0% 7.0-7.5%
Expected long-term rate
of return on assets 8.0% 7.0% 7.5-8.0%
Rates of increase in
compensation levels 0-4.5% 0-4.5% 0-5.5%
Net periodic pension cost was comprised of:
December 31,
1994 1993 1992
Service cost - benefits
earned during the period $2,212 $2,318 $2,309
Interest cost on projected
benefit obligations 1,888 1,808 1,601
Actual return on plan assets (1,118) (1,708) (1,037)
Net amortization and deferral 552 1,259 636
Net periodic pension cost $3,534 $3,677 $3,509
The following table sets forth the funded status of the Company's defined
benefit plans and the amount recognized in the Company's consolidated balance
sheets. The funded status of plans with assets exceeding the accumulated
benefit obligation (ABO) is segregated by column from that of plans with the
ABO exceeding assets.
December 31,
1994 1993
Assets ABO Assets ABO
Exceed Exceeds Exceed Exceeds
ABO Assets ABO Assets
Actuarial present value of
benefit obligations:
Vested benefits $ 9,365 $ 6,599 $ 9,051 $ 6,308
Nonvested benefits 916 313 1,604 449
Total accumulated benefit
obligation $10,281 $ 6,912 $10,655 $ 6,757
Projected benefit obligation $19,334 $ 7,244 $22,299 $ 6,835
Plan net assets at fair value 12,451 2,980 12,070 2,777
Projected benefit obligation in
excess of plan net assets (6,883) (4,264) (10,229) (4,058)
Unamortized transition asset (1,382) (20) (1,535) (23)
Unrecognized prior service
cost 2,586 3,022 2,821 2,867
Unrecognized net (gain) loss (604) (679) 3,546 (592)
Adjustment to recognize
minimum liability - (2,000) - (2,200)
Accrued pension liability
at December 31 $(6,283) $(3,941) $(5,397) $(4,006)
Defined contribution plan - The Company maintains a defined contribution
retirement plan covering certain salaried employees. Annual contributions are
discretionary and are determined by the Company's Executive Committee.
Charges to operations by the Company for contributions under this plan totaled
$531, $565 and $658 for 1994, 1993 and 1992, respectively.
The Company also has a supplemental retirement program for designated
employees. Annual provisions to this unfunded plan are discretionary and are
determined by the Company's Executive Committee. Charges to operations by the
Company for additions to this plan totaled $244, $379 and $310 for 1994, 1993
and 1992, respectively.
Deferred employee benefit plans - The Company has deferred compensation and
supplemental retirement arrangements with certain key officers.
Postretirement health and life insurance plan - The Company sponsors an
unfunded defined benefit postretirement health insurance plan that covers
eligible salaried employees. Life insurance benefits are provided under the
plan to qualifying retired employees. The postretirement health insurance
plan is offered, on a shared cost basis, only to employees electing early
retirement. This coverage ceases when the employee reaches age 65 and becomes
eligible for medicare. Retiree contributions are adjusted periodically.
In 1992, the Company adopted the provisions of SFAS No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions." In applying this
pronouncement, the Company elected to immediately recognize the accumulated
postretirement benefit obligation as of the beginning of 1992 of approximately
$1 million in the first quarter of 1992 as a change in accounting principle.
The charge, net of an income tax benefit of $400, was $601 or $.04 per share.
The following table sets forth the funded status of the plan and the
postretirement benefit cost recognized in the Company's consolidated balance
sheets:
December 31,
1994 1993
Accumulated postretirement benefit obligation:
Retirees $ 159 $ 119
Fully eligible active plan participants 169 216
Other active plan participants 523 670
851 1,005
Plan assets - -
Unrecognized net gain 497 281
Accrued postretirement benefit cost $1,348 $1,286
Net periodic postretirement benefit cost was comprised of:
Year Ended December 31,
1994 1993 1992
Service cost - benefits attributed
to employee service during the year $ 67 $ 98 $119
Interest cost on accumulated
postretirement benefit obligation 53 61 75
Net amortization and deferral (38) (18) -
Net periodic postretirement benefit
cost $82 $141 $194
The discount rate used in determining the accumulated postretirement
benefit obligation was 7% in 1994 and 1993. The assumed health care cost
trend rate used in measuring the accumulated postretirement benefit obligation
was 12%, declining gradually to 6% by 2012 and then declining further to an
ultimate rate of 4% by 2022.
The health care cost trend rate assumption has a significant impact on the
amounts reported. Increasing the assumed health care cost trend rate by one
percentage point would increase the accumulated postretirement benefit
obligation at December 31, 1994 by approximately $108 and the aggregate of the
service and interest cost components of net periodic postretirement benefit
cost for 1994 by approximately $13.
Note 11. Common stock
In May, 1993 shareholders of the Company approved a stock conversion plan
whereby shares of Class B common stock may be converted to an equal number of
Class A common shares.
The Company's common stock authorization provides that dividends be paid on
both the Class A and Class B common stock at any time that dividends are paid
on either. Whenever dividends (other than dividends of Company stock) are
paid on the common stock, each share of Class A common stock is entitled to
receive 115% of the dividend paid on each share of Class B common stock.
The Class A common stock shareholders are entitled to receive a liquidation
preference of $7.50 per share before any payment or distribution to holders of
the Class B common stock. Thereafter, holders of the Class B common stock are
entitled to receive $7.50 per share before any further payment or distribution
to holders of the Class A common stock. Thereafter, holders of the Class A
common stock and Class B common stock share on a pro-rata basis in all
payments or distributions upon liquidation, dissolution or winding up of the
Company.
Note 12. Business and credit concentrations
The Company provides credit, in the normal course of business, to
department and specialty stores. The Company performs ongoing credit
evaluations of its customers and maintains allowances for potential credit
losses.
The Company's customers are not concentrated in any specific geographic
region. In 1993, sales to a customer, as a percentage of total sales,
amounted to approximately 10%. In 1992, sales to two customers, as a
percentage of total sales, amounted to approximately 12% each.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item is incorporated by reference to the
definitive Proxy Statement of OshKosh B'Gosh, Inc. for its annual meeting to
be held on May 5, 1995.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated by reference to the
definitive Proxy Statement of OshKosh B'Gosh, Inc. for its annual meeting to
be held on May 5, 1995.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is incorporated by reference to the
definitive Proxy Statement of OshKosh B'Gosh, Inc. for its annual meeting to
be held on May 5, 1995.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is incorporated by reference to the
definitive Proxy Statement of OshKosh B'Gosh, Inc. for its annual meeting to
be held on May 5, 1995.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) (1) Financial Statements
Financial statements for OshKosh B'Gosh, Inc. listed in the Index to
Financial Statements and Supplementary Data on page 17 are filed
as part of this Annual Report.
(2) Financial Statement Schedules:
Schedule II - Valuation and Qualifying Accounts F-1
Schedules not included have been omitted because they are not
applicable or the required information is included in the
consolidated financial statements and notes thereto.
(3) Index to Exhibits
(b) Reports on Form 8-K
None.
34
<PAGE>
(3) Exhibits
3.1 Certificate of Incorporation of OshKosh B'Gosh, Inc., as restated,
October 20, 1988, previously filed as Exhibit 3.1 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended December 31, 1988,
Commission File Number 0-13365, is incorporated herein by reference.
3.2 By-laws of OshKosh B'Gosh, Inc., as amended through the date hereof.
*10.1 Employment Agreement dated July 7, 1980, between OshKosh B'Gosh, Inc.
and Charles F. Hyde as extended by "Request For Later Retirement" dated
April 15, 1986 and accepted by Board of Directors' resolution on May 2,
1986, previously filed as Exhibit 10.1 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 1986,
Commission File Number 0-13365, is incorporated herein by reference.
*10.2 Employment Agreement dated July 7, 1980, between OshKosh B'Gosh, Inc.
and Thomas R. Wyman, previously filed as Exhibit 10.2 to the
Registrant's Registration Statement No. 2-96586 on Form S-1, is
incorporated herein by reference.
*10.3 OshKosh B'Gosh, Inc. Pension Plan as amended, previously filed as
Exhibit 10.3 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1992, Commission File Number 0-13365, is
incorporated herein by reference.
*10.4 OshKosh B'Gosh, Inc. Profit Sharing Plan, as amended on August 5, 1985,
previously filed as Exhibit 10.4 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1985, Commission File
Number 0-13365, is incorporated herein by reference.
*10.5 OshKosh B'Gosh, Inc. Restated Excess Benefit Plan as amended,
previously filed as Exhibit 10.5 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1992, Commission File
Number 0-13365, is incorporated herein by reference.
*10.6 OshKosh B'Gosh, Inc. Executive Deferred Compensation Plan as amended,
previously filed as Exhibit 10.6 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1992, Commission File
Number 0-13365, is incorporated herein by reference.
*10.7 OshKosh B'Gosh, Inc. Officers Medical and Dental Reimbursement Plan, as
amended.
10.8 Lease Agreement between OshKosh B'Gosh, Inc. and City of Oshkosh,
Wisconsin, dated as of March 1, 1975, previously filed as Exhibit 10.13
to the Registrant's Registration Statement No. 2-96586 on Form S-1, is
incorporated herein by reference.
*Represents a plan that covers compensation, benefits and/or related
arrangements for executive management.
35
10.9 Acknowledgement and Guaranty Agreement between City of Liberty, Casey
County, Kentucky and OshKosh B'Gosh, Inc., dated October 4, 1984, and
related Contract of Lease and Rent dated as of November 26, 1968,
previously filed as Exhibit 10.14 to the Registrant's Registration
Statement No. 2-96586 on Form S-1, is incorporated herein by reference.
10.10 Loan Agreement between OshKosh B'Gosh, Inc. and City of Oshkosh,
Wisconsin, dated as of October 1, 1985, previously filed as Exhibit
10.15 to the Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1985, Commission File Number 0-13365, is
incorporated herein by reference.
10.11 Indemnity Agreement between OshKosh B'Gosh, Inc. and William P.
Jacobsen (Vice President and Treasurer of OshKosh B'Gosh, Inc.) dated
as of June 8, 1987, previously filed as Exhibit 10.16 to the
Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1987, Commission File Number 0-13365, is incorporated
herein by reference. (Note: Identical agreements have been entered
into by the Company with each of the following officers: Charles F.
Hyde, Thomas R. Wyman, John F. Beckman, Anthony S. Giordano, Douglas W.
Hyde, Michael D. Wachtel, and Kenneth H. Masters).
*10.12 Employment agreement dated December 14, 1989 and effective February 1,
1990, between OshKosh B'Gosh, Inc. and Harry M. Krogh, previously filed
as Exhibit 10.17 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1989, Commission File Number 0-13365, is
incorporated herein by reference.
*10.13 OshKosh B'Gosh, Inc. Executive Non-Qualified Profit Sharing Plan
effective as of January 1, 1989, previously filed as Exhibit 10.18 to
the Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1990, Commission File Number 0-13365, is incorporated
herein by reference.
10.14 Employment agreement dated and effective May 1, 1994, by and among
OshKosh B'Gosh, Inc., Essex Outfitters, Inc. and Barbara Widder-Lowry.
10.15 Employment agreement dated and effective May 1, 1994 by and among
OshKosh B'Gosh, Inc., Essex Outfitters, Inc. and Paul A. Lowry.
10.16 Credit agreement between Oshkosh B'Gosh, Inc. and Firstar Bank
Milwaukee, N.A. and participating banks as amended, dated as of June
24, 1994.
*10.17 OshKosh B'Gosh, Inc. 1994 Incentive Stock Plan.
10.18 OshKosh B'Gosh, Inc. 1995 Outside Directors' Stock Option Plan.
*Represents a plan that covers compensation, benefits and/or related
arrangements for executive management.
36
21. The following is a list of the subsidiaries of the Company as of
December 31, 1994. The consolidated financial statements reflect the
operations of all subsidiaries as they existed on December 31, 1994.
State or Other
Jurisdiction of
Name of Incorporation or
Subsidiary Organization
Term Co. (formerly Absorba, Inc.) Delaware
Grove Industries, Inc. Delaware
Manufacturera International Apparel, S.A. Honduras
OshKosh B'Gosh Europe, S.A. France
OshKosh B'Gosh International Sales, Inc. Virgin Islands
OshKosh B'Gosh Asia/Pacific Ltd. Hong Kong
OshKosh B'Gosh U.K. Ltd. United Kingdom
OshKosh B'Gosh Deutschland GmbH Germany
27. Financial Data Schedule
37
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
OSHKOSH B'GOSH, INC.
By: /s/ DOUGLAS W. HYDE
Chairman of the Board, President and Chief Executive Officer
By: /s/ DAVID L. OMACHINSKI
Vice President, Treasurer and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title
/S/ DOUGLAS W. HYDE Chairman of the Board, President,
Chief Executive Officer and Director
/S/ MICHAEL D. WACHTEL Executive Vice President,
Chief Operating Officer and Director
/S/ DAVID L. OMACHINSKI Vice President, Treasurer, Chief
Financial Officer and Director
/S/ STEVEN R. DUBACK Secretary and Director
/S/ THOMAS R. WYMAN Director
38
<PAGE>
OSHKOSH B'GOSH, INC. AND SUBSIDIARIES
Schedule II
Valuation and Qualifying Accounts
(Dollars in Thousands)
Years Ended December 31,
1994 1993 1992
Accounts Receivable - Allowances:
Balance at Beginning of Period $ 3,310 $2,265 $2,335
Charged to Costs and Expenses 6,508 5,979 4,500
Deductions - Bad Debts Written off,
Net of Recoveries and Other
Allowances (6,118) (4,934) (4,570)
Balance at End of Period $ 3,700 $3,310 $2,265
Years Ended December 31,
1994 1993 1992
Restructuring Costs - Allowances:
Balance at Beginning of Period $ 8,186 $ 422 $ 5,600
Charged to Cost and Expenses - 10,836 (2,800)
Actual Restructuring Costs Incurred (5,805) (3,072) (2,378)
Balance at End of Period $ 2,381 $ 8,186 $ 422
39
<PAGE>
EXHIBIT 3.2
BYLAWS
OF
OSHKOSH B'GOSH, INC.
APPROVALS/AMENDMENTS
11/04/85 First Approval of Amended and Restated Bylaws
02/03/86 Final Approval of Amended and Restated Bylaws
05/08/87 New Section 49 Adopted - (Indemnification)
02/01/88 Amended Section 11 - (Increase in Number of Directors)
02/01/90 Repealed old Sections 23-34 and created new Sections 23.01-23.16
08/03/90 Amended Section 41 [formerly Section 30]
05/03/91 Amended Section 15 to create Sections 15.01 - 15.06
07/01/91 Amended Sections 23.01, 23.05, 23.07 and 23.09
05/01/92 Amended Sections 23.05, 23.07, 23.08 and 23.10
02/20/95 Amended Section 15.03
40
<PAGE>
BYLAWS
OF
OSHKOSH B'GOSH, INC.
STATED TO INCLUDE ALL AMENDMENTS
ADOPTED THROUGH FEBRUARY 20, 1995
QB1\225399.1
<PAGE>
TABLE OF CONTENTS
Page
OFFICES 1
SEAL 1
STOCKHOLDERS' MEETING 1
Place of Meeting 1
Annual Meeting 1
Notice of Annual Meeting 1
Quorum 2
Voting of Shares 2
Special Meetings 2
Notice of Special Meeting 3
DIRECTORS 3
General Powers 3
Number 3
Office 3
Vacancies 3
Removal 4
COMMITTEES 4
Executive Committee 4
Audit Committee 4
Nominating Committee 5
Retirement Plan Committee 6
Compensation Committee 6
Other Committees 6
COMPENSATION OF DIRECTORS 6
MEETINGS OF DIRECTORS 7
Annual Meeting 7
Regular Meetings 7
Special Meetings 7
Quorum 7
Action By Written Consent of Directors 8
Participation By Conference Telephone 8
OFFICERS 8
Number 8
Election and Term of Office 8
Removal 8
Vacancies 9
Chairman of the Board 9
Vice-Chairman of the Board 9
President 9
Executive Vice President 9
The Vice Presidents 10
Shared Functions 10
The Secretary 10
The Treasurer 10
Assistant Secretaries and Assistant Treasurers 11
Other Assistants and Acting Officers 11
Additional Officers 11
Salaries 11
CERTIFICATES OF STOCK AND THEIR TRANSFER 11
Certificates 11
Facsimile Signatures 12
Transfers of Stock 12
CLOSING OF TRANSFER BOOKS 12
In General 12
List of Stockholders Available for Inspection 13
REGISTERED STOCKHOLDERS 13
LOST CERTIFICATES 13
CHECKS 14
FISCAL YEAR 14
DIVIDENDS 14
DIRECTORS' ANNUAL STATEMENT 14
NOTICES 14
Notice 14
Waiver of Notice 15
AMENDMENTS 15
INDEMNIFICATION OF OFFICERS AND DIRECTORS 15
Mandatory Indemnification 15
Right to Indemnification: How Determined 18
Termination of an Action is Nonconclusive 21
Advance Payment 21
Partial Indemnification: Interest 21
Nonexclusivity of Section 49 22
Insurance 23
Witness Expenses 23
Contribution 23
Severability 24
Amendment 24
<PAGE>
BYLAWS
OF
OSHKOSH B'GOSH, INC.
OFFICES
1. The registered office shall be in the City of Wilmington,
County of New Castle, State of Delaware, and the name of the resident agent in
charge thereof is the Corporation Trust Company.
The corporation may also have an office in the City of Oshkosh,
State of Wisconsin, and also offices at such other places as the Board of
Directors may from time to time appoint or the business of the corporation may
require.
SEAL
2. The corporate seal shall have inscribed thereon the name of
the corporation, the year of its organization and the words "Corporate Seal,
Delaware." Said seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
STOCKHOLDERS' MEETINGS
3. Place of Meeting. All meetings of the stockholders for the
election of directors shall be held at such place either within or without the
State of Delaware as shall be designated from time to time by the board of
directors and stated in the notice of the meeting. Meetings of shareholders
for any other purpose may be held at such time and place, within or without
the State of Delaware, as shall be stated in the notice of the meeting or in
duly executed waiver of notice thereof.
4. Annual Meeting. Annual meetings of stockholders shall be
held on the first Friday of May if not a legal holiday, and if a legal
holiday, then on the next business day following, at 2:00 p.m., local time, or
at such other date and time as shall be designated from time to time by the
Board of Directors and stated in the notice of the meeting, at which the
stockholders shall elect a Board of Directors, and transact such other
business as may properly be brought before the meeting.
5. Notice of Annual Meeting. Written notice stating the date,
place and hour of the annual meeting shall be mailed to each stockholder
entitled to vote thereat at such address as appears on the records of the
corporation, at least fifteen days prior to the meeting.
6. Quorum. The holders of a majority of the shares of stock
issued and outstanding and entitled to vote at a meeting of stockholders on a
particular matter, present in person or represented by proxy, shall constitute
<PAGE>
a quorum for the decision with respect to such matter except as otherwise
provided by statute or by the certificate of incorporation. If, however, such
quorum shall not be present or represented at any meeting of the stockholders,
the stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present
or represented. At such adjourned meeting at which a quorum shall be present
or represented, any business may be transacted which might have been
transacted at the meeting as originally notified. If the adjournment is for
more than thirty days, or if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
7. Voting of Shares. At every meeting of the stockholders,
each stockholder having the right to vote on a particular matter shall be
entitled to vote on such matter in person, or by proxy, appointed by an
instrument in writing subscribed by such stockholder and bearing a date not
more than three years prior to said meeting, unless such proxy provides for a
longer period. Each stockholder shall have one vote on a particular matter
for each share of stock having voting power with respect to such matter,
registered in his or her name on the books of the corporation, except that no
share of stock shall be voted at any election for directors which has been
transferred on the books of the corporation within twenty days next preceding
such election. The vote for directors, and, upon the demand of any
stockholder, the vote upon any question before the meeting, shall be by
ballot. When a quorum of stockholders entitled to vote on a particular matter
brought before any meeting is present at such meeting, the vote of the holders
of a majority of the shares of stock having voting power with respect to such
matter, present in person or represented by proxy, shall decide such matter,
unless the matter is one upon which by express provision of the statutes or of
the certificate of incorporation, a different vote is required in which case
such express provision shall govern and control the decision of such matter.
8. Special Meetings. Special meetings of the stockholders, for
any purpose or purposes, unless otherwise prescribed by statute or by the
Certificate of Incorporation, may be called by the president and shall be
called by the president or secretary at the request in writing of a majority
of the Board of Directors, or at the request in writing of stockholders owning
a majority in amount of the entire capital stock of the corporation issued and
outstanding and entitled to vote. Such request shall state the purpose or
purposes of the proposed meeting.
9. Notice of Special Meetings. Written notice stating the time
and place of a special meeting of stockholders, and the purpose or purposes
for which the meeting is called, shall be mailed, postage prepaid, at least
ten (10) but not more than sixty (60) days before the date of such meeting, to
each stockholder entitled to vote thereat at such address as appears on the
records of the corporation. Business transacted at any special meeting of
stockholders shall be confined to the purposes stated in the notice.
DIRECTORS
10. General Powers. The business of the corporation shall be
managed by or under the direction of its Board of Directors which may exercise
all such powers of the corporation and do all such lawful acts and things as
are not by statute or by the certificate of incorporation or by these bylaws
directed or required to be exercised or done by the stockholders or by others.
11. Number. The number of directors which shall constitute the
whole board shall be nine (9). The directors shall be elected at the annual
meeting of the stockholders, except as provided in Section 13 of these Bylaws,
and each director elected shall hold office until his or her successor is
elected and qualified. The number of directors may be increased or decreased
from time to time by amendment to this Section, adopted by the stockholders or
Board of Directors, but no decrease shall have the effect of shortening the
term of an incumbent director.
12. Office. The directors may hold their meetings and have one
or more offices outside of Delaware, at the office of the corporation in the
City of Oshkosh, Wisconsin, or at such other places as they may from time to
time determine.
13. Vacancies. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be
filled by a majority of the directors then in office, though less than a
quorum, or by a sole remaining director, and the directors so chosen shall
hold office until the next annual election and until their successors are duly
elected and shall qualify, unless sooner displaced. If there are no directors
in office, then an election of directors may be held in the manner provided by
statute. If, at the time of filling any vacancy or any newly created
directorship, the directors then in office shall constitute less than a
majority of the whole board (as constituted immediately prior to any such
increase), the Court of Chancery may, upon application of any stockholder or
stockholders holding at least ten percent of the total number of the shares at
the time outstanding having the right to vote for such directors, summarily
order an election to be held to fill any such vacancies or newly created
directorships, or to replace the directors chosen by the directors then in
office.
14. Removal. Unless otherwise restricted by the certificate of
incorporation or by law, any director or the entire Board of Directors may be
removed, with or without cause, by the holders of a majority of shares
entitled to vote at an election of directors. The provisions of this Section
14 shall apply, in respect to the removal without cause of a director or
directors elected by the holders of any class of stock voting as a separate
class, to the vote of the holders of the outstanding shares of that class and
not to the vote of the outstanding shares as a whole.
COMMITTEES
15.01 Executive Committee. The Board of Directors, by resolution
passed by a majority of the whole board, shall elect the Executive Committee,
composed of five (5) or more members, all of whom shall be directors of the
corporation. The board may designate one or more directors as alternate
members, who may replace any absent or disqualified member at any meeting of
the committee. In the absence or disqualification of a member of a committee,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absent or disqualified member. The Executive Committee shall have
and may exercise all powers and authority of the Board of Directors in the
management of the business and affairs of the corporation, and may authorize
the seal of the corporation, if any, to be affixed to all papers which may
require it, except that the Executive Committee shall not have the power or
authority in reference to amending the certificate of incorporation, adopting
an agreement of merger or consolidation, recommending to the shareholders the
sale, lease or exchange of all or substantially all of the corporation's
property and assets, recommending to the stockholders a dissolution of the
corporation or a revocation of a dissolution, or amending the by-laws of the
corporation; and, unless a resolution of the Board of Directors adopted within
the preceding 12 months shall expressly so provide, the Executive Committee
shall not have the power or authority to declare a dividend or to authorize
the issuance of stock.
15.02 Audit Committee. The Board of Directors, by resolution
passed by a majority of the whole board, shall elect the Audit Committee,
composed of three (3) members, all of whom shall be directors, and at least
two (2) of whom shall be persons who are not officers or employees of the
corporation and who are free of any relationship that, in the opinion of the
Board of Directors, would interfere with the exercise of their independent
judgment as members of the Audit Committee. A majority of the members of the
Audit Committee shall constitute a quorum for the transaction of all business
of the committee. The Audit Committee shall provide assistance to the
directors in fulfilling their responsibilities relating to corporate
accounting, reporting practices of the corporation, and the quality and
integrity of the financial reports of the corporation. In assisting the
directors in carrying out these responsibilities, the Audit Committee shall
have the following powers, duties and functions:
(a) To review the corporation's accounting
functions, operations and management;
(b) To consider and review the adequacy and
effectiveness of the corporation's internal controls,
record keeping and internal auditing methods and
procedures;
(c) To consider and recommend to the board of
directors for appointment independent auditors for the
corporation;
(d) To meet and consult with the independent
auditors and with the corporation's financial and
accounting personnel and internal auditors;
(e) To review and approve the scope of the
annual independent audit and the budget for
independent audit fees;
(f) To review with the independent auditors
their report of the audit; and
(g) To report, from time to time, to the board
of directors on the activities and findings of the
Audit Committee and to make recommendations to the
board based on such findings.
15.03 Nominating Committee. The Board of Directors, by
resolution passed by a majority of the whole board, shall elect the Nominating
Committee, composed of at least five (5) members, all of whom shall be
directors and at least two (2) of whom shall be persons who are not officers
or employees of the corporation. A majority of the members of the Nominating
Committee shall constitute a quorum for the transaction of all business of the
committee. The Nominating Committee shall have the following powers, duties
and functions:
(a) To seek out and consider individuals to
serve as directors of the corporation;
(b) To make recommendations to the Board of
Directors regarding the total size and frequency of
meetings of the Board of Directors;
(c) To recommend to the Board of Directors
candidates for election to the board and to fill any
vacancies that occur between annual meetings; and
(d) To make recommendations to the Board of
Directors regarding compensation of board members for
serving on the board and for board and committee
meetings attended.
15.04 Retirement Plan Committee. The Board of Directors, by
resolution passed by a majority of the whole board, shall elect the Retirement
Plan Committee, composed of at least three (3) members, all of whom shall be
directors of the corporation. A majority of the members of the Retirement
Plan Committee shall constitute a quorum for the transaction of all business
of the committee. The Retirement Plan Committee shall have general oversight
responsibilities with respect to (a) the administration of all employee
welfare benefit plans and all employee pension and profit sharing retirement
benefit plans of this Corporation (the "Welfare and Pension Plans"), and (b)
the investment management of all funded Welfare and Pension Plans.
15.05 Compensation Committee. The Board of Directors, by
resolution passed by a majority of the whole board, shall elect the
Compensation Committee, composed of at least three (3) members, all of whom
shall be directors and at least a majority of whom shall be persons who are
not employees of the corporation. A majority of the members of the
Compensation Committee shall constitute a quorum for the transaction of all
business of the committee. The Compensation Committee shall make recommenda-
tions to the Board of Directors concerning the compensation of officers and
corporate department directors.
15.06 Other Committees. The Board of Directors, by resolution
passed by a majority of the whole board, may designate other committees, each
committee to consist of three (3) or more directors of the corporation and to
have such duties and powers as the resolution may specify.
COMPENSATION OF DIRECTORS
16. Unless otherwise restricted by the certificate of
incorporation or these bylaws, the Board of Directors shall have the authority
to fix the compensation of directors. The directors may be paid their
expenses, if any, of attendance at each meeting of the Board of Directors and
may be paid a fixed sum for attendance at each meeting of the Board of
Directors or a stated salary as director. No such payment shall preclude any
director from serving the corporation in any other capacity and receiving
compensation therefor. Members of special or standing committees may be
allowed like compensation for attending committee meetings.
MEETINGS OF DIRECTORS
17. Annual Meeting. The first meeting of each newly elected
Board of Directors shall be held at such time and place as shall be fixed by
the vote of the stockholders at the annual meeting and no notice of such
meeting shall be necessary to the newly elected directors in order legally to
constitute the meeting, provided a quorum shall be present. In the event of
the failure of the stockholders to fix the time or place of such first meeting
of the newly elected Board of Directors, or in the event such meeting is not
held at the time and place so fixed by the stockholders, the meeting may be
held at such time and place as shall be specified in a notice given as
hereinafter provided for special meetings of the Board of Directors, or as
shall be specified in a written waiver signed by all of the directors.
18. Regular Meetings. Regular meetings of the Board of
Directors may be held within or without the State of Delaware, without notice,
at such time and place as shall from time to time be determined by the board.
19. Special Meetings. Special meetings of the board may be
held within or without the State of Delaware and may be called by the president
on forty-eight (48) hours notice to each director, either personally or by mail
or by telegram; special meetings shall be called by the president or secretary
in like manner and on like notice on the written request of two directors.
20. Quorum. At all meetings of the board, a majority of the
number of the directors elected in accordance with these bylaws shall be
necessary and sufficient to constitute a quorum for the transaction of
business at such meeting, and the act of a majority of the directors present
at any meeting at which there is a quorum shall be the act of the Board of
Directors, except as may be otherwise specifically provided by statute or by
the certificate or incorporation or by these bylaws. If a quorum shall not be
present at any meeting of the Board, the directors present thereat may adjourn
the meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
21. Action By Written Consent of Directors. Unless otherwise
restricted by the certificate of incorporation or these bylaws, any action
required or permitted to be taken at any meeting of the Board of Directors, or
of any committee thereof, may be taken without a meeting if all members of the
board or committee, as the case may be, consent thereto in writing, and the
writings are filed with the minutes of proceedings of the board or committee.
22. Participation By Conference Telephone. Unless otherwise
restricted by the certificate of incorporation or these bylaws, members of the
Board of Directors, or any committee designated by the Board of Directors, may
participate in a meeting of the Board of Directors, or any committee, by means
of conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and such
participation in a meeting shall constitute presence in person at the meeting.
OFFICERS
23.01 Number. The principal officers of the corporation shall
be a Chairman of the Board, a Vice-Chairman of the Board, a President, an
Executive Vice President, one or more other Vice Presidents (the number
thereof to be determined by the Board of Directors), a Secretary and a
Treasurer, each of whom shall be elected by the Board of Directors. The Board
of Directors may designate one or more of the Vice Presidents as Senior Vice
Presidents. Such other officers and assistant officers and agents as may be
deemed necessary may be elected or appointed by the Board of Directors. Any
two or more offices may be held by the same person unless the certificate of
incorporation or these Bylaws otherwise provide.
23.02 Election and Term of Office. The officers of the
corporation to be elected by the Board of Directors shall be elected annually
at the first meeting of the Board of Directors held after each annual meeting
of the shareholders. If the election of officers shall not be held at such
meeting, such election shall be held as soon thereafter as conveniently may
be. Each officer shall hold office until his successor shall have been duly
elected or until his prior death, resignation or removal.
23.03 Removal. Any officer or agent may be removed by the
Board of Directors whenever in its judgment the best interests of the
corporation will be served thereby, but such removal shall be without prejudice
to the contract rights, if any, of the person so removed. Election or appoint-
ment shall not of itself create contract rights.
23.04 Vacancies. A vacancy in any principal office because
of death, resignation, removal, disqualification or otherwise, shall be filled
by the Board of Directors for the unexpired portion of the term.
23.05 Chairman of the Board. The Chairman of the Board shall
call meetings of the Board of Directors, and he shall, when present, preside
at all meetings of the shareholders and of the Board of Directors.
Specifically, he shall have the power to supervise the activities of and to
prescribe the powers and duties of the Vice Chairman of the Board, he shall be
responsible for providing high-level support to the President and the
Executive Vice President as and when requested, and he shall perform such
other duties as may be prescribed by the Board of Directors from time to time.
23.06 Vice-Chairman of the Board. The Vice-Chairman of the
Board shall preside at all meetings of the Board of Directors when the Chairman
of the Board is absent. In addition he shall be responsible for providing high-
level support for special projects and activities, he shall represent the
corporation in various civic and trade organizations, and shall perform such
other duties as may from time to time be assigned to him by the Chairman of
the Board and the Board of Directors.
23.07 President. The President shall be the chief executive
officer of the corporation and subject to the control and direction of the
Board of Directors, shall have general direction and control over the policies
and affairs of the corporation. Specifically, he shall have the power to
supervise the activities of and to prescribe the powers and duties of the
Executive Vice President (except as the Executive Vice President's powers and
duties are hereinafter specifically defined), the Vice President of Finance,
the Vice President of International Sales and Marketing, the Director of
Licensed Products, the Director of Retail Operations, the Director of
Corporate Marketing and Planning, the President of Essex Outfitters, Inc. and
Vice President and General Manager of Absorba, Inc. He shall report to the
Board and keep the Board informed concerning the affairs and conditions of the
corporation's business. He shall, in the absence or incapacity of the
Chairman of the Board, perform the functions of the Chairman of the Board
except those functions assigned to the Vice Chairman of the Board by these
Bylaws.
23.08 Executive Vice President. The Executive Vice President
shall be the chief operating officer of the corporation. He shall report
directly to the President. Specifically, he shall have the power to supervise
the activities and to prescribe the powers and duties of the Vice President of
Manufacturing, the Vice President of Sales, the Vice President of Human
Resources, the Vice President of Management Information Systems, and the
Directors of Distribution and Finishing Services, Manufacturing Support,
Quality, and Merchandising. He shall be primarily responsible for achieving
the short-term and operational objectives of the corporation. He shall also
perform such other duties as from time to time may be assigned to him by the
President or by the Board of Directors. He shall, in the absence or
incapacity of the President, perform all duties and functions and exercise all
powers of the President.
23.09 The Vice Presidents. Each Vice President shall perform
such duties as from time to time may be assigned to him by that officer who
has supervisory power over him. Vice Presidents may by their election have
charge and supervision of designated divisions, departments or portions of the
corporation's business.
23.10 Shared Functions. Except in cases where the signing and
execution thereof is expressly delegated by the Board of Directors or these
Bylaws to some other officer or agent of the corporation, or is required by
law to be otherwise signed or executed, the President and the Executive Vice
President shall each have authority to sign, execute and acknowledge, on
behalf of the corporation, all deeds, mortgages, bonds, stock certificates,
contracts, leases, reports and all other documents or instruments necessary or
proper to be executed in the course of the corporation's regular business, or
which shall be authorized by resolution of the Board of Directors; and, except
as otherwise provided by law or the Board of Directors, each of them acting
alone may authorize any Vice President or other officer or agent of the
corporation to sign, execute and acknowledge such documents or instruments in
his place and stead.
