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, 1995
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 15, 1996, there were outstanding 11,189,387 shares
of Class A Common Stock and 1,266,413 shares of Class B Common
Stock, of which 9,239,201 shares and 226,039 shares,
respectively, were held by non-affiliates of the registrant.
Based upon the closing sales prices as of March 15, 1996, the
aggregate market value of the Class A Common Stock and Class B
Common Stock held by non-affiliates was $143,207,615.50 and
$4,337,123.31, respectively.
DOCUMENTS INCORPORATED BY REFERENCE
OshKosh B'Gosh, Inc definitive Proxy Statement for its annual
meeting to be held on May 3, 1996 (or such later date as the
directors may determine), incorporated into Part III.
INDEX
PART I PAGE
Item 1. Business 1
(a) General Development of Business 1
(b) Financial Information About Industry Segments2
(c) Narrative Description of Business 2
Products 2
Raw Materials, Manufacturing and Sourcing 3
Trademarks 4
Seasonality 5
Working Capital 5
Sales and Marketing 5
Backlog 6
Competitive Conditions 6
Environmental Matters 7
Employees 7
Item 2. Properties 7
Item 3. Legal Proceedings 8
Item 4. Submission of Matters to a Vote of Security Holders8
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 10
Item 8. Financial Statements and Supplementary Data 16
Item 9. Disagreements on Accounting and Financial
Disclosure 32
PART III
Item 10. Directors and Executive Officers of the Registrant32
Item 11. Executive Compensation 32
Item 12. Security Ownership of Certain Beneficial Owners 33
and Management
Item 13. Certain Relationships and Related Transactions 33
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K 33
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 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 92% of
consolidated Company revenues for 1995. 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 92 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 80 domestic OshKosh B'Gosh factory
outlet stores sells irregular and first quality OshKosh B'Gosh
merchandise throughout the United States. In 1994, the
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Company opened an OshKosh B'Gosh showcase store in New York
City bringing total domestic stores to 81. 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. Due to low sales volume the decision
was made to discontinue the catalog sales as of December 31,
1995.
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 through its wholly owned subsidiary
Manufacturera International Apparel S.A. As a part of the
Company's ongoing review of its internal manufacturing
capacity, operational effectiveness, and alternative sourcing
opportunities, during 1995 the Company decided to close two of
its operating facilities and downsize an operating facility.
For the last nine years the Company has licensed its name
for use on footwear. In 1995, the Company began sourcing
footwear itself and distributed its first footwear line in the
fall of 1995.
(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
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. The products are distributed
primarily through better quality department and specialty
stores, 173 Company owned domestic 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 92% of 1995 sales compared to
approximately 94% of such sales in both 1994 and 1993.
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 16 and boys 8 to 16.
The Company's children's wear and youth wear business
includes 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
2
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. The
Company procures and purchases its raw materials directly for
its owned manufacturing facilities and may also procure and
retain ownership of fabric relating to garments cut and
assembled by contract manufacturers. In other circumstances,
fabric is procured by the contract manufacturer directly but
in accordance with the Company's specifications. In 1995,
approximately 74% of the Company's direct expenditures for raw
materials (fabric) were from its five largest suppliers, with
the largest such supplier accounting for approximately 24% of
total raw material expenditures. Fabric and various non-
fabric items, 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.
3
Production administration is primarily coordinated from
the Company's headquarters facility in Oshkosh with most
production taking place in its one Wisconsin, six Tennessee,
and four 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 16 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 two of the Company's eleven 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
4
background. In addition, "The Genuine Article " is
embroidered on the small OshKosh B'Gosh patch to signify
apparel that is classic in design and all-but-indestructible
in quality construction. The Company currently uses
approximately 24 registered and 22 unregistered trademarks in
the United States and has registered trademarks in 84 other
countries. 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 wholesale shipping period and a major retail
selling season at its retail outlet stores. The Company's
second quarter sales and income are the lowest because of both
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 1996 quarterly sales and income.
Working Capital
Working capital needs are affected primarily by inventory
levels, outstanding accounts receivable and trades payable.
The Company maintains a credit agreement with a number of
banks which provides a $60 million 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. There were no
outstanding borrowings against these credit arrangements at
December 31, 1995. Letters of credit of approximately $19
million were outstanding at December 31, 1995.
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.
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
5
retailers and other outlets, including 172 Company operated
domestic retail and factory outlet stores and one retail
showcase store. No one customer accounted for more than 10%
of the Company's 1995 sales. The Company's largest ten and
largest 100 customers accounted for approximately 42% and 62%
of 1995 sales, respectively. In 1995, the Company's products
were sold to approximately 3,200 wholesale customers
(approximately 9,600 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 end is not material for an understanding
of the business of the Company taken as a whole.
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
6
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 primary 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, 1995, the Company employed approximately
6,500 persons. Approximately 41% 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.
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
Floor Area in Principal
Location 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
Jamestown, TN 43,000 Manufacturing
Liberty, KY 218,000 Manufacturing/
Warehousing
Liberty, KY (2) 32,000 Warehousing
7
New York City, NY (3) 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 - 1998 , (2) Lease expiration date -
1999, (3) 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.
8
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS.
Quarterly Common Stock Data
1995 1994
Stock Price Dividends Stock Price Dividends
High Low Per Share High Low Per Share
Class A Common Stock
1st $15 $13-1/2 $ 0.07 $21-3/4 $14-1/2 $ 0.1025
2nd 16-3/4 14 0.07 15 12-1/4 0.1025
3rd 18 15-1/2 0.07 15-1/2 13-1/2 0.1025
4th 17-1/2 11-1/2 0.07 15-1/4 13 0.07
Class B Common Stock
1st $15 $13-1/2 $ 0.06 $22 $16-3/4 $ 0.09
2nd 16-1/2 14-1/4 0.06 17 13-3/4 0.09
3rd 18 16-1/4 0.06 15-1/2 14 0.09
4th 18-3/4 17-1/4 0.06 15-1/4 13-1/2 0.06
The Company's Class A common stock and Class B common
stock trade on the Over-The-Counter market and are 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. Company
management currently expects that quarterly dividends
comparable to dividends paid in 1995 will continue.
As of February 16, 1996, there were 1,721 Class A common
stock shareholders of record and 176 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,
1995 1994 1993 1992 1991
Financial Results
Net Sales $ 432,266 $ 363,363 $ 340,186 $346,206 $ 365,173
Net Income 10,947 7,039 4,523 15,135* 23,576
Return on Sales 2.5% 1.9% 1.3% 4.4% 6.5%
Financial Condition
Working Capital $ 95,414 $ 101,946 $ 111,794 $111,075 $ 106,803
Total Assets 208,579 217,211 229,131 226,195 214,963
Shareholders' Equity 150,078 158,814 171,998 175,153 167,380
Data per Common Share
Net Income $ .85 $ .50 $ .31 $ 1.04* $ 1.62
Cash Dividends Declared
Class A .28 .3775 .5125 .5125 .5125
Class B .24 .33 .45 .45 .45
Shareholders' Equity 12.05 11.76 11.79 12.01 11.48
* After a charge of $601 or $.04 per share to reflect
cummulative effect of change in accounting for nonpension
postretirement benefits.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
Results of Operations
The following table sets forth, for the periods indicated,
selected Company income statement data expressed as a
percentage of net sales and the percentage change in dollar
amounts compared to the previous years.
As a Percentage of Net Sales Percentage Change in
For the Years Ended Dollar Amounts
December 31, from Fiscal Year
1995 1994 1993 1995 to 1994 1994 to 1993
Net sales 100.0% 100.0% 100.0% 19.0% 6.8%
Cost of products sold 68.2% 71.4% 72.0% 13.6% 5.9%
Gross profit 31.8% 28.6% 28.0% 32.3% 9.1%
Selling, general, and
administrative expenses 27.6% 26.1% 23.1% 25.6% 21.0%
Restructuring & plant
closings 0.6% --- 3.2% --- -100.0%
Operating income 3.6% 2.5% 1.7% 73.0% 51.0%
Other income - net 1.1% 1.1% 1.0% 17.2% 19.0%
Income before income taxes 4.7% 3.6% 2.7% 55.8% 39.5%
Income taxes 2.2% 1.7% 1.4% 56.1% 24.1%
Net income 2.5% 1.9% 1.3% 55.5% 55.6%
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Year Ended December 31, 1995 Compared to Year Ended December
31, 1994
Net sales in 1995 were $432.3 million, an increase of $68.9
million (19%) over 1994 sales of $363.4 million. The
Company's 1995 domestic wholesale business of approximately
$255 million was 9% more than 1994 sales of approximately $234
million, with a corresponding increase in unit shipments of
approximately 11.7%. The average unit selling price during
1995 was down slightly due primarily to product mix (i.e.,
consumer preference towards garments with lighter weight
fabrics). The increase in domestic wholesale unit shipments
was the result of a number of factors. Improved product
design during 1994 contributed to better "sell-thrus" and
margins for a majority of our wholesale customers, and
resulted in significantly higher spring 1995 (shipped
primarily during the Company's first quarter) and fall back-
to-school (shipped primarily during the Company's third
quarter) children's fashion shipments. In addition, Company
initiatives undertaken during 1994, and continuing during
1995, resulted in significantly improved shipping performance
to customers on spring and fall back-to-school orders.
Difficulties experienced by the Company in coordinating the
transition of its sourcing strategy (which calls for
increasing sourcing of its product from offshore contractors)
resulted in the inability of the Company to make timely
deliveries on certain holiday orders to customers. This
resulted in a slowdown in the rate of unit shipment growth
during the fourth quarter of 1995. Company management is
implementing adjustments to its sourcing plan and anticipates
improved shipping performance in 1996.
With a relatively weak apparel market in general, the Company
does not anticipate the unit shipment growth experienced
during 1995 to continue in 1996. The Company's preliminary
outlook for 1996 indicates that unit shipments of domestic
wholesale products will be generally flat as compared with
1995.
Company retail sales at its OshKosh B'Gosh branded outlet
stores and Genuine Kids stores were approximately $138.4
million for 1995, a 39.2% increase over 1994 retail sales of
approximately $99.4 million. This retail sales increase was
primarily driven by the opening of an additional 35 retail
stores during 1995. In addition, the Company's comparable
store sales for 1995 were up approximately 3.6%. At year end,
the Company operated 81 OshKosh B'Gosh branded stores and 92
Genuine Kids stores. Current Company plans for 1996 call for
the opening of approximately 14 new retail stores and the
closing of 8 to 10 unprofitable stores. Accordingly, the
Company anticipates a slowdown in its retail sales growth for
1996 as compared to 1995 and 1994.
The Company's gross profit margin as a percent of sales
increased to 31.8% in 1995 compared with 28.6% in 1994. This
gross profit margin improvement was due to the impact of the
Company's increased retail sales at higher gross margins
relative to its domestic wholesale business, as well as
11
improvement in the wholesale business gross profit margin.
The Company's restructuring and plant closing initiatives over
the past two years, including redirection to a higher volume
of product sourced offshore, improved internal manufacturing
efficiencies, as well as more focused attention to product
design, have also contributed to the Company's increased gross
profit margin experienced during 1995. With the anticipated
growth of the Company's retail business during 1996, along
with the continuing effects of its internal manufacturing
capacity reduction initiatives, the Company anticipates
further improvement in its gross profit margins during 1996.
Selling, general, and administrative expenses for 1995
(excluding the $2.7 million charge for plant closures recorded
during the third quarter) increased $24.3 million over 1994.
As a percent of net sales, these costs increased to 27.6% as
compared to 26.1% in 1994. The primary reason for the
increase in the Company's selling, general, and administrative
expenses is the Company's expansion of its retail business.
In addition, the Company's expansion of its international
operations have added to these costs.
During the third quarter of 1995, the Company recorded a
pretax charge for plant closings of $2.7 million. This plant
closing charge (net of income tax benefit) reduced net income
by $1.6 million ($.13 per share) in 1995. As a part of the
Company's ongoing review of its manufacturing capacity,
operational effectiveness, and alternative sourcing
opportunities, the Company decided to close its Hermitage
Springs and McEwen, Tennessee facilities and downsize its
Oshkosh, Wisconsin sewing facility.
During the fourth quarter of 1995, the Company substantially
completed its downsizing of the Oshkosh sewing facility. The
Hermitage Springs and McEwen facilities were closed in
January, 1996. The Hermitage Springs facility was also sold
in early 1996.
The $2.7 million pretax charge for plant closings included
approximately $1.9 million of severance and related costs
pertaining to workforce reductions, as well as $750,000 for
facility closings and the write-down of the related assets.
The Company anticipates that the plant closings (net of income
tax benefit) will require cash expenditures of approximately
$1.1 million. Of this amount, $375,000 was expended in the
fourth quarter of 1995. The Company believes that these plant
closings, along with its other restructuring initiatives
carried out over the past two years, will result in reduced
cost of products and improved gross profit margins.
During 1993, the Company recorded a pretax restructuring
charge of $10.8 million. The restructuring charge including
approximately $3.3 million for facility closings, write-down
of the related assets, and severance costs pertaining to
workforce reductions. The restructuring charge also reflected
the Company's decision to market its Trader Kids line of
children's apparel under the new name of Genuine Kids and the
resulting costs of the Company's decision not to renew its
Boston Trader license arrangement beyond 1994, as well as
12
expenses to consolidate its retail operations. Accordingly,
the restructuring charge included approximately $7.5 million
for write-off of unamortized trademark rights and expenses
related to consolidating the Company s retail operations.
During 1994, the Company implemented its restructuring plan.
The Company closed its McKenzie, Tennessee facility and
reached satisfactory agreements with all affected workforce
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 successfully consolidated the
operations of its retail business into its Oshkosh office.
During 1995, the Company finalized its 1993 restructuring plan
by closing its Marrowbone, Kentucky and Dover, Tennessee
facilities. The Dover facility has been sold, and the Company
reached satisfactory agreements with the workforce concerning
severance arrangements.
There were no material changes in cost to fully implement the
Company's 1993 restructuring plan. The Company's cash
expenditures (net of income tax benefit) to carry out this
restructuring plan were approximately $4.4 million.
Interest expense for 1995 was $1.8 million compared to $1.0
million in 1994. This increase is the result of additional
Company borrowings to finance the Company's stock repurchase
program.
The Company licenses the use of its trade names to selected
licensees in the U.S. and in foreign countries. The Company's
net royalty income was $4.4 million in 1995, a $1.0 million
increase over 1994 net royalty income of $3.4 million. Net
royalty income from domestic licensees was approximately $2.3
million in 1995 as compared to $2.4 million in 1994. Net
royalty income from foreign licensees was approximately $2.1
million in 1995 as compared to $1.0 million in 1994. The
increase in royalty income from foreign licensees is the
result of both the addition of new licensees during 1994 and
1995 as well as the increased royalties from existing
licensees.
The Company's effective tax rate for 1995 was 45.8% compared
to 45.7% in 1994. The relatively high effective tax rates for
both years result primarily from the Company's foreign
operating losses (principally in Europe), which provide no tax
benefit. Company management believes that the $11.4 million
deferred tax asset at December 31, 1995 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.
Net income per share of $.85 in 1995 was a 70% increase over
1994 net income per share of $.50. While the Company's
domestic wholesale and retail operations demonstrated progress
during 1995, its European subsidiaries continued to struggle.
The Company incurred a loss from its European subsidiaries of
13
approximately $4.6 million in 1995 as compared to an
approximate $1.7 million loss in 1994. Management is
currently instituting a number of changes including
elimination of independent European design and sourcing
functions. Beginning with the fall 1996 product line, the
European subsidiaries will function primarily as distributors
of U.S. designed and sourced products. Management believes
that these changes will serve to improve European operating
results primarily during the second half of 1996. Management
is also evaluating alternative product sales and marketing
options for Europe.
In March, 1995, the Financial Accounting Standards Board
issued its Statement No. 121 entitled "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of". This standard requires impairment losses to
be recorded on long-lived assets used in operations when
indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than
the assets' carrying amount. Statement No. 121 also addresses
the accounting for long-lived assets that are expected to be
disposed of. The Company will adopt Statement No. 121 during
1996. The effect of applying this new standard has not yet
been fully determined.
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.
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 December
31, 1994, the Company operated 61 OshKosh B'Gosh branded
stores and 77 Genuine Kids stores.
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
14
of reduced unit volume on our manufacturing operations and
slightly lower pricing to wholesale customers.
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 1993, added approximately $1.6 million to selling,
general, and administrative expenses in 1994.
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 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 U.S. income before income taxes in 1993
(which resulted in part from the restructuring charge).
Seasonality
The Company's business is increasingly seasonal, with highest
sales and income in the third quarter, which is the Company's
peak wholsesale shipping period and a major 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 1996 quarterly sales and income.
Financial Position, Capital Resources, and Liquidity
The Company's financial strength is demonstrated by its
balance sheet. At December 31, 1995 and 1994, the Company did
not have any outstanding long-term debt.
At December 31, 1995, the Company's cash and cash equivalents
were $2.4 million compared to $10.5 million at the end of 1994
and $17.9 million at the end of 1993. The decrease in cash
and cash equivalents is primarily due to the Company s stock
repurchase program which was completed in 1995. Net working
capital at the end of 1995 was $95.4 million, compared to
$101.9 million at 1994 year end and $111.8 million at 1993
year end. Cash provided by operations was approximately $19.5
million in 1995, compared to $22.1 million in 1994, and $21.6
million in 1993.
15
Accounts receivable at December 31, 1995 were $24.7 million
compared to $23.9 million at December 31, 1994. Inventories
at the end of 1995 were $95.7 million, up $1.8 million from
1994. Management believes that year end 1995 inventory levels
are generally appropriate for anticipated 1996 business
activity.
Capital expenditures were approximately $9.7 million in 1995
and $9.9 million in 1994. Capital expenditures for 1996 are
currently budgeted at approximately $10 million.
The Company's stock repurchase program announced in 1994 was
completed in 1995. A total of 2,150,000 shares of Class A
common stock were acquired under the repurchase program,
requiring a cash outlay of approximately $16.8 million in 1995
and $15.0 million in 1994.
The Company has a credit agreement with participating banks.
This arrangement provides a $60 million 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 seasonal working capital needs as well as its
capital expenditures, remaining plant closing costs, and
business development needs.
Dividends on the Company's Class A and Class B common stock
totaled $.28 per share and $.24 per share, respectively, in
1995 compared to $.3775 per share and $.33 per share on the
Company's Class A and Class B common stock, respectively, in
1994. The dividend payout rate was 33% of net income in 1995
and 75% in 1994.
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 17
Consolidated Balance Sheets - December 31, 1995 and 1994 18
Consolidated Statements of Income - years ended
December 31, 1995, 1994, and 1993 19
Consolidated Statements of Changes in Shareholders' Equity -
years ended December 31, 1995, 1994, and 1993 20
Consolidated Statements of Cash Flows - years ended
December 31, 1995, 1994, and 1993 21
Notes to Consolidated Financial Statements 22
16
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, 1995 and 1994, and the related consolidated
statements of income, changes in shareholders' equity and cash
flows for each of the three years in the period ended December
31, 1995. Our audits also included the financial statement
schedule listed in the Index at Item 14. These financial
statements and schedule are the responsibility of the
Company's management. Our responsibility is to express an
opinion on these financial statements and schedule 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 beleive 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 the Company at December 31, 1995 and
1994, and the consolidated results of its operations and its
cash flows for each of the three years in the period ended
December 31, 1995, in conformity with generally accepted
accounting principles. Also in our opinion, the related
financial statement schedule, when considered in relation to
the basic financial statements taken as a whole, presents
fairly, in all material respects, the information set forth
therein.
/S/ ERNST & YOUNG LLP
Milwaukee, Wisconsin ERNST & YOUNG LLP
February 2, 1996
17
OSHKOSH B'GOSH, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in thousands, except share and per share amounts)
December 31,
1995 1994
ASSETS
Current assets
Cash and cash equivalents $ 2,418$ 10,514
Accounts receivable, less allowances of
$3,970 in 1995 and $3,700 in 1994 24,691 23,857
Inventories 95,743 93,916
Prepaid expenses and other current assets 3,127 2,510
Deferred income taxes 11,400 11,510
Total current assets 137,379 142,307
Property, plant, and equipment, net 65,011 69,829
Other assets 6,189 5,075
Total assets $208,579 $217,211
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 13,910$ 9,436
Accrued liabilities 28,055 30,925
Total current liabilities 41,965 40,361
Deferred income taxes 2,700 2,869
Employee benefit plan liabilities 13,836 15,167
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 - 11,189,387 shares
in 1995, 12,233,787 shares in 1994 112 122
Class B, authorized - 3,750,000 shares;
Issued and outstanding - 1,266,413 shares
in 1995, 1,267,713 shares in 1994 13 13
Retained earnings 149,720 158,933
Cumulative foreign currency
translation adjustments 233 (254)
Total shareholders' equity 150,078 158,814
Total liabilities and shareholders' equity $208,579 $217,211
See notes to consolidated financial statements.
18
OSHKOSH B'GOSH, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(Dollars and shares in thousands, except per share amounts)
Year Ended December 31,
1995 1994 1993
Net sales $432,266 $363,363 $340,186
Cost of products sold 294,770 259,416 244,926
Gross profit 137,496 103,947 95,260
Selling, general, and
administrative expenses 119,295 94,988 78,492
Restructuring and plant closings 2,700 - 10,836
Operating income 15,501 8,959 5,932
Other income (expense):
Interest expense (1,772) (1,034) (626)
Interest income 1,383 1,048 1,114
Royalty income, net of expenses4,443 3,442 3,417
Miscellaneous 633 543 (545)
Other income - net 4,687 3,999 3,360
Income before income taxes 20,188 12,958 9,292
Income taxes 9,241 5,919 4,769
Net income $ 10,947 $ 7,039 $ 4,523
Weighted average common
shares outstanding 12,865 14,144 14,586
Net income per common share $.85 $.50 $.31
See notes to consolidated financial statements.
19
<TABLE>
OSHKOSH B'GOSH,INC. AND SUBSIDIARIES
Consolidated Statements of Changes in Shareholders' Equity
(Dollars and shares in thousands, except per share amounts)
<CAPTION>
Cumulative
Foreign
Common Stock Additional Currency
Class A Class B Paid-In Retained Translation
Shares Amount Shares Amount Capital Earnings Adjustments
<S> <C> <C> <C> <C> <C> <C> <C>
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)
Net income - - - - - 10,947 -
Dividends
- Class A ($.28 per share) - - - - - (3,260) -
- Class B ($.24 per share) - - - - - (304) -
Foreign currency translation
adjustments - - - - - - 487
Conversions of common shares 2 - (2) - - - -
Repurchase of common
shares,net (1,046) (10) - - - (16,596) -
Balance - December 31, 1995 11,190 $112 1,266 $13 $ - $149,720 $233
See notes to consolidated financial statements.
20
OSHKOSH B'GOSH, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Dollars in thousands)
Year Ended December 31,
1995 1994 1993
Cash flows from operating activities
Net income $10,947 $ 7,039 $ 4,523
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 10,591 9,972 8,425
Amortization 765 720 808
(Gain) loss on disposal of assets 79 (185) 63
Provision for deferred income taxes (59) (965) (5,537)
Pension expense, net
of contributions (1,331) 979 1,852
Restructuring - - 10,836
Changes in operating assets and liabilities:
Accounts receivable (834) (4,380) 4,948
Inventories (1,827) 6,083 (7,247)
Prepaid expenses and other
current assets (617) 1,300 (1,624)
Accounts payable 4,474 (284) (1,376)
Accrued liabilities (2,716) 1,863 5,940
Net cash provided by
operating activities 19,472 22,142 21,611
Cash flows from investing activities
Additions to property, plant,
and equipment (9,728) (9,914) (8,990)
Proceeds from disposal of assets 3,722 1,425 1,159
Additions to other assets (1,392) (186) (1,783)
Net cash used in investing activities (7,398) (8,675) (9,614)
Cash flows from financing activities
Payments of long-term debt - (536) (7,896)
Dividends paid (3,564) (5,311) (7,377)
Repurchase of common shares, net (16,606)(14,959) -
Net cash used in financing activities(20,170)(20,806)(15,273)
Net decrease in cash and
cash equivalents (8,096) (7,339) (3,276)
Cash and cash equivalents at
beginning of year 10,514 17,853 21,129
Cash and cash equivalents at
end of year $ 2,418 $10,514 $17,853
Supplementary disclosures
Cash paid for interest $ 1,547 $ 638 $ 1,030
Cash paid for income taxes $ 8,544 $ 3,937 $12,194
See notes to consolidated financial statements.
21
<PAGE>
OSHKOSH B'GOSH, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
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. The
Company provides credit, in the normal course of business,
to department and specialty stores which are not
concentrated in any geographic region. The Company performs
ongoing credit evaluations of its customers and maintains
allowances for potential credit losses.
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 95.3% of total 1995 and 95.7% of total 1994
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
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.
22
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.
Use of estimates - The preparation of financial statements
in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those
estimates.
Deferred rent - Many of the Company's retail operating
leases contain predetermined fixed increases of the minimum
rental rate during the initial lease term. The Company
recognizes the related rental expense for these leases on a
straight-line basis and records the difference between the
amount charged to expense and the rent paid as deferred
rent.
Advertising - Advertising costs are expensed as incurred and
totaled $12,213, $9,858, and $11,209 in 1995, 1994, and
1993, respectively.
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. The dilutive
effect of stock options on net income per share is
immaterial.
Recent accounting pronouncements - In March, 1995, the FASB
issued Statement No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of, which requires impairment losses to be recorded on
long-lived assets used in operations when indicators of
impairment are present and the undiscounted cash flows
estimated to be generated by those assets are less than the
assets' carrying amount. Statement 121 also addresses the
accounting for long-lived assets that are expected to be
disposed of. The Company will adopt Statement 121 in the
first quarter of 1996. The effect of applying this new
standard has not yet been fully determined.