23.11 The Secretary. The Secretary shall: (a) keep the minutes
of the shareholders' and of the Board of Directors' meetings in one or more
books provided for that purpose; (b) see that all notices are duly given in
accordance with the provisions of these Bylaws or as required by law; (c) be
custodian of the corporate records and of the seal of the corporation and see
that the seal of the corporation is affixed to all documents, the execution of
which on behalf of the corporation under its seal is duly authorized; (d) sign
with another appropriate officer, certificates for shares of the corporation,
the issuance of which shall have been authorized by resolution of the Board of
Directors; and (e) in general perform all duties incident to the office of the
Secretary and such other duties as from time to time may be assigned to him by
the Chairman of the Board, the President or the Board of Directors.
23.12 The Treasurer. The Treasurer shall: (a) have charge and
custody of and be responsible for funds and securities of the corporation; (b)
receive and give receipts for monies due and payable to the corporation, and
deposit such monies in the name of the corporation in such banks, trust
companies or other depositories as shall have been duly selected; and (c) in
general perform all of the duties incident to the office of Treasurer. The
Treasurer shall also perform such other duties and exercise such other
authority as from time to time may be assigned to him by the Chairman of the
Board or the President or by the Board of Directors. If required by the Board
of Directors, the Treasurer shall give a bond for the faithful discharge of
his duties in such sum and with such surety or sureties as the Board of
Directors shall determine.
23.13 Assistant Secretaries and Assistant Treasurers. The
Assistant Secretaries, when authorized by the Board of Directors, may sign
with another appropriate officer, certificates for shares of the corporation
the issuance of which shall have been authorized by resolution of the Board of
Directors. The Assistant Treasurers shall, respectively, if required by the
Board of Directors, give bonds for the faithful discharge of their duties in
such sums and with such sureties as the Board of Directors shall determine.
The Assistant Secretaries and Assistant Treasurers, in general, shall perform
such duties as shall be assigned to them by the Secretary or the Treasurer,
respectively, or by the Chairman of the Board, the President or the Board of
Directors.
23.14 Other Assistants and Acting Officers. The Board of
Directors shall have the power to appoint any person to act as assistant to
any officer, or to perform the duties of such officer whenever for any reason
it is impracticable for such officer to act personally, and such assistant or
acting officer so appointed by the Board of Directors shall have the power to
perform all the duties of the office to which he is so appointed to be
assistant, or as to which he is so appointed to act, except as such power may
be otherwise defined or restricted by the Board of Directors.
23.15 Additional Officers. Any additional officers not specified
above shall have only such authority, duties and responsibilities as shall be
specifically authorized and designated by the Board of Directors.
23.16 Salaries. The salaries of the principal officers shall be
fixed from time to time by the Board of Directors or by a committee of the
Board of Directors and no officer shall be prevented from receiving such
salary by reason of the fact that he is also a director of the corporation.
[Sections 24-34 are intentionally omitted.]
CERTIFICATES OF STOCK AND THEIR TRANSFER
35. Certificates. Every holder of stock in the corporation
shall be entitled to have a certificate, signed by, or in the name of the
corporation by, the chairman or vice-chairman of the Board of Directors, or
the president or a vice-president and the treasurer or an assistant treasurer,
or the secretary or an assistant secretary of the corporation, representing
the number of shares owned by him or her in the corporation. The powers,
designations, preferences and relative, participating, optional or other
special rights of the various classes of stock or series thereof and the
qualifications, limitations or restrictions of such rights shall be set forth
in full or summarized on the face or back of the certificates which the
corporation shall issue to represent such stock, provided that, except as
otherwise provided by statute, in lieu of the foregoing requirements, there
may be set forth on the face or back of the certificate which the Corporation
shall issue to represent such class or series of stock, a statement that the
corporation will furnish without charge to each stockholder who so requests,
the power, designations, preferences and relative, participating, optional or
other special rights of each class of stock or series thereof and the
qualifications, limitations or restrictions on such preferences and/or rights.
36. Facsimile Signatures. Any of or all the signatures on the
certificate may be facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the corporation with
the same effect as if he or she were such officer, transfer agent or registrar
at the date of issue.
37. Transfers of Stock. Upon surrender to the corporation or
the transfer agent of the corporation of a certificate for shares duly
endorsed or accompanied by proper evidence of succession, assignation or
authority to transfer, it shall be the duty of the corporation to issue a new
certificate to the person entitled thereto, cancel the old certificate and
record the transaction upon its books.
CLOSING OF TRANSFER BOOKS
38. In General. The Board of Directors shall have power to
close the stock transfer books of the corporation for a period not exceeding
sixty days preceding the date of any meeting of stockholders, or adjournment
thereof, or to express consent to corporate action in writing without a
meeting, or the date for payment of any dividend or the date for the allotment
of rights or the date when any change or conversion or exchange of capital
stock shall go into effect; provided, however, that in lieu of closing the
stock transfer books as aforesaid, the Board of Directors may fix in advance a
date, not exceeding sixty days preceding the date of any meeting or
adjournment or action by consent of stockholders or the date for the payment
of any dividend, or the date for the allotment of rights, or the date when any
change or conversion or exchange of capital stock shall go into effect, as a
record date for the determination of the stockholders entitled to notice of,
and to vote at, any such meeting, or entitled to receive payment of any such
dividend, or to any such allotment of rights, or to exercise the rights in
respect of any such change, conversion or exchange of capital stock, and in
such case only such stockholders as shall be stockholders of record on the
date so fixed shall be entitled to such notice of, and to vote at, such
meeting, or to receive payment of such dividend, or to receive such allotment
of rights, or to exercise such rights, as the case may be, notwithstanding any
transfer of any stock on the books of the corporation after any such record
date fixed as aforesaid.
39. List of Stockholders Available for Inspection. The officer
who has charge of the stock ledger of the corporation shall prepare and make,
at least ten days before every meeting of stockholders, a complete list of the
stockholders entitled to vote at the meeting, arranged in alphabetical order,
and showing the address of each stockholder and the number of shares regis-
tered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during the whole
time thereof, and may be inspected by any stockholder who is present.
REGISTERED STOCKHOLDERS
40. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
LOST CERTIFICATES
41. The corporation, acting by its President or any Senior Vice
President or its Vice President of Finance may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing
such issue of a new certificate or certificates, the corporation, acting by
its President or any Senior Vice President or its Vice President of Finance
may, as a condition precedent to the issuance thereof, require the owner of
such lost, stolen or destroyed certificate or certificates, or his legal
representative, to advertise the same in such manner as the corporation shall
require and/or to give the corporation a bond in such sum as the corporation
may direct as indemnity against any claim that may be made against the
corporation with respect to the certificate alleged to have been lost, stolen
or destroyed.
CHECKS
42. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the Board of Directors may from time to time designate.
FISCAL YEAR
43. The fiscal year shall begin the first day of January in each
year.
DIVIDENDS
44. Dividends upon the capital stock of the corporation, subject
to the provisions of the certificate of incorporation, if any, may be declared
by the Board of Directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock.
Before payment of any dividend, there may be set aside out of
funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interests of the
corporation; and the directors may modify or abolish any such reserve in the
manner in which it was created.
DIRECTORS' ANNUAL STATEMENT
45. The Board of Directors shall present at each annual meeting,
and at any special meeting of the stockholders when called for by vote of the
stockholders, a full and clear statement of the business and condition of the
corporation.
NOTICES
46. Notice. Whenever, under the provisions of the Delaware
Statutes or of the certificate of incorporation or these bylaws, notice is
required to be given to any director, officer or stockholder, it shall not be
construed to mean personal notice, but such notice may be given in writing, by
mail, by depositing the same in the United States mail with postage prepaid
thereon, addressed to such stockholder, officer or director at such address as
appears on the records of the corporation, or in default of other address, to
such director, officer or stockholder at the General Post Office in the City
of Wilmington, Delaware, and such notice shall be deemed to be given at the
time when the same shall be thus mailed. Notice to directors may also be
given by telegram.
47. Waiver of Notice. Whenever any notice is required to be
given under the provisions of the statutes or of the certificate of
incorporation or of these bylaws, a waiver thereof in writing, signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto.
AMENDMENTS
48. These by-laws may be altered, amended or repealed or new by-
laws may be adopted by the shareholders or by the Board of Directors, when
such power is conferred upon the Board of Directors by the certificate of
incorporation at any regular meeting of the shareholders or of the Board of
Directors or at any special meeting of the shareholders or of the Board of
Directors if notice of such alteration, amendment, repeal or adoption of new
by-laws be contained in the notice of such special meeting. If the power to
adopt, amend or repeal by-laws is conferred upon the Board of Directors by the
certificate of incorporation it shall not divest or limit the power of the
shareholders to adopt, amend or repeal by-laws.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
49. Mandatory Indemnification
(1) Subject to the conditions and limitations set forth
hereinafter in this Section 49 and the corporation's certificate of
incorporation, the corporation shall, to the fullest extent permitted by the
Delaware General Corporation Law as it may then be in effect, indemnify and
hold harmless any person who is or was a party, or is threatened to be made a
party, to any threatened, pending or completed action, claim, litigation, suit
or proceeding, whether civil, criminal, administrative or investigative,
whether predicated on foreign, federal, state or local law and whether formal
or informal (collectively, "action(s)"), by reason of his status as, or the
fact that he is, was or has agreed to become, a director and/or an executive
officer (collectively, "executive(s)") of the corporation, and/or is or was
serving or has agreed to serve as an executive of another corporation,
partnership, joint venture, employee benefit plan, trust or other similar
enterprise affiliated with the corporation, except with respect to any
executive who is serving or has agreed to serve as an executive of any
subsidiary of the corporation which is excluded from this Section 49 from time
to time or at any time by the board of directors of the corporation (any
and/or all of which are referred to in this Section 49 as an "affiliate"), and
as to acts performed in the course of such executive's duty to the corporation
and/or to an affiliate, against:
(i) expenses, fees, costs and charges including, without
limitation, attorneys' fees and disbursements (collectively, "expenses")
reasonably incurred by or on behalf of an executive in connection with
any action (including, without limitation, in connection with the
investigation, defense, settlement or appeal of such action:), no matter
by whom brought, including, without limitation, actions brought under
and/or predicated upon the Securities Act of 1933, as amended, and/or
the Securities Exchange Act of 1934, as amended, and/or their respective
state counterparts and/or any rule or regulation promulgated thereunder
(collectively, "securities law action(s)"); provided, that it is not
determined pursuant to Paragraph B of this Section 49, or by the court
before which such action was brought, that:
(A) the executive engaged in criminal, fraudulent or
intentional misconduct in the performance of his duty to the
corporation,
(B) with respect to criminal actions, the executive had
reasonable cause to believe his conduct was unlawful, and
(C) with respect to securities law action, the executive
did not act in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of
the corporation and its stockholders;
(ii) subject to the restrictions set forth in Subparagraph (3)
hereof, amounts incurred by an executive in settlement of any action, no
matter by whom brought, including, without limitation, securities law
actions; provided, that it is not determined pursuant to Paragraph B of
this Section 49, or by the court before which such action was brought,
that:
(A) such settlement was not in the best interests of the
corporation and its stockholders,
(B) the amount incurred by the executive in such
settlement was unreasonable (to a material extent) in
light of all of the circumstances of such action, or
intentional misconduct in the performance of his duty to
the corporation, and
(C) the executive engaged in criminal, fraudulent or
intentional misconduct in the performance of his duty to
the corporation, and
(D) with respect to securities law action, the executive
did not act in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of
the corporation and its stockholders; and
(iii) subject to the restrictions set forth in Subparagraph (3)
hereof, judgments, fines, penalties or other amounts incurred by an
executive pursuant to an adjudication of liability in connection with
any action, including, without limitation, securities law action;
provided, that it is not determined pursuant to Paragraph B of this
Section 49, or by the court before which such action was brought, that:
(A) the executive engaged in criminal, a fraudulent or
intentional misconduct in the performance of his duty to
the corporation,
(B) with respect to securities law actions, the executive
did not act in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of
the corporation and its stockholders, and
(C) with respect to criminal actions, the executive had
reasonable cause to believe his conduct was unlawful and
that he otherwise did not act in good faith and in a
manner he reasonably believed to be in or not opposed to
the best interests of the corporation and its stockholders
(2) To the extent an executive of the corporation and/or of an
affiliate has been successful on the merits or otherwise in connection with
any action, no matter by whom brought (including, without limitation, the
settlement, dismissal, abandonment or withdrawal of any such action where the
executive does not pay, incur or assume any material liability) or in
connection with any claim, issue or matter therein, he shall be indemnified by
the corporation against expenses reasonably incurred by or on behalf of him in
connection therewith. The corporation shall pay such amounts (net of all
amounts, if any, previously advanced to the executive pursuant to Paragraph D)
to the executive (or to such other person or entity as such executive may
designate in writing to the corporation) upon the executive's written request
therefor without regard to the provisions of Paragraph B.
(3) Notwithstanding the provisions of Subparagraph (1) hereof,
no indemnification shall be made to an executive by the corporation for
monetary damages incurred by the executive pursuant to an action brought by or
in the right of the corporation to procure a judgment in its favor (sometimes
hereinafter referred to as "derivative action(s)") or an action brought by a
stockholder of the corporation if it is determined pursuant to Paragraph B of
this Section 49, or by the court before which such action was brought, that:
(i) The executive breached his duty of loyalty to the
corporation or its stockholders;
(ii) The executive committed acts or omissions in bad faith
or which involve intentional misconduct or a knowing violation
of the law;
(iii) The executive engaged in any willful or negligent
conduct in paying dividends or repurchasing stock of the corp-
oration out of other than lawfully available funds; or
(iv) The executive derived any improper personal benefit
from any transaction, unless such improper personal benefit is
determined to be immaterial in light of all the circumstances
of such action.
(4) In the event an executive is or was serving as an executive,
trustee, fiduciary, administrator, employee or agent of an employee benefit
plan sponsored by or otherwise associated with the corporation and incurs
expenses, amounts in settlement or judgments, fines, penalties or other
amounts, including, without limitation, any excise tax or penalty assessed
with respect to the employee benefit plan by reason of an action having been
brought, or having been threatened, against such executive because of his
status as such an executive, trustee, fiduciary, administrator, employee or
agent of such plan or by reason of his performing duties in any such capacity,
the corporation shall indemnify and hold harmless the executive against any
and all of such reasonable amounts; provided, it is not determined pursuant to
Paragraph B of this Section 49, or by the court before which such action was
brought, that the executive's conduct with respect to such employee benefit
plan was for a purpose he did not reasonably believe to be in the interests of
the participants in and beneficiaries of such plan.
B. Right to Indemnification: How Determined.
(1) Except as otherwise set forth in this Paragraph B, any
indemnification to be provided to an executive by the corporation under
Paragraph A of this Section 49 upon the final disposition or conclusion of an
action (or a claim, issue or matter associated with such an action), unless
otherwise ordered by the court before which such action was brought, shall be
paid by the corporation (net of all amounts, if any, previously advanced to
the executive pursuant to Paragraph D) to the executive (or to such other
person or entity as the executive may designate in writing to the corporation)
within sixty (60) days after the receipt of the executive's written request
therefor, which request shall include a comprehensive accounting of amounts
for which indemnification is being sought and shall reference the provision(s)
of this Section 49 pursuant to which such claim is being made.
Notwithstanding the foregoing, the payment of such requested
amounts may be denied by the corporation in the event:
(i) the Board of Directors of the corporation by a
majority vote thereof determines that such payment, in whole
or in part, would not be in the best interests of the corp-
oration and its stockholders and would contravene the terms
and conditions of this Section 49, or
(ii) a majority of the directors of the corporation are a
party in interest to such an action.
In either of such events, the Board of Directors of the
corporation shall immediately authorize and direct, by resolution, that an
independent determination be made as to whether the executive has met the
applicable standard(s) of conduct under Paragraph A of this Section 49 and,
therefore, whether indemnification of the executive is proper pursuant to this
Section 49. Such independent determination shall be made by a panel of three
arbitrators in Oshkosh, Wisconsin, in accordance with the rules then
prevailing of the American Arbitration Association, or, at the option of the
executive, by an independent legal counsel mutually selected by the Board of
Directors of the corporation and the executive (such panel of arbitrators
and/or independent legal counsel being hereinafter referred to as
"authority").
In any such determination there shall exist a rebuttable
presumption that the executive has met such standard(s) of conduct and is
therefore entitled to indemnification hereunder. The burden of rebutting such
presumption by clear and convincing evidence shall be on the corporation.
If a panel of arbitrators is to be employed hereunder, one of
such arbitrators shall be selected by the Board of Directors of the corporation
by a majority vote of a quorum thereof consisting of directors who were not
parties in interest to such action (or, if such a quorum is not obtainable, by
an independent legal counsel chosen by the Board of Directors of the
corporation), the second by the executive(s) who claim entitlement to
indemnification under this Section 49 and the third by the previous two
arbitrators.
The authority shall make its determination within sixty (60)
days of being selected and shall simultaneously submit a written opinion of its
conclusions to both the corporation and the executive and, in the event the
authority determines that the executive is entitled to be indemnified for any
amounts pursuant to this Section 49, the corporation shall pay such amounts
(net of all amounts, if any, previously advanced to the executive pursuant to
Paragraph D), including interest thereon as provided in Paragraph E, to the
executive (or to such other person or entity as the executive may designate in
writing to the corporation), within ten (10) days of receipt of such opinion.
(2) An executive may, either before or within two years after a
determination, if any, has been made by the authority petition any court of
competent jurisdiction to determine whether the executive is entitled to
indemnification under this Section 49 and such court shall thereupon have the
exclusive authority to make such determination unless and until such court
dismisses or otherwise terminates such proceeding without having made such
determination.
The court shall make an independent determination of whether the
executive is entitled to indemnification as provided under this Section 49,
irrespective of any prior determination made by the authority; provided,
however, that there shall exist a rebuttable presumption that the executive
has met the applicable standard(s) of conduct and is therefore entitled to
indemnification hereunder. The burden of rebutting such presumption by clear
and convincing evidence shall be on the corporation.
In the event the court determines that the executive is entitled
to be indemnified for any amounts pursuant to the terms and conditions of this
Section 49, unless otherwise ordered by such court, the corporation shall pay
such amounts (net of all amounts, if any, previously advanced to the executive
pursuant to Paragraph D), including interest thereon as provided in Paragraph
E, to the executive (or to such other person or entity as the executive may
designate in writing to the corporation) within ten (10) days of the rendering
of such determination.
The executive shall pay all expenses incurred by such executive in
connection with the judicial determination provided in this Subparagraph (2),
unless it shall ultimately be determined by the court that he is entitled to
be indemnified, in whole or in part, by the corporation as authorized in this
Section 49. All expenses incurred by the executive in connection with any
subsequent appeal of the judicial determination provided for in this
Subparagraph (2) shall be paid by the executive regardless of the disposition
of such appeal.
(3) Except as otherwise set forth in this Paragraph B, the
expenses associated with the indemnification process set forth in this
Paragraph B, including, without limitation, the expenses of the authority
selected hereunder, shall be paid by the corporation.
C. Termination of an Action is Nonconclusive. The termination of
any action, no matter by whom brought, including, without limitation, securities
law actions, by judgment, order, settlement, conviction, or upon a plea of no
contest or its equivalent, shall not, of itself, create a presumption that the
executive has not met the applicable standard(s) of conduct set forth in
Paragraph A.
D. Advance Payment.
(1) Expenses reasonably incurred by or on behalf of an executive
in connection with any action (or claim, issue or matter associated with such
action), no matter by whom brought, including, without limitation, securities
law actions, shall be paid by the corporation to the executive (or to such
other person or entity as the executive may designate in writing to the corpo-
ration) in advance of the final disposition or conclusion of such action (or
claim, issue or matter associated with such action) upon the receipt of the
executive's written request therefor; provided, the following conditions are
satisfied:
(i) the executive has first requested in advance of such
expenses in writing (and delivered a copy of such request to the
corporation) from the insurance carrier(s) to whom a claim has
been reported under an insurance policy purchased by the corp-
oration, if any, as provided under Paragraph G of this Section 49
and each such insurance carrier has declined to make such an
advance;
(ii) the executive furnishes to the corporation an executed
written certificate affirming his good faith belief that he has
met the applicable standard(s) of conduct set forth in Paragraph
A of this Section 49;
(iii) the executive furnishes to the corporation an
executed written agreement to repay any advances made under this
Paragraph D if it is ultimately determined that such executive is
not entitled to be indemnified by the corporation for such
amounts pursuant to this Section 49.
(2) In the event the corporation makes an advance of expenses to
an executive pursuant to this Paragraph D, the corporation shall be subrogated
to every right of recovery the executive may have against any insurance
carrier from whom the corporation has purchased insurance for such purpose.
E. Partial Indemnification: Interest.
(1) In the event it is determined by the authority pursuant to
Paragraph B of this Section 49, or by the court before which such action was
brought, that an executive is entitled to indemnification as to some claims,
issues or matters, but not as to other claims, issues or matters, involved in
any action, no matter by whom brought, including, without limitation,
securities law actions, the authority (or the court) shall authorize the
reasonable proration (and payment by the corporation) of such expenses,
judgments, penalties, fines and/or amounts incurred in settlement with respect
to which indemnification is sought by the executive, among such claims, issues
or matters as the authority (or the court) shall deem appropriate in light of
all of the circumstances of such action.
(2) In the event it is determined by the authority, or by the
court before which such action was brought pursuant to Paragraph B of this
Section 49, that certain amounts incurred by or on behalf of an executive are
for whatever reason unreasonable in amount, the authority (or the court) shall
authorize indemnification to be paid by the corporation to the executive for
only such amounts as the authority (or the court) shall deem reasonable in
light of all of the circumstances of such action.
(3) To the extent deemed appropriate by the authority pursuant
to Paragraph B, or by the court before which such action was brought, interest
shall be paid by the corporation to an executive, at a reasonable interest
rate, for amounts for which the corporation indemnifies the executive.
F. Nonexclusivity of Section 49. The right to indemnification
provided to an executive by this Section 49 shall not be deemed exclusive of
any other rights to indemnification or the advancement of expenses to which
any executive may be entitled under any charter provision, by-law, agreement,
resolution, vote of stockholders or disinterested directors of the corporation
or otherwise, including, without limitation, under Delaware General
Corporation Law Section 145 as it may then be in effect, both as to acts in
his official capacity as such executive or other employee or agent of the
corporation or of an affiliate or as to acts in any other capacity while
holding such office or position, and the terms and provisions of this Section
49 shall continue as to any executive who has ceased to be an executive or
other employee or agent of the corporation and/or of an affiliate, and such
terms and provisions shall inure to the benefit of the heirs executors and
administrators of such executive.
G. Insurance.
(1) The corporation may purchase and maintain insurance on
behalf of an executive, against any liability asserted against him and/or
incurred by or on behalf of him, or arising out of his status as such, whether
or not the corporation would have the power to indemnify him against such
liability under the provisions of this Section 49 or under Delaware General
Corporation Law Section 145 as it may then be in effect. The purchase and
maintenance of such insurance shall not in any way limit or affect the rights
and obligations of the corporation or any executive under this Section 49.
Such insurance may, but need not, be for the benefit of all executives of the
corporation and those serving as an executive of an affiliate.
(2) In the event an executive shall receive payment from any
insurance carrier or from the plaintiff in any action against such executive
in respect of indemnified amounts after payments on account of all or part of
such indemnified amounts have been made by the corporation pursuant to this
Section 49, such executive shall promptly reimburse the corporation for the
amount, if any, by which the sum of such payment by such insurance carrier or
such plaintiff and payments by the corporation to such executive exceeds such
indemnified amounts; provided, however, that such portions, if any, of such
insurance proceeds that are required to be reimbursed to the insurance carrier
under the terms of its insurance policy, such as deductible or co-insurance
payments, shall not be deemed to be payments to such executive hereunder.
In addition, upon payment of indemnified amounts under this
Section 49, the corporation shall be subrogated to such executive's rights
against any insurance carrier in respect of such indemnified amounts and the
executive shall execute and deliver any and all instruments and/or documents
and perform any and all other acts or deeds which the corporation shall deem
necessary or advisable to secure such rights. The executive shall do nothing
to prejudice such rights of recovery or subrogation.
H. Witness Expenses. Upon an executive's written request, the
corporation shall pay (in advance or otherwise) or reimburse any and all
expenses reasonably incurred by an executive in connection with his appearance
as a witness in any action at a time when he has not been formally named a
defendant or respondent to such an action.
I. Contribution.
(1) In the event the indemnity provided for in Paragraph A of
this Section 49 is unavailable to an executive for any reason whatsoever, the
corporation, in lieu of indemnifying the executive, shall contribute to the
amount reasonably incurred by or on behalf of the executive, whether for
judgments, fines, penalties, amounts incurred in settlement and/or for
expenses, in connection with any action, no matter by whom brought, including
without limitation, securities law actions, in such proportion as deemed fair
and reasonable by the authority pursuant to Paragraph B hereof, or by the
court before which such action was brought, taking into account all of the
circumstances of such action, in order to reflect:
(i) the relative benefits received by the corporation and
the executive as a result of the event(s) and/or transaction(s)
giving cause to such action, and/or
(ii) the relative fault of the corporation (and its other
executives, employees and/or agents) and the executive in
connection with such event(s) and/or transaction(s).
(2) An executive shall not be entitled to contribution from the
corporation under this Paragraph I in the event it is determined by the
authority pursuant to Paragraph B, or by the court before which such action
was brought, that the executive engaged in criminal, fraudulent or intentional
misconduct in the performance of his duty to the corporation or otherwise
violated the provisions of Paragraph A(3) of this Section 49.
(3) The corporation's payment of, and an executive's right to,
contribution under this Paragraph I shall be made and determined in accordance
with the provisions in Paragraph B of this Section 49 relating to the
corporation's payment of, and the executive's right to, indemnification under
this Section 49.
J. Severability. If any provision of this Section 49 shall be
deemed invalid or inoperative, or in the event a court of competent jurisdiction
determines that any of the provisions of this Section 49 contravene public
policy, this Section 49 shall be construed so that the remaining provisions
shall not be affected, but shall remain in full force and effect, and any such
provisions which are invalid or inoperative or which contravene public policy
shall be deemed, without further action or deed by or on behalf of the
corporation, be modified, amended and/or limited, but only to the extent
necessary to render the same valid and enforceable, and the corporation shall
indemnify an executive as to reasonable expenses, judgments, fines and amounts
incurred in settlement with respect to any action, no matter by whom brought,
including securities law actions, to the full extent permitted by an
applicable provision of this Section 49 that shall not have been invalidated
and to the full extent otherwise permitted by the Delaware General Corporation
Law as it may then be in effect.
K. Amendment. This Section 49 may only be altered or repealed by
the affirmative vote of not less than two-thirds of the stockholders of the
corporation so entitled to vote; provided, however, that stockholder approval
shall not be required if any such alteration or amendment;
(1) is made in order to conform to any amendment or revision of
the Delaware General Corporation Law which expands an executive's rights to
indemnification thereunder or is otherwise beneficial to the executive, or
(2) in the sole judgment and discretion of the board of
directors, does not materially adversely affect the rights and protections of
the stockholders of the corporation.
EXHIBIT 10.7
OSHKOSH B'GOSH, INC.
Officers Medical and Dental Reimbursement Plan
(including Amendments through November 7, 1994)
OSHKOSH B'GOSH, INC., a Delaware corporation (hereinafter referred
to as the "Corporation") hereby establishes this Officers Medical and Dental
Reimbursement Plan (hereinafter referred to as the "Plan") for the benefit of
certain of its officer-employees as more fully set forth below.
1. Purpose. The purpose of this Plan is to encourage and
insure full and complete health care for the welfare of each covered employee,
his or her spouse and dependents.
2. Coverage. This Plan is for the benefit of those employees
of the Corporation who from time to time hold any of the following elective
offices: Chairman of the Board, President, Executive Vice President and Vice
President of Finance; provided such officer/employee is not eligible for
hospital or medical insurance benefits under the Medicare provisions of the
federal social security laws.
3. Reimbursement for Expenses.
a) Effective March 1, 1978, and as to certain
employees, January 1, 1978, the Corporation will pay
the entire cost of each covered employee's premium
under the Corporation's group medical insurance,
including that portion of the premium attributable to
the group term life insurance provided thereunder (not
to exceed $50,000 of life insurance).
b) Effective May 1, 1978, the Corporation
will reimburse the covered employees of the
Corporation for all expenses incurred by such
employees of the Corporation for dental care,
psychiatric care, optometric expenses, hospital
charges, nursing care, drugs and prescriptions,
medical related transportation expense, health and
accident insurance, as well as other medical care, (to
the extent allowable under and as defined in Section
213 of the Internal Revenue Code of 1954, as amended)
of such employees, their spouse, and dependents (as
defined in Section 152 of the Internal Revenue Code of
1954, as amended) to the extent that such expenses are
not reimbursable or payable under any other plan in
effect on such date.
c) The Corporation may, in its discretion,
pay any or all of the above-described expenses
directly in lieu of making reimbursement therefore.
In such event, the Corporation shall be relieved of
all further responsibility with respect to that
particular expense.
d) The reimbursement to, or the payment on
behalf of any one covered employee, including his
spouse and his dependents, shall be subject to an
annual aggregate limit of $10,000.
e) Each covered employee who applies for
reimbursement under this Plan shall submit to the
Corporation all hospitalization, doctor, dental or
other medical bills, including premium notices for
accident or health insurance, for verification by the
Corporation prior to payment. A failure to comply
herewith may, at the discretion of the Corporation,
terminate the right to reimbursement of such covered
employee.
4. Other Insurance. Reimbursement under this Plan shall be
made by the Corporation only in the event and to the extent that such
reimbursement or payment is not provided for under any insurance policy or
policies, whether owned by the Corporation or the covered employee, or under
any other health and accident plan. In the event that there is such a policy
or plan in effect providing for reimbursement or payment in whole or in part,
then to the extent of the coverage under such policy or plan the Corporation
shall be relieved of any liability hereunder.
5. Termination. This Plan shall be subject to
termination at any time hereafter by action of the Board of Directors of the
Corporation; provided, that such termination shall not affect any right to
claim reimbursement for medical and dental expenses under the provisions of
this Plan arising prior to such termination.
6. ERISA Information. This Plan document shall constitute
the summary plan description required by the Employee Retirement Income
Security Act of 1974 ("ERISA"). Pursuant to the requirements of such law, the
following information is provided:
a) The sponsor and plan administrator of this
Plan is the Corporation, 112 Otter Avenue, Oshkosh,
Wisconsin 54901 (phone: 414-231-8800). The
Corporation's federal tax identification number is 39-
0519915. The Corporation is the agent for service of
legal process. The Plan is operated on a calendar
year basis.
b) Paragraph 3(e) of this Plan describes the
procedure for claiming benefits. If a claim is
denied, the Corporation will provide, on written
request, a notice containing specific reasons for the
denial, references to the pertinent Plan provisions, a
description of any additional information needed to
perfect the claim and an explanation of the claim
review procedure. If a participant wishes to appeal a
denial of benefits, he must submit a written request
for review to the Corporation within 60 days of his
receipt of the notice of denial. Such request should
include any comments and data the participant believes
are relevant to the review. The Corporation will make
a written decision on the appeal, including the
reasons for the decision and references to the
pertinent Plan provisions, and a copy will be sent to
the participant.
c) A participant in the Plan is entitled to
certain rights under ERISA. He may obtain copies of
all plan documents and other plan information upon
written request to the Corporation. The Corporation
may make a reasonable charge for the copies. He may
file suit in federal court if any materials requested
to which he is entitled are not received within 30
days, unless the same were not sent because of matters
beyond the control of the Corporation. The court has
the discretion to require the Corporation to pay up to
$100 for each day's delay until the materials are
received.
In addition to creating rights for Plan participants, ERISA
imposes obligations on the persons responsible for the operation of a plan
("fiduciaries"). Fiduciaries must act solely in the interest of Plan
participants and must act prudently. Fiduciaries who violate ERISA may be
removed and required to make good any losses they caused the Plan.
The Corporation may not discriminate against a participant to
prevent him from obtaining a benefit or exercising his rights under ERISA. If
a participant is improperly denied a benefit, he may file suit in state or
federal court. If he wins his case, the court may order the other party to
pay the costs and legal fees. If he loses, the court may order him to pay
such items, for example, if it finds his claim frivolous.
If a participant has questions about a plan or his rights under
ERISA, he should contact the nearest area office of the U.S. Labor-Management
Services Administration, Department of Labor.
EXHIBIT 10.14
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into as of the 1st day of May, 1994,
by and among OSHKOSH B'GOSH, INC., a Delaware corporation ("OshKosh"), ESSEX
OUTFITTERS, INC., a Delaware corporation ("Essex") (OshKosh and Essex
collectively referred to herein as the "Companies"), and BARBARA WIDDER-LOWRY,
an individual ("Employee").
R E C I T A L S:
A. Essex is a wholly-owned subsidiary of OshKosh.
B. OshKosh and Essex are engaged in the business of designing,
manufacturing or having manufactured, marketing and selling clothing;
C. The Companies desire to employ Employee and Employee desires to be
employed by the Companies pursuant to the terms and conditions set forth
herein;
D. OshKosh presently contemplates that at some time in the near
future it may cause Essex to be liquidated or merged into OshKosh in which
case Employee's services would be rendered solely to OshKosh but that in
the meantime Employee would render her services to both Essex and OshKosh;
and
E. The Companies and Employee desire to reduce their agreement
concerning the terms and conditions of Employee's employment to written
form.
NOW, THEREFORE, in consideration of the premises set forth above, and
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereby agree as follows:
1. Employment Duties. During the Employment Period (as hereinafter
defined):
(a) The Companies will employ Employee and Employee will perform
services as the President of Essex and as the Vice President - Children's
Wear Product Development of OshKosh. At such time, if any, as OshKosh
determines to liquidate or merge Essex into OshKosh, Employee will no
longer be employed as the President of Essex but solely as the Vice
President - Children's Wear Product Development of OshKosh. Employee will
have the following duties and responsibilities: (i) responsibility for
all phases of the management of children's wear product design, develop-
ment, Asian package sourcing and shared responsibility for other sourcing
decisions and planning; (ii) planning complete seasonal product offer-
ings; (iii) management of the budget for children's wear product develop-
ment, design, art and sourcing functions; (iv) assistance in costing
and pricing all children's wear products; and (v) assistance to "Genuine
Kids" wholesale staff in meeting sales targets and budgets.