Note 2. Restructuring and Plant Closings
During the third quarter of 1995, the Company recorded a
pretax charge for plant closings of $2,700. This plant
closing charge (net of income tax benefit) reduced net
income by $1,600 ($.13 per share) in 1995. As a part of the
Company's ongoing review of its manufacturing capacity,
operational effectiveness, and alternative sourcing
opportunities, the Company decided to close its Hermitage
Springs and McEwen, Tennessee facilities and downsize its
Oshkosh, Wisconsin sewing facility.
During the fourth quarter of 1995, the Company substantially
completed its downsizing of the Oshkosh sewing facility.
23
The Hermitage Springs and McEwen facilities were closed in
January, 1996. The Hermitage Springs facility was also sold
in early 1996.
The $2,700 pretax charge for plant closings included
approximately $1,900 of severance and related costs
pertaining to workforce reductions as well as $750 for
facility closings and the write-down of the related assets.
The Company anticipates that the plant closings (net of
income tax benefit) will require cash expenditures of
approximately $1,100. Of this amount, $375 was expended in
the fourth quarter of 1995.
During 1993, the Company recorded a pretax restructuring
charge of $10,836. The restructuring charge included
approximately $3,300 for facility closings, write-downs 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
reached satisfactory agreements with all affected workforce
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
childrens' apparel. The Company also successfully
consolidated the operations of its retail business into its
Oshkosh office.
During 1995, the Company finalized its restructuring plan by
closing its Marrowbone, Kentucky and Dover, Tennessee
facilities. The Dover facility has been sold, and the
Company reached satisfactory agreements with the workforce
concerning severance arrangements.
There were no material changes in cost to fully implement
the Company s 1993 restructuring plan. The Company s cash
expenditures (net of income tax benefit) to carry out this
restructuring plan were approximately $4,400.
24
Note 3. Inventories
A summary of inventories follows:
December 31,
1995 1994
Finished goods $70,837 $75,187
Work in process 15,462 10,803
Raw materials 9,444 7,926
Total $95,743 $93,916
The replacement cost of inventory exceeds the above LIFO
costs by $16,158 and $16,122 at December 31, 1995 and 1994,
respectively.
Note 4. Property, plant, and equipment
A summary of property, plant, and equipment follows:
December 31,
1995 1994
Land and improvements $ 4,123$ 4,139
Buildings 35,478 37,442
Leasehold improvements 11,964 7,862
Machinery and equipment 64,759 70,498
Construction in progress 33 9
Total 116,357 119,950
Less: accumulated depreciation
and amortization 51,346 50,121
Property, plant, and
equipment, net $ 65,011$ 69,829
Note 5. Lines of Credit
The Company maintains a credit agreement with a number of
banks which provides a $60,000 revolving credit facility and
a $40,000 revocable demand line of credit for cash
borrowings, issuance of commercial paper, and letters of
credit.
All borrowing and commercial paper issues under this
agreement are supported by the revolving credit facility
which 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 revolving
credit facility. The Company is required to maintain
certain financial ratios in connection with this agreement.
25
There were no outstanding borrowings against these credit
arrangements at December 31, 1995. Letters of credit of
approximately $19,000 were outstanding at December 31, 1995,
with $81,000 of the unused credit facilities available for
borrowing.
Note 6. Accrued liabilities
A summary of accrued liabilities follows:
December 31,
1995 1994
Compensation $ 5,893$ 8,491
Worker's compensation 10,400 10,800
Income taxes 2,288 1,729
Restructuring costs 334 2,381
Other 9,140 7,524
Total $28,055 $30,925
Note 7. 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,
1996 $13,208
1997 12,344
1998 11,053
1999 9,591
2000 6,756
Thereafter 14,469
Total minimum lease payments$67,421
Total rent expense charged to operations for all operating
leases is as follows:
Year Ended December 31,
1995 1994 1993
Minimum rentals $15,760 $11,139 $7,718
Contingent rentals 279 196 167
Total rent expense $16,039 $11,335 $7,885
26
Note 8. Income taxes
Income tax expense (credit) is comprised of the following:
Year Ended December 31,
1995 1994 1993
Current:
Federal $7,440 $5,653 $ 8,571
State and local 1,860 1,231 1,735
9,300 6,884 10,306
Deferred (59) (965) (5,537)
Total $9,241 $5,919 $ 4,769
Deferred tax assets and liabilities relate to temporary
differences between the financial reporting and income tax
basis of Company assets and liabilities, and include the
following components:
December 31,
1995 1994
[Assets (Liabilities)]
Current deferred taxes
Accounts receivable allowances $ 1,398 $ 1,402
Inventory valuation 3,778 2,835
Accrued liabilities 5,685 5,994
Restructuring costs 134 834
Other 405 445
Total net current deferred tax assets$11,400 $11,510
Non-current deferred taxes
Depreciation $(7,881) $(8,497)
Deferred employee benefits 4,734 5,234
Trademark 447 394
Foreign loss carryforwards 3,971 2,418
Valuation allowance (3,971) (2,418)
Total net non-current deferred
tax liabilities $(2,700) $(2,869)
The valuation allowance in each year relates to foreign loss
carryforwards for which utilization is uncertain. The
majority of the foreign loss carryforward is in France.
This French loss carryforward expires beginning in 1999.
For financial reporting purposes, income before income taxes
includes the following components:
Year Ended December 31,
1995 1994 1993
Pretax income (loss):
United States $24,513 $14,319 $11,704
Foreign (4,325) (1,361) (2,412)
Total $20,188 $12,958 $ 9,292
27
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,
1995 1994 1993
Federal statutory tax rate 35.0% 35.0% 35.0%
Differences resulting from:
State and local income taxes, net
of federal income tax benefit 4.7 4.5 4.1
Foreign losses with no
tax benefit 7.5 3.7 9.1
Other (1.4) 2.5 3.1
Total 45.8% 45.7% 51.3%
Note 9. 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
$4,002, $4,309, and $4,621 for 1995, 1994 and 1993,
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.
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,
1995 1994 1993
Discount rate 7.0% 7.5% 7.0%
Expected long-term rate
of return on assets 8.0% 8.0% 7.0%
28
Rates of increase in
compensation levels 0-4.5% 0-4.5% 0-4.5%
Net periodic pension cost was comprised of:
Year Ended December 31,
1995 1994 1993
Service cost - benefits
earned during the period $1,923 $2,212 $2,318
Interest cost on projected
benefit obligations 1,947 1,888 1,808
Actual return on plan assets (4,818) (1,118) (1,708)
Net amortization and deferral 3,982 552 1,259
Net periodic pension cost $3,034 $3,534 $3,677
In conjunction with the plant closings discussed in Note 2,
the Company curtailed its defined benefit plans for the
affected plants. A curtailment cost of approximately $389
is included in the plant closing cost of $2,700.
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,
1995 1994
Assets ABO Assets ABO
Exceed Exceeds Exceed Exceeds
ABO Assets ABO Assets
Actuarial present value of
benefit obligations:
Vested benefits $11,957 $ 8,293 $ 9,365 $ 6,599
Nonvested benefits 740 211 916 313
Total accumulated benefit
obligation $12,697 $ 8,504 $10,281 $ 6,912
Projected benefit
obligation $22,791 $ 8,864 $19,334 $ 7,244
Plan net assets at
fair value 18,184 5,761 12,451 2,980
Projected benefit
obligation in excess of
plan net assets (4,607) (3,103) (6,883) (4,264)
Unamortized transition
asset (1,245) (58) (1,382) (20)
Unrecognized prior service
cost 2,264 2,447 2,586 3,022
Unrecognized net
(gain)loss (2,012) (100) (604) (679)
Adjustment to recognize
minimum liability - (2,000) - (2,000)
Accrued pension liability
at December 31 $(5,600) $(2,814) $(6,283) $(3,941)
29
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 $923, $531 and $565 for 1995, 1994 and 1993,
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 $45, $244 and $379 for
1995, 1994 and 1993, 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.
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,
1995 1994
Accumulated postretirement benefit obligation:
Retirees $ 189 $ 159
Fully eligible active plan participants 157 169
Other active plan participants 404 523
Total 750 851
Plan assets - -
Unrecognized net gain 630 497
Accrued postretirement benefit cost $1,380 $1,348
30
Net periodic postretirement benefit cost was comprised of:
Year Ended December 31,
1995 1994 1993
Service cost - benefits attributed
to employee service during
the year $ 42 $ 67 $ 98
Interest cost on accumulated
postretirement benefit obligation 48 53 61
Net amortization and deferral (34) (38) (18)
Net periodic postretirement
benefit cost $ 56 $ 82 $141
The discount rate used in determining the accumulated
postretirement benefit obligation was 7% in 1995, 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, 1995 by approximately $58 and the aggregate
of the service and interest cost components of net periodic
postretirement benefit cost for 1995 by approximately $3.
Note 10. 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 $3.75 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 $3.75 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.
31
The Class A common stock shareholders have the right to
elect or remove, as a class, 25% of the entire board of
directors of the Company. Class B common stock shareholders
are entitled to elect or remove, as a class, the other 75%
of the directors (subject to any rights granted to any
series of preferred stock) and are entitled to one vote per
share on all matters (including an increase or decrease in
the unissued authorized capital stock of any class)
presented to the shareholders for vote.
In February, 1995, the Company initiated stock option plans
for certain employees and directors. A total of 1,470,000
shares have been authorized for these option programs. As
of December 31, 1995, 155,800 options have been granted to
purchase Company Class A common stock at the fair market
value at date of grant issuance, primarily $14.50 per share.
Rights to exercise these options vest over a four year
period. At December 31, 1995, no options have vested.
The Company has elected to follow Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to
Employees" (APB 25) and related Interpretations in
accounting for its employee stock options. Under APB 25,
since the exercise price of the Company s employee stock
options equals the market price of the underlying stock on
the date of grant, no compensation expense is recognized.
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 3, 1996.
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 3, 1996.
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 3, 1996.
32
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 3, 1996.
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 16 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
A Form 8-K covering Item 5. Other Events - an updated
description of capital stock - was filed on October
25, 1995.
33
(c) Exhibits
3.1 Certificate of Incorporation of OshKosh B'Gosh, Inc.,
as restated, May 7, 1993, previously filed as Exhibit
99.3 to the Registrant's Current Report on Form 8-K
dated October 25, 1995, Commission File Number 000-
13365, is incorporated herein by reference.
3.2 By-laws of OshKosh B'Gosh, Inc., as amended through
March 31, 1995, previously filed as Exhibit 3.2 to the
Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1994, Commission File Number
000-13365, is incorporated herein by reference.
*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. Profit Sharing Plan, as amended
on February 19, 1996
*10.4 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.
*10.5 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.
*10.6 OshKosh B'Gosh, Inc. Officers Medical and Dental
Reimbursement Plan, as amended previously filed as
Exhibit 10.18 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31,1994,
Commission File Number 000-13365, is incorporated
herein by reference.
10.7 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.
*Represents a plan that covers compensation, benefits and/or
related arrangements for executive management.
34
10.8 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: Anthony S. Giordano,
Douglas W. Hyde, Michael D. Wachtel, and Kenneth H.
Masters).
*10.9 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.
10.10 Employment agreement dated and effective May 1, 1994,
by and among OshKosh B'Gosh, Inc., Essex Outfitters,
Inc. and Barbara Widder-Lowry previously filed as
Exhibit 10.14 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31,1994,
Commission File Number 000-13365, is incorporated
herein by reference.
10.11 Employment agreement dated and effective May 1, 1994
by and among OshKosh B'Gosh, Inc., Essex Outfitters,
Inc. and Paul A. Lowry previously filed as Exhibit
10.15 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31,1994, Commission
File Number 000-13365, is incorporated herein by
reference.
10.12 Credit agreement between Oshkosh B'Gosh, Inc. and
Firstar Bank Milwaukee, N.A. and participating banks
as amended, dated as of January 30, 1996.
*10.13 OshKosh B'Gosh, Inc. 1994 Incentive Stock Plan
previously filed as Exhibit 10.17 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended
December 31,1994, Commission File Number 000-13365, is
incorporated herein by reference.
10.14 OshKosh B'Gosh, Inc. 1995 Outside Directors' Stock
Option Plan previously filed as Exhibit 10.18 to the
Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31,1994, Commission File Number
000-13365, is incorporated herein by reference.
*Represents a plan that covers compensation, benefits and/or
related arrangements for executive management.
35
21. The following is a list of the subsidiaries of the
Company as of December 31, 1995. The consolidated
financial statements reflect the operations of all
subsidiaries as they existed on December 31, 1995.
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
23. Consent of Ernst & Young LLP, Independent Auditors
27. Financial Data Schedule
36
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 and Chief Executive Officer
/S/ MICHAEL D. WACHTEL Executive Vice President,
Chief Operating Officer and Director
/S/ DAVID L. OMACHINSKI Vice President, Treasurer
and Chief Financial Officer
/S/ STEVEN R. DUBACK Secretary and Director
/S/ ORREN J. BRADLEY Director
/S/ JERRY M. HIEGEL Director
/S/ JUDITH D. PYLE Director
37
(d)
OSHKOSH B'GOSH, INC. AND SUBSIDIARIES
Schedule II
Valuation and Qualifying Accounts
(Dollars in Thousands)
Years Ended December 31,
1995 1994 1993
Accounts Receivable - Allowances:
Balance at Beginning of Period $ 3,700 $3,310 $2,265
Charged to Costs and Expenses 8,084 6,508 5,979
Deductions - Bad Debts Written off,
Net of Recoveries and Other
Allowances (7,814) (6,118) (4,934)
Balance at End of Period $ 3,970 $3,700 $3,310
Years Ended December 31,
1994 1993 1992
Restructuring Costs - Allowances:
Balance at Beginning of Period $ 2,381 $ 8,186 $ 422
Charged to Cost and Expenses - - 10,836
Actual Restructuring Costs
Incurred (2,047) (5,805) (3,072)
Balance at End of Period $ 334 $ 2,381 $ 8,186
F-1
</TABLE>
EXHIBIT 10.3
OSHKOSH B'GOSH, INC.
PROFIT SHARING PLAN
EFFECTIVE: JANUARY 1, 1994
OSHKOSH B'GOSH, INC.
PROFIT SHARING PLAN
TABLE OF CONTENTS
Chapter Page
INTRODUCTION
I DEFINITIONS1
II ELIGIBILITY AND PARTICIPATION 10
2.01 Eligibility 10
2.02 Re-employment 10
2.03 Exclusion of Collective Bargaining
Employees 10
2.04 Change in Participant Status 10
2.05 Employees Not in Eligible Class 10
III CONTRIBUTIONS AND ALLOCATIONS 11
3.01 Determination of Employer Contributions 11
3.02 Allocation of Employer Contributions
and Forfeitures 11
IV CONTRIBUTION LIMITATIONS 12
4.01 Definitions 12
4.02 Maximum Annual Additions 13
4.03 Reduction of Annual Additions 13
4.04 Limitations if Participant in Other Plan(s)14
V INVESTMENT OF ACCOUNTS 15
5.01 Funding Policy 15
5.02 Employee Direction of Investments 15
5.03 Expenses 15
VI VESTING OF ACCOUNTS 16
6.01 100% Vesting Situations 16
6.02 Vesting Schedule 16
6.03 Bad-Boy Provision 16
6.04 Forfeitures 16
6.05 Resumption of Participation 18
7/22/94
VII PAYMENT OF BENEFITS 19
7.01 Commencement of Benefits 19
7.02 Form of Payment 19
7.03 Incidental Death Benefits 19
7.04 Transfers 21
7.05 Distribution of Small Amounts 21
7.06 Direct Rollover21
VIII TOP-HEAVY PROVISIONS 24
8.01 Provisions Will Control 24
8.02 Definitions 24
8.03 Minimum Allocation 27
8.04 Nonforfeitability of Minimum Allocation 27
8.05 Minimum Vesting Schedules 28
8.06 Compensation Limitation 28
IX ADJUSTMENT OF ACCOUNTS 29
9.01 Allocation of Trust Earnings 29
9.02 Allocation of Employer Contributions
and Forfeitures 29
X DESIGNATION OF BENEFICIARY 30
10.01 Beneficiary Designation 30
10.02 Priority if no Designated Beneficiary 30
XI AMENDMENT OF THE PLAN 31
11.01 Amendment by Employer 31
11.02 Conformance to Law 32
11.03 Right to Terminate 32
11.04 Merger, Consolidation, or Transfer 32
XII CLAIMS PROCEDURE 33
12.01 Written Claim 33
12.02 Claim Denial 33
12.03 Request for Review of Denial 33
12.04 Decision on Review 33
12.05 Additional Time 34
7/22/94
XIII MISCELLANEOUS PROVISIONS 35
13.01 Reversion of Assets 35
13.02 Equitable Adjustment 35
13.03 Reasonable Compensation 35
13.04 Indemnification 35
13.05 Protection From Loss 36
13.06 Protection From Liability 36
13.07 Adoption of Rules and Procedures 36
13.08 Assignment of Benefits 36
13.09 Mental Competency 37
13.10 Authentication 37
13.11 Not an Employment Contract 37
13.12 Appointment of Auditor 37
13.13 Uniform Treatment 38
13.14 Interpretation 38
13.15 Plural and Gender 38
13.16 Headings 38
13.17 Expenses 38
13.18 Unclaimed Accounts 38
XIV EMPLOYER STOCK SAVINGS ACCOUNTS AND INVESTMENTS 39
14.01 Stock Savings Accounts 39
14.02 Employer Stock Defined 39
14.03 Distributions from Stock Savings Accounts 39
14.04 Employer Stock Valuation 39
7/22/94
INTRODUCTION
The name of this Plan is the Oshkosh B'Gosh, Inc. Profit
Sharing Plan.
The validity, construction, and all rights granted under this
Plan and Trust will be governed, interpreted, and administered
by the laws of the United States under the Employee Retirement
Income Security Act of 1974 (ERISA, as it may be amended) and
the Internal Revenue Code of 1986 (the Internal Revenue Code,
as it may be amended). However, regardless of the preceding,
to the extent that ERISA and/or the Internal Revenue Code do
not preempt local law, the Plan and Trust will be governed,
interpreted, construed, and enforced according to the laws of
the State of Wisconsin.
If the U.S. Department of Labor or the Internal Revenue
Service, or both, determines at any time that this Plan does
not meet these requirements or that it is being administered
or interpreted in a manner inconsistent with these
requirements, the Employer may make the appropriate amendments
or adjustments, or both, which may be retroactive, to correct
the situation, or terminate the Plan.
If any provisions of the Plan and Trust are held to be invalid
or unenforceable, the remaining provisions will continue to be
fully effective.
7/22/94
CHAPTER I
DEFINITIONS
1.01 Unless the context requires otherwise, the capitalized
terms defined below will have the following meanings
throughout the Plan:
a. Account is any or all of a Participant's Account(s)
as may be established by the Committee from time to
time to administer the Plan, depending upon the
context of the sentence in which it is used.
Account(s) shall include:
1. Regular Account (the Account to which are
credited Employer Contributions and earnings
thereon).
2. Employee Contributions Account (the Account to
which are credited voluntary Employee
Contributions and earnings thereon).
b. Affiliated Employer. means (i) each corporation
which is included as a member of a controlled group
with the Employer and trades or businesses, whether
or not incorporated, which are under common control
by or with the Employer within the meanings of
Sections 414(b) and (c) of the Internal Revenue
Code of 1986, or any amendments thereof and (ii)
any other corporation not described in clause (i)
acquired by the Employer and designated by it as an
Affiliated Employer, except that for purposes of
the limitation on Annual Additions, the term shall
also include trades or businesses on the basis of a
more than 50% test rather than an 80% test.
Further, the term shall include any members of the
same "affiliated service group" within the meaning
of Code Section 414(m) and any other entity
required to be aggregated with the Employer under
Code Sections 414(n) or (o).
c. Anniversary Date is December 31.
d. Beneficiary is the person or entity designated in
Chapter X to receive any death benefits of a
Participant which become payable under the Plan.
e. Break in Service shall mean, as to any Participant
who, as of December 31, 1988 or earlier, had
incurred a One Year Break in Service after
termination of employment, a One Year Break in
Service, which means a Plan Year in which the
Employee does not complete an aggregate of more
than 500 Hours of Service with the Employer or
Affiliated Employers.
7/22/94 1
As to any Participant who, as of December 31, 1988
or earlier, has not incurred a Break in Service
under the rules then in existence, and as to
terminations of employment on and after January 1,
1989, a Break in Service shall be any subsequently
ending and consecutive five One Year Breaks in
Service.
f. Code means the Internal Revenue Code of 1986, as
amended and as it may be amended.
g. Committee is the organization appointed by the
Board of Directors of the Employer (which may name
itself as the Committee) for purposes of overseeing
the administration of the Plan, and performing any
other duties specified in this Plan. A Committee
member may resign or be removed at any time by the
Board of Directors of the Employer by written
notice. To assist it in its duties, the Committee
may employ agents or legal counsel.
Any such Committee may in its regulations or by
action delegate the authority to any one or more of
its members to take any action on behalf of the
Committee and as to such actions, no meetings or
unanimous consent shall be required. The Committee
may also act at a meeting or by its unanimous
written consent. A majority of the members of the
Committee shall constitute a quorum for the
transaction of business and shall have full power
to act hereunder. All decisions shall be made by
vote of the majority present at any meeting at
which a quorum is present, except for actions in
writing without a meeting which must be unanimous.
The Committee may appoint a Secretary who may, but
need not, be a member of the Committee. The
Committee may adopt such bylaws and regulations as
it deems desirable for the conduct of its affairs.
Any absent Committee member, and any dissenting
Committee member who (at the time of the making of
any decision by the majority) registers his dissent
in writing delivered at that time to the other
Committee members, shall be immune to the fullest
extent permitted by law from any and all liability
occasioned by or resulting from the decision of the
majority. All rules and decisions of the Committee
shall be uniformly and consistently applied to all
persons in similar circumstances. The Committee
shall be entitled to rely upon the Employer's
records as to information pertinent to calculations
or determinations made pursuant to the Plan. A
member of the Committee may not vote or decide upon
any matter relating solely to himself or vote in
7/22/94 2
any case in which his individual right of claim to
any benefit under the Plan is particularly
involved. If, in any case in which a Committee
member is so disqualified to act, the remaining
members cannot agree, then, the President of the
Employer will appoint a temporary substitute member
to exercise all of the powers of the disqualified
member concerning the matter in which that member
is disqualified to act.
In the event a dispute arises under the Plan and
Trust, the Committee will be the authorized agent
for the service of legal process.
h. Compensation means total wages, salaries, fees and
other amounts received for a particular Plan Year
(without regard to whether or not an amount is paid
in cash) for personal services actually rendered in
the course of employment by the Participant from
the Employer to the extent that the amounts are
includable in gross income (or such Compensation
paid or accrued for Plan Years prior to January 1,
1991), and including any elective contributions not
otherwise includable in income under a Code Section
125 cafeteria plan or Section 401(k) plan, but
excluding reimbursement or other expense
allowances, fringe benefits (cash and noncash),
moving expenses, deferred compensation and welfare
benefits. In the Plan Year in which an Employee
becomes a Participant, for purposes of allocating
Employer Contributions, Compensation includes only
his Compensation after he becomes a Participant
under Chapter II.
However, for any Plan Year beginning after December
31, 1988, Compensation in excess of $200,000 (as
adjusted as permitted under Code Section 401(a)(17)
from time to time) shall be disregarded. Further,
in determining the Compensation of a Participant
who is a highly compensated employee as defined in
Code Section 414(q) for purposes of this dollar
limitation, the family member aggregation rules of
Code Section 414(q)(6) shall apply, except that in
applying such rules, the term "family" shall
include only the spouse of the Participant and any
lineal descendants of the Participant who have not
attained age 19 before the end of the Plan Year
under consideration. If the $200,000 adjusted
Compensation limit applies to a Participant and one
or more family members under the rules of the
preceding sentence, then any benefits affected will
be adjusted by prorating the $200,000 adjusted
limit among the affected individuals who are
3/15/96 3
Participants pro rata to each such individual's
Compensation determined without regard to the
$200,000 adjusted limit.
In addition to other applicable
limitations set forth in the Plan, and
notwithstanding any other provision of
the Plan to the contrary, for Plan
Years beginning on or after January 1,
1994, the annual Compensation of each
employee taken into account under the
plan shall not exceed the OBRA '93
annual compensation limit. The OBRA '93
annual compensation limit is $150,000,
as adjusted by the Commissioner for
increases in the cost of living in
accordance with section 401(a)(17)(B) of
the Internal Revenue Code. The cost-of-
living adjustment in effect for a
calendar year applies to any period, not
exceeding 12 months, over which
compensation is determined
(determination period) beginning in such
calendar year. If a determination
period consists of fewer than 12 months,
the OBRA '93 annual compensation limit
will be multiplied by a fraction, the
numerator of which is the number of
months in the determination period, and
the denominator of which is 12.
For Plan Years beginning on or after
January 1, 1994, any reference in this
plan to the limitation under section
401(a)(17) of the Code shall mean the
OBRA '93 annual compensation limit set
forth in this provision.
If Compensation for any prior
determination period is taken into
account in determining an employee's
benefits accruing in the current plan
year, the Compensation for that prior
determination period is subject of the
OBRA '93 annual compensation limit in
effect for that prior determination
period. For this purpose, for
determination periods beginning before
the first day to the first Plan Year
beginning on or after January 1, 1994,
the OBRA '93 annual compensation limit
is $150,000.
3/15/96 4
i. Contributions to the Plan by the Employer and the
Participant shall include:
1. "Employer Contributions" shall mean Employer
contributions made to the Plan.