(b) The parties understand and agree that the division of
Employee's services as between Essex and OshKosh is presently difficult to
determine and may from time to time change depending upon a number of
factors which cannot presently be determined including whether and when
Essex is liquidated or merged into OshKosh, the nature of future business
operations which OshKosh determines should be conducted by OshKosh as
opposed to Essex (including business operations presently being carried on
by Essex but which may at some time in the future be determined to be best
carried on by OshKosh). For these reasons, Employee agrees to perform her
services hereunder for Essex and OshKosh in such proportions as may be
determined by the President of OshKosh after reasonable consultation with
Employee.
(c) Employee will perform her services hereunder faithfully and
to the best of her abilities, and will devote her best efforts and all of
her working time, attention and skill to the business and affairs of the
Companies during regular business hours, except for temporary illness,
vacation periods and reasonable leaves of absences or as agreed by the
parties hereto. If Employee is elected as an officer of any of OshKosh's
affiliates in addition to Essex during the term of this Agreement,
Employee will serve in such capacities without further compensation.
Notwithstanding the foregoing, Employer acknowledges that the performance
of Employee's duties will include extensive communications with firms and
individuals in different time zones, including without limitation the Far
East. Such communications will likely occur outside of regular business
hours. As a result, the term "regular business hours" shall not be
strictly construed.
(d) Employee will act with loyalty, honesty and in good faith in
all dealings with the Companies and their businesses.
(e) Nothing contained herein shall preclude Employee from
serving as a director or member of a committee of any business organi-
zation which does not conflict with the Companies or their businesses,
and from engaging in charitable and community activities, provided that
such services and activities do not interfere with the regular performance
of her duties and responsibilities under this Agreement and provided that
such services and activities have first been approved by the President of
OshKosh.
(f) The services which are to be performed by Employee hereunder
are to be rendered primarily in OshKosh, Wisconsin, to a lesser extent in
New York, New York, and to some extent in other places, including outside
the United States. Employee presently resides in New York, but promises
to change her residence to the Oshkosh, Wisconsin area by no later than
August 31, 1994. After such change Employee will not be required to again
change her place of residence without her consent.
(g) The Companies will provide to Employee adequate resources to
permit Employee to perform the duties described above. In addition, the
Companies will grant to Employee customary authority over employees,
agents, suppliers and others reporting to Employee.
2. Compensation; Benefits.
(a) In consideration of the services to be performed by Employee
during the Employment Period pursuant to Section 1 hereof and Employee's
compliance with the other provisions of this Agreement, the Companies will
pay Employee (in such proportions as the Companies may determine except
that notwithstanding such proportionate allocation, for the purposes of
pension and profit sharing plan computations, all compensation shall be
deemed to have been paid by Oshkosh.) (i) a base salary at the annual rate
of $205,000.00 increased for each calendar year beginning with 1995 at the
rate of 5% per annum over the prior year's salary or such greater amount
as may from time to time be approved by OshKosh's Board of Directors, in
its sole discretion, payable in accordance with the Company's normal pay-
roll practices from time to time in effect for its executive employees,
and (ii) an annual performance bonus for each year during the Employment
Period in accordance with the Company's Management Incentive Compensation
Plan for its officers, the design specifications for which are described
in Exhibit 1 attached hereto.
(b) (i) For purposes of the calculation of the performance
bonus referred to in Section 2(a)(ii) hereof for the period May 1, 1994 -
December 31, 1994, the specific bonus award composition; minimum,
target and maximum awarded percentages of 20%/40%/60% (i.e. bonus award
as a percentage of base salary); and the minimum, target and maximum
performance measures, as set forth and described in Exhibit 2 attached
hereto, shall be utilized; provided, however, that the performance bonus
for such period shall be two thirds ( ) of the amount indicated by such
calculation.
(ii) For purposes of the calculation of the annual
performance bonus for calendar years 1995, 1996, 1997, 1998 and the
first four (4) months of 1999, the same bonus award composition, the
same award percentages (i.e. awards as a percent of base salary), and
the same performance measures as set forth in Exhibit 2 shall be used;
provided, however, that (A) OshKosh may at its option reduce the
"Corporate (Consolidated Except Essex Retail)" component of the bonus
award composition from 45% to 35% and add another bonus award component
reasonably related to Employee's duties and responsibilities equalling
10% of the total; (B) the target amount for Net Sales and Net Income for
the "Essex Retail" component, shall be the same as the budgeted amounts
for 1995, 1996, 1997, 1998 and 1999, respectively, as approved by the
Oshkosh board of directors, with the minimum amount to be 90% and the
maximum amount 120% of the target amount; (C) the target amount for Net
Sales and Net Income for the "Corporate (Consolidated Except Essex
Retail)" component, shall be the same as the budgeted amounts for 1995,
1996, 1997, 1998 and 1999, respectively, as approved by the OshKosh
board of directors, with the Minimum Net Sales amount, the Maximum Net
Sales amount, the Minimum Net Income amount, and the Maximum Net Income
amount to be such percentages of target amounts as are approved for
other executive officers of OshKosh for each such year respectively; and
(D) the performance bonus for the first four (4) months of 1999 shall be
one-third ( ) of the amount indicated by the bonus calculation for the
full year 1999.
(iii) Each annual performance bonus shall be computed and
paid within seventy-five (75) days after the end of the fiscal year of
OshKosh to which such bonus relates.
(c) Employee shall also be entitled to participate in any
employee benefits which generally are made available by OshKosh to its
executives during the Employment Period, including those benefits listed
on Exhibit 3 hereto. During the Employment Period, Employee will be en-
titled to participate in any life, health, dental, accident, sickness and
disability plans (whether or not insured), and in any qualified or non-
qualified pension or profit sharing plan, savings plan, stock option plan,
deferred compensation plan or any other fringe benefit plan or program
which the Company may from time to time make available to its executives.
Employee acknowledges that she shall have no vested rights in any such
plan or program except as expressly provided under the terms thereof and
that such plans or programs may be amended or terminated as well as
supplemented. Notwithstanding the foregoing, Employee shall receive four
(4) weeks of vacation for each complete year of the Employment Period,
including 1994. The vacation period for 1994 shall include a two (2)
week period to accomplish the move to Oshkosh described elsewhere herein.
(d) The amounts payable to Employee under this Section 2 are
before any deductions therefrom for any taxes required to be withheld by
federal, state and local governments.
3. Term and Termination.
(a) The term of this Agreement during which Employee will
provide services to the Companies hereunder (the "Employment Period") will
commence on May 1, 1994 and end on April 30, 1999, unless earlier
terminated as follows:
(i) The Employment Period will terminate upon the written
agreement of the parties;
(ii) The Employment Period will terminate upon the death or
permanent disability of Employee. The term "permanent disability" of
Employee means the inability of Employee to effectively perform her
duties hereunder on a full-time basis by reason of physical or mental
illness, disability or incapacity for a continuous period of sixty (60)
working days. Physical or mental illness, disability or incapacity will
be deemed to exist if a licensed physician opines in writing that
Employee for medical reasons should terminate or substantially reduce
her services to the Company. If there is any dispute as to whether
Employee is permanently disabled within the meaning of this Section
3(a)(ii), such dispute shall be submitted to a licensed physician
agreeable to the parties who shall conduct an examination of Employee
for the purpose of resolving such dispute; provided, however, that if
the parties cannot agree upon a physician within ten (10) days after
written notice by either Employee or OshKosh to the other, a physician
designated by the then President of the Medical Society of Winnebago
County, Wisconsin shall conduct such examination. Employee shall submit
to such examination, and the determination of such physician as to
whether Employee is permanently disabled within the meaning of this
Section 3(a)(ii) shall be binding and conclusive on the parties.
(iii) Oshkosh may terminate the Employment Period for cause
upon (a) written notice to Employee stating in reasonable detail the
facts constituting such cause ("Written Notice"), and (b) the expiration
of (10) days following receipt by Employee of Written Notice, during
which ten (10) day period, Employee shall be permitted to cure, if
curable, the conduct constituting the alleged cause. For purposes of
this Section 3(a)(iii), the term "cause" means the diversion or
attempted diversion by Employee of business from either of the Companies
for Employee's personal gain or benefit; the commission by Employee of
an act of dishonesty or moral turpitude involving either of the
Companies; gross incompetence in the performance by Employee of her
services hereunder; gross negligence by Employee involving either of the
Companies; habitual use by Employee of alcohol or narcotics; commission
by Employee of a felony or serious misdemeanor offense or pleading
guilty or nolo contendere to same; willful misconduct by Employee as
determined in good faith by the Board of Directors of OshKosh which
results in a demonstrably material injury to the Companies; the willful
and persistent failure of Employee to follow a specific directive of the
Board of Directors or the President of OshKosh provided that the
directive is consistent with the terms of this Agreement; or a material
breach by Employee of any provision of this Agreement, including without
limitation any provision contained in Section 4 hereof.
(b) Upon termination of the Employment Period, the Company will
pay to Employee:
(i) The full amount of any unpaid salary earned by
Employee pursuant to Section 2 of this Agreement through and
including the termination date and prorated as appropriate, and
neither Essex nor OshKosh will be obligated to make any further
salary payments to Employee;
(ii) If the termination is for cause, no further bonus
shall be payable other than a bonus which is awardable pursuant to
Section 2 hereof with respect to a calendar year that has already
ended prior to such termination for cause but which has not yet
been paid;
(iii) If the termination is because of death or permanent
disability, a bonus pursuant to Section 2 hereof shall be payable
for the year during which such event occurs, but the bonus shall be
prorated based on the number of whole months worked in such year
prior to such event divided by twelve (12) and such prorated bonus
shall not be payable until such time as it would otherwise have
been payable had such death or disability not occurred.
(c) Notwithstanding anything to the contrary herein, if for any
reason other than cause or Employee's death or disability, Employee's
employment is terminated by Essex and/or OshKosh before April 30, 1999,
Employee shall be entitled to receive from the date of such termination
through April 30, 1999, in lieu of all other amounts payable hereunder, a
monthly amount of $23,917, and the obligations set forth in Sections 4
and 5 hereof shall survive such termination. In the event Employee
continues to receive payments pursuant to this Section 3(c) following
termination of the Employment Period, Employee shall have no obligation
to seek other employment or to otherwise mitigate damages hereunder,
provided, however, that if Employee obtains full-time or substantially
full-time employment (i.e. more than thirty (30) hours a week), whether
by another employer or through self-employment, the amounts she receives
from such other employer or earned pursuant to such self-employment shall
be offset, dollar for dollar, against any payments owing to Employee
under this Section 3(c).
4. Noncompetition.
(a) During the Employment Period and for one (1) full year
thereafter and without regard to the early termination thereof or whether
such early termination is or is not for cause, Employee will not directly
or indirectly:
(i) own, operate, manage, join, finance, control,
participate in the ownership, management, operation or control of, or be
paid or employed by, consult with or acquire any securities of, or
otherwise become associated with or provide assistance to, any entity,
firm, business, activity or enterprise ("Enterprise") which is engaged
in the business of manufacturing, having manufactured, designing,
developing and/or selling products which are the same as or are similar
to the products of the Companies as of the date of termination of
employment hereunder or other apparel products sold by the Companies
during such one (1) year period ("Competing Products") in the same
geographic market in which the Companies operate as of the date of
termination of employment hereunder during such one (1) year period;
(ii) contact, sell or solicit to sell Competing Products
to any entity to whom either Company is selling its products at the time
of the termination of employment hereunder or has sold its products
during the prior twelve (12) months;
(iii) solicit, cause or seek to cause any customer, supplier
or employee (with the exception of Paul Lowry) of either of the
Companies to terminate, curtail or otherwise modify any customer,
supplier or employment relationship with either of the Companies for the
purpose of entering into a customer, supplier, employment or other
relationship with Employee or with any Enterprise with which Employee is
directly or indirectly affiliated.
(b) Notwithstanding the provisions of Section 4(a) hereof,
Employee may acquire securities of any entity the securities of which are
publicly traded, provided that the value of the securities of such entity
held directly or indirectly by Employee following such acquisition is
less than 5% of the total value of the then outstanding class or type of
securities acquired.
(c) Employee acknowledges and agrees that the restrictions set
forth in Section 4(a) hereof are founded on valuable consideration and
are reasonable in duration and geographic area in view of the circum-
stances under which this Agreement is executed and that such restrictions
are necessary to protect the legitimate interests of the Companies. In
the event that any provision of Section 4(a) hereof is determined to be
invalid by any court of competent jurisdiction, the provisions of Section
4(a) shall be deemed to have been amended and the parties will execute
any documents and take whatever action is necessary to evidence such
amendment, so as to eliminate or modify any such invalid provision and
to carry out the intent of Section 4(a) so to render the terms of
Section 4(a) enforceable in all respects as so modified. Employee ack-
nowledges and agrees that irreparable injury will result to the Companies
in the event she breaches any covenant contained in Section 4(a) and
that the remedy at law for such breach will be inadequate. Therefore, if
Employee engages in any act in violation of the provisions of Section
4(a), the Companies, and each of them, shall be entitled, in addition to
such other remedies and damages as may be available to them by law or
under this Agreement, to injunctive or other equitable relief to enforce
the provisions of Section 4(a).
5. Unauthorized Disclosure; Inventions and Improvements.
(a) Employee will not knowingly disclose to any person or
entity, other than employees of the Companies or other persons to whom
disclosure is reasonably necessary or appropriate in connection with the
performance by Employee of her services hereunder, any Confidential
Information obtained by Employee during the Employment Period. Employee
also will not use in any manner any Confidential Information for
Employee's own purposes or for the benefit of any person or entity ex-
cept the Companies, whether such use consists of duplication, removal,
oral communication, disclosure, transfer or other unauthorized use
thereof. As used herein, the term "Confidential Information" refers to
all information and materials belonging to, used by or in the possession
of the Companies relating to their business strategies, products,
pricing, customers, technology, programs, costs, employee compensation,
marketing plans, developmental plans, computer programs, computer
systems, inventions, developments, formulae, processes, designs, draw-
ings and trade secrets of every kind and character. "Confidential
Information" also includes confidential information belonging to
other companies and disclosed to Employee by the Companies. In
addition, the Companies acknowledge that Employee has been employed for
many years in the apparel business and that as such, has acquired sub-
stantial knowledge as to the manufacture, marketing, financing, design
and other aspects of the clothing business. Thus, the information that
shall be subject to this paragraph shall be information that is truly
proprietary with the Companies or any subsidiary or affiliate; that is,
information that could only have been acquired by Employee as the result
of her having been employed by the Companies. Examples of such con-
fidential information are strategic marketing plans unique to the
Companies, proposed new product lines, and new retailing initiatives.
(b) Employee will disclose to the Companies and upon the
Companies' request, assign to them or either of them, without charge,
all of Employee's right, title and interest, if any, in and to any and
all ideas, inventions, discoveries and improvements pertaining in any
manner to the business of the Companies which Employee may make or con-
ceive, solely or jointly with others, during the Employment Period
(collectively, the "New Developments"). Upon request by the Companies,
or either of them, during or within one (1) year subsequent to the
Employment Period, Employee will do any and all acts and execute and
deliver such documents as may be deemed by the Companies or either of
them or their counsel to be necessary or advisable to vest in the
Companies or either of them all of Employee's right, title and
interest in and to such New Developments and to apply and obtain
domestic or foreign patents, provided that the expenses incurred in
connection with the foregoing shall be borne by the Companies.
6. Common Law of Torts or Trade Secrets. Nothing in this Agreement
shall be construed to limit or negate the common law of torts or trade
secrets where such common law provides the Companies with broader pro-
tection than the protection provided by this Agreement.
7. Expense Reimbursement. The Companies will reimburse Employee for
her out-of-pocket expenses reasonably incurred by her in connection with
the performance of her services hereunder, subject to compliance with
OshKosh's written policy, if any, regarding expense reimbursement.
8. No Conflict with Other Agreements. Employee hereby represents and
warrants that she is not a party to any agreement (whether written or
oral) with any employer other than the Companies, or subject to any
obligations or restrictions under any such prior agreement, including,
without limitation, any obligations and restrictions relating to non-
competition, nonsolicitation, new developments or the like, which are in
conflict with or are violated by this Agreement.
9. Severability. The invalidity or unenforceability of any provision
of this Agreement shall not affect or impair the validity or enforce-
ability of any other provision and this Agreement shall be construed as
if such invalid or unenforceable provision were not contained herein.
Notwithstanding the preceding sentence, if any court of competent juris-
diction shall determine that any geographic or time restraint provided
in this Agreement is too broad as to the area or time covered, such res-
traint may be reduced to whatever extent the court deems reasonable
and such restraint may be enforced as reduced.
10. Notice. All notices under this Agreement shall be in writing and
a notice shall be considered to be given and received in all respects on
the day it is personally delivered, faxed or mailed by certified mail,
postage prepaid, addressed as follows or to such other address as may be
designated by one party to the other by notice duly given:
If to OshKosh or Essex:
OshKosh B'Gosh, Inc.
P.O. Box 300
Oshkosh, WI 54902-0300
Attn: President
FAX: (414) 231-3261
If to Employee:
Barbara Widder-Lowry
c/o Theodore C. Widder, III
Mohs, MacDonald, Widder & Paradise
20 North Carroll Street
Madison, Wisconsin 53703
FAX: (608) 257-1106
11. Litigation; Attorney's Fees. Any controversy or claim arising
out of or related to this Agreement shall be finally settled by binding
arbitration in the City of Milwaukee, Wisconsin in accordance with the
then prevailing Commercial Arbitration Rules of the American Arbitra-
tion Association, and judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof.
Notwithstanding the foregoing, and the rules of the American Arbitra-
tion Association, civil discovery as provided for in Chapter 804 of the
Wisconsin Statutes shall be available to either party in the arbitra-
tion proceeding. Each party shall be reimbursed by the other party for
all reasonable legal fees and expenses, if any, reasonably incurred by
it in the enforcement of its or her rights under any provision of this
Agreement.
12. Waiver. A waiver by a party of any breach by the other party of
any provision of this Agreement shall not be deemed to be a waiver by
such first party of any subsequent breach.
13. Assignment. This Agreement may not be assigned by either Essex
or OshKosh without the written consent of Employee, except that if
either OshKosh or Essex shall merge or consolidate with or into, or
transfer substantially all of its business or the assets thereof to
another corporation or other form of business or other entity, this
Agreement shall be assigned to such a successor and this Agreement
shall be expressly assumed, and it shall be binding upon and inure
to its benefit. Employee may not assign, pledge or encumber this
Agreement or any interest herein.
14. Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties hereto, Essex's and OshKosh's successors
and permitted assigns and Employee's heirs and legal representatives.
15. Complete Agreement; Amendment. This Agreement constitutes the
complete agreement of the parties concerning its subject matter, and
may be amended only by a written instrument executed by the parties
hereto or their respective successors, assigns, heirs or legal rep-
resentatives, as applicable.
16. Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of Wisconsin.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
OSHKOSH B'GOSH, INC.
By /s/ DOUGLAS W. HYDE
Douglas W. Hyde, President
ESSEX OUTFITTERS, INC.
By /s/ PAUL A. LOWRY
Paul A. Lowry, Vice President
/s/ BARBARA WIDDER-LOWRY
Management Incentive Compensation Plan -
Design Specifications
Exhibit 1
Management
Incentive
Compensation
Plan - Design
Specifications
Plan Purposes . Focus the efforts of all key management employees on
the maximization of annual profits, while growing
aggressively by offering quality products and services.
. Provide a meaningful incentive geared to the
achievement of specific Company and Responsibility Area
goals.
. Encourage teamwork and cooperation in the achievement
of Company and Responsibility Area goals.
. Recognize differences in the performance of individual
participants.
Plan Year The fiscal year (January through December)
Participants . Will be selected by the President/Chief Executive
Officer and the Executive Vice President/Chief
Operating Officer.
. Selection normally will take place, and will be
communicated to each participant, prior to the
pertinent plan year. Participation for the 1994 plan
year is projected to be around 50 key contributors.
. In those cases when participation begins during a plan
year:
- Participation will be communicated as soon as
possible following selection.
- Newly hired or promoted employees will
participate on a pro-rata basis for the remainder
of the first plan year of their employment or
tenure in a participating position.
- If a participant changes positions during a plan
year, whether due to a promotion, demotion, or
lateral move, that individual's award will be
based on factors such as the individual's overall
contribution, and the portion of the year the
individual actually spent in each position.
Award . Participating positions are grouped by
Opportunities incentive award categories.
. Each incentive category has a target award level
assigned to it.
- The target award is paid if a stated performance
goal(s) is achieved.
- Minimum and maximum performance/award levels are
built around the target performance/award levels.
. This plan's award opportunities will provide 65th
percentile total cash compensation (base plus bonus)
levels if stated target performance goals are achieved.
Target goal levels will be selected to represent
aggressive, but achievable, performance. The following
award opportunities should permit Oshkosh to attain its
performance and compensation objectives.
Award Opportunity (as % of
Incentive Beginning of Year Salary)
Category Minimum Target Maximum
A (CEO, COO) 24% 47% 71%
B (Other Officers) 20% 35% 53%
C (Director-level) 13% 25% 35%
D (Plant Mgrs.) 11% 21% 32%
The award schedule as set forth above, minimum at
approximately 50% of target and maximum at
approximately 150% of target, is typical. Award
interpolation will take place between "minimum,"
"target," and "maximum." (For example, if actual
performance falls exactly midway between the minimum
and target goals, the award would be approximately 75%
of the target award opportunity.)
Based on preliminary estimates, incentive Category B
will include nine participants, Category C will
include 15 participants, and Category D will include
22 participants.
Performance/ . Each participant's award opportunity is
Award Components segmented into one or more components as follows:
Weighting of Award
Opportunity/Perf Factors (Total 100%)
Position Title Responsibility Individual
(Incumbent) Corporate Area Evaluation
Example: Vice 35% 50% 15%
President
Manufacturing
See Appendix A for individual participant weightings.
. One component's performance will not directly affect
the portion of the award opportunity earnable from
another one.
. A participant's final award amount will be determined
as the sum of the awards earned based on the
performance of his pertinent award components.
Performance . Normally one to three performance criteria
Criteria will be established for each performance/award
component (e.g. Corporate component: Net income before
taxes and profit sharing, and Net Sales).
. Target, minimum, and maximum performance levels will
be established for each of the performance criteria.
These performance levels will coincide with the
target, minimum, and maximum award levels referred to
previously. Interpolated performance/reward levels
will be established on a straight-line basis between
each of the above performance/reward levels. If
actual performance falls below the minimum level set
forth for the particular performance criterion, the
portion of the award related to that performance
criterion will be forfeited in its entirety.
. The Corporate Performance component will be measured
as a combination of Net Income (70%) and Net Sales
(30%). "Corporate," for the purposes of calculating
the foregoing, will be defined at the beginning of the
plan year and administered according to such defini-
tion for such year's duration. The definition may
differ for various participant groupings if such diff-
erence is appropriate to accomplish the motivational
purposes of the plan. (See Appendix A.)
. The Responsibility Area component will be embodied in
the Responsibility Area performance criteria that are
impacted by the particular B, C, or D Category
participant. The performance criteria should focus on
quality, delivery, and/or cost.
. Each participant's immediate manager will be
responsible for recommending how much of the
Individual Evaluation component of a participant's
award opportunity has been earned. Each such manager
will be guided by the following:
% of Individual
Individual Portion of Target
Performance Rating Incentive Award Earned
Outstanding 120%-150%
Excellent 100%-120%
Good 80%-100%
Satisfactory 50%- 80%
Unsatisfactory 0%
The Chief Executive Officer and Chief Operating
Officer will review these recommendations and
finalize the Individual Evaluation "performance
score."
Final Award The final incentive award is determined as the sum of the
awards earned based on Corporate, Responsibility Area, and/or
Individual Evaluation performance. See Appendix B for award
calculation examples.
Termination . If the participant's employment is terminated during a plan
year for reason of death, disability, or normal or early
retirement, a tentative award will be calculated (at year-
end) as if the participant had remained employed as of the
end of the plan year. The final award will be calculated by
multiplying the tentative award by a proration factor. The
proration factor will be equal to the number of full weeks of
employment divided by 52.
. If a participant's employment is terminated during a
plan year for any other reason, an incentive award
normally will not be paid. However, the Chief
Executive Officer and the Chief Operating Officer may
exercise discretion in this matter.
Form and Payments will be made in cash as soon as
Timing of practicable following the release of audited
Payments results for the plan year.
Appendix A - Incentive Compensation
Plan Award Components
Appendix A
Oshkosh B'Gosh, Inc.
Incentive Compensation Plan Award Components
Incentive Responsibility Individual
Category Name Corporate Area Evaluation
A Doug Hyde 85* 15
A Mike Wachtel 85 15
B Mike Donabauer 65* 20 15
B Dave Omachinski 50* 35 15
B Tony Giordano 35 50 15
B Jon Dell'Antonia 35 50 15
B Don Carlson 35 50 15
B Bill Wyman 35 50 15
B Ken Masters 35 50 15
B Chips Wood 25 60 15
B Pat Garvey 25 60 15
C Larry Habeck 35 50 15
C Greg Spaeth 35 50 15
C Marty Smith 35 50 15
C Mark Greenspan 25 60 15
C Gary Brock 25 60 15
C D. Hursh 25 60 15
C Harold Brown 25 60 15
C Bobby Morrison 25 60 15
C Don Hess 25 60 15
C Eddie White 25 60 15
C Aaron Poore 25 60 15
C Lee Tiegen 25 60 15
C Steve Fischer 25 60 15
C Janell Cleveland 25 60 15
C Larry Delk 25 60 15
D All Plant Managers 20 65 15
*Denotes Corporate responsibility defined as total consolidated performance of
all corporate entities (exclusive of Rio Sportswear, Inc. for 1994).
All others - Corporate component is defined as the aggregate performance of all
entities that market product under the Oshkosh B'Gosh name.
Appendix B - Award Calculation - Examples
Appendix B
Oshkosh B'Gosh, Inc.
Award Calculation - Examples
Incentive Category
Award Opportunity (As % of Salary)
Minimum Target Maximum
A (CEO, COO) 24% 47% 71%
B (Other Officers) 20% 35% 53%
C (Directors and 13% 25% 35%
Regional Sales Mgrs)
D (Plant Mgrs) 11% 21% 32%
Minimum Target Maximum
The above as a percent 50% (approx) 100% 150% (approx)
of the target opportunity
Appendix B
Oshkosh B'Gosh, Inc.
Award Calculation - Examples
Vice President, Manufacturing
Target = 35% of Salary
Overall Award Structure
Award Composition
(at target) Performance Measure Goals
35% Corporate:
. Sales (30%)
. Income (70%)
50% Responsibility Area (Weighting):
. Quality (30%) Irregulars (% of):
3.0% Minimum
2.0% Target
1.5% Maximum
. Delivery (40%) Work Order Completion:
92% Minimum
95% Target
97% Maximum
. Cost (30%) Cost per Minute:
+10% Minimum
Current: Target
-10% Maximum
15% Individual
. Succession Plan TBD
. Manufacturing TBD
Effectiveness
. Service Task Force TBD
Participation
Appendix B
Oshkosh B'Gosh, Inc.
Award Calculation - Examples
Example #1 All Goals Attained at Target
Sales: At Target
Income: At Target
Irregular Levels: 2%
Work Order Completion: 95%
Cost Per Minute: Current Levels
Succession Planning
Manufacturing Effectiveness At Target
Service Task Force Participation
VP - Manufacturing: Target Award 35%
Score = 35% Corporate Measures
10.5% = (10.5% x 100%) Sales
(30% x 35% = 10.5%)
24.5% = (24.5% x 100%) Net Income
(70% x 35% = 24.5%)
50% Responsibility Area
15% = (15% x 100%) Quality
(30% x 50% = 15%)
15% = (15% x 100%) Cost
(30% x 50% = 15%)
20% = (20% x 100%) Delivery
(40% x 50% = 20%)
15% Individual Evaluation
100%
Payout = Performance Target
Score X Opportunity
100% X 35% = 35%
Appendix B
Oshkosh B'Gosh, Inc.
Award Calculation - Examples
Example #2 Mixed Goal Attainment
Sales: Midway Between Minimum and Target
Income: Midway Between Minimum and Target
Irregular Levels: 1.5% (Maximum)
Work Order Completion: 97% (Maximum)
Cost Per Minute: -10% (Maximum)
Succession Planning
Manufacturing Effectiveness Excellent (Maximum)
Service Task Force Participation
VP - Manufacturing: Target Award 35%
Score = 26.3% Corporate Measures
7.9% = (10.5% x 75%) Sales
(30% x 35% = 10.5%)
18.4% = (24.5% x 75%) Net Income
(70% x 35% = 24.5%)
75% Responsibility Area
22.5% = (15% x 150%) Quality
(30% x 50% = 15%)
22.5% = (15% x 150%) Cost
(30% x 50% = 15%)
30% = (20% x 150%) Delivery
(40% x 50% = 20%)
22.5%Individual Goals (15% x 150%)
123.8%
Payout = Performance Target
Score X Opportunity
123.8% X 35% = 43.33%
Appendix B
Oshkosh B'Gosh, Inc.
Award Calculation - Examples
Example #3 Mixed Goal Attainment
Sales: Below Minimum
Income: Below Minimum
Irregular Levels: 1.5% (Maximum)
Work Order Completion: 95% (Target)
Cost Per Minute: +10% (Minimum)
Succession Planning
Manufacturing Effectiveness At Target
Service Task Force Participation
VP - Manufacturing: Target Award 35%
Score = 0% Corporate Measures
0% = (10.5% x 0%) Sales
(30% x 35% = 10.5%)
0% = (24.5% x 0%) Net Income
(70% x 35% = 24.5%)
50% Responsibility Area
22.5% = (15% x 150%) Quality
(30% x 50% = 15%)
7.5% = (15% x 50%) Cost
(30% x 50% = 15%)
20% = (20% x 100%) Delivery
(40% x 50% = 20%)
15% Individual Goals (15% x 150%)
65.0%
Payout = Performance Target
Score X Opportunity
65.0% X 35% = 22.75%
Barbara Widder Lowry
Minimum Award 20% of Salary/Target Award 40% of Salary*/
Maximum Award 60% of Salary
*Base Salary $180,000
Award
Composition Performance
(at Target) Measure Specifics Target Range
45% Corporate(Consolidated Except Essex Retail)
.(30%) Sales Net Sales $314,277,000 Minimum
$349,197,000 Target
$419,036,000 Maximum
.(70%) Income Net Income before Profit $23,205,000 Minimum
Sharing Contribution, $30,940,000 Target
Incentive Compensation, $37,128,000 Maximum
Extraordinary Items, Franchise
and Income Taxes
40% Essex Retail Net Income before Profit $2,253,000 Minimum
.(70%) Income Sharing Contribution, $2,503,000 Target
Incentive Compensation, $3,004,000 Maximum
Extraordinary Items, Franchise
and Income Taxes*
.(30%) Sales Net Sales $34,650,000 Minimum
$38,500,000 Target
$46,200,000 Maximum
15% Individual Review by CEO Satisfactory:Minimum
Evaluation Good: Target
Outstanding: Maximum
100%
*Extraordinary items are defined as non-recurring unusual expense or income
items such as license agreement termination, plant closures, or the effects of
litigation.
BENEFIT SUMMARY FOR VICE PRESIDENT - CORPORATE OFFICE
INCENTIVE COMPENSATION PLAN
The amount of the bonus is dependent upon the level of performance in achieving
company, departmental, and individual goals. The bonus is usually payable in
February for the prior year's performance and is taxable in the year in which
it is paid.
DEFERRED COMPENSATION
The employee can defer a percentage of income each pay period. The money earns
interest equal to the prime rate. The money is not taxable until withdrawn.
PERSONAL AUTOMOBILE
The company provides an automobile (with a value of up to $30,000) for personal
use by the officer.
PROFIT SHARING
An employee who has completed one year of service and is at least 21 years of
age automatically become a participant in the Oshkosh B'Gosh, Inc. non-
qualified Profit Sharing Plan. The percentage of gross earnings contributed to
the plan annually is determined by the Board of Directors and can vary from 0%
to 15%. Each participant in the plan receives the same percentage of their
gross earnings. Upon entry into the profit sharing plan, the employee is 100%
vested.
The Profit Sharing Plan is intended to supplement retirement benefits,
therefore, the funds in an employee's account are unavailable until retirement,
death or termination of employment. Upon termination, the entire account
balance is payable. The benefit payment does not qualify for a rollover to
defer taxes.
PENSION PLAN
The Pension Plan is designed to provide an employee with income upon
retirement. As an employee works for OshKosh B'Gosh the pension benefit
continues to accumulate. An employee who has completed one year of service and
is at least 21 years of age automatically becomes a participant in the 100%
company-funded Pension Plan. An employee becomes fully vested in the pension
plan upon completing 5 vested years of service. A vested year is one in which
the employee has been credited with at least 1,000 hours of service. The
employee does not have any vested interest in the plan until completing 5
vested years. The formula for calculating the age 65 monthly benefit is: 5
consecutive years of earnings which produce the highest monthly average,
multiplied by 1%, multiplied by years of service.
A vested employee can request early reduced retirement benefits after reaching
age 60 or full benefits after reaching age 65. An employee leaving the company
who is not yet retirement age leaves with a deferred vested benefit and can
apply for the benefit upon reaching retirement age. If the benefit has a
present day value of less than $3,500, it will be automatically paid in a lump
sum to the employee, generally within three months after termination.
HEALTH CARE COVERAGE
In order to provide protection to employees and their dependents in the event
of illness or injury, OshKosh B'Gosh offers health care coverage. Employees
are eligible for health care coverage from the first day of employment and may
elect either single or family coverage. Employees have three plans to choose
from: HMO of Wisconsin, Network Health Plan, or OshKosh B'Gosh, Inc., self-
funded plan. Once employees choose coverage, they may change their election
only once per year during January. Employees have 30 days from date of hire to
enroll in the health plan. An employee making late application must first be
approved by the insurance company and could be denied coverage.
OshKosh B'Gosh pays 100% of the premium cost.
SICK LEAVE/SALARY CONTINUATION
OshKosh B'Gosh provides salary continuation for a period of time during which
an employee is ill or injured. The amount of time allowed is subject to the
discretion of the C.O.O.
LONG-TERM DISABILITY
The long-term disability program is designed to provide a benefit of 60% of an
employee's regular monthly pay up to a maximum of $5,000 per month when the
employee is unable to work due to a serious debilitating illness or injury.
The monthly payments begin after a 180 day waiting period and are paid for
total or partial disability until the employee is able to return to work. If
the disability qualifies an employee for social security or workers'
compensation benefits, the long-term disability benefit would be reduced by the
amounts received. The company pays 100% of the premium for the employee and
adds the premium cost to the employee's earnings at the end of the year. The
employee pays taxes on the premium, but under current tax law, benefits paid
are non-taxable.
LIFE INSURANCE
Life insurance helps provide financial assistance to family members in the
event of the employee's death. The level of term life insurance provided by
OshKosh B'Gosh, Inc., is $50,000. The employee will need to name a beneficiary
upon enrollment, which may be changed in writing at any time. Employees also
have an additional $100,000 of coverage for accidental death 24 hours per day,
7 days per week. The company pays for 100% of both premiums.