2. "Employee Contributions" shall mean voluntary
Employee contributions made on an after-tax
basis.
j. Date of Employment means:
1. the day on which the Employee performs his
first Hour of Service on or after the date on
which he is employed by the Employer, or
2. the date on which the Employee performs his
first Hour of Service on or after the date on
which he is re-employed following a One Year
Break in Service.
k. Effective Date of the Plan is January 1, 1952. The
effective date of this amendment and restatement is
January 1, 1994.
l. Employee is any person employed directly by the
Employer and for whom the Employer pays Social
Security taxes and who is a salaried employee not
receiving any commissions (and if any portion of an
otherwise eligible employee s pay is directly
related to sales volume, such individual shall be
considered an employee receiving commissions and
hence excluded). By amendment to the Plan effective
January 1, 1989, certain classes of employees were
excluded from the Plan (the Excluded Group ).
Individuals who were in the Excluded Group with an
undistributed account under the Plan as of July 1,
1989 became 100% vested as of that date, regardless
of their years of vesting service, notwithstanding
any other provision of this Plan. No further
Employer contributions of forfeitures shall be
allocated to the accounts of Participants in the
Excluded Group after January 1, 1989, for so long
as such individuals remain in the Excluded Group
after January 1, 1989, but such account shall
continue to be adjusted for investment results of
the Trust Fund and become subject to distribution
in accordance with Chapter VII hereof. Any
individual who was in the Excluded Group but who
again became an eligible Employee because of the
amendment of this Section as of January 1, 1995
shall be treated from and after that date the same
as any other eligible Employee hereunder and if any
3/15/96 5
such individual is not already 100% vested, a
separate Regular Account shall be established for
such individual subject to the vesting schedule
under Section 6.02 and the other vesting provisions
of this Plan.
Leased Employees (as defined in Code Section
414(n)) shall not be included even though it is
recognized that such leased employees shall be
included for purposes of non-discriminatory testing
under Code Section 410.
m. Employer is Oshkosh B'Gosh, Inc. and any successor
corporation or partnership by merger, purchase, or
otherwise. Unless specifically included, Absorba,
Inc. and Essex Outfitters, Inc. and other
subsidiaries of Oshkosh B'Gosh, Inc. are not
considered as an Employer. Due to the change of
Essex Outfitters from a subsidiary to a division as
of May 31, 1994, and notwithstanding the preceding
sentence, Essex Outfitters shall be deemed an
Employer as of June 1, 1994. Employees of Essex
Outfitters shall become Participants the first of
the month conicident with or next following their
satisfaction of the Plan's minimum age and service
requirements after May 31, 1994. Such employees
shall receive Years of Vesting Service credit for
service prior to June 1, 1994.
The Employer will be the named fiduciary as defined
in ERISA.
n. Employment Year means a 12-month period following
an Employee's most recent Date of Employment.
o. ERISA is the Employee Retirement Income Security
Act of 1974, as amended.
p. Hours of Service means any of the following hours
(assuming a 190 hour month for any Employee not
paid on an hourly basis who works one hour during
the month):
1. Each hour for which an Employee is directly or
indirectly paid, or entitled to payment, for
the performance of duties for the Employer.
These hours will be credited to the Employee
for the computation period in which the duties
are performed; and
2. Each hour for which an Employee is directly or
indirectly paid, or entitled to payment, by
3/15/96 6
the Employer on account of a period of time
during which no duties are performed
(irrespective of whether the employment
relationship has terminated) due to vacation,
holiday, illness, incapacity (including
disability), layoff, jury duty, military duty
or leave of absence. No more than 501 Hours
of Service will be credited under this
paragraph for a single computation period
(whether or not the period occurs in a single
computation period). Hours under this
paragraph will be calculated and credited
pursuant to Section 2530.200b-2 of the
Department of Labor Regulations which are
incorporated herein by this reference; and
3. Each hour for which back pay, irrespective of
mitigation of damages, is either awarded or
agreed to by the Employer. The same Hours of
Service will not be credited both under 1. or
2. above, as the case may be, and under this
definition 3. These hours will be credited to
the Employee for the computation period or
periods to which the award or agreement
pertains rather than the computation period in
which the award, agreement, or payment is
made.
For purposes of determining whether a One Year
Break in Service has occurred for participation and
vesting purposes, and Employee who is absent from
work
i. by reason of her pregnancy,
ii. by reason of the birth of a child of the
Employee,
iii. by reason of the placement of a child in
connection with the adoption of the child
by the Employee,
iv. for purposes of caring for the child
during the period immediately following
the birth or placement for adoption,
Hours of Service shall be credited according to the
following rule. During the period of absence, the
Employee shall be deemed to have completed the
number of hours that normally would have been
credited but for the absence. If the normal work
hours are unknown, eight hours of service shall be
credited for each normal work day during the leave.
3/15/96 7
The Hours of Service to be credited under this
paragraph shall be credited in the year in which
the absence begins if such crediting is necessary
to prevent a One Year Break in Service in that year
or in the following year. Provided, however, the
total number of Hours of Service credited by this
paragraph shall not exceed 501.
Hours of Service will be credited for employment
with other members of an Affiliated Employer.
Hours of Service will also be credited for any
individual considered an employee under Section
414(n).
If records of employment with respect to an
Employee's service with the Employer before the
effective date of this restatement are insufficient
to determine his exact Hours of Service, the
Committee will make reasonable estimates of said
Hours of Service based on such records of
employment. Any such Hours of Service estimates
will be made in a uniform, nondiscriminatory manner
and will be binding on all Employees.
q. Normal Retirement Age is the date an Employee is 65
years old.
s. Participant is an Employee who has met the
eligibility requirements of Chapter II, or a person
who has an Account balance under this Plan.
t. Plan means the Oshkosh B'Gosh, Inc. Profit Sharing
Plan as it may be amended from time to time.
u. Plan Administrator is Oshkosh B'Gosh, Inc.
v. Plan Year is January 1 to December 31.
w. Suspense Account is the separate Account within a
Regular Account consisting of the forfeiture (under
Section 6.02) of a Participant who terminates
employment and who returns to the employ of the
Employer before he incurs five One Year Breaks in
Service.
x. Suspense Amount is the dollar amount of the non-
Vested portion, if any, of a terminated
Participant's Regular Account. The crediting, if
any, of Trust earnings to the Suspense Amount will
be determined by the Committee in a uniform and
nondiscretionary manner.
3/15/96 8
y. Trust means the Oshkosh B'Gosh, Inc. Profit Sharing
Trust, as it may be amended from time to time.
z. Trustee is the person(s), corporation, or
combination thereof (and any duly appointed
successor) named in the Trust document.
aa. Trust Fund is the total of contributions made to
the Trust, increased by profits, income, refunds,
and other recoveries received, and decreased by
losses and expenses incurred, and benefits paid.
Trust Fund may also include any assets transferred
to the Trust Fund from the qualified corporate
retirement trust of the Employer or any other
employer, if permitted by applicable law, and, if
permitted by the Committee, the individual
retirement account (as defined by the Internal
Revenue Code and referred to as "IRA" in the Plan
and Trust) of an Employee, or a distribution to a
Participant from the qualified corporate retirement
plan of the Employer or another employer.
bb. Valuation Date is any date on which the market
valuation of the Trust Fund is made. This
valuation must be made on each March 31st, June
30th, September 30th, and December 31st of the Plan
Year if there is a need to make a benefit
distribution as of such date, as determined by the
Committee. If it desires, the Committee in its
discretion, may also instruct the Trustee to make
valuations at other times.
cc. Vested is that portion of an Account to which a
Participant has a nonforfeitable right.
dd. Year of Eligibility Service is the Employment Year
of an Employee, provided he completes at least
1,000 Hours of Service during such Employment Year.
For an Employee who does not complete at least
1,000 Hours of Service in his Employment Year, a
Year of Eligibility Service is a Plan Year,
starting with the Plan Year next following his Date
of Employment, during which he completes at least
1,000 Hours of Service.
ee. Year of Vesting Service is any Plan Year, starting
with the Plan Year in which an Employee is hired by
the Employer, during which such Employee completes
at least 1,000 Hours of Service.
3/15/96 9
CHAPTER II
ELIGIBILITY AND PARTICIPATION
2.01 Eligibility. On and after January 1, 1989, each
Employee shall become eligible to participate in the
Plan on the first day of the pay period coincident with
or next following his completion of both of the
following requirements:
a. one Year of Eligibility Service following his most
recent Date of Employment; and
b. attainment of age 21.
2.02 Re-employment. Notwithstanding the provisions of
Section 2.01, any Participant who terminated employment
with the Employer after the effective date of this
restatement, and is later rehired, shall again become
eligible to become a Participant on his most recent Date
of Employment.
2.03 Exclusion of Collective Bargaining Employees. An
Employee who is covered by a collective bargaining
agreement to which the Employer is a party will not be
eligible to participate in this Plan unless that
collective bargaining agreement specifically provides
for coverage of such Employee under this Plan. Also, a
Participant who becomes covered by a collective
bargaining agreement to which the Employer is a party
will not be eligible to share in any Employer Contri-
butions and forfeiture reallocations for any Plan Year
during which he is covered for the entire Plan Year by
that collective bargaining agreement, unless such
collective bargaining agreement specifically provides to
the contrary.
2.04 Change in Participant Status. In the event a
Participant is no longer a member of an eligible class
of Employees (as defined in Section 1.01l.) and becomes
ineligible to participate, such employee will
participate immediately upon returning to an eligible
class of Employees.
2.05 Employees Not in Eligible Class. In the event an
employee who is not a member of the eligible class of
Employees (as defined in Section 1.011.) becomes a
member of the eligible class, such employee will
participate immediately if such employee has satisfied
the minimum age and service requirements and would have
otherwise previously become a Participant.
3/15/96 10
CHAPTER III
CONTRIBUTIONS AND ALLOCATIONS
3.01 Discretionary Employer Contributions.
This Plan is intended to be a discretionary contribution
plan, not dependent upon the existence of Employer
profits, pursuant to Code Section 401(a)(27).
Notwithstanding the preceding, this Plan shall be
treated as a profit sharing plan for purpose of Code
Sections 401(a), 402, 412, and 417.
The Employer agrees to pay to the Trustee with respect
to each Plan Year such amount, if any, as may be
determined by the Board of Directors of the Employer
each year. The Employer's contribution for any
particular Plan Year shall not exceed the amount
(including the amount of any credit-carryovers from
prior years available to the Employer) which the
Employer may lawfully deduct for federal income Tax
purposes.
Employer contributions shall be made before or as soon
as reasonably possible after the close of the Employer's
fiscal year, without interest and within the time limit
for deductibility thereof by the Employer as specified
by the Internal Revenue Code.
3.02 Allocation of Employer Contributions and Forfeitures.
Except as provided in Section 6.04, the Employer
contributions shall be allocated to the Regular Accounts
of all Participants who are Employees on the last day of
the Plan Year or who terminated employment during the
Plan Year due to death, retirement (on or after either
the attainment of age 65, or the attainment of age 60
and the completion of 10 Years of Vesting Service) or
disability, in the proportion that the Compensation of
each such Participant bears to the total Compensation of
all such Participants. Any forfeitures which become
reallocable during the Plan Year under any other
provision of this Plan shall be applied to reduce the
amount of Employer contributions otherwise determined
for such Plan Year. To the extent any unapplied balance
of forfeitures remain, the same shall be similarly
applied as soon as possible in the immediately following
Plan Years. On the effective date of any total
termination of the Plan or complete discontinuance of
any contributions to the Trust, any unapplied
forfeitures shall be allocated to the Regular Accounts
of all Participants who are Employees on such effective
date pro rata to Compensation as provided above.
3/15/96 11
CHAPTER IV
CONTRIBUTION LIMITATIONS
4.01 Definitions. For purposes of this Chapter IV only, the
capitalized terms defined below will have the following
meaning when capitalized:
Annual Additions means the total of the following
amounts, if any, which are allocated to the Combined
Accounts of a Participant:
a. Employer Contributions (excluding Employer
contributions arising from an award of back pay by
agreement with the Employer or by court order);
b. Amounts forfeited by non-vested previous
Participants; and
c. Non-deductible voluntary Employee Contributions.
For purposes of determining Annual Additions, a rollover
contribution from an IRA of a Participant, or from his
account in the qualified retirement plan of his previous
employer will not be included.
Average Compensation of a Participant is his Total
Compensation during the three consecutive Limitation
Year period in which he earned a year of service and
which produced the highest average.
Combined Accounts means the total of all accounts of a
Participant in all of the Defined Contribution Plans of
the Employer.
Defined Benefit Plan is a retirement plan which does not
provide for benefits from an individual account of a
Participant, but rather such benefits are based on a
benefit formula provided by the Plan.
Defined Contribution Plan is a retirement plan which
provides for an individual account for each Participant
and for benefits based entirely on the balance of that
account. The account balance is usually derived from
contributions, income, expenses, market value increases
or decreases, and sometimes non-Vested amounts from
Participants who quit before retirement.
Limitation Year is the Plan Year.
Total Compensation includes a Participant's earned
income, wages, salaries, and fees for professional
service and other amounts received for personal services
3/15/96 12
actually rendered in the course of employment with an
employer maintaining the plan (including but not limited
to, commissions paid salesmen, compensation for services
on the basis or a percentage of profits, commissions on
insurance premiums, tips and bonuses) and excluding the
following:
a. Employer contributions to a plan or deferred
compensation which are not included in the gross
income of the employee for the taxable year in
which contributed, or on behalf of an employee to a
simplified employee pension plan to the extent such
contributions are deductible by the employee, or
any distributions from a plan of deferred
compensation;
b. Amounts realized from the exercise of a non-
qualified stock option, or when restricted stock
(or property) held by an employee either becomes
freely transferable or is no longer subject to a
substantial risk of forfeiture;
c. Amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified
stock option; and
d. Other amounts which receive special tax benefits,
or contributions made by the Employer (whether or
not under a salary reduction agreement) towards the
purchase of a 403(b) annuity contract (whether or
not the contributions are excludable from the gross
income of the employee).
4.02 Maximum Annual Additions. The maximum amount of Annual
Additions which can be made to the Combined Accounts of
a Participant for any Limitation Year is equal to the
lesser of:
a. 25% of his Total Compensation for that period; or
b. $30,000 (or such other dollar amount as is
specified annually by the Secretary of the
Treasury, or his delegate or any other Federal law
or regulations).
4.03 Reduction of Annual Additions. If the Annual Additions
to any Participant's Combined Accounts exceed this
maximum for any Limitation Year, the Committee will
reduce the amount of his Annual Additions in the
following order of priority until the Annual Additions
equal the maximum allowed:
a. First, any amounts of voluntary Employee
3/15/96 13
Contributions shall be returned, to the extent
required, to the Participant.
b. Second, the forfeitures credited to his Account for
the Limitation Year will be reallocated to the
appropriate Accounts of all other Participants to
the extent required, in the same manner as the
other forfeitures for the Limitation Year.
c. Third, and subject to Section 4.02, Employer
Contributions shall be reallocated to other
Participants covered by the Plan in that Limitation
Year.
4.04 Limitations if Participant in Other Plan(s). If a
Participant is also a participant in a Defined Benefit
Plan (or plans) maintained by the Employer, the decimal
equivalent of the sum of the fractions determined as
follows for all Defined Benefit Plans and Defined
Contribution Plans maintained by the Employer in which
he participates shall not exceed 1.0 for any Limitation
Year:
a. A defined benefit fraction, the numerator being the
projected total annual benefits of the Participant
under all Employer-sponsored Defined Benefit Plans
(whether or not terminated), and the denominator
being the lesser of:
1. the product of 1.25 multiplied by $90,000 (or,
if permitted by applicable law, such other
dollar amount as is specified annually by the
Secretary of the Treasury, or his delegate);
or
2. the product of 1.4 multiplied by the
Participant's Average Compensation.
b. A defined contribution fraction, the numerator
being the sum of the actual Annual Additions to the
Participant's Combined Accounts under all Defined
Contribution Plans (whether or not terminated)
maintained by the Employer for the current and all
prior Limitation Years, and the denominator being
the sum of the lesser of the following amounts
determined for such Limitation Year and all prior
Limitation Years of the Participant's service with
the Employer (regardless of whether a Defined
Contribution Plan was maintained by the Employer):
1. the product of 1.25 multiplied by $30,000 (or,
if permitted by applicable law, such other
dollar amount as is specified annually by the
3/15/96 14
Secretary of the Treasury, or his delegate);
or
2. the product of 1.4 multiplied by 25% of his
Total Compensation for such Limitation Year.
In the event the projected annual benefits of a
Participant under all Defined Benefit Plans cause the
total of the fractions determined under a. and b. above
to exceed 1.0, the benefits under such Defined Benefit
Plans will be reduced to the extent required so that the
total of such fractions equals 1.0.
3/15/96 15
CHAPTER V
INVESTMENT OF ACCOUNTS
5.01 Funding Policy. In order to implement and carry out the
provisions of the Plan and to finance the benefits under
the Plan, the Employer will establish and maintain a
funding policy with respect to the Trust Fund in a
manner consistent with applicable law.
5.02 Employee Direction of Investments. The Committee may,
in its discretion, direct the Trustee to establish
"separate investment funds" within the Trust Fund
according to Committee specification for the investment
of Accounts. The Committee will then establish uniform,
nondiscriminatory rules permitting each Participant to
direct the percentage of his Account(s) to be invested
in each of these separate investment funds. Any such
written direction will remain in effect for a
Participant until it is replaced by his subsequent
written direction filed with the Committee.
The Committee may also provide for the transfer of funds
within an Account from one separate investment fund to
another under uniform rules established by the
Committee.
If a Participant makes no written direction under this
provision, the Committee will direct the Trustee to
place 100% of his Account(s) in a separate investment
fund chosen by the Committee under uniform,
nondiscriminatory rules.
5.03 Expenses. The Employer may pay the expenses of admini-
stering the Plan, if desired. However, if they do not
pay these expenses directly, then, to the extent
permitted by law, the payments will be made from the
Trust Fund.
3/15/96 16
CHAPTER VI
VESTING OF ACCOUNTS
6.01 100% Vesting Situations. A Participant will be fully
(100%) Vested in his Regular Account upon the occurrence
of any of the following events; provided such event
occurs while he is an Employee:
a. either his attainment of his Normal Retirement Age,
or his attainment of age 60 and the completion of 10
Years of Vesting Service;
b. his death;
c. his total and permanent disability as determined by
a physician selected by the Committee. For
purposes of this paragraph, a Participant will be
considered totally and permanently disabled if he
incurs a mental or physical disability which may be
expected to be of a long continued duration or
which may be expected to result in death and which
prevents him from satisfactorily performing his
duties with the Employer; or
d. the termination (either full or partial) of this
Plan or the complete discontinuance of Employer
contributions to this Plan, provided however, that
in the event of a partial termination, only those
Participants to whom the partial termination
applied will be 100% Vested.
6.02 Vesting Schedule. A Participant who is not yet fully
Vested under Section 6.01 will be Vested (subject to
Section 6.03) in his Regular Account according to the
following vesting schedule:
Years of
Vesting Service Vested Percentage
Less than 3 0%
3 or more 100%
6.03 Bad-Boy Provision. Prior to his eligibility for full
Vesting under Section 6.01, and whether or not he is
eligible to be Vested in his Regular Account under
Section 6.02, a Participant with fewer than 5 years of
Vesting Service will have no Vested interest in his
Regular Account if prior to or after his termination of
employment with the Employer, he commits an act which
would constitute a crime against the Employer under
Federal law or the laws of the State of Wisconsin.
3/15/96 17
6.04 Forfeitures. As to any Participant who terminates
employment with the Employer and all Affiliated
Employers prior to his Retirement Date or earlier death,
and prior to becoming fully vested in his Account:
(a) If distribution of the vested portion of such a
Participant's Regular Account is not made until
after he incurs a Break in Service, then the
unvested portion of his Account shall be forfeited
as of the Anniversary Date of the last Plan Year in
such Break in Service and reallocated as provided
in Section 3.02 hereof.
(b) If such Participant receives distribution of the
vested portion of his Regular Account (and his
Employee Contributions Account, if any) prior to
incurring a Break in Service, then that part of his
Account in which he is not vested at the date of
such distribution shall be considered a forfeiture
as of the date of distribution and shall be
reallocated as provided in Section 3.02 hereof as
of the Anniversary Date of the Plan Year in which
the distribution occurs. A Participant with no
vested interest in his Regular Account at his
termination shall be deemed to have received a
distribution as of his date of termination.
(c) The number of Years of Vesting Schedule Service of
a terminated Participant who incurs a Break in
Service shall not thereafter be increased for
purposes of measuring his vested interest in his
Regular Account as it exists at the end of such
Break in Service.
(d) If a Participant terminates his employment with the
Employer before he is fully Vested in his Regular
Account, receives a distribution and he is later
rehired by the Employer before he incurs five One
Year Breaks in Service, the Committee will instruct
the Trustee to create a Suspense Account for him
(prior to any allocations under Section 3.02) in an
amount equal to the forfeiture specified in 6.04(b)
above. Then, if he is not fully vested in his
Regular Account when he subsequently terminates his
employment with the Employer, the value of his
Regular Account will be calculated according to
Sections 6.02 or 6.03, and the value of his Vested
Suspense Account will be calculated by multiplying
the balance of the Suspense Account by the ratio
of:
(i) the difference between the Vested
percentage under Sections 6.02 or 6.03
3/15/96 18
and the prior Vested percentage. The
prior Vested percentage shall mean the
Vested percentage at the prior
termination date; and
(ii) the difference between 100% and the prior
Vested percentage.
(e) Any amounts which must be restored to a rehired
Participant's Suspense Account pursuant to the
foregoing shall first come out of forfeitures and
Employer Contributions which would otherwise be
applied pursuant to subsection 3.02 for the Plan
Year in which the restoration is made, and only
thereafter and to the extent necessary, by a
special Employer contribution made solely for this
purpose.
6.05 Resumption of Participation.
(a) Except as otherwise provided in paragraph (b)
below, upon re-employment of any Participant a new
Account shall be created to which all allocations
of contributions and forfeitures after he is re-
employed shall be made. If a Participant had any
vested interest in his Regular Account at his
termination, all his Years of Vesting Service shall
be aggregated to determine the Participant's vested
interest in such new Regular Account. If the
Participant terminated employment prior to being
credited with any vested interest and incurs a
Break in Service, only his Years of Vesting Service
after his re-employment shall be used to determine
his vested interest in such new Regular Account.
(b) If a Participant is re-employed before incurring a
Break in Service without having received
distribution of the vested portion of his Regular
Account, then any subsequent allocations of
Employer contributions and forfeitures may be made
to the same Account, and the Participant's vested
interest in such Account shall be determined under
Sections 6.02 or 6.03 based upon his Years of
Vesting Service both before and after his re-
employment.
3/15/96 19
CHAPTER VII
PAYMENT OF BENEFITS
7.01 Commencement of Benefits. Unless a Participant elects
in writing to further defer the starting date of any
benefit payable under the Plan and Trust, benefits must
begin to be paid within 60 days after the later of:
a. the last day of the Plan Year in which he attains
age 65;
b. the last day of the Plan Year in which he termi-
nates his employment with the Employer.
A Participant may not defer the commencement date of his
benefit payments beyond the April 1st following the
calendar year in which he attains age 70 1/2 even if he
is still employed.
If a distribution is one to which sections
401(a)(11) and 417 of the Internal Revenue Code do
not apply, such distribution may commence less than
30 days after the notice required under section
1.411(a)-11(c) of the Income Tax Regulations is
given, provided that:
a. the Plan Administrator clearly informs the
Participant that the participant has a right
to a period of at least 30 days after
receiving the notice to consider the decision
of whether or not to elect a distribution
(and, if applicable, a particular distribution
option), and
b. the Participant, after receiving the notice,
affirmatively elects a distribution.
7.02 Form of Payment. All distributions under this Plan will
be made in one, or a combination of, the following
forms, as selected by the Participant or his
Beneficiary:
a. By payment in a series of substantially equal
installments not less frequently than annually;
b. By payment in a lump sum.
Distributions will be based on the Account values as of
the most recent Valuation Date.
7.03 Incidental Death Benefits. Regardless of any statement
to the contrary, the ability of any Participant or
3/15/96 20
Beneficiary to select the timing and method of a
distribution option will be limited by the following
provisions:
a. If the Participant's entire interest is to be dis-
tributed in other than a lump sum, then the amount
to be distributed each year must be at least an
amount equal to the quotient obtained by dividing
the Participant's entire interest by the life
expectancy of the Participant or joint and last
survivor expectancy of the Participant and
designated Beneficiary. Life expectancy and joint
and last survivor expectancy are computed by the
use of the return multiples contained in Section
1.72-9 of the Income Tax Regulations. For purposes
of this computation, a Participant's life
expectancy may be recalculated no more frequently
than annually, however, the life expectancy of a
nonspouse Beneficiary may not be recalculated. If
the Participant's spouse is not the designated
Beneficiary, the method of distribution selected
must satisfy the minimum death incidental benefit
requirements of Regulation Section 1.401(a)(9)-2.
b. If the Participant dies after distribution of his
or her interest has commenced, the remaining
portion of such interest will continue to be
distributed at least as rapidly as under the method
of distribution being used prior to the
Participant's death.
c. If the Participant dies before distribution of his
or her interest commences, the Participant's entire
interest will be distributed no later than five
years after the Participant's death except to the
extent that an election is made to receive
distributions in accordance with 1. or 2. below:
1. If any portion of the Participant's interest
is payable to a designated Beneficiary,
distributions may be made in substantially
equal installments over the life or life
expectancy of the designated Beneficiary
commencing no later than one year after the
Participant's death;
2. If the designated Beneficiary is the
Participant's surviving spouse, the date
distributions are required to begin in
accordance with 1. above shall not be earlier
than the date on which the Participant would
have attained age 70-1/2, and, if the spouse
dies before payments begin, subsequent
3/15/96 21
distributions shall be made as if the spouse
had been the Participant.
d. For purposes of 7.04c. above, payments will be
calculated by use of the return multiples specified
in Section 1.72-9 of the regulations. Life
expectancy of a surviving spouse may be
recalculated annually, however, in the case of any
other designated Beneficiary, such life expectancy
will be calculated at the time payment first
commences without further recalculation.