SUPPLEMENTAL LIFE INSURANCE
OshKosh B'Gosh provides supplemental life insurance in the amount of $150,000.
The premium is paid by the company but the amount of the premium is added to
the employee's W-2 form as additional taxable income.
FLEXIBLE SPENDING PLAN (SECTION 125)
OshKosh B'Gosh, Inc., offers a benefit which allows certain expenses to be
deducted from the employee's pay check before taxes. Depending on the
employee's federal tax bracket, between 28% - 40% in taxes can be saved
(including social security and state taxes) on allowable expenses, thereby
providing more disposable income for other things. Allowable expenses include:
group insurance premiums, and two Flexible Spending Accounts -- non-reimbursed
medical and dependent care. Employees can participate in one or all three
portions of the plan after meeting the eligibility requirements. All employees
are eligible for before-tax payment of group insurance premiums at the time of
insurance enrollment. Full-time employees are eligible to enroll in one or
both Flexible Spending Accounts. Enrollment takes place prior to January and
July of each year, after the employee completes six months of employment.
VACATION SCHEDULE
Employees need to relax and take time off work to pursue their outside
interests. Paid vacations are provided for this purpose. Vacation will
available for use according to the following schedule:
Employed less than 1 year Two weeks
Employed 1 through 4 years Three weeks per year
Employed 5 or more years Four weeks per year
Although vacation is earned during an anniversary year, it is available for use
on a calendar year basis. Vacation time must be used by the end of the
calendar year or it is forfeited. When an employee terminates, unused earned
vacation will be paid on a prorated basis. If an employee used more vacation
than earned, this amount will be deducted from the employee's final check.
PAID HOLIDAYS
Eligibility for paid holidays begins upon date of hire. Specific dates for
holiday observation are published each year. The 10 paid holidays are as
follows:
New Years Day Fourth of July Day after Thanksgiving
New Years Eve Day Good Friday Labor Day
Christmas Eve Day Memorial Day Thanksgiving Day
Christmas Day
JURY DUTY
OshKosh B'Gosh believes it is the civic responsibility of its employees to
accept jury duty service. A full-time employee serving on jury duty shall be
allowed to serve without a loss of income. To be eligible for excused absence
for jury duty, the employee notifies their supervisor upon receipt of the
notice to serve. The employee presents the jury duty pay receipt to the Human
Resources Department. The employee will be compensated by OshKosh B'Gosh for
the difference between regular pay and jury duty pay, thus maintaining normal
income.
BEREAVEMENT PAY
OshKosh B'Gosh recognizes a time of bereavement is very difficult for an
employee. Every effort will be made to insure an employee is able to attend to
family matters prior to making the transition back to the normal work routine.
Therefore, an employee is eligible for up to three days excused absence with
pay in the event of a death in the immediate family. Immediate family consists
of parents, spouse, children, brothers, sisters, grandparents, grandchildren,
spouse's parents, spouse's grandparents, step-parents, step-sister, step-
brother and step-children.
LEAVES OF ABSENCE
Under the Family Medical Leave Act all employers with 50 or more permanent
employees within a 75-mile radius must allow employees of either sex, who have
met the eligibility requirements, a leave of absence for: (1) the birth or
adoption of the employee's child; (2) the care of the employee's child, spouse,
or parent with a serious health condition; (3) the employee's own serious
health condition.
OshKosh B'Gosh recognizes that occasionally employees will need time away from
work to attend to critical personal matters that do not fit in the category of
Family Medical Leave. It is the company's intent to grant personal leaves on a
case-by-case basis based upon both the company and employee needs.
TUITION REIMBURSEMENT
OshKosh B'Gosh recognizes the value of continuing education both to the
employee and to the company. In support of this, the company reimburses the
employee for tuition and text book costs for pre-approved business related
courses. Reimbursement will be made upon successful completion of the course
and proof of payment. Tuition reimbursement is limited to $1,500 per calendar
year.
GARMENT/PROMOTIONAL ITEM PURCHASES
In order to identify with the company products and promote the company image
within the community, employees may purchase up to four garments per week from
an OshKosh B'Gosh wholesale catalog at cost plus sales tax. "Garment
Requisition" forms are completed and deposited in a drop box located within the
facility. Garments are available for pick up according to the schedule posted
at each facility. Garments must be paid for at the time of pick up. An
unlimited amount of promotional items are also available for purchase through
this system, using a separate Requisition form.
An employee and their immediate family (same household) are also entitled to a
20% discount off the regular ticket price at the OshKosh B'Gosh Factory Outlet
Store located closest to their facility.
OSHKOSH COUNTRY CLUB
The annual social membership of this association is 100% paid for by OshKosh
B'Gosh. The employee is responsible for monthly fees and charges.
YMCA MEMBERSHIP
OshKosh B'Gosh pays 100% of an annual membership at the Appleton, Oshkosh or
Fond du Lac YMCA. Fees for YMCA classes or programs attended by the employee
and their immediate family are the responsibility of the employee. Employees
who want to become a member should contact the accounting department for a
membership application card for completion and forward it to the YMCA
Membership Office.
OSHKOSH POWER AND BOAT MEMBERSHIP
The annual social membership of this association is 100% paid by OshKosh
B'Gosh. The employee is responsible for monthly fees and charges.
PAYPERIOD
The employee is paid monthly on the 15th which covers the payperiod from the
1st of the month through the last day of the month.
CASUAL DAY
For the comfort and enjoyment of employees, Casual Day is observed every
Friday!
This summary is not intended to be a complete description of benefits and is
subject to change. Please refer to summary plan descriptions and to policies
and procedures for detailed descriptions of benefits. In the case of a
misunderstanding, official plan documents and company policies and procedures
will rule.
EXHIBIT 10.15
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into as of the 1st day of May, 1994,
by and among OSHKOSH B'GOSH, INC., a Delaware corporation ("OshKosh"), ESSEX
OUTFITTERS, INC., a Delaware corporation ("Essex") (OshKosh and Essex
collectively referred to herein as the "Companies"), and PAUL A. LOWRY, an
individual ("Employee").
R E C I T A L S:
A. Essex is a wholly-owned subsidiary of OshKosh.
B. OshKosh and Essex are engaged in the business of designing,
manufacturing or having manufactured, marketing and selling clothing;
C. The Companies desire to employ Employee and Employee desires to be
employed by the Companies pursuant to the terms and conditions set forth
herein;
D. OshKosh presently contemplates that at some time in the near future
it may cause Essex to be liquidated or merged into OshKosh in which case
Employee's services would be rendered solely to OshKosh but that in the
meantime Employee would render his services to both Essex and OshKosh; and
E. The Companies and Employee desire to reduce their agreement
concerning the terms and conditions of Employee's employment to written form.
NOW, THEREFORE, in consideration of the premises set forth above, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereby agree as follows:
1. Employment Duties. During the Employment Period (as hereinafter
defined):
(a) The Companies will employ Employee and Employee will perform
services as a Vice-President of Essex and as the Vice President -
Corporate Retail of OshKosh. At such time, if any, as OshKosh determines
to liquidate or merge Essex into OshKosh, Employee will no longer
be employed as a Vice-President of Essex but solely as the Vice
President - Corporate Retail of OshKosh. Employee will have respons-
ibility for all phases of the management of domestic retail stores and
corporate retail support staff including the following: (i) assisting
in planning, forecasting and reviewing of financial and strategic budget
and performance relating to retail operations; (ii) site selection,
lease execution, store design and construction; (iii) planning,
selection, pricing and distribution of merchandise for the retail stores;
(iv) creation and execution of store procedures for operations, customer
service, and merchandising; (v) all phases of human resource develop-
ment; and (vi) assisting in the direction and execution of promo-
tional, advertising, and marketing strategies relating to retail
operations.
(b) The parties understand and agree that the division of
Employee's services as between Essex and OshKosh is presently
difficult to determine and may from time to time change depending upon a
number of factors which cannot presently be determined including
whether and when Essex is liquidated or merged into OshKosh, the
nature of future business operations which OshKosh determines should
be conducted by OshKosh as opposed to Essex (including business
operations presently being carried on by Essex but which may at some
time in the future be determined to be best carried on by OshKosh).
For these reasons, Employee agrees to perform his services hereunder for
Essex and OshKosh in such proportions as may be determined by the
President of OshKosh after reasonable consultation with Employee.
(c) Employee will perform his services hereunder faithfully and
to the best of his abilities, and will devote his best efforts and all
of his working time, attention and skill to the business and affairs of
the Companies during regular business hours, except for temporary ill-
ness, vacation periods and reasonable leaves of absences or as agreed
by the parties hereto. If Employee is elected as an officer of any of
OshKosh's affiliates in addition to Essex during the term of this Agree-
ment, Employee will serve in such capacities without further compensation
(d) Employee will act with loyalty, honesty and in good faith in
all dealings with the Companies and their businesses.
(e) Nothing contained herein shall preclude Employee from serving
as a director or member of a committee of any business organization
which does not conflict with the Companies or their businesses, and
from engaging in charitable and community activities, provided that such
services and activities do not interfere with the regular per-
formance of his duties and responsibilities under this Agreement and
provided that such services and activities have first been approved by
the President of OshKosh.
(f) The services which are to be performed by Employee hereunder
are to be rendered primarily in OshKosh, Wisconsin. Employee presently
resides in New York, but promises to change his residence to the
Oshkosh, Wisconsin area by no later than August 31, 1994. After such
change Employee will not be required to again change his place of
residence without his consent.
(g) The Companies will provide to Employee adequate resources to
permit Employee to perform the duties described above. In addition,
the Companies will grant to Employee customary authority over employees,
agents, suppliers and others reporting to Employee.
2. Compensation; Benefits.
(a) In consideration of the services to be performed by Employee
during the Employment Period pursuant to Section 1 hereof and
Employee's compliance with the other provisions of this Agreement, the
Companies will pay Employee (in such proportions as the Companies
may determine except that notwithstanding such proportionate allo-
cation, for the purposes of pension and profit sharing plan computations,
all compensation shall be deemed to have been paid by Oshkosh.) (i) a
base salary at the annual rate of $150,000.00 increased for each
calendar year beginning with 1995 at the rate of 5% per annum over the
prior year's salary or such greater amount as may from time to time be
approved by OshKosh's Board of Directors, in its sole discretion, payable
in accordance with the Company's normal payroll practices from time to
time in effect for its executive employees, and (ii) an annual per-
formance bonus for each year during the Employment Period in accord-
ance with the Company's Management Incentive Compensation Plan for its
officers, the design specifications for which are described in Exhibit
1 attached hereto.
(b) (i) For purposes of the calculation of the performance
bonus referred to in Section 2(a)(ii) hereof for the period May 1, 1994
- December 31, 1994, the specific bonus award composition; minimum,
target and maximum awarded percentages of 20%/40%/60% (i.e. bonus
award as a percentage of base salary); and the minimum, target
and maximum performance measures, as set forth and described in
Exhibit 2 attached hereto, shall be utilized; provided, however,
that the performance bonus for such period shall be two thirds ( ) of
the amount indicated by such calculation.
(ii) For purposes of the calculation of the annual
performance bonus for calendar years 1995, 1996, 1997, 1998 and the
first four (4) months of 1999, the same bonus award composition, the
same award percentages (i.e. awards as a percent of base salary),
and the same performance measures as set forth in Exhibit 2 shall be
used; provided, however, that (A) OshKosh may at its option
reduce the "Corporate (Consolidated Except Essex and Oshkosh Retail)"
component of the bonus award composition from 35% to 25% and add
another bonus award component reasonably related to Employee's
duties and responsibilities equalling 10% of the total; (B) the target
amount for Net Sales and Net Income for the "Essex Retail" component,
shall be the same as the budgeted amounts for 1995, 1996, 1997,
1998 and 1999, respectively, as approved by the Oshkosh board of
directors, with the minimum amount to be 90% and the maximum
amount 120% of the target amount; (C) the target amount for Net
sales and Net Income for the "Corporate (Consolidated Except Essex
and Oshkosh Retail)" component, and the target amount for the Net Sales
and Net Income components, respectively, for Oshkosh B'Gosh Factory
Stores, shall be the same as the budgeted amounts for 1995, 1996, 1997,
1998 and 1999, respectively, as approved by the OshKosh board of
directors, with the Minimum Net Sales amounts, the Maximum Net Sales
amounts, the Minimum Net Income amounts, and the Maximum Net Income
amounts to be such percentages of target amount as are approved for
other executive officers of OshKosh for each such year respectively;
and (D) the performance bonus for the first four (4) months of 1999
shall be one-third ( ) of the amount indicated by the bonus calculation
for the full year 1999.
(iii) Each annual performance bonus shall be computed and
paid within seventy-five (75) days after the end of the fiscal year of
OshKosh to which such bonus relates.
(c) Employee shall also be entitled to participate in any
employee benefits which generally are made available by OshKosh
to its executives during the Employment Period, including those
benefits listed on Exhibit 3 hereto. During the Employment Period,
Employee will be entitled to participate in any life, health,
dental, accident, sickness and disability plans (whether or not
insured), and in any qualified or non-qualified pension or profit
sharing plan, savings plan, stock option plan, deferred compensation
plan or any other fringe benefit plan or program which the Company
may from time to time make available to its executives. Employee
acknowledges that he shall have no vested rights in any such plan or
program except as expressly provided under the terms thereof and that
such plans or programs may be amended or terminated as well as supple-
mented. Notwithstanding the foregoing, Employee shall receive four (4)
weeks of vacation for each complete year of the Employment Period,
including 1994. The vacation period for 1994 shall include a two (2)
week period to accomplish the move to Oshkosh described elsewhere
herein.
(d) The amounts payable to Employee under this Section 2 are
before any deductions therefrom for any taxes required to be with
held by federal, state and local governments.
3. Term and Termination.
(a) The term of this Agreement during which Employee will provide
services to the Companies hereunder (the "Employment Period") will
commence on May 1, 1994 and end on April 30, 1999, unless earlier term-
inated as follows:
(i) The Employment Period will terminate upon the written
agreement of the parties;
(ii) The Employment Period will terminate upon the death or
permanent disability of Employee. The term "permanent disability"
of Employee means the inability of Employee to effectively perform
his duties hereunder on a full-time basis by reason of physical or
mental illness, disability or incapacity for a continuous period of
sixty (60) working days. Physical or mental illness, disability or
incapacity will be deemed to exist if a licensed physician opines
in writing that Employee for medical reasons should terminate or
substantially reduce his services to the Company. If there is any
dispute as to whether Employee is permanently disabled within the
meaning of this Section 3(a)(ii), such dispute shall be submitted
to a licensed physician agreeable to the parties who shall conduct
an examination of Employee for the purpose of resolving such
dispute; provided, however, that if the parties cannot agree upon
a physician within ten (10) days after written notice by
either Employee or OshKosh to the other, a physician designated by the
then President of the Medical Society of Winnebago County, Wisconsin
shall conduct such examination. Employee shall submit to such
examination, and the determination of such physician as to whether
Employee is permanently disabled within the meaning of this Section
3(a)(ii) shall be binding and conclusive on the parties.
(iii) Oshkosh may terminate the Employment Period for cause
upon (a) written notice to Employee stating in reasonable detail the
facts constituting such cause("Written Notice"), and (b) the expiration
of (10) days following receipt by Employee of Written Notice, during
which ten (10) day period, Employee shall be permitted to cure, if
curable, the conduct constituting the alleged cause. For purposes of
this Section 3(a)(iii), the term "cause" means the diversion or
attempted diversion by Employee of business from either of the
Companies for Employee's personal gain or benefit; the commission by
Employee of an act of dishonesty or moral turpitude involving either
of the Companies; gross incompetence in the performance by Employee
of his services hereunder; gross negligence by Employee involving
either of the Companies; habitual use by Employee of alcohol or
narcotics; commission by Employee of a felony or serious mis-
demeanor offense or pleading guilty or nolo contendere to same;
willful misconduct by Employee as determined in good faith by the
Board of Directors of OshKosh which results in a demonstrably
material injury to the Companies; the willful and persistent
failure of Employee to follow a specific directive of the Board of
Directors or the President of OshKosh provided that the directive is
consistent with the terms of this Agreement; or a material breach by
Employee of any provision of this Agreement, including without
limitation any provision contained in Section 4 hereof.
(b) Upon termination of the Employment Period, the Company will
pay to Employee:
(i) The full amount of any unpaid salary earned by
Employee pursuant to Section 2 of this Agreement through and including
the termination date and prorated as appropriate, and neither Essex nor
OshKosh will be obligated to make any further salary payments to
Employee;
(ii) If the termination is for cause, no further bonus
shall be payable other than a bonus which is awardable pursuant to
Section 2 hereof with respect to a calendar year that has already ended
prior to such termination for cause but which has not yet been paid;
(iii) If the termination is because of death or permanent dis-
ability, a bonus pursuant to Section 2 hereof shall be payable for the
year during which such event occurs, but the bonus shall be prorated
based on the number of whole months worked in such year prior to such
event divided by twelve (12) and such prorated bonus shall not be pay-
able until such time as it would otherwise have been payable had such
death or disability not occurred.
(c) Notwithstanding anything to the contrary herein, if for any
reason other than cause or Employee's death or disability,
Employee's employment is terminated by Essex and/or OshKosh before
April 30, 1999, Employee shall be entitled to receive from the date of
such termination through April 30, 1999, in lieu of all other amounts
payable hereunder, a monthly amount of $17,500, and the obligations
set forth in Sections 4 and 5 hereof shall survive such termination.
In the event Employee continues to receive payments pursuant to this
Section 3(c) following termination of the Employment Period, Employee
shall have no obligation to seek other employment or to
otherwise mitigate damages hereunder, provided, however, that if
Employee obtains full-time or substantially full-time employment (i.e.
more than thirty (30) hours a week), whether by another employer or
through self-employment, the amounts he receives from such other
employer or earned pursuant to such self-employment shall be offset,
dollar for dollar, against any payments owing to Employee under this
Section 3(c).
4. Noncompetition.
(a) During the Employment Period and for one (1) full year
thereafter and without regard to the early termination thereof or
whether such early termination is or is not for cause, Employee will
not directly or indirectly:
(i) own, operate, manage, join, finance, control,
participate in the ownership, management, operation or control of, or
be paid or employed by, consult with or acquire any securities of, or
otherwise become associated with or provide assistance to, any entity,
firm, business, activity or enterprise ("Enterprise") which is engaged
in the business of manufacturing, having manufactured, designing,
developing and/or selling products which are the same as or are similar
to the products of the Companies as of the date of termination of
employment hereunder or other apparel products sold by the Companies
during such one (1) year period ("Competing Products") in the same
geographic market in which the Companies operate as of the date of
termination of employment hereunder during such one (1) year period;
(ii) contact, sell or solicit to sell Competing Products to
any entity to whom either Company is selling its products at the time
of the termination of employment hereunder or has sold its products
during the prior twelve (12) months;
(iii) solicit, cause or seek to cause any customer, supplier
or employee (with the exception of Paul Lowry) of either of the
Companies to terminate, curtail or otherwise modify any customer,
supplier or employment relationship with either of the Companies
for the purpose of entering into a customer, supplier, employment or
other relationship with Employee or with any Enterprise with which
Employee is directly or indirectly affiliated.
(b) Notwithstanding the provisions of Section 4(a) hereof,
Employee may acquire securities of any entity the securities of
which are publicly traded, provided that the value of the securities of
such entity held directly or indirectly by Employee following such
acquisition is less than 5% of the total value of the then outstanding
class or type of securities acquired.
(c) Employee acknowledges and agrees that the restrictions set
forth in Section 4(a) hereof are founded on valuable consideration
and are reasonable in duration and geographic area in view of the
circumstances under which this Agreement is executed and that such
restrictions are necessary to protect the legitimate interests of
the Companies. In the event that any provision of Section 4(a)
hereof is determined to be invalid by any court of competent
jurisdiction, the provisions of Section 4(a) shall be deemed to have
been amended and the parties will execute any documents and take
whatever action is necessary to evidence such amendment, so as to
eliminate or modify any such invalid provision and to carry out the
intent of Section 4(a) so to render the terms of Section 4(a)
enforceable in all respects as so modified. Employee acknowledges and
agrees that irreparable injury will result to the Companies in the
event he breaches any covenant contained in Section 4(a) and that
the remedy at law for such breach will be inadequate. Therefore, if
Employee engages in any act in violation of the provisions of Section
4(a), the Companies, and each of them, shall be entitled, in addition
to such other remedies and damages as may be available to them by
law or under this Agreement, to injunctive or other equitable relief to
enforce the provisions of Section 4(a).
5. Unauthorized Disclosure; Inventions and Improvements.
(a) Employee will not knowingly disclose to any person or entity,
other than employees of the Companies or other persons to whom dis-
closure is reasonably necessary or appropriate in connection with
the performance by Employee of his services hereunder, any Confidential
Information obtained by Employee during the Employment Period. Employee
also will not use in any manner any Confidential Information for
Employee's own purposes or for the benefit of any person or entity
except the Companies, whether such use consists of duplication,
removal, oral communication, disclosure, transfer or other
unauthorized use thereof. As used herein, the term "Confidential
Information" refers to all information and materials belonging to,
used by or in the possession of the Companies relating to their
business strategies, products, pricing, customers, technology,
programs, costs, employee compensation, marketing plans, developmental
plans, computer programs, computer systems, inventions, developments,
formulae, processes, designs, drawings and trade secrets of every kind
and character. "Confidential Information" also includes confidential
information belonging to other companies and disclosed to Employee
by the Companies. In addition, the Companies acknowledge that
Employee has been employed for many years in the apparel business
and that as such, has acquired substantial knowledge as to the man-
ufacture, marketing, financing, design and other aspects of the
clothing business. Thus, the information that shall be subject to this
paragraph shall be information that is truly proprietary with the
Companies or any subsidiary or affiliate; that is, information
that could only have been acquired by Employee as the result of his
having been employed by the Companies. Examples of such con-
fidential information are strategic marketing plans unique to the
Companies, proposed new product lines, and new retailing initiatives.
(b) Employee will disclose to the Companies and upon the
Companies' request, assign to them or either of them, without charge,
all of Employee's right, title and interest, if any, in and to any and
all ideas, inventions, discoveries and improvements pertaining in any
manner to the business of the Companies which Employee may make or
conceive, solely or jointly with others, during the Employment Period
(collectively, the "New Developments"). Upon request by the
Companies, or either of them, during or within one (1) year subsequent
to the Employment Period, Employee will do any and all acts and
execute and deliver such documents as may be deemed by the Companies
or either of them or their counsel to be necessary or advisable to
vest in the Companies or either of them all of Employee's right,
title and interest in and to such New Developments and to apply and
obtain domestic or foreign patents, provided that the expenses incurred
in connection with the foregoing shall be borne by the Companies.
6. Common Law of Torts or Trade Secrets. Nothing in this Agreement
shall be construed to limit or negate the common law of torts or trade
secrets where such common law provides the Companies with broader
protection than the protection provided by this Agreement.
7. Expense Reimbursement. The Companies will reimburse Employee for
his out-of-pocket expenses reasonably incurred by his in connection
with the performance of his services hereunder, subject to compliance
with OshKosh's written policy, if any, regarding expense reimbursement.
8. No Conflict with Other Agreements. Employee hereby represents
and warrants that he is not a party to any agreement (whether written
or oral) with any employer other than the Companies, or subject to any
obligations or restrictions under any such prior agreement, including,
without limitation, any obligations and restrictions relating to non-
competition, nonsolicitation, new developments or the like, which are
in conflict with or are violated by this Agreement.
9. Severability. The invalidity or unenforceability of any pro-
vision of this Agreement shall not affect or impair the validity or
enforceability of any other provision and this Agreement shall be con-
strued as if such invalid or unenforceable provision were not contained
herein. Notwithstanding the preceding sentence, if any court of com-
petent jurisdiction shall determine that any geographic or time
restraint provided in this Agreement is too broad as to the area or
time covered, such restraint may be reduced to whatever extent the
court deems reasonable and such restraint may be enforced as reduced.
10. Notice. All notices under this Agreement shall be in writing
and a notice shall be considered to be given and received in all
respects on the day it is personally delivered, faxed or mailed by
certified mail, postage prepaid, addressed as follows or to such other
address as may be designated by one party to the other by notice duly
given:
If to OshKosh or Essex:
OshKosh B'Gosh, Inc.
P.O. Box 300
Oshkosh, WI 54902-0300
Attn: President
FAX: (414) 231-3261
If to Employee:
Paul A. Lowry
c/o Theodore C. Widder, III
Mohs, MacDonald, Widder & Paradise
20 North Carroll Street
Madison, Wisconsin 53703
FAX: (608) 257-1106
11. Litigation; Attorney's Fees. Any controversy or claim arising
out of or related to this Agreement shall be finally settled by binding
arbitration in the City of Milwaukee, Wisconsin in accordance with
the then prevailing Commercial Arbitration Rules of the American
Arbitration Association, and judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof.
Notwithstanding the foregoing, and the rules of the American
Arbitration Association, civil discovery as provided for in Chapter
804 of the Wisconsin Statutes shall be available to either party in the
arbitration proceeding. Each party shall be reimbursed by the other
party for all reasonable legal fees and expenses, if any, reasonably
incurred by it in the enforcement of its or his rights under any pro-
vision of this Agreement.
12. Waiver. A waiver by a party of any breach by the other party of
any provision of this Agreement shall not be deemed to be a waiver by
such first party of any subsequent breach.
13. Assignment. This Agreement may not be assigned by either Essex
or OshKosh without the written consent of Employee, except that if
either OshKosh or Essex shall merge or consolidate with or into, or
transfer substantially all of its business or the assets thereof to
another corporation or other form of business or other entity, this
Agreement shall be assigned to such a successor and this Agreement
shall be expressly assumed, and it shall be binding upon and inure to
its benefit. Employee may not assign, pledge or encumber this
Agreement or any interest herein.
14. Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties hereto, Essex's and OshKosh's
successors and permitted assigns and Employee's heirs and legal rep-
resentatives.
15. Complete Agreement; Amendment. This Agreement constitutes
the complete agreement of the parties concerning its subject matter,
and may be amended only by a written instrument executed by the
parties hereto or their respective successors, assigns, heirs or legal
representatives, as applicable.
16. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of
Wisconsin.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
OSHKOSH B'GOSH, INC.
By /s/ DOUGLAS W. HYDE
Douglas W. Hyde, President
ESSEX OUTFITTERS, INC.
By /s/ BARBARA WIDDER LOWRY
Barbara Widder-Lowry, President
/s/ PAUL A. LOWRY
Management Incentive Compensation Plan -
Design Specifications
Exhibit 1
Management
Incentive
Compensation
Plan - Design
Specifications
Plan Purposes . Focus the efforts of all key management employees on
the maximization of annual profits, while growing
aggressively by offering quality products and services.
. Provide a meaningful incentive geared to the
achievement of specific Company and Responsibility Area
goals.
. Encourage teamwork and cooperation in the achievement
of Company and Responsibility Area goals.
. Recognize differences in the performance of individual
participants.
Plan Year The fiscal year (January through December)
Participants . Will be selected by the President/Chief Executive
Officer and the Executive Vice President/Chief
Operating Officer.
. Selection normally will take place, and will be
communicated to each participant, prior to the
pertinent plan year. Participation for the 1994 plan
year is projected to be around 50 key contributors.
. In those cases when participation begins during a plan
year:
- Participation will be communicated as soon as
possible following selection.
- Newly hired or promoted employees will
participate on a pro-rata basis for the remainder
of the first plan year of their employment or
tenure in a participating position.
- If a participant changes positions during a plan
year, whether due to a promotion, demotion, or
lateral move, that individual's award will be
based on factors such as the individual's overall
contribution, and the portion of the year the
individual actually spent in each position.
Award . Participating positions are grouped by
Opportunities incentive award categories.
. Each incentive category has a target award level
assigned to it.
- The target award is paid if a stated performance
goal(s) is achieved.
- Minimum and maximum performance/award levels are
built around the target performance/award levels.
. This plan's award opportunities will provide 65th
percentile total cash compensation (base plus bonus)
levels if stated target performance goals are achieved.
Target goal levels will be selected to represent
aggressive, but achievable, performance. The following
award opportunities should permit Oshkosh to attain its
performance and compensation objectives.
Award Opportunity (as % of
Incentive Beginning of Year Salary)
Category Minimum Target Maximum
A (CEO, COO) 24% 47% 71%
B (Other Officers) 20% 35% 53%
C (Director-level) 13% 25% 35%
D (Plant Mgrs.) 11% 21% 32%
The award schedule as set forth above, minimum at
approximately 50% of target and maximum at
approximately 150% of target, is typical. Award
interpolation will take place between "minimum,"
"target," and "maximum." (For example, if actual
performance falls exactly midway between the minimum
and target goals, the award would be approximately 75%
of the target award opportunity.)
Based on preliminary estimates, incentive Category B
will include nine participants, Category C will
include 15 participants, and Category D will include
22 participants.
Performance/ . Each participant's award opportunity is
Award Components segmented into one or more components as follows:
Weighting of Award
Opportunity/Perf Factors (Total 100%)
Position Title Responsibility Individual
(Incumbent) Corporate Area Evaluation
Example: Vice 35% 50% 15%
President
Manufacturing
See Appendix A for individual participant weightings.
. One component's performance will not directly affect
the portion of the award opportunity earnable from
another one.
. A participant's final award amount will be determined
as the sum of the awards earned based on the
performance of his pertinent award components.
Performance . Normally one to three performance criteria
Criteria will be established for each performance/award
component (e.g. Corporate component: Net income before
taxes and profit sharing, and Net Sales).
. Target, minimum, and maximum performance levels will be
established for each of the performance criteria.
These performance levels will coincide with the target,
minimum, and maximum award levels referred to
previously. Interpolated performance/reward levels will
be established on a straight-line basis between each of
the above performance/reward levels. If actual
performance falls below the minimum level set forth for
the particular performance criterion, the portion of
the award related to that performance criterion will be
forfeited in its entirety.
. The Corporate Performance component will be measured as
a combination of Net Income (70%) and Net Sales (30%).
"Corporate," for the purposes of calculating the
foregoing, will be defined at the beginning of the plan
year and administered according to such definition for
such year's duration. The definition may differ for
various participant groupings if such difference is
appropriate to accomplish the motivational purposes of
the plan. (See Appendix A.)
. The Responsibility Area component will be embodied in
the Responsibility Area performance criteria that are
impacted by the particular B, C, or D Category
participant. The performance criteria should focus on
quality, delivery, and/or cost.
. Each participant's immediate manager will be
responsible for recommending how much of the Individual
Evaluation component of a participant's award
opportunity has been earned. Each such manager will be
guided by the following:
% of Individual
Individual Portion of Target
Performance Rating Incentive Award Earned
Outstanding 120%-150%
Excellent 100%-120%
Good 80%-100%
Satisfactory 50%- 80%
Unsatisfactory 0%
The Chief Executive Officer and Chief Operating Officer
will review these recommendations and finalize the
Individual Evaluation "performance score."
Final Award . The final incentive award is determined as the sum of
the awards earned based on Corporate, Responsibility
Area, and/or Individual Evaluation performance. See
Appendix B for award calculation examples.
Termination . If the participant's employment is terminated during a
plan year for reason of death, disability, or normal or
early retirement, a tentative award will be calculated
(at year-end) as if the participant had remained
employed as of the end of the plan year. The final
award will be calculated by multiplying the tentative
award by a proration factor. The proration factor will
be equal to the number of full weeks of employment
divided by 52.
. If a participant's employment is terminated during a
plan year for any other reason, an incentive award
normally will not be paid. However, the Chief
Executive Officer and the Chief Operating Officer may
exercise discretion in this matter.
Form and . Payments will be made in cash as soon as
Timing of practicable following the release of audited
Payments results for the plan year.
Appendix A - Incentive Compensation
Plan Award Components
Appendix A
Oshkosh B'Gosh, Inc.
Incentive Compensation Plan Award Components
Incentive Responsibility Individual
Category Name Corporate Area Evaluation
A Doug Hyde 85* 15
A Mike Wachtel 85 15
B Mike Donabauer 65* 20 15
B Dave Omachinski 50* 35 15
B Tony Giordano 35 50 15
B Jon Dell'Antonia 35 50 15
B Don Carlson 35 50 15
B Bill Wyman 35 50 15
B Ken Masters 35 50 15
B Chips Wood 25 60 15
B Pat Garvey 25 60 15
C Larry Habeck 35 50 15
C Greg Spaeth 35 50 15
C Marty Smith 35 50 15
C Mark Greenspan 25 60 15
C Gary Brock 25 60 15
C D. Hursh 25 60 15
C Harold Brown 25 60 15
C Bobby Morrison 25 60 15
C Don Hess 25 60 15
C Eddie White 25 60 15
C Aaron Poore 25 60 15
C Lee Tiegen 25 60 15
C Steve Fischer 25 60 15
C Janell Cleveland 25 60 15
C Larry Delk 25 60 15
D All Plant Managers 20 65 15
*Denotes Corporate responsibility defined as total consolidated performance of
all corporate entities (exclusive of Rio Sportswear, Inc. for 1994).
All others - Corporate component is defined as the aggregate performance of all
entities that market product under the Oshkosh B'Gosh name.
Appendix B - Award Calculation - Examples
Appendix B
Oshkosh B'Gosh, Inc.
Award Calculation - Examples
Incentive Category
Award Opportunity (As % of Salary)
Minimum Target Maximum
A (CEO, COO) 24% 47% 71%
B (Other Officers) 20% 35% 53%
C (Directors and 13% 25% 35%
Regional Sales Mgrs)
D (Plant Mgrs) 11% 21% 32%
Minimum Target Maximum
The above as a percent 50% (approx) 100% 150% (approx)
of the target opportunity
Appendix B
Oshkosh B'Gosh, Inc.
Award Calculation - Examples
Vice President, Manufacturing
Target = 35% of Salary
Overall Award Structure
Award Composition
(at target) Performance Measure Goals
35% Corporate:
. Sales (30%)
. Income (70%)
50% Responsibility Area (Weighting):
. Quality (30%) Irregulars (% of):
3.0% Minimum
2.0% Target
1.5% Maximum
. Delivery (40%) Work Order Completion:
92% Minimum
95% Target
97% Maximum
. Cost (30%) Cost per Minute:
+10% Minimum
Current: Target
-10% Maximum
15% Individual
. Succession Plan TBD
. Manufacturing TBD
Effectiveness
. Service Task Force TBD
Participation
Appendix B
Oshkosh B'Gosh, Inc.