7.04 Transfers. In addition to the other methods of
distribution described in this chapter, the Committee
may direct the Trustee to make distribution of Account
balances under this Plan directly to the IRA of a
Participant, if such Participant files a written request
to the effect with the Committee and such distribution
is permitted by law. To the extent permitted by
applicable law, neither the Employer, the Committee, the
Plan Administrator, nor the Trustee will incur any
liability under this Plan for Account distributions made
in the specified amount to a Participant's IRA in
accordance with such written request, regardless of any
adverse tax consequences which may be incurred by the
Participant as a result of such distribution.
The Plan will not accept the transfer into the Trust
Fund of IRA's or distributions to Participants from
other qualified retirement plans.
7.05 Distribution of Small Amounts. Notwithstanding the
other provisions of this Chapter VII, if the vested
portion of all of the Accounts of a Participant who
terminates, retires, or dies does not exceed $3,500 (or
such other sum as may be permitted from time to time by
applicable governmental regulations) as of the Valuation
Date preceding the Participant's termination, such
vested interest shall be distributed in the form of a
single sum cash distribution as soon as practicable
following the Participant's termination.
7.06 Direct Rollover.
a. This Section applies to distributions made on or
after January 1, 1993. Notwithstanding any
provision of the Plan to the contrary that would
otherwise limit a Distributee's election under this
Section, a Distributee may elect, at the time and
in the manner prescribed by the Plan Administrator,
to have any portion of an Eligible Rollover
Distribution paid directly to an Eligible
Retirement Plan specified by the Distributee in a
3/15/96 22
Direct Rollover.
b. Definitions
(i) Eligible Rollover Distribution: An Eligible
Rollover Distribution is any distribution of
all or any portion of the balance to the
credit of the Distributee, except that an
Eligible Rollover Distribution does not
include:
1. any distribution that is one of a series
of substantially equal periodic payments
(not less frequently than annually) made
for the life (or life expectancy) of the
Distributee or the joint lives (or joint
life expectancies) of the Distributee and
the Distributee's designated Beneficiary,
or for a specified period of ten years or
more;
2. any distribution to the extent such
distribution is required under section
401(a)(9) of the Code;
3. the portion of any distribution that is
not includible in gross income
(determined without regard to the
exclusion for net unrealized appreciation
with respect to employer securities);
4. returns of section 401(k) elective
deferrals that are returned as a result
of the section 415 limitations;
5. corrective distributions of excess
contributions, excess deferrals, and
excess aggregate contributions, together
with the income allocable to these
corrective distributions;
6. loans treated as distributions under
section 72(p) and not excepted by section
72(p)(2);
7. loans in default that are deemed
distributions;
8. a distribution less than $200; and
9. similar items designated by the IRS in
revenue rulings, notices, and other
guidance of general applicability.
3/15/96 23
(ii) Eligible Retirement Plan: An Eligible
Retirement Plan is an individual retirement
account described in section 408(a) of the
Code, an individual retirement annuity
described in section 408(b) of the Code, an
annuity plan described in section 403(a) of
the Code, or a qualified trust described in
section 401(a) of the Code, that accepts the
Distributee's Eligible Rollover Distribution.
However, in the case of an Eligible Rollover
Distribution to the surviving spouse, an
Eligible Retirement Plan is an individual
retirement account or individual retirement
annuity.
(iii) Distributee: A Distributee includes an
Employee or former Employee. In addition, the
Employee's or former Employee's surviving
spouse and the Employee's or former Employees'
spouse or former spouse who is the alternate
payee under a qualified domestic relations
order, as defined in section 414(p) of the
Code, are Distributees with regard to the
interest of the spouse or former spouse.
(iv) Direct Rollover: A Direct Rollover is a
payment by the Plan to the Eligible Retirement
Plan specified by the Distributee.
3/15/96 24
CHAPTER VIII
TOP-HEAVY PROVISIONS
8.01 Provisions Will Control. If the Plan is or becomes Top-
Heavy in any Plan Year beginning after December 31,
1983, the provisions of Chapter VIII will supersede any
conflicting provisions in the Plan.
8.02 Definitions. For purposes of this Chapter VIII the
following definitions shall apply:
a. Key Employee: Any Employee or former Employee (and
the Beneficiaries of such Employee) who at any time
during the Determination Period was:
1. an officer of the Employer having annual
compensation from the Employer greater than
50% of the amount in effect under Section
415(b)(1)(A) for any such Plan Year;
2. an owner (or considered an owner under Section
318 of the Code) of one of the ten largest
interests in the Employer if such individual's
compensation exceeds the dollar limitation
under Section 415(c)(1)(A) of the Code;
3. a 5% owner of the Employer; or
4. a 1% owner of the Employer who has an annual
compensation of more than $150,000.
The Determination Period is the Plan Year
containing the Determination Date and the 4
preceding Plan Years. The determination of who is
a Key Employee will be made in accordance with
Section 416(i)(l) of the Code and the regulations
thereunder.
b. Top-Heavy Plan: For any Plan Year beginning after
December 31, 1983, this Plan is Top-Heavy if any of
the following conditions exist:
1. If the Top-Heavy Ratio for this Plan exceeds
60% and this Plan is not part of any Required
Aggregation Group or Permissive Aggregation
Group of Plans.
2. If this Plan is a part of a Required
Aggregation Group of plans but not part of a
Permissive Aggregation Group and the Top-Heavy
Ratio for the group of plans exceeds 60%.
3/15/96 25
3. If this Plan is a part of Required Aggregation
Group and part of Permissive Aggregation Group
of plans and the Top-Heavy Ratio for the
Permissive Aggregation Group exceeds 60%.
c. Top-Heavy Ratio:
1. If the Employer maintains one or more defined
benefit plans and the Employer has not
maintained any defined contribution plans
(including any Simplified Employee Pension
Plan) which during the 5-year period ending on
the Determination Date(s) has or has had
account balances, the Top-Heavy Ratio for this
Plan alone or for the Required or Permissive
Aggregation Group, as appropriate, is a
fraction, the numerator of which is the sum of
the Present Value of accrued benefits of all
Key Employees as of the Determination Date(s)
(including any part of any accrued benefit
distribution in the 5-year period ending on
the Determination Date(s)), and the
denominator of which is the sum of all accrued
benefits distributed in the 5-year period
ending on the Determination Date(s)) deter-
mined in accordance with Section 416 of the
Code and the regulations thereunder.
2. If the Employer maintains one or more defined
benefit plans and the Employer maintains or
has maintained one or more defined
contribution plans (including any Simplified
Employee Pension Plan) which during the 5-year
period ending on the Determination Date(s) has
or has had account balances, the Top-Heavy
Ration for any Required or Permissive
Aggregation Group, as appropriate, is a
fraction, the numerator of which is the sum of
account balances under the aggregate defined
contribution plan or plans for all Key
Employees and the Present Value of accrued
benefits under the aggregate defined benefit
plan or plans for all Key Employees, and the
denominator of which is the sum of the account
balances under the aggregate defined
contribution plan or plans for all
Participants and the Present Value of accrued
benefits under the aggregate defined
contribution plan or plans for all
Participants and the Present Value of accrued
benefits under the aggregate defined benefit
plan or plans for all Participants as
determined in accordance with Section 416 of
3/15/96 26
the Code and the regulations thereunder. The
account balances under a defined contribution
plan and the Present Value of accrued benefits
under a define benefit plan in both the
numerator and denominator of the Top-Heavy
Ratio are adjusted for any distribution made
in the 5-year period ending on the
Determination Date.
3. For purposes of 1. and 2. above, the value of
account balances and the Present Value of
accrued benefits will be determined as of the
most recent Valuation Date that falls within
or ends with the 12-month period ending on the
Determination Date except as provided in
Section 416 of the Code and the regulations
thereunder for the first and second plan years
of a defined benefit plan. The account
balances and accrued benefits of a Participant
i. who is not a Key Employee but who was a
Key Employee in a prior year, or
ii. who has not received any compensation
from any employer maintaining the Plan at
any time during the 5-year period ending
on the Determination Date,
will be disregarded. The calculation of the
Top-Heavy Ratio, and the extent to which
distributions, rollovers, and transfers are
taken into account will be made in accordance
with Section 416 of the Code and the
regulations thereunder. Deductible employee
contributions will not be taken into account
for purposes of computing the Top-Heavy Ratio.
When aggregating plans the value of account
balances and accrued benefits will be
calculated with reference to the Determination
Dates that fall within the same calendar year.
d. Permissive Aggregation Group: The Required
Aggregation Group of plans plus any other plan or
plans of the Employer which, when considered as a
group with the Required Aggregation Group, would
continue to satisfy the requirements of Sections
401(a)(4) and 410 of the Code.
e. Required Aggregation Group:
1. Each qualified plan of the Employer in which
at least one Key Employee participates, and
3/15/96 27
2. any other qualified plan of the Employer which
enables a plan described in 1. to meet the
requirements of Sections 401(a)(4) or 410 of
the Code.
f. Determination Date: For any Plan Year subsequent
to the first Plan Year, the last day of the
preceding Plan Year. For the first Plan Year of
the Plan, the last day of that year.
g. Valuation Date: December 31st of each Plan Year,
as of which account balances or accrued benefits
are valued for purposes of calculating the Top-
Heavy Ratio.
h. Present Value: Present Value shall be based only
on the interest and mortality rates specified in
the defined benefit plan.
8.03 Minimum Allocation.
a. Except as otherwise provide in c. and d. below, the
Employer contributions and forfeitures allocated on
behalf of any Participant who is not a Key Employee
shall not be less than the lesser of three percent
of such Participant's Compensation or in the case
where the Employer has no defined benefit plan
which designates this plan to satisfy Section 401
of the Code, the largest percentage of Employer
contributions, as a percentage of the first
$200,000 of the Key Employee's Compensation,
allocated on behalf of any Key Employee for that
year. The minimum allocation is determined without
regard to any Social Security contribution. This
minimum allocation shall be made even though, under
other Plan provisions, the Participant would not
otherwise be entitled to receive an allocation, or
would have received a lesser allocation in the year
because of the participant's failure to complete
1,000 Hours of Service (or any equivalent provided
in the Plan).
b. For purposes of computing the Minimum Allocation,
Compensation will mean Compensation as defined in
Section 1.01h.
c. The provisions in a. above shall not apply to any
Participant who was not employed by the Employer on
the last day of the Plan Year.
d. The provisions in a. above shall not apply to any
Participant to the extent that the Participant is
covered under any other plan or plans of the
3/15/96 28
Employer and the Employer has provided that the
minimum allocation or benefit requirement
applicable to Top-Heavy plans will be met in the
other plan or plans.
8.04 Nonforfeitability of Minimum Allocation. The minimum
allocation required (to the extent required to be
nonforfeitable under Section 416(b)) may not be
forfeited due to any suspension of benefits upon re-
employment of retiree.
8.05 Minimum Vesting Schedules. For any Plan Year in which
this Plan is Top-Heavy, the following vesting schedule
will automatically apply to the Plan:
Years of
Vesting Vested
Service Percentage
1 0%
2 20%
3 or more 100%
The minimum vesting schedule applies to all benefits
within the meaning of Section 411(a)(7) of the Code,
including benefits accrued before the effective date of
Section 416 and benefits accrued before the Plan became
Top-Heavy. Further, no reduction in vested benefits may
occur in the event the Plan's status as Top-Heavy
changes for any Plan Year. However, this section does
not apply to the account balances of any Employee who
does not have an Hour of Service after the Plan has
initially become Top-Heavy and such Employee's account
balances attributable to Employer contributions will be
determined without regard to this section. If the
vesting schedule under the Plan shifts in or out of the
above schedule for any Plan Year because of the Plan's
Top-Heavy status, such shift is an amendment to the
vesting schedule and the election in Section 11.01c. of
the Plan applies.
8.06 Compensation Limitation. For any Plan Year in which the
Plan is Top-Heavy, only the first $200,000 (or such
larger amount as may be prescribed by the Secretary or
his delegate) of a Participant's annual Compensation
shall be taken into account for purposes of determining
Employer contributions under the Plan.
3/15/96 29
CHAPTER IX
ADJUSTMENT OF ACCOUNTS
9.01 Allocation of Trust Earnings. As of each Valuation
Date, the Committee will charge the Trustee to value the
Trust at its fair market value and any gains or losses
will be allocated to the Account of each Participant in
proportion to the value of each such Account as of the
previous Valuation Date. In making such allocations,
the Committee will adjust the beginning or ending
Account balances to reflect the amount and timing of any
Employee Contributions, withdrawals, and benefit
payments under uniform and nondiscriminatory rules
established by the Committee.
9.02 Allocation of Employer Contributions and Forfeitures.
As of each Anniversary Date, the Committee will allocate
Employer Contributions (and forfeitures, if any, which
shall be used to reduce Employer Contributions) for the
Plan Year ending on that Anniversary Date to the Regular
Account of Participants.