Award Calculation - Examples
Example #1 All Goals Attained at Target
Sales: At Target
Income: At Target
Irregular Levels: 2%
Work Order Completion: 95%
Cost Per Minute: Current Levels
Succession Planning
Manufacturing Effectiveness At Target
Service Task Force Participation
VP - Manufacturing: Target Award 35%
Score = 35% Corporate Measures
10.5% = (10.5% x 100%) Sales
(30% x 35% = 10.5%)
24.5% = (24.5% x 100%) Net Income
(70% x 35% = 24.5%)
50% Responsibility Area
15% = (15% x 100%) Quality
(30% x 50% = 15%)
15% = (15% x 100%) Cost
(30% x 50% = 15%)
20% = (20% x 100%) Delivery
(40% x 50% = 20%)
15% Individual Evaluation
100%
Payout = Performance Target
Score X Opportunity
100% X 35% = 35%
Appendix B
Oshkosh B'Gosh, Inc.
Award Calculation - Examples
Example #2 Mixed Goal Attainment
Sales: Midway Between Minimum and Target
Income: Midway Between Minimum and Target
Irregular Levels: 1.5% (Maximum)
Work Order Completion: 97% (Maximum)
Cost Per Minute: -10% (Maximum)
Succession Planning
Manufacturing Effectiveness Excellent (Maximum)
Service Task Force Participation
VP - Manufacturing: Target Award 35%
Score = 26.3% Corporate Measures
7.9% = (10.5% x 75%) Sales
(30% x 35% = 10.5%)
18.4% = (24.5% x 75%) Net Income
(70% x 35% = 24.5%)
75% Responsibility Area
22.5% = (15% x 150%) Quality
(30% x 50% = 15%)
22.5% = (15% x 150%) Cost
(30% x 50% = 15%)
30% = (20% x 150%) Delivery
(40% x 50% = 20%)
22.5%Individual Goals (15% x 150%)
123.8%
Payout = Performance Target
Score X Opportunity
123.8% X 35% = 43.33%
Appendix B
Oshkosh B'Gosh, Inc.
Award Calculation - Examples
Example #3 Mixed Goal Attainment
Sales: Below Minimum
Income: Below Minimum
Irregular Levels: 1.5% (Maximum)
Work Order Completion: 95% (Target)
Cost Per Minute: +10% (Minimum)
Succession Planning
Manufacturing Effectiveness At Target
Service Task Force Participation
VP - Manufacturing: Target Award 35%
Score = 0% Corporate Measures
0% = (10.5% x 0%) Sales
(30% x 35% = 10.5%)
0% = (24.5% x 0%) Net Income
(70% x 35% = 24.5%)
50% Responsibility Area
22.5% = (15% x 150%) Quality
(30% x 50% = 15%)
7.5% = (15% x 50%) Cost
(30% x 50% = 15%)
20% = (20% x 100%) Delivery
(40% x 50% = 20%)
15% Individual Goals (15% x 150%)
65.0%
Payout = Performance Target
Score X Opportunity
65.0% X 35% = 22.75%
Paul Lowry
Minimum Award 20% of Salary/Target Award 40% of Salary*/
Maximum Award 60% of Salary
*Base Salary $150,000
Award
Composition Performance
(at Target) Measure Specifics Target Range
35% Corporate(Consolidated Except Essex and Oshkosh Retail)
.(30%) Sales Net Sales $253,108,000 Minimum
$281,231,000 Target
$337,477,000 Maximum
.(70%) Income Net Income before Profit $17,748,000 Minimum
Sharing Contribution, $23,664,000 Target
Incentive Compensation, $28,397,000 Maximum
Extraordinary Items, Franchise
and Income Taxes
50% Responsibility Area (Retail)
For Essex Retail
.(70%) Income Net Income before Profit $7,710,000 Minimum
Sharing Contribution, $9,779,000 Target
Incentive Compensation, $11,735,000 Maximum
Extraordinary Items, Franchise
and Income Taxes*
PLUS
For Oshkosh B'Gosh Factory Stores
Net Income before Corporate
Allocations
.(30%) Sales Net Sales $95,819,000 Minimum
$106,466,000 Target
$127,759,000 Maximum
15% Individual Review by CEO Satisfactory:Minimum
Evaluation Good: Target
Outstanding: Maximum
100%
*Extraordinary items are defined as non-recurring unusual expense or income
items such as license agreement terminations, plant closures, or the effect of
litigation.
BENEFIT SUMMARY FOR VICE PRESIDENT - CORPORATE OFFICE
INCENTIVE COMPENSATION PLAN
The amount of the bonus is dependent upon the level of performance in achieving
company, departmental, and individual goals. The bonus is usually payable in
February for the prior year's performance and is taxable in the year in which
it is paid.
DEFERRED COMPENSATION
The employee can defer a percentage of income each pay period. The money earns
interest equal to the prime rate. The money is not taxable until withdrawn.
PERSONAL AUTOMOBILE
The company provides an automobile (with a value of up to $30,000) for personal
use by the officer.
PROFIT SHARING
An employee who has completed one year of service and is at least 21 years of
age automatically become a participant in the Oshkosh B'Gosh, Inc. non-
qualified Profit Sharing Plan. The percentage of gross earnings contributed to
the plan annually is determined by the Board of Directors and can vary from 0%
to 15%. Each participant in the plan receives the same percentage of their
gross earnings. Upon entry into the profit sharing plan, the employee is 100%
vested.
The Profit Sharing Plan is intended to supplement retirement benefits,
therefore, the funds in an employee's account are unavailable until retirement,
death or termination of employment. Upon termination, the entire account
balance is payable. The benefit payment does not qualify for a rollover to
defer taxes.
PENSION PLAN
The Pension Plan is designed to provide an employee with income upon
retirement. As an employee works for OshKosh B'Gosh the pension benefit
continues to accumulate. An employee who has completed one year of service and
is at least 21 years of age automatically becomes a participant in the 100%
company-funded Pension Plan. An employee becomes fully vested in the pension
plan upon completing 5 vested years of service. A vested year is one in which
the employee has been credited with at least 1,000 hours of service. The
employee does not have any vested interest in the plan until completing 5
vested years. The formula for calculating the age 65 monthly benefit is: 5
consecutive years of earnings which produce the highest monthly average,
multiplied by 1%, multiplied by years of service.
A vested employee can request early reduced retirement benefits after reaching
age 60 or full benefits after reaching age 65. An employee leaving the company
who is not yet retirement age leaves with a deferred vested benefit and can
apply for the benefit upon reaching retirement age. If the benefit has a
present day value of less than $3,500, it will be automatically paid in a lump
sum to the employee, generally within three months after termination.
HEALTH CARE COVERAGE
In order to provide protection to employees and their dependents in the event
of illness or injury, OshKosh B'Gosh offers health care coverage. Employees
are eligible for health care coverage from the first day of employment and may
elect either single or family coverage. Employees have three plans to choose
from: HMO of Wisconsin, Network Health Plan, or OshKosh B'Gosh, Inc., self-
funded plan. Once employees choose coverage, they may change their election
only once per year during January. Employees have 30 days from date of hire to
enroll in the health plan. An employee making late application must first be
approved by the insurance company and could be denied coverage.
OshKosh B'Gosh pays 100% of the premium cost.
SICK LEAVE/SALARY CONTINUATION
OshKosh B'Gosh provides salary continuation for a period of time during which
an employee is ill or injured. The amount of time allowed is subject to the
discretion of the C.O.O.
LONG-TERM DISABILITY
The long-term disability program is designed to provide a benefit of 60% of an
employee's regular monthly pay up to a maximum of $5,000 per month when the
employee is unable to work due to a serious debilitating illness or injury.
The monthly payments begin after a 180 day waiting period and are paid for
total or partial disability until the employee is able to return to work. If
the disability qualifies an employee for social security or workers'
compensation benefits, the long-term disability benefit would be reduced by the
amounts received. The company pays 100% of the premium for the employee and
adds the premium cost to the employee's earnings at the end of the year. The
employee pays taxes on the premium, but under current tax law, benefits paid
are non-taxable.
LIFE INSURANCE
Life insurance helps provide financial assistance to family members in the
event of the employee's death. The level of term life insurance provided by
OshKosh B'Gosh, Inc., is $50,000. The employee will need to name a beneficiary
upon enrollment, which may be changed in writing at any time. Employees also
have an additional $100,000 of coverage for accidental death 24 hours per day,
7 days per week. The company pays for 100% of both premiums.
SUPPLEMENTAL LIFE INSURANCE
OshKosh B'Gosh provides supplemental life insurance in the amount of $150,000.
The premium is paid by the company but the amount of the premium is added to
the employee's W-2 form as additional taxable income.
FLEXIBLE SPENDING PLAN (SECTION 125)
OshKosh B'Gosh, Inc., offers a benefit which allows certain expenses to be
deducted from the employee's pay check before taxes. Depending on the
employee's federal tax bracket, between 28% - 40% in taxes can be saved
(including social security and state taxes) on allowable expenses, thereby
providing more disposable income for other things. Allowable expenses include:
group insurance premiums, and two Flexible Spending Accounts -- non-reimbursed
medical and dependent care. Employees can participate in one or all three
portions of the plan after meeting the eligibility requirements. All employees
are eligible for before-tax payment of group insurance premiums at the time of
insurance enrollment. Full-time employees are eligible to enroll in one or
both Flexible Spending Accounts. Enrollment takes place prior to January and
July of each year, after the employee completes six months of employment.
VACATION SCHEDULE
Employees need to relax and take time off work to pursue their outside
interests. Paid vacations are provided for this purpose. Vacation will
available for use according to the following schedule:
Employed less than 1 year Two weeks
Employed 1 through 4 years Three weeks per year
Employed 5 or more years Four weeks per year
Although vacation is earned during an anniversary year, it is available for use
on a calendar year basis. Vacation time must be used by the end of the
calendar year or it is forfeited. When an employee terminates, unused earned
vacation will be paid on a prorated basis. If an employee used more vacation
than earned, this amount will be deducted from the employee's final check.
PAID HOLIDAYS
Eligibility for paid holidays begins upon date of hire. Specific dates for
holiday observation are published each year. The 10 paid holidays are as
follows:
New Years Day Fourth of July Day after Thanksgiving New Years Eve Day
Good Friday Labor Day Christmas Eve Day
Memorial Day Thanksgiving Day Christmas Day
JURY DUTY
OshKosh B'Gosh believes it is the civic responsibility of its employees to
accept jury duty service. A full-time employee serving on jury duty shall be
allowed to serve without a loss of income. To be eligible for excused absence
for jury duty, the employee notifies their supervisor upon receipt of the
notice to serve. The employee presents the jury duty pay receipt to the Human
Resources Department. The employee will be compensated by OshKosh B'Gosh for
the difference between regular pay and jury duty pay, thus maintaining normal
income.
BEREAVEMENT PAY
OshKosh B'Gosh recognizes a time of bereavement is very difficult for an
employee. Every effort will be made to insure an employee is able to attend to
family matters prior to making the transition back to the normal work routine.
Therefore, an employee is eligible for up to three days excused absence with
pay in the event of a death in the immediate family. Immediate family consists
of parents, spouse, children, brothers, sisters, grandparents, grandchildren,
spouse's parents, spouse's grandparents, step-parents, step-sister, step-
brother and step-children.
LEAVES OF ABSENCE
Under the Family Medical Leave Act all employers with 50 or more permanent
employees within a 75-mile radius must allow employees of either sex, who have
met the eligibility requirements, a leave of absence for: (1) the birth or
adoption of the employee's child; (2) the care of the employee's child, spouse,
or parent with a serious health condition; (3) the employee's own serious
health condition.
OshKosh B'Gosh recognizes that occasionally employees will need time away from
work to attend to critical personal matters that do not fit in the category of
Family Medical Leave. It is the company's intent to grant personal leaves on a
case-by-case basis based upon both the company and employee needs.
TUITION REIMBURSEMENT
OshKosh B'Gosh recognizes the value of continuing education both to the
employee and to the company. In support of this, the company reimburses the
employee for tuition and text book costs for pre-approved business related
courses. Reimbursement will be made upon successful completion of the course
and proof of payment. Tuition reimbursement is limited to $1,500 per calendar
year.
GARMENT/PROMOTIONAL ITEM PURCHASES
In order to identify with the company products and promote the company image
within the community, employees may purchase up to four garments per week from
an OshKosh B'Gosh wholesale catalog at cost plus sales tax. "Garment
Requisition" forms are completed and deposited in a drop box located within the
facility. Garments are available for pick up according to the schedule posted
at each facility. Garments must be paid for at the time of pick up. An
unlimited amount of promotional items are also available for purchase through
this system, using a separate Requisition form.
An employee and their immediate family (same household) are also entitled to a
20% discount off the regular ticket price at the OshKosh B'Gosh Factory Outlet
Store located closest to their facility.
OSHKOSH COUNTRY CLUB
The annual social membership of this association is 100% paid for by OshKosh
B'Gosh. The employee is responsible for monthly fees and charges.
YMCA MEMBERSHIP
OshKosh B'Gosh pays 100% of an annual membership at the Appleton, Oshkosh or
Fond du Lac YMCA. Fees for YMCA classes or programs attended by the employee
and their immediate family are the responsibility of the employee. Employees
who want to become a member should contact the accounting department for a
membership application card for completion and forward it to the YMCA
Membership Office.
OSHKOSH POWER AND BOAT MEMBERSHIP
The annual social membership of this association is 100% paid by OshKosh
B'Gosh. The employee is responsible for monthly fees and charges.
PAYPERIOD
The employee is paid monthly on the 15th which covers the payperiod from the
1st of the month through the last day of the month.
CASUAL DAY
For the comfort and enjoyment of employees, Casual Day is observed every
Friday!
This summary is not intended to be a complete description of benefits and is
subject to change. Please refer to summary plan descriptions and to policies
and procedures for detailed descriptions of benefits. In the case of a
misunderstanding, official plan documents and company policies and procedures
will rule.
EXHIBIT 10.16
OshKosh B'Gosh, Inc.
112 Otter Avenue
Oshkosh, Wisconsin 54901-5008
CREDIT AGREEMENT
June 24, 1994
Firstar Bank Milwaukee,
National Association
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Bank One, Milwaukee, NA
111 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Harris Trust and Savings Bank
111 West Monroe Street
Chicago, Illinois 60603
Norwest Bank Wisconsin,
National Association
100 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Gentlemen:
OshKosh B'Gosh, Inc., a Delaware corporation with its principal
offices located in the City of Oshkosh, Wisconsin (the "Company"), hereby
requests that each of you (collectively the "Banks" and individually a "Bank")
severally agree to make loans to the Company from time to time on the terms
and conditions set forth below:
ARTICLE I
LOANS AND NOTES
1.1 Revolving Credit. From time to time prior to June 24, 1997
or the earlier termination in full of the Commitments (in either case the
"Termination Date"), the Company may obtain loans from each of the Banks, pro
rata according to each Bank's Percentage Interest, up to an aggregate
principal amount equal to the amount by which (i) $60,000,000 (the "Aggregate
Commitment" and as to each Bank's respective Percentage Interest thereof, its
"Commitment"), as terminated or reduced pursuant to section 1.7, exceeds (ii)
the sum of (A) the aggregate amount of Letter of Credit Obligations (as
defined in section 10.1(o) below), and (B) the aggregate face amount of
outstanding Commercial Paper (as defined in section 10.1(d) below), including
for this purpose all Nicolet Funding Corp. Loans (as defined in section 1.9(e)
below). The Commitment and Percentage Interest of each Bank is set forth in
the table below:
Percentage
Name of Bank Commitment Interest
Firstar Bank Milwaukee, $19,500,000 32.5%
National Association
Bank One, Milwaukee, NA $16,500,000 27.5%
Harris Trust and Savings Bank $12,000,000 20.0%
Norwest Bank Wisconsin, $12,000,000 20.0%
National Association
Total: $60,000,000 100%
The failure of any one or more of the Banks to lend in accordance with its
Commitment shall not relieve the other Banks of their several obligations
hereunder, but no Bank shall be liable in respect to the obligation of any
other Bank hereunder or be obligated in any event to lend in excess of its
Commitment. Subject to the limitations of section 2.2(d)(3) the Company may
repay such loans and reborrow hereunder from time to time prior to the
Termination Date. Each loan hereunder from the Banks collectively shall be in
a multiple of $100,000 (except that any such loan subject to a LIBOR Pricing
Option shall be in an amount of $1,000,000 or any multiple of $100,000 in
excess of such amount). The loans from each Bank advanced under this section
1.1 shall be evidenced by a single promissory note of the Company (each a
"Revolving Credit Note", and collectively with the Demand Notes (as defined in
section 1.2 below), sometimes called the "Notes") in the form of Exhibit 1.1
annexed hereto, payable to the order of the lending Bank.
1.2 Demand Line of Credit. There is hereby established a
revocable line of credit in the aggregate principal amount of $40,000,000 (the
"Demand Line") for the current use of the Company. The amount of the Demand
Line provided by each Bank is set forth in the table below:
Name of Bank Demand Line
Firstar Bank Milwaukee, $13,000,000
National Association
Bank One, Milwaukee, NA $11,000,000
Harris Trust and Savings Bank $8,000,000
Norwest Bank Wisconsin, National
Association $8,000,000
Total: $40,000,000
Each Bank in its sole discretion may decline to make advances under the Demand
Line at any time without having made demand for payment. Any Bank so
declining to make advances shall immediately give written notice of such
declination to the Company and the Agent, but failure to give such notice
shall not affect the validity or effectiveness of such declination. Any loans
under the Demand Line shall be made pro rata according to the participating
Banks' respective shares of the Demand Line from time to time in effect, up to
an aggregate principal amount equal to (i) $40,000,000 minus (ii) the amount
by which (A) the sum of (1) the outstanding principal amount of all revolving
credit loans made pursuant to section 1.1, (2) the aggregate amount of Letter
of Credit Obligations, and (3) the aggregate face amount of outstanding
Commercial Paper, including for this purpose all Nicolet Funding Corp. Loans,
exceeds (B) the Aggregate Commitment. The Demand Line shall be unused for at
least 90 consecutive days during each twelve-month period commencing July 1 of
a given year and ending June 30 the following year. Each advance under the
Demand Line from the Banks collectively shall be in a multiple of $100,000
(except that any such advance subject to a LIBOR Pricing Option shall be in an
amount of $1,000,000 or any multiple of $100,000 in excess of such amount).
The advances under the Demand Line from each Bank shall be evidenced by a
single promissory note of the Company (each a "Demand Note", and collectively
with the Revolving Credit Notes, sometimes called the "Notes"), payable on
demand to the order of the lending Bank in the form of Exhibit 1.2 attached
hereto. The Company acknowledges that all amounts due under the Demand Notes
are payable on demand, regardless of whether the Company has breached any of
the terms, covenants and conditions set forth in this Agreement, the Notes,
any Collateral Document or any other document or agreement applicable to the
loans described herein.
1.3 Notes. The Notes shall be executed by the Company and
delivered to the Banks prior to the initial loans. Although the Notes shall
be expressed to be payable in the full amounts specified above, the Company
shall be obligated to pay only the amounts actually disbursed to or for the
account of the Company, together with interest on the unpaid balance of sums
so disbursed which remains outstanding from time to time, at the rates and on
the dates specified in the Notes, together with the other amounts provided
therein.
1.4 Letters of Credit.
(a) Firstar Bank Milwaukee, N.A. and such other Bank or
Banks as the Company may from time to time designate with the
consent of the Agent (each an "LOC Bank") shall from time to time
when so requested by the Company issue standby and import letters
of credit, respectively (each a "Letter of Credit" and
collectively the "Letters of Credit") for the account of the
Company up to an aggregate face amount equal to the amount by
which (i) the sum of (A) the Aggregate Commitment and (B) the
Demand Line from time to time in effect exceeds (ii) the sum of
(A) the outstanding principal amount of loans made pursuant to
sections 1.1 and 1.2, (B) the aggregate amount of all unpaid
Reimbursement Obligations (as defined in section 10.1(r) below)
and (C) the aggregate face amount of outstanding Commercial Paper,
including for this purpose all Nicolet Funding Corp. Loans. In
addition to the foregoing aggregate limitation on Letters of
Credit, standby Letters of Credit shall not exceed $25,000,000 in
aggregate face amount at any time outstanding and import Letters
of Credit shall not exceed $35,000,000 in aggregate face amount at
any time outstanding. Each LOC Bank hereby grants to each other
Bank, and each other Bank hereby agrees to take, a pro rata
participation in each Letter of Credit issued hereunder and all
rights (including rights to reimbursement from the Company under
paragraph (c) below) and obligations associated therewith in
accordance with the Percentage Interest of each Bank. In the
event of any drawing on a Letter of Credit which is not reimbursed
by or on behalf of the Company, each Bank shall pay to the
appropriate LOC Bank a proportionate amount of such drawing equal
to its Percentage Interest therein. Each LOC Bank shall divide
the proceeds of any reimbursement of a drawing on a Letter of
Credit with the other Banks that have made payment to the LOC Bank
pursuant to the foregoing sentence, pro rata according to the
respective contributions of such other Banks.
(b) The Company agrees to pay to the Agent for the pro
rata benefit of the Banks a letter of credit fee in respect of
each standby Letter of Credit in the amount of three quarters of
one percent (3/4%) per annum of the face amount of such standby
Letter of Credit. Such fees shall be payable quarterly in arrears
on the first day of each calendar quarter.
(c) The Company hereby unconditionally promises to pay to
the appropriate LOC Bank upon demand, without defense, setoff or
counterclaim, the amount of each drawing under Letters of Credit
issued by such LOC Bank plus interest on the foregoing from the
date due at the Prime Rate (as defined in section 2.2(b)(2)).
(d) Reliance on Documents. Delivery to the LOC Banks of
any documents strictly complying on their face with the
requirements of any Letter of Credit shall be sufficient evidence
of the validity, genuineness and sufficiency thereof and of the
good faith and proper performance of drawers and users of such
Letter of Credit, their agents and assignees; and the LOC Banks
may rely thereon without liability or responsibility with respect
thereto, even if such documents should in fact prove to be in any
or all respects invalid, fraudulent or forged.
(e) Non-Liability for Other Matters. The LOC Banks shall
not be liable to the Company for (i) honoring any requests for
payment under any Letter of Credit which strictly comply on their
face with the terms of such Letter of Credit, (ii) any delay in
giving or failing to give any notice, (iii) errors, delays,
misdeliveries or losses in transmission of telegrams, cables,
letters or other communications or documents or items forwarded in
connection with any Letter of Credit or any draft, (iv) accepting
and relying upon the name, signature or act of any party who is or
purports to be acting in strict compliance with the terms of any
Letter of Credit; or (v) any other action taken or omitted by the
LOC Banks in good faith in connection with any Letter of Credit or
any draft; except only that the Company shall have a claim against
an LOC Bank, and such LOC Bank shall be liable to the Company, to
the extent of damages suffered by the Company which the Company
proves were caused by (A) the LOC Bank's willful misconduct or
gross negligence or (B) the LOC Bank's willful and wrongful
failure to pay under any Letter of Credit after the presentation
to it of documents strictly complying with the terms and
conditions of the Letter of Credit.
1.5 Use of Proceeds. The Company represents, warrants and
agrees that:
(a) The proceeds of the loans made hereunder will be used
solely for the following purposes: (i) contemporaneously with the
making of the initial loan hereunder, the proceeds of such initial
loan shall be used to the extent necessary to pay all indebtedness
of Company outstanding under its demand lines of credit with
Firstar Bank Milwaukee, N.A. and Norwest Bank Wisconsin; and (ii)
all other proceeds shall be used (A) for the repayment at maturity
of outstanding Commercial Paper (to the extent necessary), and (B)
for working capital and other lawful corporate purposes.
(b) No part of the proceeds of any loan made hereunder
will be used to "purchase" or "carry" any "margin stock" or to
extend credit to others for the purpose of "purchasing" or
"carrying" any "margin stock" (as such terms are defined in the
Regulation U of the Board of Governors of the Federal Reserve
System), and the assets of the Company and its Subsidiaries do not
include, and neither the Company nor any Subsidiary has any
present intention of acquiring, any such security.
1.6 Commitment Fee. The Company shall pay to the Agent for the
account of the Banks, pro rata according to their respective Percentage
Interests, a commitment fee computed at the rate of one-eighth of one percent
(1/8%) per annum on the Aggregate Commitment (as reduced pursuant to section
1.7). Such commitment fees shall accrue during the period from the date of
this Agreement to and including the Termination Date and be payable quarterly
in advance on the date of the initial loan and on the first day of each
calendar quarter thereafter.
1.7 Termination or Reduction.
(a) The Company shall have the right, upon five business
days' prior written notice to each Bank, to ratably reduce in part
the Commitments, provided, however, that (i) each partial
reduction of the Aggregate Commitment shall be in the amount of
$100,000 or an integral multiple thereof, and (ii) no reduction
shall reduce the Aggregate Commitment to an amount less than the
sum of (A) the aggregate principal amount of outstanding revolving
credit loans made under Section 1.1, (B) the aggregate amount of
Letter of Credit Obligations, and (C) the aggregate face amount of
outstanding Commercial Paper, including for this purpose all
Nicolet Funding Corp. Loans. Subject to the limitations of the
preceding sentence, the entire Commitments of all of the Banks may
be terminated in whole at any time upon five Business Days' prior
written notice to each Bank.
(b) Each Bank in its sole discretion may at any time
reduce or terminate its individual Demand Line by giving written
notice of such reduction or termination to the Agent and the
Company. If any Bank shall decline to make additional advances
pursuant to the Demand Line or shall demand payment of any amount
outstanding under its Demand Note, the aggregate Demand Line shall
automatically be reduced by an amount equal to such Bank's
individual Demand Line.
1.8 Optional Prepayment. The Notes may be prepaid in whole or
in part at the option of the Company at any time without premium or penalty
except as otherwise provided in section 2.2(d)(3). All prepayments shall be
applied as set forth in section 2.4(b) pro rata among the Banks in accordance
with their respective Percentage Interests. All prepayments shall be
accompanied by interest accrued on the amount prepaid through the date of
prepayment.
1.9 Commercial Paper.
(a) The Company may issue Commercial Paper from time
to time, including sales of Commercial Paper through one or more
of the Banks acting as placement agent pursuant to separate
agreements between the Company and such Bank or Banks. The
aggregate face amount of all outstanding Commercial Paper (but not
including for this purpose any Nicolet Funding Corp. Loans) shall
not at any time exceed the lesser of (i) $60,000,000 and (ii) the
amount by which (A) the sum of (1) the Aggregate Commitment and
(2) the Demand Line in effect from time to time, exceeds (B) the
sum of (1) the outstanding principal amount of loans made pursuant
to sections 1.1 and 1.2, (2) the aggregate amount of Letter of
Credit Obligations and (3) the outstanding principal amount of all
Nicolet Funding Corp. Loans. No Commercial Paper shall have a
term to maturity greater than 100 days.
(b) The Company shall pay a Commercial Paper
placement fee in respect of Commercial Paper placed by any of the
Banks computed at a rate of one-quarter of one percent (1/4%) per
annum of the aggregate face amount of such Commercial Paper,
payable at the time such Commercial Paper is issued as follows:
(i) one-eighth of one percent (1/8%) to the Bank acting as
placement agent for the sale of such Commercial Paper and (ii)
one-eighth of one percent (1/8%) to the Agent for the pro rata
benefit of the Banks.
(c) The Company will give written notice to the
Agent in the form of Part 1 to Exhibit 2.1 hereto on each Business
Day on which there is any change in the aggregate outstanding face
amount of Commercial Paper and Nicolet Funding Corp. Loans,
setting forth the aggregate principal amount of all Commercial
Paper and Nicolet Funding Corp. Loans then outstanding after
giving effect to the issuance or repayment of Commercial Paper and
Nicolet Funding Corp. Loans (as the case may be) taking place on
such Business Day.
(d) For all purposes of this Agreement, the
outstanding face amount of all Commercial Paper (but not including
for this purpose any Nicolet Funding Corp. Loans) shall be deemed
to be use of the Aggregate Commitment. The principal amount of
outstanding loans (including Nicolet Funding Corp. Loans) and the
face amount of outstanding Letters of Credit shall be deemed to be
use of the Aggregate Commitment to the extent that the Aggregate
Commitment exceeds the face amount of outstanding Commercial Paper
(but not including for this purpose any Nicolet Funding Corp.
Loans) from time to time, and otherwise shall be deemed to be use
of the Demand Line.
(e) The Company may also obtain direct loans from
Nicolet Funding Corp. ("Nicolet Funding Corp. Loans") from time to
time. The aggregate principal amount of such loans at any time
outstanding shall not exceed the lesser of (i) $20,000,000 and
(ii) the sum of (A) the amount by which the Aggregate Commitment
exceeds the aggregate principal amount of Commercial Paper from
time to time outstanding, plus (B) the amount available to be
borrowed from time to time under the Demand Line provided by
Norwest Bank Wisconsin, National Association. Such loans shall
have maturities not exceeding 100 days, and shall bear interest at
rates to be agreed upon by the Company and Nicolet Funding Corp.
ARTICLE II
ADMINISTRATION OF CREDIT
2.1 Borrowing Procedure. Loans hereunder shall be made at the
principal banking office of the Agent in Milwaukee, Wisconsin, on written or
telephonic notice from the Company to the Agent received not later than 10:30
a.m. on the date of the proposed borrowing (subject to the notice requirement
of section 2.2(c)(2) if the Company wishes to elect a LIBOR Pricing Option
with respect to such loan), which notice shall specify the date and the
aggregate principal amount of such borrowing. Each written request for a
borrowing hereunder shall be given in the form of Part 2 to Exhibit 2.1
hereto; each telephonic request for a borrowing hereunder shall be confirmed
within three (3) Business Days of the borrowing date by delivery of a written
request in such form. Upon its receipt of such notice from the Company, the
Agent shall promptly give notice to the other Banks, each of which shall have
its respective portion of the loans available to the Agent in Milwaukee in
immediately available funds not later than 2:00 p.m. on the date of the
borrowing. Out of the funds received from the Banks for the making of the
loans hereunder, the Agent will make a loan to the Company in such amount on
behalf of such Banks. Notes and other required documents delivered to the
Agent for the account of each Bank shall be promptly delivered to such Bank,
or in accordance with instructions received from it, together with copies of
such other documents received in connection with the borrowing as such Bank
shall request.
2.2 Interest Calculation.
(a) Interest. The principal amount of the indebtedness
from time to time evidenced by the Notes shall accrue and bear
interest at a rate per annum which shall at all times equal the
Applicable Rate (as defined in section 2.2(b)). To the extent
that any portion of the indebtedness evidenced by the Notes bears
interest at the Prime Rate (defined below), the Company will pay
such interest monthly in arrears on the last day of each month.
On the last day of each LIBOR Interest Period or on any earlier
termination of any LIBOR Pricing Option, the Company will pay the
accrued and unpaid interest on the indebtedness evidenced by the
Notes which was subject to the LIBOR Pricing Option which expired
or terminated on such date. On any stated or accelerated maturity
of the indebtedness evidenced by the Notes all accrued and unpaid
interest on such indebtedness shall be forthwith due and payable,
including without limitation any accrued and unpaid interest on
such indebtedness which is subject to a LIBOR Pricing Option. In
addition, the Company will, on demand, pay interest on any overdue
installments of principal and pay interest during the continuance
of any Event of Default both at a rate per annum which is at all
times equal to the sum of (a) the Applicable Rate (or, if more
than one Applicable Rate is then in effect, the weighted average
of the Applicable Rates then in effect), plus (b) 2% per annum.
(b) Applicable Rate. The term "Applicable Rate" shall
mean:
(1) With respect to any portion of the indebtedness
evidenced by the Notes which is at the time subject to an
effective LIBOR Pricing Option, the applicable LIBOR Rate
set forth in section 2.2(c)(1)(D).
(2) With respect to any portion of the indebtedness
evidenced by the Notes which is not at the time subject to
an effective LIBOR Pricing Option, the rate announced by
Firstar Bank Milwaukee, N.A. from time to time as its prime
rate (changing as and when such prime rate changes) (the
"Prime Rate").
(c) The LIBOR Pricing Options. The following provisions
shall apply to the LIBOR Pricing Options:
(1) Certain Definitions. For purposes of this
Agreement:
(A) The term "Basic LIBOR Rate" as applied to
any LIBOR Interest Period shall mean the per annum
rate of interest determined by the Agent (which shall
be applicable to all of the Banks) to be the average
(rounded up, if necessary, to the nearest 1/16 of 1%)
of the offered rates for deposits in U.S. dollars for
the applicable LIBOR Interest Period which appear on
the Reuters Screen LIBO Page (or such other page on
which the appropriate information may be displayed),
on the electronic communications terminals in the
Agent's money center as of 11:00 a.m. (London time) on
the day which is two Business Days prior to the first
day of such LIBOR Interest Period ("Calculation
Date"), except as provided below. If fewer than two
offered rates appear for the applicable LIBOR Interest
Period or if the appropriate screen is not accessible
as of such time, the term "Basic LIBOR Rate" shall
mean the per annum rate of interest determined by the
Agent (but which shall be applicable to all of the
Banks) to be the average (rounded up, if necessary, to
the nearest 1/16 of 1%) of the rates at which deposits
in U.S. dollars are offered to the Agent by four major
banks in the London interbank market, as selected by
the Agent ("Reference Banks"), at approximately 11
a.m., London time, on the Calculation Date for the
applicable LIBOR Interest Period and in an amount
equal to the principal amount of the loans subject to
the applicable LIBOR Pricing Option. The Agent will
request the principal London office of each of the
Reference Banks to provide a quotation of its rate.
If at least two such quotations are provided, the
applicable rate will be the mean of the quotations.
If fewer than two quotations are provided as
requested, the applicable rate will be the mean of the
rates quoted by major banks in New York City, selected
by the Agent, at approximately 11 a.m., New York City
time, on the Calculation Date for loans in U.S.
dollars to leading European banks for the applicable
LIBOR Interest Period and in an amount equal to the
principal amount of the loans subject to the
applicable LIBOR Pricing Option.
(B) The term "LIBOR Interest Period" shall
mean any period, selected as provided below in this
section 2.2(c) of one, two or three months, each
commencing on any Business Day. Such LIBOR Interest
Period shall end on the day in the succeeding calendar
month which corresponds numerically to the beginning
day of such LIBOR Interest Period, provided, however,
that if there is no such numerically corresponding day
in such succeeding month, such LIBOR Interest Period
shall end on the last Business Day of such succeeding
month. If any LIBOR Interest Period so selected would
otherwise end on a date which is not a Business Day,
such LIBOR Interest Period shall instead end on the
immediately succeeding Business Day, provided,
however, that if said next succeeding Business Day
falls in a new month, such LIBOR Interest Period shall
end on the immediately preceding Business Day.
(C) The term "LIBOR Pricing Options" shall
mean the options granted pursuant to this section
2.2(c) to have the interest on all or any portion of
the principal amount of indebtedness evidenced by the
Notes computed with reference to a LIBOR Rate.
(D) The term "LIBOR Rate" for any LIBOR
Interest Period shall mean a rate per annum equal to
the sum of (i) the quotient of (A) the Basic LIBOR
Rate applicable to that LIBOR Interest Period divided
by (B) one minus the LIBOR Reserve Requirement
(expressed as a decimal) applicable to that LIBOR
Interest Period, plus (ii) five-eighths of one percent
(5/8%). The LIBOR Rate shall be rounded, if
necessary, to the next higher 1/16 of 1%.
(E) The term "LIBOR Reserve Requirement" shall
mean, with respect to each LIBOR Interest Period, the
stated rate of all reserve requirements (including all
basic, supplemental, marginal and other reserves and
taking into account any transitional adjustments or
other scheduled changes in reserve requirements during
such LIBOR Interest Period) that is specified on the
first day of such LIBOR Interest Period by the Board
of Governors of the Federal Reserve System for
determining the maximum reserve requirement with
respect to eurocurrency funding (currently referred to
as "Eurocurrency liabilities" in Regulation D of such
Board of Governors) applicable to the Agent.
(F) The term "Regulatory Change" means any
change enacted or issued after the date of this
Agreement of any (or the adoption after the date of
this Agreement of any new) federal or state law,
regulation, interpretation, direction, policy or
guideline, or any court decision, which in any case
has general application to banks of the class of which
any Bank is a member and which affects the treatment
of any loans of such Bank, all as set forth below.
(2) Election of LIBOR Pricing Options. Subject to
all the terms and conditions hereof, the Company may, by
notice to the Agent received not later than 10:30 a.m.
(Milwaukee time) on the day which is three Business Days
prior to the first day of the LIBOR Interest Period selected
in such notice, elect to have all or such portion of the
principal amount of indebtedness then evidenced (or to be
evidenced at the commencement of such LIBOR Interest Period)
by the Notes as the Company may specify in such notice (in
the minimum amount of $1,000,000 or any multiple of $100,000
in excess of such amount) accrue and bear daily interest
during the LIBOR Interest Period so selected at a per annum
rate equal to the LIBOR Rate for such LIBOR Interest Period;
provided, however, that no such election shall become
effective if the Agent determines (which determination shall
be binding and conclusive on all parties) that (i) by reason
of circumstances affecting the London interbank market
adequate and reasonable means do not exist for ascertaining
the applicable LIBOR Rate; (ii) the LIBOR Rate does not
accurately reflect the cost to the Banks of making or
maintaining LIBOR-based loans in general; or (iii) any
Default or Event of Default has occurred and is continuing.
Each notice of election of a LIBOR Pricing Option shall be
irrevocable.
(d) Special Provisions.
(1) Increased Costs. If any Regulatory Change,
(A) shall subject any Bank to any tax, duty or
other charge with respect to any of its loans, Letters
of Credit or participations therein, or Reimbursement
Obligations owed to it hereunder, or shall change the
basis of taxation of payments to any Bank of the
principal of or interest on its loans hereunder or
Reimbursement Obligations owed to it, or any other
amounts due under this Agreement in respect of such
loans or Reimbursement Obligations, or its obligation
to make loans hereunder or issue Letters of Credit or
participate therein (except for changes in the rate of
tax on the overall net income of such Bank);
(B) shall impose, modify or make applicable any
reserve (including, without limitation, any reserve
imposed by the Board of Governors of the Federal
Reserve System, but excluding any reserve included in
the determination of the LIBOR Rate), special deposit
or similar requirement against assets of, deposits
with or for the account of, or credit extended by, any
Bank; or
(C) shall impose on any Bank any other
condition affecting its loans, Letters of Credit or
participations therein, or any Reimbursement
Obligation owed to it hereunder; and the result of any
of the foregoing is to increase the cost to (or in the
case of Regulation D or any other analogous law, rule
or regulation, to impose a cost on) such Bank of
making or maintaining any loans, issuing or
maintaining any Letter of Credit, or participating
therein, or to reduce the amount of any sum received
or receivable by such Bank under this Agreement and
any document or instrument related hereto, then after
30 days' notice from such Bank (which notice shall be
sent to the Agent and the Company and shall be
accompanied by a statement setting forth in reasonable
detail the basis of such increased cost or other
effect on the loans, Letters of Credit or
Reimbursement Obligations), the Company shall pay
directly to such Bank, on demand, such additional
amount or amounts as will compensate such Bank for
such increased cost or such reduction incurred on or
after the date of the giving of such notice to the
Agent and the Company.
Each of the Banks represents to the Company
that, as of the date hereof, it is not aware of any
fact or circumstance that would give rise to any
increased cost under this section 2.2(d)(1). Each
Bank further agrees that, for purposes of this section
2.2(d)(1), it will not treat the Company in a manner
different from its other commercial loan customers
having similar loan relationships with the Bank.
(2) Changes in Law Rendering Certain Loans Unlawful.
In the event that any Regulatory Change should make it (or,
in the good faith judgment of a Bank, should raise
substantial questions as to whether it is) unlawful for a
Bank to make, maintain or fund a loan subject to a LIBOR
Rate, then (i) such Bank shall promptly notify each of the
other parties hereto, (ii) the obligation of all Banks to
make such loan shall, upon the effectiveness of such event,
be suspended for the duration of such unlawfulness, and
(iii) to the extent that it is unlawful for such Bank to
maintain an outstanding loan subject to a LIBOR Rate, such
loan shall thereafter bear interest at the Prime Rate or
such other lower rate as may be agreed upon by the Company
and the Bank.
(3) Funding Losses. The Company hereby agrees that
upon demand by any Bank (which demand shall be sent to the
Agent and the Company and shall be accompanied by a
statement setting forth in reasonable detail the basis for
the calculations of the amount being claimed) the Company
will indemnify such Bank against any net loss or expense
which such Bank may sustain or incur (including, without
limitation, any net loss or expense incurred by reason of
the liquidation or reemployment of deposits or other funds
acquired by such Bank to fund or maintain loans hereunder),
as reasonably determined by such Bank, as a result of (i)
any payment or prepayment of any loan subject to a LIBOR
Rate of such Bank on a date other than the last day of a
LIBOR Interest Period for such loan whether or not required
by any other provision of this Agreement, or (ii) any
failure of the Company to borrow any loans on a date
specified therefor in a notice of borrowing pursuant to this
Agreement.
(4) Discretion of Banks as to Manner of Funding.
Notwithstanding any provision of this Agreement to the
contrary, each Bank shall be entitled to fund and maintain
its funding of all or any part of its loans hereunder in any
manner it sees fit.
(5) Capital Adequacy. If any Regulatory Change
affects the treatment of any loan, Letter of Credit or
participation therein of a Bank as an asset or other item
included for the purpose of calculating the appropriate
amount of capital to be maintained by such Bank or any
corporation controlling such Bank and has the effect of
reducing the rate of return on such Bank's or such
corporation's capital as a consequence of the obligations of
such Bank hereunder to a level below that which such Bank or
such corporation could have achieved but for such Regulatory
Change (taking into account such Bank's or such
corporation's policies with respect to capital adequacy) by
an amount deemed in good faith by such Bank to be material,
then after 30 days' notice from such Bank to the Company and
the Agent of such Regulatory Change, the Company shall pay
to such Bank, on demand, such additional amount or amounts
as will compensate such Bank or such corporation, as the
case may be, for such reduction incurred on or after the
date of the giving of such notice to the Agent and the
Company. Such Bank shall submit, to the Agent and the
Company, a statement as to the amount of such compensation,
prepared in good faith and in reasonable detail. Each of
the Banks represents to the Company that, as of the date
hereof, it is not aware of any fact or circumstance that
would give rise to a claim for compensation under this
section 2.2(d)(5).
(6) Conclusiveness of Statements; Survival of
Provisions. Determinations and statements of any Bank
pursuant to sections 2.2(d)(1), (2), (3) and (5) shall be
rebuttably presumptive evidence of the correctness of the
determinations and statements and shall be conclusive absent
manifest error if the Company fails to deliver written
notice to the Agent within 30 days of (i) the date of
mailing of such statement or (ii) the giving of notice of
such determination if no such statement is mailed. The
provisions of section 2.2(d)(1), (3) and (5) shall survive
the obligation of the Banks to extend credit under this
Agreement and the repayment of the loans and Reimbursement
Obligations.
2.3 Computations; Non-Business Days. All fees, and all interest
payable on the Notes, shall be computed for the actual number of days elapsed
using a daily rate determined by dividing the annual rate by 360. Whenever
any payment to be made hereunder or under any Note shall be stated to be due
on a non-Business Day, such payment may be made on the next succeeding
Business Day, and such extension of time shall be included in the computation
of interest under the Notes, or fees payable hereunder, as the case may be.
2.4 Application of Payments.
(a) All payments of principal, interest and fees under
this Agreement and the Notes shall be made to the Agent in
immediately available funds for the ratable account of the Banks
and the holders of the Notes then outstanding, as appropriate, in
respect of amounts then due hereunder. The Agent shall promptly
distribute to each such Bank or holder pro rata the amount of
principal, interest or fees received by the Agent for the account
of such holder. Any payment to the Agent for the account of a
Bank or a holder of a Note under this Agreement shall constitute a
payment by the Company to such Bank or holder of the amount so
paid to the Agent, and any Notes or portions thereof so paid shall
not be considered outstanding for any purpose after the date of
such payment to the Agent.
(b) All payments received by the Agent under this
Agreement from any source shall be applied to the obligations of
the Company hereunder in the following order of priority:
(i) First, to the payment of all unreimbursed fees and
expenses due hereunder;
(ii) Second, to the repayment of all outstanding loans
under the Demand Line and all accrued interest thereon;
(iii) Third, to the payment of all outstanding loans
under the Aggregate Commitment, to the extent then due and
payable, and all accrued interest thereon;
(iv) Fourth, to secure reimbursement of the
outstanding face amount of all Letters of Credit issued
against the Demand Line;
(v) Fifth, to secure reimbursement of the outstanding
face amount of all Letters of Credit issued against the
Aggregate Commitment; and
(vi) Sixth, to secure payment at maturity of all
outstanding Commercial Paper, including for this purpose
all Nicolet Funding Corp. Loans.
2.5 Pro Rata Treatment. All payments or prepayments of
principal, interest or fees shall be made pro rata in accordance with the
amounts of the Notes then due. In the event that any Bank shall receive from
the Company or any other source (other than the sale of a participation to
another commercial lender pursuant to section 10.10) any payment of, on
account of, or for any obligation of the Company hereunder or under the Notes
(whether pursuant to the exercise of any right of set off, banker's lien,
realization upon any security held for or appropriated to such obligation,
counterclaim or otherwise) other than as above provided, then such Bank shall
immediately purchase, without recourse and for cash, an interest in the
obligations of the same nature held by the other Banks so that each Bank shall
thereafter have a percentage interest in all of such obligations equal to the
percentage interest which such Bank held in the Notes outstanding immediately
before such payment; provided, that if any payment so received shall be
recovered in whole or in part from such purchasing Bank, the purchase shall be
rescinded and the purchase price restored to the extent of such recovery, but
without interest. The Company specifically acknowledges and consents to the
preceding sentence.
2.6 Set Off. In the event that the unpaid principal balance of
the Notes or any other amount becomes immediately due and payable pursuant to
section 7.2, each Bank may offset and apply any monies, balances, accounts and
deposits (including certificates of deposit) of the Company then at such Bank
toward the payment of the Note or Notes held by such Bank or other amounts
owed to it hereunder. Promptly upon its charging any account of the Company
pursuant to this section, the Bank shall give the Company notice thereof,
provided that failure to give such notice shall not affect the obligations of
the Company hereunder.
ARTICLE III
CONDITIONS OF BORROWING
Without limiting any of the other terms of this Agreement, none of
the Banks shall be required to make any loan to the Company hereunder or issue
any Letter of Credit unless each of the following conditions has been
satisfied:
3.1 Representations. The representations and warranties
contained in Article IV hereof continue to be true and correct on the date of
such loan and no Default or Event of Default hereunder shall have occurred and
be continuing.
3.2 Insurance Certificate. Prior to the initial loan the Banks
shall have received satisfactory evidence that the Company maintains hazard
and liability insurance coverage reasonably satisfactory to the Banks.
3.3 Form U-1. Prior to the initial loan the Company shall have
executed and delivered to the Banks a Federal Reserve Form U-1 provided for in
Regulation U of the Board of Governors of the Federal Reserve System, and the
statements made therein shall be such, in the reasonable opinion of the Banks,
as to permit the transactions contemplated hereby without violation of
Regulation U.
3.4 Counsel Opinion. Prior to the initial loan the Banks shall
have received from their special counsel and from Company's counsel,
satisfactory opinions as to such matters relating to the Company and its
Subsidiaries, the validity and enforceability of this Agreement, the loans to
be made hereunder and the other documents required by this Article III as the
Banks shall reasonably require. The Company shall execute and/or deliver to
the Banks or their respective counsel such documents concerning its corporate
status and the authorization of such transactions as may be requested.
3.5 Proceedings Satisfactory. All proceedings taken in
connection with the transactions contemplated by this Agreement, and all
instruments, authorizations and other documents applicable thereto, shall be
satisfactory in form and substance to the Banks and their respective counsel.
3.6 Violation of Environmental Laws. In the reasonable opinion
of the Banks there shall not exist any uncorrected violation by the Company or
any Subsidiary of an Environmental Law or any condition which requires, or may
require, a cleanup, removal or other remedial action by the Company or any
Subsidiary under any Environmental Laws costing $2,500,000 or more in the
aggregate.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
In order to induce the Banks to make the loans as provided herein,
the Company represents and warrants to the Banks as follows, except as set
forth in a letter (the "Information and Exceptions Letter") delivered to the
Banks not later than three (3) Business Days prior to the date of this
Agreement.
4.1 Organization. The Company and each of its Subsidiaries is a
corporation duly organized and existing in good standing under the laws of the
jurisdiction under which it was incorporated, and has all requisite power and
authority, corporate or otherwise, to conduct its business and to own its
properties. Set forth in the Information and Exceptions Letter is a complete
and accurate list of all of its Subsidiaries, showing as of the date hereof
(as to each such Subsidiary) the jurisdiction of its incorporation, the
percentage of the outstanding shares of each class of capital stock owned
(directly or indirectly) by the Company and the number of shares covered by
all outstanding options, warrants, rights of conversion or purchase, and
similar rights. All of the outstanding stock of all of the Subsidiaries has
been legally and validly issued, is fully paid and non-assessable except as
provided by section 180.0622(2)(b) of the Wisconsin Business Corporation Law
and its predecessor statute, as judicially interpreted, and is owned by the
Company or one or more other Subsidiaries free and clear of all pledges,
liens, security interests and other charges or encumbrances. The Company is
duly licensed or qualified to do business in all jurisdictions in which such
qualification is required, and failure to so qualify could have a material
adverse effect on the property, financial condition or business operations of
the Company.
4.2 Authority. The execution, delivery and performance of this
Agreement, the Notes and the documents required by Article III (the
"Collateral Documents") are within the corporate powers of the Company, have
been duly authorized by all necessary corporate action and do not and will not
(i) require any consent or approval of the stockholders of the Company, (ii)
violate any provision of the articles of incorporation or by-laws of the
Company or of any law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award presently in effect having applicability to the
Company or any Subsidiary; (iii) require the consent or approval of, or filing
or registration with, any governmental body, agency or authority; or (iv)
result in a breach of or constitute a default under, or result in the
imposition of any lien, charge or encumbrance upon any property of the Company
or any Subsidiary pursuant to, any indenture or other agreement or instrument
under which the Company or any Subsidiary is a party or by which it or its
properties may be bound or affected. This Agreement constitutes, and each of
the Notes and each of the Collateral Documents when executed and delivered
hereunder will constitute, legal, valid and binding obligations of the Company
or other signatory enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy or similar laws affecting the
enforceability of creditors' rights generally.
4.3 Investment Company Act of 1940. Neither the Company nor any
Subsidiary is an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
4.4 Employee Retirement Income Security Act. All Plans are in
compliance in all material respects with the applicable provisions of ERISA.
Neither the Company nor any Subsidiary has incurred any material "accumulated
funding deficiency" within the meaning of section 302(a)(2) of ERISA in
connection with any Plan. There has been no Reportable Event for any Plan,
the occurrence of which would have a materially adverse effect on the Company
or any Subsidiary, nor has the Company or any Subsidiary incurred any material
liability to the Pension Benefit Guaranty Corporation under section 4062 of
ERISA in connection with any Plan. The Unfunded Liabilities of all Plans do
not in the aggregate exceed $2,500,000.
4.5 Financial Statements. The consolidated and consolidating
balance sheets of the Company and its Subsidiaries as of December 31, 1993,
and the consolidated and consolidating statements of profit and loss and
surplus of the Company and its Subsidiaries for the year ended on that date,
as prepared by the Company and certified by Ernst & Young and heretofore
furnished to the Banks, present fairly the financial condition of the Company
and such Subsidiaries as of that date, and the results of their operations for
the fiscal year ended on that date. Since December 31, 1993, there has been
no material adverse change in the property, financial condition or business
operations of the Company or any Subsidiary.
4.6 Liens. The Company and each Subsidiary has good and
marketable title to all of its assets, real and personal, free and clear of
all liens, security interests, mortgages and encumbrances of any kind, except
Permitted Liens. To the best of the Company's knowledge and belief, all owned
and leased buildings and equipment of the Company and its Subsidiaries are in
good condition, repair and working order in all material respects and conform
in all material respects to all applicable laws, regulations and ordinances.
4.7 Contingent Liabilities. Neither the Company nor any
Subsidiary has any guarantees or other contingent liabilities outstanding
(including, without limitation, liabilities by way of agreement, contingent or
otherwise, to purchase, to provide funds for payment, to supply funds to or
otherwise invest in the debtor or otherwise to assure the creditor against
loss), except those permitted by section 5.7 hereof.
4.8 Taxes. Except as expressly disclosed in the financial
statements referred to in section 4.5 above, neither the Company nor any
Subsidiary has any material outstanding unpaid tax liability (except for taxes
which are currently accruing from current operations and ownership of
property, which are not delinquent), and no tax deficiencies have been
proposed or assessed against the Company or any Subsidiary. The most recent
completed audit of the Company's federal income tax returns was for the
Company's income tax year ending December 31, 1989, and all taxes shown by
such returns (together with any adjustments arising out of such audit, if any)
have been paid.
4.9 Absence of Litigation. Neither the Company nor any
Subsidiary is a party to any litigation or administrative proceeding, nor so
far as is known by the Company is any litigation or administrative proceeding
threatened against it or any Subsidiary, which in either case (i) relates to
the execution, delivery or performance of this Agreement, the Notes, or any of
the Collateral Documents, (ii) could, if adversely determined, cause any
material adverse change in the property, financial condition or the conduct of
the business of the Company and its Subsidiaries taken as a whole, (iii)
asserts or alleges the Company or any Subsidiary violated Environmental Laws,
(iv) asserts or alleges that Company or any Subsidiary is required to cleanup,
remove, or take remedial or other response action due to the disposal,
depositing, discharge, leaking or other release of any hazardous substances or
materials, or (v) asserts or alleges that Company or any Subsidiary is
required to pay all or a portion of the cost of any past, present or future
cleanup, removal or remedial or other response action which arises out of or
is related to the disposal, depositing, discharge, leaking or other release of
any hazardous substances or materials by Company or any Subsidiary, except
with respect to violations, cleanups, removals and other remedial and response
actions referred to clauses (iii), (iv) and (v) above which will cost the
Company and its Subsidiaries less than $2,500,000 in the aggregate.
4.10 Absence of Default. No event has occurred which either of
itself or with the lapse of time or the giving of notice or both, would give
any creditor of the Company or any Subsidiary the right to accelerate the
maturity of any indebtedness of the Company or any Subsidiary for borrowed
money. Neither the Company nor any Subsidiary is in default under any other
lease, agreement or instrument, or any law, rule, regulation, order, writ,
injunction, decree, determination or award, non-compliance with which could
materially adversely affect its property, financial condition or business
operations.
4.11 No Burdensome Agreements. Neither the Company nor any
Subsidiary is a party to any agreement, instrument or undertaking, or subject
to any other restriction, (i) which materially adversely affects the property,
financial condition or business operations of the Company and its Subsidiaries
taken as a whole, or (ii) under or pursuant to which the Company or any
Subsidiary is or will be required to place (or under which any other person
may place) a lien upon any of its properties securing indebtedness either upon
demand or upon the happening of a condition, with or without such demand,
other than Permitted Liens.
4.12 Trademarks, etc. The Company and its Subsidiaries possess
adequate trademarks, trade names, copyrights, patents, permits, service marks
and licenses, or rights thereto, for the present and planned future conduct of
their respective businesses substantially as now conducted, without any known
conflict with the rights of others which might result in a material adverse
effect on the Company and its Subsidiaries taken as a whole.
4.13 Partnerships; Joint Ventures. Neither the Company nor any
Subsidiary is a member of any partnership or joint venture except as permitted
under section 5.4.
4.14 Full Disclosure. No information, exhibit or report
furnished by the Company or any Subsidiary to any Bank in connection with the
negotiation or execution of this Agreement contained any material misstatement
of fact as of the date when made or omitted to state a material fact or any
fact necessary to make the statements contained therein not misleading as of
the date when made.
4.15 Fiscal Year. The fiscal year of the Company and each
Subsidiary ends on December 31 of each year.
4.16 Environmental Conditions. To the Company's knowledge after
reasonable investigation, there are no conditions existing currently or likely
to exist during the term of this Agreement which would subject the Company or
any Subsidiary to damages, penalties, injunctive relief or cleanup costs under
any Environmental Laws or which require or are likely to require cleanup,
removal, remedial action or other response pursuant to Environmental Laws by
the Company or any Subsidiary, except for such matters which will cost the
Company and its Subsidiaries less than $2,500,000 in the aggregate.
4.17 Environmental Judgments, Decrees and Orders. Neither the
Company nor any Subsidiary is subject to any judgment, decree, order or
citation related to or arising out of Environmental Laws and neither the
Company nor any Subsidiary has been named or listed as a potentially
responsible party by any governmental body or agency in a matter arising under
any Environmental Laws, except for such matters which will cost the Company
and its Subsidiaries less than $2,500,000 in the aggregate.
ARTICLE V
NEGATIVE COVENANTS
While any part of the credit granted to the Company is available
and while any part of the principal of or interest on any Note remains unpaid
or any Letter of Credit Obligation remains outstanding, the Company shall not
do any of the following, or permit any Subsidiary to do any of the following,
without the prior written consent of the Required Banks:
5.1 Restriction of Indebtedness. Create, incur, assume or have
outstanding any indebtedness for borrowed money or the deferred purchase price
of any asset (including obligations under Capitalized Leases), except:
(a) the Notes issued under this Agreement;
(b) outstanding indebtedness in respect of industrial
revenue bond financing shown on the financial statements referred
to in section 4.5 above, provided that such indebtedness shall not
be renewed, extended or increased;
(c) additional long-term indebtedness incurred pursuant to
an offering of long-term notes, bonds or similar obligations of
the Company; provided that, simultaneously with the closing of
such debt offering, the Aggregate Commitment shall be reduced by
an amount equal to the net proceeds to the Company of such long-
term indebtedness;
(d) indebtedness described in section 10.1(p)(iv),
provided such indebtedness does not exceed an aggregate of
$5,000,000 outstanding at any one time;
(e) Commercial Paper in an aggregate face amount of not
more than the amount permitted by section 1.9(a);
(f) Nicolet Funding Corp. Loans in aggregate principal
amount of not more than the amount permitted by section 1.9(e);
(g) unsecured indebtedness which is subordinated to the
prior payment of the Company's obligations under this Agreement in
a manner satisfactory to the Banks;
(h) indebtedness in respect of Capitalized Leases, provided that
the aggregate lease payments thereunder do not exceed $1,000,000
in any fiscal year of the Company; and
(i) other indebtedness not exceeding $5,000,000 in aggregate
principal amount at any time outstanding.
5.2 Restriction on Liens. Create or permit to be created or
allow to exist any mortgage, pledge, encumbrance or other lien upon or
security interest in any property or asset now owned or hereafter acquired by
the Company or any Subsidiary, except Permitted Liens.
5.3 Sale and Leaseback. Enter into any agreement providing for
the leasing by the Company or a Subsidiary of property which has been or is to
be sold or transferred by the Company or a Subsidiary to the lessor thereof,
or which is substantially similar in purpose to property so sold or
transferred, except for agreements relating to sales of property not exceeding
$5,000,000 (in gross sales proceeds to the Company) in the aggregate.
5.4 Acquisitions and Investments. Acquire any other business or
make any loan, advance or extension of credit to, or investment in, any other
person, corporation or other entity (including without limitation
Subsidiaries, partnerships and joint ventures), including investments acquired
in exchange for stock or other securities or obligations of any nature of the
Company or any Subsidiary, except:
(a) investments in (i) bank repurchase agreements; (ii)
savings accounts or certificates of deposit in a financial
institution of recognized standing; (iii) obligations issued or
fully guaranteed by the United States; and (iv) prime commercial
paper maturing within 90 days of the date of acquisition by the
Company or a Subsidiary;
(b) loans and advances made to employees and agents in the
ordinary course of business, such as travel and entertainment
advances and similar items;
(c) investments in the Company by a Subsidiary;
(d) credit extended to customers in the ordinary course of
business;
(e) other investments outstanding on December 31, 1993,
and shown on the financial statements referred to in section 4.5
above, provided that such investments shall not be increased;
and
(f) additional acquisitions and investments in present and
future Subsidiaries and joint ventures, provided that all such
acquisitions and investments (valued at original cost without
regard to subsequent increases or decreases in the value
thereof) shall not exceed (i) $15,000,000 in the aggregate and
(ii) $5,000,000 with respect to any single entity.
5.5 Liquidation; Merger; Disposition of Assets. Liquidate or
dissolve; or merge with or into or consolidate with or into any other
corporation or entity except a merger of a wholly-owned Subsidiary into the
Company or another wholly-owned Subsidiary; or sell, lease, transfer or
otherwise dispose of all or any substantial part of its property, assets or
business (other than sales made in the ordinary course of business), or any
stock of any Subsidiary.
5.6 Accounts Receivable. Discount or sell with recourse, or
sell for less than the face amount thereof, any of its notes or accounts
receivable, whether now owned or hereafter acquired.
5.7 Contingent Liabilities. Guarantee or become a surety or
otherwise contingently liable (including, without limitation, liable by way of
agreement, contingent or otherwise, to purchase, to provide funds for payment,
to supply funds to or otherwise invest in the debtor or otherwise to assure
the creditor against loss) for any obligations of others, except (i) pursuant
to the deposit and collection of checks and similar items in the ordinary
course of business, (ii) in connection with letters of credit issued for the
account of the Company from time to time by Republic National Bank of New
York, provided that (A) such letters of credit shall not exceed $10,000,000 in
aggregate face amount at any time outstanding and (B) none of such letters of
credit shall remain outstanding on or after June 1, 1995, and (iii) other
contingent liabilities in respect of third party obligations not exceeding an
aggregate of $5,000,000 outstanding at any one time.
5.8 Affiliates. Suffer or permit any transaction with any
Affiliate, except on terms not less favorable to the Company or Subsidiary
than would be usual and customary in similar transactions with non-affiliated
persons.
ARTICLE VI
AFFIRMATIVE COVENANTS
While any part of the credit granted to the Company is available
and while any part of the principal of or interest on any Note remains unpaid
or any Letter of Credit Obligation is outstanding, and unless waived in
writing by the Required Banks, the Company shall:
6.1 Financial Status. Maintain:
(a) At all times a Consolidated Current Ratio of at least
2.00 to 1.00;
(b) A ratio of Consolidated Total Liabilities to
Consolidated Tangible Net Worth of (i) not more than 1.00 to 1.00
at all times prior to January 1, 1996 and (ii) not more than 0.85
to 1.00 at all times after December 31, 1995; and
(c) At the end of each fiscal quarter a Consolidated Fixed
Charge Coverage Ratio for the four consecutive fiscal quarters
then ended of at least 3.00 to 1.00.
6.2 Insurance. Maintain insurance in such amounts and against
such risks as is customary by companies engaged in the same or similar
businesses and similarly situated.
6.3 Corporate Existence; Obligations. Do, and cause each
Subsidiary to do, all things necessary to: (i) maintain its corporate
existence (except for mergers permitted by section 5.5) and all rights and
franchises necessary or desirable for the conduct of its business; (ii) comply
in all material respects with all applicable laws, rules, regulations and
ordinances, and all restrictions imposed by governmental authorities,
including those relating to environmental standards and controls; and (iii)
pay, before the same become delinquent and before penalties accrue thereon,
all taxes, assessments and other governmental charges against it or its
property, and all of its other liabilities, except to the extent and so long
as the same are being contested in good faith by appropriate proceedings in
such manner as not to cause any material adverse effect upon its property,
financial condition or business operations, with adequate reserves provided
for such payments.
6.4 Business Activities. Continue to carry on its business
activities in substantially the manner such activities are conducted on the
date of this Agreement and not make any material change in the nature of its
business.
6.5 Properties. Keep and cause each Subsidiary to keep its
properties (whether owned or leased) in good condition, repair and working
order, ordinary wear and tear and obsolescence excepted, and make or cause to
be made from time to time all necessary repairs thereto (including external or
structural repairs) and renewals and replacements thereof consistent with the
exercise of its reasonable business judgment.
6.6 Accounting Records; Reports. Maintain and cause each
Subsidiary to maintain a standard and modern system for accounting in
accordance with generally accepted principles of accounting consistently
applied throughout all accounting periods and consistent with those applied in
the preparation of the financial statements referred to in section 4.5; and
furnish to the Agent such information respecting the business, assets and
financial condition of the Company and its Subsidiaries as any Bank may
reasonably request and, without request, furnish to the Agent:
(a) Within 45 days after the end of each of the first
three quarters of each fiscal year of the Company (i) consolidated
and consolidating balance sheets of the Company and all of its
Subsidiaries as of the close of such quarter and of the comparable
quarter in the preceding fiscal year; and (ii) consolidated and
consolidating statements of income and surplus of the Company and
all of its Subsidiaries for such quarter and for that part of the
fiscal year ending with such quarter and for the corresponding
periods of the preceding fiscal year; all in reasonable detail and
certified as true and correct (subject to audit and normal year-
end adjustments) by the chief financial officer of the Company;
and
(b) As soon as available, and in any event within 90 days
after the close of each fiscal year of the Company, a copy of the
audit report for such year and accompanying consolidated and
consolidating financial statements of the Company and its
Subsidiaries, as prepared by independent public accountants of
recognized standing selected by the Company and reasonably
satisfactory to the Required Banks, which audit report shall be
accompanied by an opinion of such accountants, in form reasonably
satisfactory to the Required Banks, to the effect that the same
fairly present the financial condition of the Company and its
Subsidiaries and the results of its and their operations as of the
relevant dates thereof; and
(c) As soon as available, copies of all reports or
materials submitted or distributed to shareholders of the Company
or filed with the Securities and Exchange Commission or other
governmental agency having regulatory authority over the Company
or any Subsidiary or with any national securities exchange; and
(d) Promptly, and in any event within 10 days after an
officer of the Company has actual knowledge thereof a statement of
the chief financial officer of the Company describing: (i) any
Default or Event of Default hereunder, or any other event which,
either of itself or with the lapse of time or the giving of notice
or both, would constitute a default under any other material
agreement to which the Company or any Subsidiary is a party,
together with a statement of the actions which the Company
proposes to take with respect thereto; (ii) any pending or
threatened litigation or administrative proceeding of the type
described in section 4.9; and (iii) any fact or circumstance which
is materially adverse to the property, financial condition or
business operations of the Company and its Subsidiaries taken as a
whole; and
(e)(i) Promptly, and in any event within 30 days, after an
officer of the Company acquires actual knowledge that any
Reportable Event with respect to any Plan has occurred, a
statement of the chief financial officer of the Company setting
forth details as to such Reportable Event and the action which the
Company proposes to take with respect thereto, together with a
copy of any notice of such Reportable Event given to the Pension
Benefit Guaranty Corporation if a copy of such notice is available
to the Company, (ii) promptly after the filing thereof with the
Internal Revenue Service, copies of each annual report with
respect to each Plan administered by the Company and (iii)
promptly after receipt thereof, a copy of any notice (other than a
notice of general application) the Company, any Subsidiary or any
member of the Controlled Group may receive from the Pension
Benefit Guaranty Corporation or the Internal Revenue Service with
respect to any Plan administered by the Company.
The financial statements referred to in (a) and (b) above shall be
accompanied by a certificate by the chief financial officer of the Company
demonstrating compliance with the covenants in section 6.1 during the relevant
period and stating that, as of the close of the last period covered in such
financial statements, no condition or event had occurred which constitutes a
Default hereunder or which, after notice or lapse of time or both, would
constitute a Default hereunder (or if there was such a condition or event,
specifying the same). The audit report referred to in (b) above shall be
accompanied by a certificate by the accountants who prepared the audit report,
as of the date of such audit report, stating that in the course of their
audit, nothing has come to their attention suggesting that a condition or
event has occurred which constitutes a Default hereunder or which, after
notice or lapse of time or both, would constitute a Default hereunder (or if
there was such a condition or event, specifying the same); but such
accountants shall not be liable for any failure to obtain knowledge of any
such condition or event. The Agent shall promptly furnish to each of the
Banks (i) copies of the certificates delivered to the Agent pursuant to this
paragraph, and (ii) copies of any statements delivered to the Agent pursuant
to section 6.6(d) or (e) above.
6.7 Inspection of Records. Permit representatives of the Banks
at their own expense to visit and inspect any of the properties and examine
any of the books and records of the Company and its Subsidiaries at any
reasonable time and as often as may be reasonably desired.
6.8 Compliance with Environmental Laws. Timely comply in all
material respects, and cause each Subsidiary to comply in all material
respects, with all applicable Environmental Laws.
6.9 Environmental Audit. Permit, at its expense, at the request
of the Required Banks, an Environmental Audit solely for the benefit of the
Banks, to be conducted by the Banks or an independent agent selected by the
Banks, but only in the event of a circumstance or condition of the nature
described in section 6.10 below which, in the reasonable judgment of the
Required Banks, will cost the Company $2,500,000 or more in the aggregate.
This provision shall not relieve the Company or any Subsidiary from conducting
its own Environmental Audits or taking any other steps necessary to comply
with Environmental Laws.
6.10 Orders, Decrees and Other Documents. Provide to the Agent,
immediately upon receipt, copies of any correspondence, notice, pleading,
citation, indictment, complaint, order, decree, or other document from any
source asserting or alleging a circumstance or condition which requires or may
require a financial contribution by the Company or any Subsidiary or a
cleanup, removal, remedial action, or other response by or on the part of the
Company or any Subsidiary under Environmental Laws or which seeks damages or
civil, criminal or punitive penalties from the Company or any Subsidiary for
an alleged violation of Environmental Laws; provided, however, such
documentation need not be delivered to the Agent unless and until the
circumstances or conditions referred to therein will, individually or in the
aggregate with any other such matters, likely result in costs to the Company
and its Subsidiaries of $1,000,000 or more.
ARTICLE VII
DEFAULTS
7.1 Defaults. The occurrence of any one or more of the
following events shall constitute an "Event of Default":
(a) The Company shall fail to pay (i) any interest due on
any Revolving Credit Note, or any other amount payable hereunder
(other than a principal payment on any Note or a Reimbursement
Obligation) by five days after the same becomes due; or (ii) any
principal amount due on any Revolving Credit Note or any
Reimbursement Obligation when due;
(b) The Company shall default in the performance or
observance of any agreement, covenant, condition, provision or
term contained in Article V (other than section 5.8) or section
6.1 of this Agreement;
(c) The Company shall default in the performance or
observance of any of the other agreements, covenants, conditions,
provisions or terms in this Agreement or any Collateral Document
and such default continues for a period of thirty days after
written notice thereof is given to the Company by any of the
Banks;
(d) Any representation or warranty made by the Company
herein or any certificate delivered pursuant hereto, or any
financial statement delivered to any Bank hereunder, shall prove
to have been false in any material respect as of the time when
made or given;
(e) The Company or any Subsidiary shall fail to pay as and
when due and payable (whether at maturity, by acceleration or
otherwise) all or any part of the principal of or interest on any
indebtedness of or assumed by it (including without limitation the
Demand Notes), or of the rentals due under any lease or sublease,
or of any other obligation for the payment of money, in each case
where such payments aggregate $1,000,000 or more, and such default
shall not be cured within the period or periods of grace, if any,
specified in the instruments governing such obligations; or
default shall occur under any evidence of, or any indenture,
lease, sublease, agreement or other instrument governing such
obligations, and such default shall continue for a period of time
sufficient to permit the acceleration of the maturity of any such
indebtedness or other obligation or the termination of such lease
or sublease, unless the Company or such Subsidiary shall be
contesting such default in good faith by appropriate proceedings;
(f) A final judgment which, together with all other
outstanding final judgments against the Company and its
Subsidiaries, or any of them, exceeds an aggregate of $100,000
shall be entered against the Company or any Subsidiary and shall
remain outstanding and unsatisfied, unbonded, unstayed or
uninsured after 60 days from the date of entry thereof;
(g) The Company or any Subsidiary shall: (i) become
insolvent; or (ii) be unable, or admit in writing its inability to
pay its debts as they mature; or (iii) make a general assignment
for the benefit of creditors or to an agent authorized to
liquidate any substantial amount of its property; or (iv) become
the subject of an "order for relief" within the meaning of the
United States Bankruptcy Code; or (v) become the subject of a
creditor's petition for liquidation, reorganization or to effect a
plan or other arrangement with creditors; or (vi) apply to a court
for the appointment of a custodian or receiver for any of its
assets; or (vii) have a custodian or receiver appointed for any of
its assets (with or without its consent); or (viii) otherwise
become the subject of any insolvency proceedings or propose or
enter into any formal or informal composition or arrangement with
its creditors;
(h) This Agreement, any Note or any Collateral Document
shall, at any time after their respective execution and delivery,
and for any reason, cease to be in full force and effect or be
declared null and void, or be revoked or terminated, or the
validity or enforceability thereof or hereof shall be contested by
the Company, or the Company shall deny that it has any or further
liability or obligation thereunder or hereunder, as the case may
be; or
(i) Any Reportable Event, which the Required Banks
determine in good faith to constitute grounds for the termination
of any Plan by the Pension Benefit Guaranty Corporation or for the
appointment by the appropriate United States District Court of a
trustee to administer any Plan, shall have occurred, or any Plan
shall be terminated within the meaning of Title IV of ERISA, or a
trustee shall be appointed by the appropriate United States
District Court to administer any Plan, or the Pension Benefit
Guaranty Corporation shall institute proceedings to terminate any
Plan or to appoint a trustee to administer any Plan, and in case
of any event described in the preceding provisions of this
subsection (i) the Required Banks determine in good faith that the
aggregate amount of the Company's liability to the Pension Benefit
Guaranty Corporation under ERISA shall exceed $1,000,000 and such
liability is not covered, for the benefit of the Company, by
insurance.
7.2 Termination of Aggregate Commitment and Acceleration of
Obligations. Upon the occurrence of any Event of Default:
(a) As to any Event of Default under section 7.1(a) and at
any time thereafter, and in each case, the Required Banks (or the
Agent with the written consent of the Required Banks) may, by
written notice to the Company, immediately terminate the
obligation of the Banks to make revolving credit loans and issue
Letters of Credit hereunder and declare the unpaid principal
balance of the Revolving Credit Notes, together with all interest
accrued thereon, to be immediately due and payable; and the unpaid
principal balance of such Notes and all unreimbursed amounts drawn
on Letters of Credit, together with all interest accrued thereon,
shall thereupon be due and payable without further notice of any
kind, all of which are hereby waived, and notwithstanding anything
to the contrary herein or in the Notes contained;
(b) As to any Event of Default under section 7.1(g), the
obligation of the Banks to make revolving credit loans and issue
Letters of Credit hereunder shall immediately terminate and the
unpaid principal balance of all Revolving Credit Notes and all
unreimbursed amounts drawn on Letters of Credit, together with all
interest accrued thereon, shall immediately and forthwith be due
and payable, all without presentment, demand, protest, or further
notice of any kind, all of which are hereby waived,
notwithstanding anything to the contrary herein or in the Notes
contained;
(c) As to any Event of Default other than an Event of
Default under section 7.1(a) or section 7.1(g) and at any time
thereafter, and in each case, the Required Banks, with the written
consent of all Banks that have acted as placement agent in the
sale of any Commercial Paper then outstanding (or the Agent with
the written consent of such Banks) may take the actions and
exercise the remedies provided by this section 7.2.
(d) As to each Event of Default, subject to the
limitations set forth in section 7.2(c) above, the Banks shall
have all the remedies for default provided by the Collateral
Documents, as well as applicable law.
(e) In the event that the unpaid principal balance of the
Revolving Credit Notes becomes immediately due and payable
pursuant to this section 7.2, the Company shall pay (i) to the
appropriate LOC Bank the sum of the largest drafts which could
then or thereafter be drawn under all outstanding Letters of
Credit, which sum the LOC Bank may hold for the account of the
Company, without interest, for the purpose of paying any draft
presented, with the excess, if any, to be returned to the Company
upon termination or expiration of such Letters of Credit, and (ii)
to the Agent the aggregate face amount of all Commercial Paper
(including for this purpose all Nicolet Funding Corp. Loans) then
outstanding, which amount may be held by the Agent, without
interest, to secure the payment in full of all such Commercial
Paper at maturity, with the excess, if any, to be returned to the
Company upon payment in full of all such Commercial Paper.
ARTICLE VIII
DEMAND NOTES
8.1 Right of each Bank to Demand Payment. All amounts
outstanding under each of the Demand Notes are due ON DEMAND by the holder
thereof in its sole discretion; provided that such holder shall give at least
three Business Days' prior written notice of its intention to make such demand
to the Company and the Agent. Notwithstanding the foregoing, the unpaid
principal balance of the Demand Notes, together with all interest accrued
thereon, shall automatically become immediately due and payable, without
presentment, demand, protest or further notice of any kind, all of which are
hereby waived, if an Event of Default under section 7.1(g) shall occur.
Notwithstanding reference to any Event of Default or termination in this
Agreement or any Collateral Document (except for automatic acceleration
provisions referred to above), such provisions shall have no application to,
or otherwise restrict, each Bank's right to demand payment under its Demand
Note at any time.
8.2 Cash Collateral. If at any time when demand for payment is
made on any Demand Note, the aggregate outstanding face amount of all Letters
of Credit shall exceed the Aggregate Commitment (net of all outstanding
Commercial Paper and Nicolet Funding Corp. Loans issued by the Company
thereunder), the Company shall immediately pay the amount of such excess to
the Agent, which amount (together with all accrued interest thereon) may be
held by the Agent in an interest-bearing account as cash collateral for the
purpose of securing the repayment of any draft presented in respect of
outstanding Letters of Credit, with the excess, if any, to be returned to the
Company as and when such Letters of Credit terminate or expire.
ARTICLE IX
THE AGENT
9.1 Appointment and Powers. Each of the Banks hereby appoints
Firstar Bank Milwaukee, National Association as Agent for the Banks hereunder,
and authorizes the Agent to take such action as Agent on its behalf and to
exercise such powers as are specifically delegated to the Agent by the terms
hereof, together with such powers as are reasonably incidental thereto. The
duties of the Agent shall be entirely ministerial; the Agent shall not have
any duty to ascertain or to inquire as to the performance or observance of any
of the terms, covenants or conditions of this Agreement, the Notes or any
related document, or to enforce such performance, or to inspect the property
(including the books and records) of the Company or any of its subsidiaries;
and the Agent shall not be required to take any action which exposes the Agent
to personal liability (unless indemnification with respect to such action
satisfactory to the Agent in its sole discretion is provided to the Agent by
the Required Banks) or which is contrary to this Agreement or the Notes or
applicable law. Firstar Bank Milwaukee, National Association agrees to act as
Agent upon the express terms and conditions contained in this Article IX.
9.2 Responsibility. The Agent (i) makes no representation or
warranty to any Bank and shall not be responsible to any Bank for any oral or
written recitals, reports, statements, warranties or representations made in
or in connection with this Agreement or any Note; (ii) shall not be
responsible for the due execution, legality, validity, enforceability,
genuineness, sufficiency, collectibility or value of this Agreement or any
Note or any other instrument or document furnished pursuant thereto; (iii) may
treat the payee of any Note as the owner thereof until the Agent receives
written notice of the assignment or transfer thereof signed by such payee and
in form satisfactory to the Agent; (iv) may execute any of its duties under
this Agreement by or through employees, agents and attorneys in fact and shall
not be answerable for the default or misconduct of any such employee, agent or
attorney in fact selected by it with reasonable care; (v) may (but shall not
be required to) consult with legal counsel (including counsel for the
Company), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith
by it in accordance with advice of such counsel, accountants or experts; (vi)
shall be entitled to rely upon any note, notice, consent, waiver, amendment,
certificate, affidavit, letter, telegram, telex, cable or other document or
communication believed by it to be genuine and signed or sent by the proper
party or parties, and may rely on statements contained therein without further
inquiry or investigation. Neither the Agent nor any of its directors,
officers, agents, or employees shall be liable for any action taken or omitted
to be taken by it or them under or in connection with this Agreement or the
Notes, except for its or their own gross negligence or willful misconduct.
9.3 Agent's Indemnification. The Banks agree to indemnify and
reimburse the Agent (to the extent not reimbursed by the Company), ratably
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by, or asserted
against the Agent as such in any way relating to or arising out of this
Agreement or any action taken or omitted by the Agent under this Agreement,
provided that no Bank shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Agent's gross negligence or
willful misconduct. Without limitation of the foregoing, each Bank agrees to
reimburse the Agent promptly upon demand for its ratable share of any out-of-
pocket expenses (including counsel fees) incurred by the Agent in connection
with the preparation, execution, administration or enforcement of, or the
preservation of any rights under, this Agreement to the extent that the Agent
is not reimbursed for such expenses by the Company.
9.4 Rights as a Lender. With respect to its Commitment and the
Notes issued to it, Firstar Bank Milwaukee, National Association, in its
individual capacity as a Bank, shall have, and may exercise, the same rights
and powers under this Agreement and the Notes payable to it as any other Bank
has under this Agreement and Notes, and the terms "Bank" and "Banks", unless
the context otherwise requires, shall include Firstar Bank Milwaukee, National
Association in its individual capacity as a Bank. Firstar Bank Milwaukee,
National Association and its affiliates may accept deposits from, lend money
to, act as trustee under indentures of, and generally engage in any kind of
banking or trust business with, the Company or any of its subsidiaries and any
person, firm or corporation who may do business with or own securities of the
Company or any subsidiary, all as if it were not the Agent, and without any
duty to account therefor to the Banks.
9.5 Credit Investigation. Each of the Banks severally
represents and warrants to each of the other Banks and to the Agent that it
has made its own independent investigation and evaluation of the financial
condition and affairs of the Company and its Subsidiaries in connection with
such Bank's execution and delivery of this Agreement and the making of its
loans and has not relied on any information or evaluation provided by any
other Bank or the Agent in connection with any of the foregoing (other than
information provided by the Company to the Agent for transmittal to the Banks
in connection with the foregoing); and each Bank represents and warrants to
each other Bank and to the Agent that it shall continue to make its own
independent investigation and evaluation of the credit-worthiness of the
Company and its Subsidiaries while the Commitments and/or the Notes are
outstanding.
9.6 Compensation. The Agent shall receive such compensation
for its services as Agent under this Agreement as may be agreed from time to
time by the Company and the Agent.
ARTICLE X
MISCELLANEOUS
10.1 Accounting Terms; Definitions. Except as otherwise
provided, all accounting terms shall be construed in accordance with generally
accepted accounting principles consistently applied and consistent with those
applied in the preparation of the financial statements referred to in section
4.5, and financial data submitted pursuant to this Agreement shall be prepared
in accordance with such principles. As used herein:
(a) the term "Affiliate" means any person, firm or
corporation, which, directly or indirectly, controls, is
controlled by, or is under common control with, the Company or a
Subsidiary.
(b) the term "Business Day" means any day other than a
Saturday or Sunday on which banks in the States of Wisconsin and
Illinois are open for the transaction of substantially all of
their banking functions; provided, however, that for purposes of
calculating the Basic LIBOR Rate, the LIBOR Interest Periods, and
the election of LIBOR Pricing Options, the term "Business Day"
shall mean in addition only those days on which dealings in U.S.
dollar deposits are carried out by U.S. financial institutions in
the London interbank market.
(c) the term "Capitalized Lease" means any lease which is
capitalized on the books of the lessee, or should be so
capitalized under generally accepted accounting principles.
(d) the term "Commercial Paper" means (i) all commercial
paper issued by the Company from time to time, including sales of
commercial paper through one or more of the Banks acting as
placement agent pursuant to separate agreements between the
Company and such Bank or Banks, and (ii) where expressly so
included by the terms of this Agreement, all Nicolet Funding Corp.
Loans described in section 1.9(e).
(e) the term "Consolidated Current Ratio" means the
relationship, expressed as a numerical ratio, between:
(i) the amount of all assets which under
generally accepted principles of accounting would
appear as current assets on the consolidated balance
sheet of the Company and its Subsidiaries, excluding
prepaid expenses which are not refundable on the date
the determination is made,
And
(ii) the amount of all liabilities which under
generally accepted principles of accounting would
appear as current liabilities on such balance sheet,
including all indebtedness payable on demand or
maturing (whether by reason of specified maturity,
fixed prepayments, sinking funds or accruals of any
kind, or otherwise) within 12 months or less from the
date of the relevant statement, including all lease
and rental obligations due in 12 months or less under
leases, whether or not Capitalized Leases, and
including customers' advances and progress billings on
contracts.
(f) the term "Consolidated Fixed Charge Coverage Ratio"
means, for any period, the relationship, expressed as a numerical
ratio, between:
(i) the Consolidated Net Earnings of the Company for
such period plus the sum of (A) depreciation, amortization
and all other non-cash deductions arising in the normal
course of operations and shown on the Company's financial
statements for such period, (B) net interest expense on
indebtedness of the Company (including the interest
component of Capitalized Leases) for such period and (C)
rental expense under leases other than Capitalized Leases
for such period; and
(ii) the sum of (A) net interest expense on
indebtedness of the Company (including the interest
component of Capitalized Leases) for such period, (B)
scheduled principal payments on indebtedness of the Company
during such period, (C) the principal component of required
payments in respect of Capitalized Leases during such period
and (D) rental expense under leases other than Capitalized
Leases for such period.
(g) the term "Consolidated Total Liabilities" means all
liabilities of the Company and its Subsidiaries properly appearing
on a consolidated balance sheet of the Company and its
Subsidiaries in accordance with generally accepted accounting
principles.
(h) the term "Consolidated Net Earnings" means the excess
of:
(i) all revenues and income derived from
operation in the ordinary course of business
(excluding extraordinary gains and profits upon the
disposition of investments and fixed assets),
Over:
(ii) all expenses and other proper charges
against income (including payment or provision for all
applicable income and other taxes, but excluding extra-
ordinary losses and losses upon the disposition of invest-
ments and fixed assets), all as determined in accordance
with generally accepted accounting principles as applied
on a consolidated basis to the Company and its Subsidiaries.
(i) the term "Consolidated Tangible Net Worth" means the
total of all assets properly appearing on the consolidated
balance sheet of the Company and its Subsidiaries in
accordance with generally accepted accounting principles,
less the sum of the following:
(i) the book amount of all such assets which would be
treated as intangibles under generally accepted accounting
principles, including, without limitation, all such items
as good will, trademarks, trademark rights, trade names,
tradename rights, brands, copyrights, patents, patent rights,
licenses and unamortized debt discount and expense;
(ii) any write-up in the book value of any such assets
resulting from a revaluation thereof subsequent to December
31, 1993;
(iii) all reserves, including reserves for depreciation,
obsolescence, depletion, insurance, and inventory valuation,
but excluding contingency reserves not allocated for any
particular purpose and not deducted from assets;
(iv) the amount, if any, at which any shares of stock of the
Company or any Subsidiary appear on the asset side of such
consolidated balance sheet;
(v) all liabilities of the Company and its
Subsidiaries shown on such balance sheet; and
(vi) all investments in foreign affiliates and
nonconsolidated domestic affiliates.
(j) the term "Controlled Group" means a controlled group
of corporations as defined in section 1563 of the Internal Revenue
Code of 1986, as amended, of which the Company is a part.
(k) The term "Default" means any event or condition which
with the passage of time, the giving of notice or both would
constitute an Event of Default.
(l) The term "Environmental Audit" means a review for the
purpose of determining whether the Company and each Subsidiary
complies with Environmental Laws and whether there exists any
condition or circumstance which requires or will require a
cleanup, removal, or other remedial action under Environmental
Laws on the part of the Company or any Subsidiary including, but
not limited to, some or all of the following:
(i) on site inspection including review of site
geology, hydrogeology, demography, land use and population;
(ii) taking and analyzing soil borings and installing
water monitoring wells and analyzing samples
taken from such wells;
(iii) taking and analyzing of air samples and
testing of underground tanks;
(iv) reviewing plant permits, compliance records and
regulatory correspondence, and interviewing enforcement staff
at regulatory agencies;
(v) reviewing the operations, procedures and
documentation of the Company and its Subsidiaries; and
(vi) interviewing past and present employees of
the Company and its Subsidiaries.
(m) The term "Environmental Laws" means all federal, state
and local laws including statutes, regulations, ordinances, codes,
rules and other governmental restrictions and requirements
relating to the discharge of air pollutants, water pollutants or
process waste water or otherwise relating to the environment or
hazardous substances including, but not limited to, the Federal
Solid Waste Disposal Act, the Federal Clean Air Act, the Federal
Clean Water Act, the Federal Resource Conservation and Recovery
Act of 1976, the Federal Comprehensive Environmental
Responsibility Cleanup and Liability Act of 1980, regulations of
the Environmental Protection Agency, regulations of the Nuclear
Regulatory Agency, and regulations of any state department of
natural resources or state environmental protection agency now or
at any time hereafter in effect.
(n) the term "ERISA" means the Employee Retirement Income
Security Act of 1974, as the same may be in effect from time to
time.
(o) the term "Letter of Credit Obligations" means the aggregate
undrawn face amounts of all outstanding Letters of Credit and all
unpaid Reimbursement Obligations.
(p) the term "Permitted Liens" means:
(i) liens on property financed with the proceeds
of industrial revenue bonds permitted by section 5.1(b)
given to secure indebtedness evidenced by such bonds and
other obligations of the Company directly relating thereto;
(ii) liens for taxes, assessments or governmental
charges, and liens incident to construction, which are
either not delinquent or are being contested in good faith by
the Company or a Subsidiary by appropriate proceedings which
will prevent foreclosure of such liens, and against which
adequate reserves have been provided; and easements,
restrictions, minor title irregularities and similar matters
which have no adverse effect as a practical matter upon
the ownership and use of the affected property by the
Company or any Subsidiary;
(iii) liens or deposits in connection with worker's
compensation or other insurance or to secure customs'
duties, public or statutory obligations in lieu of surety,
stay or appeal bonds, or to secure performance of contracts
or bids (other than contracts for the payment of money
borrowed), or deposits required by law or governmental
regulations or by any court order, decree, judgment or rule
as a condition to the transaction of business or the
exercise of any right, privilege or license; or other
liens or deposits of a like nature made in the ordinary
course of business; provided that the aggregate amount of
liabilities (including interest and penalties, if any) of the
Company secured by any stay or appeal bond shall not exceed
$10,000,000 at any one time outstanding; and
(iv) purchase money liens on property acquired in the
ordinary course of business, to finance or secure a portion
of the purchase price thereof, and liens on property acquired
existing at the time of acquisition; provided that in each
case such lien shall be limited to the property so
acquired, the liability secured by such lien does not exceed
either the purchase price or the fair market value of the
asset acquired, and the indebtedness secured by such lien is
permitted by section 5.1.
(q) the term "Plan" means any employee pension benefit
plan subject to Title IV of ERISA maintained by the Company, any
of its Subsidiaries, or any member of the Controlled Group, or any
such plan to which the Company, any of its Subsidiaries, or any
member of the Controlled Group is required to contribute on behalf
of any of its employees.
(r) the term "Reimbursement Obligations" means all
obligations of the Company to reimburse each LOC Bank for all
drawings under Letters of Credit.
(s) the term "Reportable Event" means a reportable event
as that term is defined in Title IV of ERISA.
(t) The term "Required Banks" means Banks holding at least
66 2/3% of the Aggregate Commitment, or if the Aggregate
Commitment has been terminated, Banks holding at least 66 2/3% in
aggregate principal amount of the loans and Letter of Credit
Obligations outstanding hereunder.
(u) the term "Subsidiary" means a corporation of which the
Company owns, directly or through another Subsidiary, at the date
of determination, more than 50% of the outstanding stock having
ordinary voting power for the election of directors, irrespective
of whether or not at such time stock of any other class or classes
might have voting power by reason of the happening of any
contingency.
(v) The term "Unfunded Liabilities" means, with regard to
any Plan, the excess of the current value of the Plan's benefits
guaranteed under ERISA over the current value of the Plan's assets
allocable to such benefits.
10.2 Amendments, Etc. No waiver, amendment, settlement or
compromise of any of the rights of any Bank under this Agreement, any Note or
any of the Collateral Documents shall be effective for any purpose unless it
is in a written instrument executed and delivered by the parties authorized to
act by this section 10.2. Subject to the provisions of this section 10.2, the
Required Banks (or the Agent with the written consent of the Required Banks)
and the Company may enter into agreements supplemental hereto for the purpose
of adding or modifying any provisions to this Agreement, the Notes, or the
Collateral Documents or changing in any manner the rights of the Banks or the
Company hereunder or thereunder or waiving any Event of Default hereunder;
provided, however, that no such supplemental agreement shall, without the
consent of all of the Banks:
(a) Extend the maturity of any Note or reduce the
principal amount thereof, or reduce the rate or amount or change
the time of payment of interest or fees payable on any Note or
otherwise under this Agreement.
(b) Amend the definition of Required Banks.
(c) Extend the Termination Date, or increase the amount of
the Commitment of any Bank hereunder, or permit the Company to
assign its rights under this Agreement.
(d) Alter the provisions of section 2.5 of this Agreement.
(e) Amend any provision of this Agreement requiring a pro
rata sharing among the Banks.
(f) Amend this section 10.2.
No amendment of any provision of this Agreement relating to the Agent shall be
effective without the written consent of the Agent.
10.3 Expenses; Indemnity.
(a) The Company shall pay, or reimburse each Bank for (i)
all reasonable out-of-pocket costs and expenses (including,
without limitation, reasonable attorneys' fees and expenses) paid
or incurred by such Bank in connection with the negotiation,
preparation, execution, delivery, and administration of this
Agreement, the Notes, the Collateral Documents and any other
document required hereunder or thereunder, including without
limitation any amendment, supplement, modification or waiver of or
to any of the foregoing; provided that such costs and expenses of
each Bank (other than the Agent) in connection with the
negotiation, preparation, execution and delivery of this
Agreement, the Notes and the Collateral Documents shall not exceed
$2,500; (ii) all reasonable out-of-pocket costs and expenses
(including, without limitation, reasonable attorneys' fees and
expenses) paid or incurred by such Bank after Default, before and
after judgment, in enforcing, protecting or preserving its rights
under this Agreement, the Notes, the Collateral Documents and any
other document required hereunder or thereunder, including without
limitation the enforcement of rights against, or realization on,
any collateral or security therefor; and (iii) any and all
recording and filing fees and any and all stamp, excise,
intangibles and other taxes, if any, (including, without
limitation, any sales, occupation, excise, gross receipts,
franchise, general corporation, personal property, privilege or
license taxes, but not including taxes levied upon the net income
of such Bank by the federal government or the state (or political
subdivision of a state) where such Bank's principal office is
located), which may be payable or determined to be payable in
connection with the negotiation, preparation, execution, delivery,
administration or enforcement of this Agreement, the Notes, the
Collateral Documents or any other document required hereunder or
thereunder or any amendment, supplement, modification or waiver of
or to any of the foregoing, or consummation of any of the
transactions contemplated hereby or thereby, including all costs
and expenses incurred in contesting the imposition of any such
tax, and any and all liability with respect to or resulting from
any delay in paying the same, whether such taxes are levied upon
such Bank, the Company or otherwise.
(b) The Company agrees to indemnify each Bank against any
and all losses, claims, damages, liabilities and expenses,
(including, without limitation, reasonable attorneys' fees and
expenses) incurred by such Bank arising out of, in any way
connected with, or as a result of (i) any acquisition or attempted
acquisition of stock or assets of another person or entity by the
Company or any subsidiary, (ii) the use of any of the proceeds of
any loans made hereunder by the Company or any subsidiary for the
making or furtherance of any such acquisition or attempted
acquisition, (iii) the construction or operation of any facility
owned or operated by the Company or any Subsidiary, or resulting
from any pollution or other environmental condition on the site
of, or caused by, any such facility, (iv) the negotiation,
preparation, execution, delivery, administration, and enforcement
of this Agreement, the Note, the Collateral Documents and any
other document required hereunder or thereunder, including without
limitation any amendment, supplement, modification or waiver of or
to any of the foregoing or the consummation or failure to
consummate the transactions contemplated hereby or thereby, or the
performance by the parties of their obligations hereunder or
thereunder, (v) any claim, litigation, investigation or
proceedings related to any of the foregoing, whether or not any
Bank is a party thereto; provided, however, that such indemnity
shall not apply to any such losses, claims, damages, liabilities
or related expenses arising from (A) any unexcused breach by such
Bank of its obligations under this Agreement or any Collateral
Document, (B) any commitment made by such Bank to a person other
than the Company or any Subsidiary which would be breached by the
performance of such Bank's obligations under this Agreement or (C)
gross negligence or willful misconduct of such Bank.
(c) The foregoing agreements and indemnities shall remain
operative and in full force and effect regardless of termination
of this Agreement, the consummation of or failure to consummate
either the transactions contemplated by this Agreement or any
amendment, supplement, modification or waiver, the repayment of
any loans made hereunder, the termination of the Letter of Credit
Obligations, the invalidity or unenforceability of any term or
provision of this Agreement or any of the Notes or any Collateral
Document, or any other document required hereunder or thereunder,
any investigation made by or on behalf of any Bank, the Company or
any Subsidiary, or the content or accuracy of any representation
or warranty made under this Agreement, any Collateral Document or
any other document required hereunder or thereunder.
(d) The foregoing indemnities shall remain operative and
in full force and effect regardless of the termination of this
Agreement, the consummation of the transactions contemplated by
this Agreement, the repayment of the loans made hereunder, the
invalidity or unenforceability of any term or provision of this
Agreement or any of the Notes, any investigation made by or on
behalf of the Bank or the Company, and the content of accuracy of
any representation or warranty made under this Agreement.
10.4 Securities Act of 1933. Each Bank represents that it is
acquiring the Notes payable to it without any present intention of making a
sale or other distribution of such Notes, provided each Bank reserves the
right to sell its Notes or participations therein.
10.5 No Agency. Except as expressly provided herein, nothing in
this Agreement and no action taken pursuant hereto shall cause any Bank to be
treated as the agent of any other Bank, or shall be deemed to constitute the
Banks a partnership, association, joint venture or other entity.
10.6 Successors. The provisions of this Agreement shall inure to
the benefit of any holder of one or more of the Notes, and shall inure to the
benefit of and be binding upon any successor to any of the parties hereto.
This Agreement shall not create any rights in favor of any other party
(including without limitation any holder of Commercial Paper, including for
this purpose Nicolet Funding Corp. Loans) and the Banks shall have no
liability whatsoever to any holder of Commercial Paper as a result of this
Agreement. No delay on the part of any Bank or any holder of any of the Notes
in exercising any right, power or privilege hereunder shall operate as a
waiver thereof nor shall any single or partial exercise of any right, power or
privilege hereunder preclude other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein
specified are cumulative and are not exclusive of any rights or remedies which
the Banks or the holder of any of the Notes would otherwise have.
10.7 Survival. All agreements, representations and warranties
made herein shall survive the execution of this Agreement, the making of the
loans hereunder and the execution and delivery of the Notes.
10.8 Wisconsin Law. This Agreement and the Notes issued
hereunder shall be governed by and construed in accordance with the internal
laws of the State of Wisconsin, except to the extent superseded by federal
law.
10.9 Counterparts. This agreement may be signed in any number of
counterparts with the same effect as if the signatures thereto and hereto were
upon the same instrument.
10.10 Notices. All communications or notices required under this
Agreement shall be deemed to have been given on the date when deposited in the
United States mail, postage prepaid, and addressed as follows (unless and
until any of such parties advises the other in writing of a change in such
address): (a) if to the Company, with the full name and address of the
Company as shown on this Agreement below; and (b) if to any of the Banks with
the full name and address of such Bank as shown on this Agreement above, to
the attention of the officer of the Bank executing the form of acceptance of
this Agreement.
10.11 Participations. With the prior written consent of the
Company and the Agent, each Bank may sell to another financial institution or
institutions interests in its Notes (except that each Bank may sell such
interests without such consent to other financial institutions owned directly
or indirectly by it or by its controlling corporation) and, in connection with
each such sale, and thereafter, disclose to any purchaser or potential
purchaser of such interest any financial information such Bank may have
concerning the Company and its Subsidiaries.
10.12 Entire Agreement; No Agency. This Agreement and the other
documents referred to herein contain the entire agreement between the Banks
and the Company with respect to the subject matter hereof, superseding all
previous communications and negotiations, and no representation, undertaking,
promise or condition concerning the subject matter hereof shall be binding
upon the Banks unless clearly expressed in this Agreement or in the other
documents referred to herein. Nothing in this Agreement or in the other
documents referred to herein and no action taken pursuant hereto shall cause
the Company to be treated as an agent of any Bank, or shall be deemed to
constitute the Banks and the Company a partnership, association, joint venture
or other entity.
10.13 Consent to Jurisdiction. The Company hereby consents to the
jurisdiction of any state or federal court situated in Milwaukee County,
Wisconsin, and waives any objection based on lack of personal jurisdiction,
improper venue or forum non conveniens, with regard to any actions, claims,
disputes or proceedings relating to this Agreement, any Note, any of the
Collateral Documents, or any other document delivered hereunder or in
connection herewith, or any transaction arising from or connected to any of
the foregoing. Nothing herein shall affect the right of the Banks, or any of
them, to serve process in any manner permitted by law, or limit the right of
any Banks, or any of them, to bring proceedings against the Company or its
property or assets in the competent courts of any other jurisdiction or
jurisdictions.
If the foregoing is satisfactory to you, please sign the form of
acceptance below and return a signed counterpart hereof to the Company. When
this instrument has been executed and delivered by all of the Banks, it will
evidence a binding agreement between the Banks and the Company.
Very truly yours,
OSHKOSH B'GOSH, INC.
Address: 112 Otter Avenue
Oshkosh, WI 54901-5008
By: /s/ DAVID L. OMACHINSKI
(CORPORATE SEAL) Vice President of Finance
The foregoing Agreement is hereby confirmed and accepted as of the
date thereof.
FIRSTAR BANK MILWAUKEE,
NATIONAL ASSOCIATION,
as the Agent and as a Bank
By: ______________________________
Title: ______________________
BANK ONE, MILWAUKEE, NA
By: ______________________________
Title: ______________________
HARRIS TRUST AND SAVINGS BANK
By: ______________________________
Title: ______________________
NORWEST BANK WISCONSIN,
NATIONAL ASSOCIATION
By: ______________________________
Title: ______________________
EXHIBIT 1.1
REVOLVING CREDIT NOTE
$____________ _____________, 19__
FOR VALUE RECEIVED, OshKosh B'Gosh, Inc., a Wisconsin corporation,
promises to pay to the order of ____________________ ________________________,
the principal sum of __________________ Dollars ($____________) at the Main
Office of Firstar Bank Milwaukee, National Association in Milwaukee,
Wisconsin, on June 24, 1997. The unpaid principal balance hereof shall bear
interest, payable on the dates specified in the Credit Agreement referred to
below, computed at the Applicable Rate as defined in such Credit Agreement.
Principal amounts unpaid at the maturity hereof (whether by fixed
maturity or acceleration) shall bear interest from and after maturity until
paid computed at a rate equal to 2% per annum plus the rate otherwise payable
hereunder. Principal of and interest on this Note shall be payable in lawful
money of the United States of America.
This Note constitutes one of the Revolving Credit Notes issued
under a Credit Agreement dated as of June 24, 1994, among the undersigned and
Firstar Bank Milwaukee, National Association, for itself and as Agent, and the
other banks party thereto, to which Agreement reference is hereby made for a
statement of the terms and conditions on which loans in part evidenced hereby
were or may be made, and for a description of the conditions upon which this
Note may be prepaid, in whole or in part, or its maturity accelerated.
OSHKOSH B'GOSH, INC.
By: ______________________________
Vice President of Finance
(CORPORATE SEAL)
EXHIBIT 1.2
DEMAND NOTE
$_______________ _________, 19__
FOR VALUE RECEIVED, OshKosh B'Gosh, Inc., a Wisconsin corporation,
promises to pay to the order of ___________________
__________________________________________ the principal sum of
_____________________________ Dollars ($_______________), at the Main Office
of Firstar Bank Milwaukee, National Association, in Milwaukee, Wisconsin, ON
DEMAND. The unpaid principal balance hereof shall bear interest, payable on
the dates specified in the Credit Agreement referred to below, computed at the
Applicable Rate as defined in such Credit Agreement.
Principal amounts unpaid at the maturity thereof (whether by fixed
maturity or acceleration) shall bear interest from and after demand until paid
computed at a rate equal to 2% per annum plus the rate otherwise payable
hereunder. Principal of and interest on this Note shall be payable in lawful
money of the United States.
This Note constitutes one of the Demand Notes issued under a
Credit Agreement dated as of June 24, 1994 among the undersigned and Firstar
Bank Milwaukee, National Association, for itself and as Agent, and the other
banks party thereto, to which Agreement reference is hereby made for a
statement of the terms and conditions on which loans in part evidenced hereby
were made and for a description of the terms and conditions upon which this
Note may be prepaid, in whole or in part, or its maturity accelerated.
OSHKOSH B'GOSH, INC.
By: ______________________________
Vice President of Finance
(CORPORATE SEAL)
EXHIBIT 2.1
COMMERCIAL PAPER REPORT/LOAN REQUEST
_______________, 19__
Memorandum to:
Firstar Bank Milwaukee,
National Association, as Agent
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Re: Credit Agreement Dated as of June 24, 1994
(the "Credit Agreement")
Part 1: Commercial Paper Report
The aggregate principal amount of all Commercial Paper (including
for this purpose all Nicolet Funding Corp. Loans) of the Company now
outstanding is $____________.
Part 2: Loan Request
The Company hereby applies to the Agent for a loan under the
Credit Agreement to be made on ____________, 19__ in the principal amount of
$__________________. If such loan is to be subject to a LIBOR Pricing Option,
the LIBOR Interest Period is _______ months.
The Company hereby certifies as follows:
(a) All of the representations and warranties set forth in Article
IV of the Credit Agreement continue to be true on the date hereof, except that
the financial statements referred to in section 4.5 of the Credit Agreement
shall be deemed to be the most recent consolidated financial statements of the
Company delivered pursuant to section 6.6(a) or (b) of the Credit Agreement.
(b) At the date hereof, no Default or Event of Default under the
Credit Agreement has occurred and is continuing.
OSHKOSH B'GOSH, INC.
By: _________________________________
Title:
AMENDMENT NO. 1 TO CREDIT AGREEMENT
As of June 30, 1994
Firstar Bank Milwaukee,
National Association
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Bank One, Milwaukee, NA
111 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Harris Trust and Savings Bank
111 West Monroe Street
Chicago, Illinois 60603
Norwest Bank Wisconsin,
National Association
100 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Gentlemen:
Please refer to that certain Credit Agreement dated as of June 24,
1994 (the "Credit Agreement") between the undersigned Oshkosh B'Gosh, Inc., a
Delaware corporation (the "Company") and you (the "Banks"). All capitalized
terms used and not otherwise defined herein shall have the meanings given to
such terms by the Credit Agreement.
1. Amendments to Credit Agreement. The Company requests that the
Banks agree to amend the Consolidated Fixed Charge Coverage Ratio covenant set
forth in section 6.1(c) of the Credit Agreement as set forth below. Subject
to all of the terms and conditions hereof, the Banks agree to amend such
covenant as set forth below.
Therefore, subject to the terms and conditions set forth herein, the
Credit Agreement shall be amended, as of the date first written above, as
follows:
(a) All references to the Credit Agreement in the Credit Agreement
and in any of the Collateral Documents shall refer to the Credit Agreement as
amended hereby.
(b) Section 6.1(c) of the Credit Agreement is amended to read in
its entirety as follows:
(c) At the end of each fiscal quarter set forth in the table below,
a Consolidated Fixed Charge Coverage Ratio for the four consecutive fiscal
quarters then ended of at least the amount set forth opposite such fiscal
quarter:
Consolidated Fixed
Fiscal Quarter Ending Charge Coverage Ratio
1. June 30, 1994 and 1.5:1.0
September 30, 1994
2. December 31, 1994, 2.0:1.0
March 31, 1995,
June 30, 1995 and
September 30, 1995
3. December 31, 1995, 2.5:1.0
March 31, 1996,
June 30, 1996 and
September 30, 1996
4. December 31, 1996 3.0:1.0
and thereafter
2. Representations. The Company repeats and reaffirms the
representations and warranties set forth in Article IV of the Credit
Agreement. The Company also represents and warrants that the execution,
delivery and performance of this Amendment are within the corporate powers of
the Company, have been duly authorized by all necessary corporate action and
do not and will not (i) violate any provision of the certificate of
incorporation or by-laws of the Company or of any law, regulation, order, or
judgment presently in effect having applicability to the Company or (ii)
require the consent or approval of, or filing or registration with, any
governmental body, agency or authority; or (iii) result in any breach of or
constitute a default under any indenture or other agreement or instrument
under which the Company is a party.
3. Confirmation of Credit Agreement. Except as expressly provided
above, the Credit Agreement shall remain in full force and effect.
4. Fees and Expenses. The Company shall be responsible for the
payment of all fees and out-of-pocket disbursements incurred by the Banks in
connection with the preparation, execution, delivery, administration and
enforcement of this Amendment and including without limitation the reasonable
fees and disbursements of counsel for the Agent.
5. Miscellaneous. The provisions of this Amendment shall inure to
the benefit of and be binding upon any successor to any of the parties hereto.
All agreements, representations and warranties made herein shall survive the
execution of this Amendment and the extension of credit under the Credit
Agreement, as so amended. This Amendment shall be governed by and construed
in accordance with the internal laws of the State of Wisconsin. This
Amendment may be signed in any number of counterparts with the same effect as
if the signatures thereto and hereto were upon the same instrument.
If the foregoing is satisfactory to you, please sign the form of
acceptance below and return a signed counterpart hereof to the Company.
Very truly yours,
OSHKOSH B'GOSH, INC.
By: ______________________________
Vice President of Finance
(Corporate Seal)
Agreed to as of the date first above written.
FIRSTAR BANK MILWAUKEE,
NATIONAL ASSOCIATION
By: ______________________________
Title: ______________________
BANK ONE, MILWAUKEE, NA
By: ______________________________
Title: ______________________
HARRIS TRUST AND SAVINGS BANK
By: ______________________________
Title: ______________________
NORWEST BANK WISCONSIN,
NATIONAL ASSOCIATION
By: ______________________________
Title: ______________________
AMENDMENT NO. 2 TO CREDIT AGREEMENT
As of December 31, 1994
Firstar Bank Milwaukee,
National Association
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Bank One, Milwaukee, NA
111 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Harris Trust and Savings Bank
111 West Monroe Street
Chicago, Illinois 60603
Norwest Bank Wisconsin,
National Association
100 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Gentlemen:
Please refer to that certain Credit
Agreement dated as of June 24, 1994, as amended by Amendment No. 1 thereto
dated as of June 30, 1994 (the "Credit Agreement") between the undersigned
Oshkosh B'Gosh, Inc., a Delaware corporation (the "Company") and you (the
"Banks"). All capitalized terms used and not otherwise defined herein shall
have the meanings given to such terms by the Credit Agreement.
1. Amendments to Credit Agreement. The Company requests that the Banks agree
to amend clause (ii) of section 5.7 of the Credit Agreement (Contingent
Liabilities) permitting certain outstanding letters of credit issued for the
account of the Company by Republic National Bank of New York. Subject to all
of the terms and conditions hereof,the Banks agree toamend such covenant as
setforth below.
Therefore, subject to the terms and
conditions set forth herein, the Credit Agreement shall be amended, as of the
date first written above, as follows:
(a) All references to the Credit
Agreement in the Credit Agreement and in any of the Collateral Documents shall
refer to the Credit Agreement as amended hereby.
(b) Clause (ii) of section 5.7 of the
Credit Agreement is amended to read in its entirety as follows:
(ii) in connection with letters of credit issued for the account of the
Company from time to time by Republic National Bank of New
York, provided that (A) such letters of credit shall not
exceed $15,000,000 in aggregate face amount at any
time outstanding and (B) none of such letters of credit
shall remain outstanding on or after October 1, 1995, and
2.Representations. The Company repeats and reaffirms the representations and
warranties set forth in Article IV of the Credit Agreement as if made on and
as of the date hereof. The Company also represents and warrants that the
execution, delivery and performance of this Amendment are within the corp-
orate powers of the Company, have been duly authorized by all necessary
corporate action and do not and will not (i) violate any provision of the
certificate of incorporation or by-laws of the Company or of any law,
regulation, order, or judgment presently in effect having applicability to
the Company or (ii) require the consent or approval of, or filing or
registration with, any governmental body, agency or authority; or (iii) result
in any breach of or constitute a default under any indenture or other agreement
or instrument under which the Company is a party.
3.Confirmation of Credit Agreement. Except as expressly provided above, the
Credit Agreement shall remain in full force and effect.
4.Fees and Expenses. The Company shall be responsible for the payment of all
fees and out-of-pocket disbursements incurred by the Banks in connection
with the preparation, execution, delivery, administration and enforcement
of this Amendment and including without limitation the reasonable fees and
disbursements of counsel for the Agent.
5.Miscellaneous. The provisions of this Amendment shall inure to the benefit of
and be binding upon any successor to any of the parties hereto. All agree-
ments, representations and warranties made herein shall survive the execution of
this Amendment and the extension of credit under the Credit Agreement, as
so amended. This Amendment shall be governed by and construed in accordance
with the internal laws of the State of Wisconsin. This Amendment may be signed
in any number of counterparts with the same effect as if the signatures thereto
and hereto were upon the same instrument.
If the foregoing is satisfactory to you,
please sign the form of acceptance below and return a signed counterpart
hereof to the Company.
Very truly yours,
OSHKOSH B'GOSH, INC.
By: ______________________________
Vice President of Finance
(Corporate Seal)
Agreed to as of the date first above written.
FIRSTAR BANK MILWAUKEE,
NATIONAL ASSOCIATION
By: ______________________________
Title: ______________________
BANK ONE, MILWAUKEE, NA
By: ______________________________
Title: ______________________
HARRIS TRUST AND SAVINGS BANK
By: ______________________________
Title: ______________________
NORWEST BANK WISCONSIN,
NATIONAL ASSOCIATION
By: ______________________________
Title: ______________________
EXHIBIT 10.17
OSHKOSH B'GOSH, INC.
1994 INCENTIVE STOCK PLAN
I. INTRODUCTION
1.01 Purpose. This plan shall be known as the Oshkosh B'Gosh, Inc.
1994 Incentive Stock Plan (the "Plan"). The purpose of the Plan is to provide
an incentive for key employees of Oshkosh B'Gosh, Inc. and its Subsidiaries to
improve corporate performance on a long-term basis, and to attract and retain
key employees. It is intended that the Plan and its operation comply with the
provisions of Rule 16b-3 under the Securities Exchange Act of 1934 (or any
successor rule).
1.02 Effective Date. The effective date of the Plan shall be August 8,
1994, subject to approval of the Plan by shareholders of the Company. Any
Award granted prior to such shareholder approval shall be expressly
conditioned upon shareholder approval of the Plan.
II. PLAN DEFINITIONS
2.01 Definitions. For Plan purposes, except where the context clearly
indicates otherwise, the following terms shall have the meanings set forth
below:
(a) "Award" shall mean the grant of any form of stock option or restricted
stock.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(d) "Committee" shall mean the Committee described in Section 4.01.
(e) "Company" shall mean Oshkosh B'Gosh, Inc., a Wisconsin corporation.
(f) "Company Stock" shall mean the Company's Class A Common Stock and such
other stock and securities as may be substituted therefor pursuant to
Section 3.02.
(g) "Eligible Employee" shall mean any regular salaried employee of the
Company or a Subsidiary who satisfies the requirements of Section 5.01.
(h) "Fair Market Value" on any date shall mean, with respect to Company
Stock, if the stock is then listed and traded on a registered national
securities exchange, or is quoted in the NASDAQ National Market System,
the mean of the high and low sale prices recorded in composite
transactions as reported in the Wall Street Journal (Midwest Edition)
for such date or the preceding business day if such date is not a
business day. In the absence of reported sales or if the stock is not
so listed or quoted, but is traded in the over-the-counter market, Fair
Market Value shall be the mean of the closing bid and asked prices for
such shares on the relevant date.
(i) "Grantee" shall mean any person who has been granted an Award under the
Plan.
(j) "Option Period" shall mean the period of time provided pursuant to
Section 6.04 within which a stock option may be exercised.
(k) "Subsidiary" shall mean any corporation now or hereafter in existence in
which the Company owns, directly or indirectly, a voting stock interest
of more than fifty percent (50%).
III. SHARES SUBJECT TO AWARD
3.01 Available Shares. The total number of shares of Company Stock
that may be issued under the Plan shall not exceed one million four hundred
thousand (1,400,000) shares. Shares subject to and not issued under an option
which expires, terminates, is canceled or forfeited for any reason under the
Plan and shares of restricted Company Stock which have been forfeited before
the Grantee has received any benefits of ownership, such as dividends from the
forfeited shares, shall again become available for the granting of Awards.
3.02 Changes in Common Stock. If any stock dividend is declared upon
the Company Stock, or if there is any stock split, stock distribution, or
other recapitalization of the Company with respect to the Company Stock,
resulting in a split or combination or exchange of shares, the aggregate
number and kind of shares which may thereafter be granted under the Plan shall
be proportionately and appropriately adjusted and the number and kind of
shares then subject to options granted to employees under the Plan and the per
share option price therefor shall be proportionately and appropriately
adjusted, without any change in the aggregate purchase prices to be paid
therefor.
IV. ADMINISTRATION
4.01 Administration by the Committee. The Plan shall be administered
by a committee designated by the Board to administer the Plan and shall
initially be the Compensation Committee of the Board. The Committee shall be
constituted to permit the Plan to comply with the provisions of Rule 16b-3
under the Securities Exchange Act of 1934 (or any successor rule). A majority
of the members of the Committee shall constitute a quorum. The approval of
such a quorum, expressed by a vote at a meeting held either in person or by
conference telephone call, or the unanimous consent of all members in writing
without a meeting, shall constitute the action of the Committee and shall be
valid and effective for all purposes of the Plan.
4.02 Committee Powers. The Committee is empowered to adopt such rules,
regulations and procedures and take such other action as it shall deem
necessary or proper for the administration of the Plan and, in its discretion,
may modify, extend or renew any Award theretofore granted. The Committee
shall also have authority to interpret the Plan, and the decision of the
Committee on any questions concerning the interpretation of the Plan shall be
final and conclusive. The Committee may consult with counsel, who may be
counsel for the Company, and shall not incur any liability for any action
taken in good faith in reliance upon the advice of counsel.
Subject to the provisions of the Plan, the Committee shall have full and
final authority to:
(a) designate the persons to whom Awards shall be granted;
(b) grant Awards in such form and amount as the Committee shall
determine;
(c) impose such limitations, restrictions and conditions upon any such
Award as the Committee shall deem appropriate, and
(d) waive in whole or in part any limitations, restrictions or
conditions imposed upon any such Award as the Committee shall deem
appropriate.
V. PARTICIPATION
5.01 Eligibility. Key employees of the Company and its Subsidiaries
(including officers and employees who may be members of the Board) who, in the
sole opinion of the Committee, contribute significantly to the growth and
success of the Company or a Subsidiary shall be eligible for Awards under the
Plan. From among all such Eligible Employees, the Committee shall determine
from time to time those Eligible Employees to whom Awards shall be granted.
No eligible employees shall be granted an Award or Awards covering more than
50,000 shares of Company Stock in any calendar year. No Eligible Employee
shall have any right whatsoever to receive an Award unless so determined by
the Committee.
5.02 No Employment Rights. The Plan shall not be construed as
conferring any rights upon any person for a continuation of employment, nor
shall it interfere with the rights of the Company or any Subsidiary to
terminate the employment of any person or to take any other action affecting
such person.
VI. STOCK OPTIONS
6.01 General. Stock options granted under the Plan may be in the form
of incentive stock options (within the meaning of Code Section 422) or
nonqualified stock options. Each option granted under the Plan shall be
evidenced by a stock option agreement between the Company and the Grantee
which shall contain the terms and conditions required by this Article VI, and
such other terms and conditions, not inconsistent herewith, as the Committee
may deem appropriate in each case. The holder of an option shall not have any
rights as a stockholder with respect to the shares covered by an option until
such shares have been delivered to him or her.
6.02 Option Price. The price at which each share of Company Stock
covered by an option may be purchased shall be determined in each case by the
Committee and set forth in each stock option agreement. In no event shall
such price be less than one hundred percent (100%) of the Fair Market Value of
the Company Stock when the option is granted. Employees who own, directly or
indirectly, within the meaning of Code Section 425(d), more than 10% of the
voting power of all classes of stock of the Company or any parent or
subsidiary corporation shall not be eligible to receive an incentive stock
option hereunder unless the purchase price per share under such option is at
least 110% of the Fair Market Value of the stock subject to the option and
such option by its terms is not exercisable after the expiration of 5 years
from the date such option is granted.
6.03 Date Option Granted. For purposes of the Plan, a stock option
shall be considered as having been granted on the date on which the Committee
authorized the grant of the option, except where the Committee has designated
a later date, in which event the later date shall constitute the date of grant
of the option; provided, however, that in either case notice of the grant of
the option shall be given to the employee within a reasonable time.
6.04 Period for Exercise of Options. Each stock option agreement shall
state the period or periods of time within which the option may be exercised
by the Grantee, in whole or in part, which shall be the period or periods of
time as may be determined by the Committee, provided that: (a) No option
granted under this Plan may be exercised until at least six months from the
later of (i) the date of grant or (ii) shareholder approval of the Plan, (b)
No Option Period for an incentive stock option may exceed ten (10) years from
the date the option is granted, and (c) No option may be treated as an
incentive stock option unless the Grantee exercises the option while employed
by the Company or a Subsidiary or within three months after termination of
employment, or if termination is caused by death or disability, within one
year after such termination.
6.05 Special Rule for Incentive Stock Options. For so long as Section
422 (or any successor provision) of the Code so provides, the aggregate Fair
Market Value (determined as of the date the incentive stock option is granted)
of the number of shares with respect to which incentive stock options are
exercisable for the first time by a Grantee during any calendar year shall not
exceed One Hundred Thousand Dollars ($100,000) or such other limit as may be
required by the Code.
6.06 Method of Exercise. Subject to Section 6.04, each option may be
exercised in whole or in part from time to time as specified in the stock
option agreement. Each Grantee may exercise an option by giving written
notice of the exercise to the Company, specifying the number of shares to be
purchased, accompanied by payment in full of the purchase price therefor. The
purchase price may be paid in cash, by check, or, with the approval of the
Committee, by delivering shares of Company Stock which have been beneficially
owned by the Grantee, the Grantee's spouse, or both of them for a period of at
least six months prior to the time of exercise ("Delivered Stock) or a
combination of cash and Delivered Stock. Delivered Stock shall be valued at
its Fair Market Value determined as of the date of exercise of the option. No
Grantee shall be under any obligation to exercise any option hereunder.
6.07 Merger, Consolidation or Reorganization. In the event of a
merger, consolidation or reorganization with another corporation in which the
Company is not the surviving corporation, the Committee shall, subject to the
approval of the Board of Directors of the Company, or the board of directors
of any corporation assuming the obligations of the Company hereunder, take
action regarding each outstanding and unexercised option pursuant to either
clause (a) or (b) below:
(a) Appropriate provision may be made for the protection of such
option by the substitution on an equitable basis of appropriate
shares of the surviving corporation, provided that the excess of
the aggregate Fair Market Value of the shares subject to such
option immediately before such substitution over the exercise
price thereof is not more than the excess of the aggregate fair
market value of the substituted shares made subject to option
immediately after such substitution over the exercise price
thereof; or
(b) The Committee may cancel such option. In such event, the Company,
or the corporation assuming the obligations of the Company
hereunder, shall pay the employee an amount of cash (less normal
withholding taxes) equal to the excess of the highest Fair Market
Value per share of the Company Stock during the 60-day period
immediately preceding the merger, consolidation or reorganization
over the option exercise price, multiplied by the number of shares
subject to such option.
6.08 Dissolution or Liquidation. Anything contained herein to the
contrary notwithstanding, on the effective date of any dissolution or
liquidation of the Company, the holder of each then outstanding and
unexercised option shall receive the cash amount described in 6.07(b) hereof
and such option shall be cancelled.
VII. RESTRICTED STOCK.
7.01 Administration. Shares of restricted stock may be issued either
alone or in addition to other Awards granted under the Plan. The Committee
shall determine the Eligible Employees to whom and the time or times at which
grants of restricted stock will be made, the number of shares to be awarded,
the time or times within which such Awards may be subject to forfeiture and
any other terms and conditions of the Awards. The Committee may condition the
grant of restricted stock upon the attainment of specified performance goals
or such other factors or criteria as the Committee shall determine. The
provisions of restricted stock Awards need not be the same with respect to
each recipient.
7.02 Awards and Certificates. Each individual receiving a restricted
stock Award shall be issued a certificate in respect of such shares of
restricted stock. Such certificate shall be registered in the name of such
individual and shall bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to such Award, substantially in the
following form:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) of the Oshkosh B'Gosh, Inc. 1994 Incentive Stock Plan and a
Restricted Stock Agreement. Copies of such Plan and Agreement are on
file at the offices of Oshkosh B'Gosh, Inc."
The Committee may require that the certificates evidencing such shares
be held in custody by the Company until the restrictions thereon shall have
lapsed and that, as a condition of any restricted stock Award, the Grantee
shall have delivered a stock power, endorsed in blank, relating to the Company
Stock covered by such Award.
7.03 Terms and Conditions. Shares of restricted stock shall be subject
to the following terms and conditions:
(a) Until the applicable restrictions lapse, the Grantee shall not be
permitted to sell, assign, transfer, pledge or otherwise encumber
shares of restricted stock.
(b) The Grantee shall have, with respect to the shares of restricted
stock, all of the rights of a stockholder of the Company,
including the right to vote the shares and the right to receive
any cash dividends. Unless otherwise determined by the Committee,
cash dividends shall be automatically paid in cash and dividends
payable in Company Stock shall be paid in the form of additional
restricted stock.
(c) Except to the extent otherwise provided in the applicable
Restricted Stock Agreement and (d) below, all shares still subject
to restriction shall be forfeited by the Grantee upon termination
of a Grantee's employment for any reason.
(d) In the event of hardship or other special circumstances of a
Grantee whose employment is involuntarily terminated (other than
for cause), the Committee may waive in whole or in part any or all
remaining restrictions with respect to such Grantee's shares of
restricted stock.
(e) If and when the applicable restrictions lapse, unlegended
certificates for such shares shall be delivered to the Grantee.
(f) Each Award shall be confirmed by, and be subject to the terms of,
a Restricted Stock Agreement.
VIII. WITHHOLDING TAXES.
8.01 General Rule. Pursuant to applicable federal and state laws, the
Company is or may be required to collect withholding taxes upon the exercise
of an option or the lapse of stock restrictions. The Company may require, as
a condition to the exercise of an option or the issuance of a stock
certificate, that the Grantee concurrently pay to the Company (either in cash
or, at the request of Grantee but in the discretion of the Committee and
subject to such rules and regulations as the Committee may adopt from time to
time, in shares of Delivered Stock) the entire amount or a portion of any
taxes which the Company is required to withhold by reason of such exercise or
lapse of restrictions, in such amount as the Committee or the Company in its
discretion may determine.
8.02 Withholding from Shares to be Issued. In lieu of part or all of
any such payment, the Grantee may elect, subject to such rules and regulations
as the Committee may adopt from time to time, or the Company may require that
the Company withhold from the shares to be issued that number of shares having
a Fair Market Value equal to the amount which the Company is required to
withhold.
8.03 Special Rule for Insiders. Any such request or election (to
satisfy a withholding obligation using shares) by an individual who is subject
to the provisions of Section 16 of the Securities Exchange Act of 1934 shall
be made in accordance with the rules and regulations of the Securities and
Exchange Commission promulgated thereunder.
IX. GENERAL
9.01 Nontransferability. No Award granted under the Plan shall be
transferable or assignable except by last will and testament or the laws of
descent and distribution. During the Grantee's lifetime, options shall be
exercisable only by the Grantee or by the Grantee's guardian or legal
representative.
9.02 General Restriction. Each Award shall be subject to the
requirement that if at any time the Board or the Committee shall determine, in
its discretion, that the listing, registration, or qualification of securities
upon any securities exchange or under any state or federal law, or the consent
or approval of any government regulatory body, is necessary or desirable as a
condition of, or in connection with, the granting of such option or the issue
or purchase of securities thereunder, such option may not be exercised in
whole or in part unless such listing, registration, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Board or the Committee.
9.03 Expiration and Termination of the Plan. Awards may be granted
under the Plan at any time and from time to time, prior to August 8, 2004, the
date on which the Plan will expire, except as to Awards then outstanding under
the Plan, which shall remain in effect until they have been exercised, the
restrictions have lapsed or the Awards have expired or been forfeited. The
Plan may be abandoned or terminated at any time by the Board of Directors of
the Company, except with respect to any Awards then outstanding under the
Plan.
9.04 Amendments. The Board may from time to time amend, modify,
suspend or terminate the Plan; provided, however, that no such action shall
(a) impair without the Grantee's consent any Award theretofore granted under
the Plan or deprive any Grantee of any shares of Company Stock which he or she
may have acquired through or as a result of the Plan or (b) be made without
shareholder approval where such approval would be required as a condition of
compliance with Rule 16b-3.
9.05 Construction. Except as otherwise required by applicable federal
laws, the Plan shall be governed by, and construed in accordance with, the
laws of the State of Wisconsin.
EXHIBIT 10.18
OSHKOSH B'GOSH, INC.
1995 OUTSIDE DIRECTORS' STOCK OPTION PLAN
I. INTRODUCTION
1.01 Purpose. This plan shall be known as the Oshkosh B'Gosh, Inc. 1995
Outside Directors' Stock Option Plan. The purpose of the Plan is to provide
an incentive for Outside Directors of Oshkosh B'Gosh, Inc. to improve
corporate performance on a long-term basis. It is intended that the Plan and
its operation comply with the provisions of Rule 16b-3 under the Securities
Exchange Act of 1934 (or any successor rule).
1.02 Effective Date. The Plan shall be effective upon its approval by
shareholders at the Company's 1995 annual meeting. If the Plan is approved by
shareholders, the first option grants will automatically be made at the Board
meeting immediately following the 1995 annual meeting.
II. PLAN DEFINITIONS
2.01 Definitions. For Plan purposes, except where the context clearly
indicates otherwise, the following terms shall have the meanings set forth
below:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Company" shall mean Oshkosh B'Gosh, Inc., a Wisconsin corporation.
(c) "Company Stock" shall mean the Company's Class A Common Stock and
such other stock and securities as may be substituted therefore
pursuant to Section 3.02.
(d) "Director" shall mean a director of the Company.
(e) "Fair Market Value" on any date shall mean, with respect to Company
Stock, if the stock is then listed and traded on a registered
national securities exchange, or is quoted in the NASDAQ National
Market System, the mean of the high and low sale prices recorded
in composite transactions as reported in the Wall Street Journal
(Midwest Edition) for such date or the preceding business day if
such date is not a business day. In the absence of reported sales
or if the stock is not so listed or quoted, but is traded in
the over-the-counter market, Fair Market Value shall be the
mean of the closing bid and asked prices for such shares on the
relevant date.
(f) "Grantee" shall mean any person who has been granted an option under
the Plan.
(g) "Outside Director" shall mean a Director who is not also an active
full-time employee of the Company or a corporation in which the
Company owns, directly or indirectly, a voting stock interest of
more than fifty percent (50%).
III. SHARES SUBJECT TO OPTION
3.01 Available Shares. The total number of shares of Company Stock that
may be issued under the Plan shall not exceed Seventy Thousand (70,000)
shares. Shares subject to and not issued under an option which expires,
terminates, or is canceled for any reason under the Plan shall again become
available for the granting of options.
3.02 Changes in Common Stock. If any stock dividend is declared upon
the Company Stock, or if there is any stock split, stock distribution, or
other recapitalization of the Company with respect to the Company Stock,
resulting in a split or combination or exchange of shares, the aggregate
number and kind of shares which may thereafter be granted under the Plan shall
be proportionately and appropriately adjusted and the number and kind of
shares then subject to options under the Plan and the per share option price
therefore shall be proportionately and appropriately adjusted, without any
change in the aggregate purchase prices to be paid therefor.
IV. ADMINISTRATION
4.01 Administration by the Committee. The Plan shall be administered by
the Compensation Committee of the Board which shall have the power, subject to
and within the limits of the express provisions of the Plan, to exercise such
powers and to perform such acts as are deemed necessary or expedient to
promote the best interests of the Company with respect to the Plan. The
Committee shall have no discretion as to the amount, price or timing of any
option granted under this Plan.
V. STOCK OPTIONS
5.01 Option Agreements. Each option granted under the Plan shall be
evidenced by a stock option agreement between the Company and the Grantee
which shall contain the terms and conditions required by this Article V, and
such other terms and conditions, not inconsistent herewith, as the Committee
may deem appropriate in each case. The holder of an option shall not have any
rights as a stockholder with respect to the shares covered by an option until
such shares have been delivered to him or her.
5.02 Option Grant Size and Grant Date.
(a) Annual Grant. Each year, upon the first meeting of the Board
following the Company's annual meeting of shareholders, each person then
serving the Company as an Outside Director shall automatically be granted a
nonqualified stock option to purchase One Thousand (1,000) shares, subject to
adjustment under Section 3.02 hereof.
(b) Special Rule. If at any time there are not sufficient available
shares under the Plan to grant each Outside Director an option to purchase the
number of shares identified above, each Outside Director shall receive an
option to purchase an equal number of the remaining available shares,
determined by dividing the remaining available shares by the number of Outside
Directors.
5.03 Exercise Price. The price at which each share of Company Stock
covered by an option may be purchased shall be one hundred percent (100%) of
the Fair Market Value of the Company Stock on the date the option is granted.
5.04 Period for Exercise of Options. Each stock option granted under
this Plan shall become exercisable six months from the date of grant,
regardless of whether the Grantee is still a Director on such date. All
rights to exercise an option shall terminate upon the earlier of (a) ten (10)
years from the date the option is granted, or (b) two years from the date the
Grantee ceases to be a Director.
5.05 Method of Exercise. Subject to Section 5.04, each option may be
exercised in whole or in part from time to time as specified in the stock
option agreement. Each Grantee may exercise an option by giving written
notice of the exercise to the Company, specifying the number of shares to be
purchased, accompanied by payment in full of the exercise price therefor. The
exercise price may be paid in cash, by check, or by delivering shares of
Company Stock which have been beneficially owned by the Grantee, the Grantee's
spouse, or both of them for a period of at least six months prior to the time
of exercise ("Delivered Stock") or a combination of cash and Delivered Stock.
Delivered Stock shall be valued at its Fair Market Value determined as of the
date of exercise of the option. No Grantee shall be under any obligation to
exercise any option hereunder.
5.06 Merger, Consolidation or Reorganization. In the event of a merger,
consolidation or reorganization with another corporation in which the Company
is not the surviving corporation, the Committee shall, subject to the approval
of the Board of Directors of the Company, or the board of directors of any
corporation assuming the obligations of the Company hereunder, take action
regarding each outstanding and unexercised option to protect such option by
the substitution on an equitable basis of appropriate shares of the surviving
corporation, provided that the excess of the aggregate Fair Market Value of
the shares subject to such option immediately before such substitution over
the exercise price thereof is not more than the excess of the aggregate fair
market value of the substituted shares made subject to option immediately
after such substitution over the exercise price thereof.
5.07 Dissolution or Liquidation. Anything contained herein to the
contrary notwithstanding, on the effective date of any dissolution or
liquidation of the Company, the Company shall pay the holder of each then
outstanding and unexercised option an amount of cash equal to the excess of
the highest Fair Market Value per share of the Company Stock during the 60-day
period immediately preceding the dissolution or liquidation over the option
exercise price, multiplied by the number of shares subject to such option.
Such option shall then be canceled.
5.08 Limitation on Plan Amendments. The option grants hereunder are
intended to be formula awards under Rule 16b-3(c)(2)(ii) under the Securities
Exchange Act of 1934. Accordingly, the provisions of this Article V may not
be amended more than once every six months.
VI. GENERAL
6.01 Nontransferability. No option granted under the Plan shall be
transferable or assignable except by last will and testament or the laws of
descent and distribution. During the Grantee's lifetime, options shall be
exercisable only by the Grantee or by the Grantee's guardian or legal
representative. In the event of the Grantee's death, the personal
representative of the Grantee's estate or the person or persons to whom the
option is transferred by will or the laws of descent and distribution may
exercise the option in accordance with its terms.
6.02 General Restriction. Each option shall be subject to the
requirement that if at any time the Board shall determine, in its discretion,
that the listing, registration, or qualification of securities upon any
securities exchange or under any state or federal law, or the consent or
approval of any government regulatory body, is necessary or desirable as a
condition of, or in connection with, the granting of such option or the issue
or purchase of securities thereunder, such option may not be exercised in
whole or in part unless such listing, registration, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Board.
6.03 Expiration and Termination of the Plan. Options may be granted
under the Plan at any time and from time to time, prior to December 31, 2004,
the date on which the Plan will expire, except as to options then outstanding
under the Plan, which shall remain in effect until they have been exercised or
have expired. The Plan may be abandoned or terminated at any time by the
Board except with respect to any options then outstanding under the Plan.
6.04 Amendments. The Board may from time to time amend, modify, suspend
or terminate the Plan; provided, however, that no such action shall (a) impair
without the Grantee's consent any option theretofore granted under the Plan or
(b) be made without shareholder approval where such approval would be required
as a condition of compliance with Rule 16b-3 under the Securities Exchange Act
of 1934.
6.05 Withholding Taxes. If the Company is required to collect
withholding taxes upon exercise of an option, the Company may require, as a
condition to such exercise, that the Grantee concurrently pay to the Company
the entire amount or a portion of any taxes which the Company is required to
withhold by reason of such exercise. In lieu of part or all of such payment,
the Grantee may elect, subject to such rules as the Board may adopt from time
to time, to have the Company withhold from the shares to be issued upon
exercise of the option that number of shares having a Fair Market Value equal
to the amount which the Company is required to withhold.
6.06 Construction. Except as otherwise required by applicable federal
laws, the Plan shall be governed by, and construed in accordance with, the
laws of the State of Wisconsin.
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