3/15/96 30
CHAPTER X
DESIGNATION OF BENEFICIARY
10.01 Beneficiary Designation. Each Participant may name, or
change the name of his Beneficiary(ies) who will receive
any death benefits payable to such Beneficiary(ies)
under the Plan and Trust. If the Participant designates
someone other than his spouse as the primary
Beneficiary, then the spouse must give written consent
(witnessed by a Plan representative or notary public) to
such designation. To be effective, a Beneficiary
designation form (available from the Committee) must be
on file with the Committee on the Participant's date of
death.
10.02 Priority if no Designated Beneficiary. If there is no
Beneficiary designation form on file, or if the desig-
nated Beneficiary(ies) predeceases the Participant,
benefit payments required under the Plan and Trust to be
payable on death to the Beneficiary(ies) will be
distributed in the following order of priority;
a. to the surviving spouse; or if none
b. to the surviving issue (per stirpes and not
per capita); or, if none
c. to the surviving parents equally, or, if one
is deceased, to the survivor of them; or, if
none
d. to the estate of the Participant.
3/15/96 31
CHAPTER XI
AMENDMENT OF THE PLAN
11.01 Amendment by Employer. The Employer may, by resolution
of the Board of Directors, amend this Plan at any time.
Any amendment by the Employer will be subject to the
following rules:
a. Without its written consent, no amendment may
increase the duties or liabilities of the
Trustee.
b. Except as permitted by law, no amendment may
provide for the use of funds or assets under
the Plan and Trust other than for the
exclusive benefit of Participants or their
Beneficiaries. In addition, no amendment may
allow Trust Fund assets to revert to or be
used or enjoyed by the Employer unless
otherwise permitted by law.
c. If an amendment changes the vesting schedule
of the Plan, or if the Plan is amended in any
way that directly or indirectly affects the
computation of a Participant's nonforfeitable
percentage, any Participant in the employ of
the Employer on the date such amendment is
adopted (or the date it is effective, if
later) who has completed at least three years
of service at the end of the election period
specified below, may make an irrevocable
election to remain under the vesting schedule
of the Plan as in existence immediately prior
to said amendment. If such Participant does
not make this election during the election
period starting on the date such amendment is
adopted, and ending 60 days following the
latest of the following dates, he will be
subject to the new vesting schedule provided
by said amendment;
1. the date the amendment is adopted;
2. the date the amendment is effective;
3. the date written notice of the amendment
is given to the Participants.
However, the failure to make an election
described above will not result in the
forfeiture of any benefits which are already
Vested.
3/15/96 32
d. No amendment may reduce the Vested percentage
of a Participant.
e. No amendment may reduce the Account balance of
a Participant.
11.02 Conformance to Law. Regardless of the provisions of
Section 11.01, the Employer has the right to make
whatever amendments are necessary to this Plan or the
Trust to bring it into conformity with applicable law.
11.03 Right to Terminate. The Board of Directors may, by
resolution, terminate the Trust and/or this Plan at any
time. However, if the Plan is terminated (either wholly
or partially), or if there is a complete discontinuance
of Employer contributions to the Trust, each Participant
who is an Employee on the effective date of such total
Plan termination or complete discontinuance of
contributions (or, if a partial termination, whose
severance causes or is a result of such partial termi-
nation) will then become 100% Vested in his Accounts.
In the event that the Plan is terminated or contribu-
tions are discontinued as provided above, all distribu-
tions will be made in accordance with the provisions of
Chapter VII and, except as provided in Section 7.05,
remaining Accounts will continue to share in the
experience of the Trust Fund on each Valuation Date as
provided in Section 9.01.
11.04 Merger, Consolidation, or Transfer. If the Plan and
Trust are merged or consolidated with, or the assets or
liabilities are transferred to, any other plan and
trust, the benefits payable to each participant immedi-
ately after such action (if the Plan was then termi-
nated) will be equal to or greater than the benefits to
which he would have been entitled if the Plan had
terminated immediately before such action.
3/15/96 33
CHAPTER XII
CLAIMS PROCEDURE
12.01 Written Claim. A Participant or Beneficiary(ies) may
make a claim for Plan benefits by filing a written
request with the Committee, on a form provided by the
Committee.
12.02 Claim Denial. If a claim is wholly or partially denied,
the Committee will furnish the Participant or
Beneficiary(ies) with written notice of the denial
within 60 days of the date the original claim was filed.
The notice of denial will specify:
a. the reason for denial;
b. specific reference to pertinent Plan and Trust
provisions on which the denial is based;
c. a description of any additional information or
requirements needed to be eligible to obtain
the denied benefit and an explanation of why
such information or requirements are
necessary; and
d. an explanation of the claim procedure.
12.03 Request for Review of Denial. The Participant or Bene-
ficiary(ies) will have 60 days from receipt of a denial
notice in which to make written application for review
by the Committee. The Participant or Beneficiary may
request that the review be in the nature of a hearing.
The Participant or Beneficiary(ies) will have the rights
to representation, to review pertinent documents, and to
submit comments in writing.
12.04 Decision on Review. The Committee will issue a decision
on such review within 60 days after receipt of an
application for review.
The Plan Administrator shall have full and complete
discretionary authority to determine eligibility
for benefits, to construe the terms of the Plan and
to decide any matter presented through the claims
review procedure. Any final determination by the
Plan Administrator shall be binding on all parties.
If challenged in court, such determination shall
not be subject to de novo review and shall not be
overturned unless proven to be arbitrary and
capricious upon the evidence considered by the Plan
Administrator at the time of such determination.
3/15/96 34
12.05 Additional Time. The Committee may take additional
time, as provided by government regulations, under this
Chapter XII, if such time is needed to gather data,
perform calculations or reach decisions in the
processing of a claim. The Participant or Benefi-
ciary(ies) will be informed by the Committee, in
writing, of the need for such additional time prior to
the date such extension begins.
3/15/96 35
CHAPTER XIII
MISCELLANEOUS PROVISIONS
13.01 Reversion of Assets. This Plan and Trust are for the
exclusive benefit of the Employees of the Employer and
none of the assets may be used for any other purpose.
Notwithstanding the above, there may be a reversion of
assets to the Employer (or the Employee) in the event
one of the following occurs:
a. If, in the course of administering the Plan
and Trust, errors in accounting arise due to
factual errors in information supplied by the
Employer, the Committee, the Plan
Administrator or the Trustee, equitable
adjustments may be made to correct these
errors. Excess contributions arising from
such adjustments may be returned to the
Employer (or Employee, if such contributions
are attributable to Employee contributions)
within one year after such contributions were
made.
b. All Employer contributions made to the Plan
are conditioned on deductibility. For any
year(s) that all or a part of the a deduction
for Employer contributions to the Plan is
disallowed by the Secretary of the Treasury,
the amount of the contributions so disallowed
must be returned to the Employer within one
year after such disallowance.
c. In the event the Plan is terminated as
provided for in Chapter XI.
13.02 Equitable Adjustment. The Committee may make equitable
adjustments, which may be retroactive, to correct for
mathematical, accounting, or factual errors made in good
faith. Such adjustments will be final and binding upon
all Participants and other parties in interest.
13.03 Reasonable Compensation. If for any Plan Year, the
Internal Revenue Service determines that the total
compensation of a Participant exceeds the amount which
can be considered "reasonable" for purposes of the
federal income tax return of the Employer, then the
Committee will readjust the Account of such Participant
to reflect only the "reasonable" compensation of said
Participant.
13.04 Indemnification. To the extent permitted by law, the
Employer will indemnify each member of the Committee and
3/15/96 36
any others to whom the Employer has delegated fiduciary
duties (except corporate trustees, insurers, or
"investment managers" (as defined in ERISA)) against any
and all claims, losses, damages, expenses and
liabilities arising from their responsibilities in
connection with the Plan, unless the same are determined
to be due to gross negligence or willful misconduct.
13.05 Protection From Loss. Neither the Trustee, the Plan
Administrator, the Committee nor the Employer guarantee
the Trust Fund in any way from loss or depreciation. To
the extent permitted by applicable law, the liability of
any of these persons, groups of persons, or entities to
make any payment under the Plan and Trust is limited to
the available assets of the Trust Fund.
13.06 Protection From Liability. To any extent allowed by
law, the Trustee, the Plan Administrator and the
Employer shall be free from all liability, joint or
several, for their acts, omissions, and conduct, agents,
designees and employees, except, in the case of their
own willful misconduct, gross negligence or bad faith.
Specifically and without limitation other than as
follows, nothing in the first sentence of this Section
or elsewhere in the Plan and Trust shall be construed to
relieve any Fiduciary from responsibility or liability
for any responsibility, obligation or duty under Part 4
of Title 1 of ERISA (except as provided in Sections
405(b)(1) and 405(d) of ERISA).
13.07 Adoption of Rules and Procedures. Any group of people
acting in a specified capacity under the Plan and Trust
(such as the Named Fiduciary, Trustee, Committee, Plan
Administrator, "investment manager" (as defined by
ERISA) if any, and so on) may create and abide by what-
ever rules and procedures they desire, so long as these
rules and procedures are not inconsistent with the Plan,
the Trust and applicable law. If these rules
specifically limit the duties and responsibilities of
the members of any of these groups, then to the extent
permitted by applicable law, the liability to each
member under the Plan and Trust will be limited to his
specific duties.
13.08 Assignment of Benefits. A Participant's interest in
this Plan may not be assigned or alienated, either
voluntarily or involuntarily. This shall not preclude
<PAGE>
the Trustee from complying with a qualified domestic
relations order (as defined in Section 414(p) of the
Code) made pursuant to a domestic relations law requir-
ing deduction from the benefits of a Participant for
alimony, child support, or marital property payments.
3/15/96 37
<PAGE>
Notwithstanding any restrictions on the timing of
distributions and withdrawals under this Plan,
distri-bution shall be made to an alternate payee
in accordance with the terms of a qualified
domestic relations order, or as determined by the
Plan Administrator and alternate payee if provided
in the order, even if such distribution is made
prior to the Participant's attainment of the
earliest retirement age (as defined in Code Section
414(p)(4)).
13.09 Mental Competency. Every person receiving or claiming
benefits under the Plan and Trust will be presumed to be
mentally competent until the date on which the Committee
receives a written notice (in a form and manner
acceptable to it) that such person is incompetent, and
that a guardian, conservator or other person legally
vested with his care or the care of his estate has been
appointed. If the Committee receives acceptable notice
that a person to whom a benefit is payable under this
Plan and Trust is unable to care for his affairs because
of incompetency, any payment due (unless a prior claim
for it has been made by duly appointed legal
representative) may be paid to the spouse, a child, a
parent, a brother or a sister or to any person
determined by the Committee to have incurred expenses
for such person. Any such payment will be a complete
discharge of the obligation of the Employer, Committee,
Plan Administrator and Trustee to provide benefits under
the Plan and Trust.
In the event that the Plan benefits of a person
receiving or claiming them are garnished or
attached by order of any court, the Committee may
bring an action for a declaratory judgment in a
court of competent jurisdiction to determine the
proper recipient of the benefits to be paid under
the Plan. While this action is pending, any
benefits that become payable under this Plan will
be paid into the court as they become payable. The
court will then make the benefit distributions to
the recipient it deems proper at the close of said
action.
13.10 Authentication. The Employer, Committee, Plan Adminis-
trator and Trustee will be fully protected in acting and
relying upon such certificate, affidavit, document or
<PAGE>
other information which that person requesting such
information may consider pertinent, reliable and
genuine.
Any notice required to be made under the Plan and
Trust may be waived, in writing, to the person
3/15/96 38
entitled thereto. In addition, the time period
specified in this Plan for filing any such notice
may be modified or waived, in writing, by the
person entitled thereto.
13.11 Not an Employment Contract. This Plan and Trust will
not be construed as creating or modifying any contract
of employment between the Employer and the Employee.
13.12 Appointment of Auditor. The Employer shall have the
right to appoint an independent auditor to audit the
books, records, and accounts of the Trustee as they
relate to the Plan and this Trust.
13.13 Uniform Treatment. All interpretations made in connec-
tion with this Plan and Trust are intended to be
exercised in a nondiscriminatory manner so that all
Employees in similar circumstances are treated alike.
13.14 Interpretation. The provisions of the Plan and Trust
are to be construed as a whole and not construed
separately without relation to the context of the entire
agreement.
13.15 Plural and Gender. When appropriate, the singular nouns
in this Plan and Trust may include the plural, and vice
versa. Also, wherever the male gender is used in the
Plan and Trust, the female gender may be included, and
vice versa.
13.16 Headings. Headings at the beginnings of any Chapter,
Section, or Sub-section are for convenience only and are
not to influence the construction of this Plan and
Trust.
13.17 Expenses. The Employer may pay the expenses of
administering the Plan, if desired. However, if they do
not pay these expenses directly, then, to the extent
permitted by law, the payments will be made from the
Trust Fund.
13.18 Unclaimed Accounts. Any Account which is payable
without Participant consent in accordance with Article
VII, but which cannot be paid due to an inability to
locate the applicable Participant or Beneficiary, shall
be forfeited and reallocated in accordance with Section
4.03. Prior to any forfeiture, the Plan Administrator
shall make reasonable attempts to locate the person
entitled to any distribution. Any Account forfeited
pursuant to this Section 13.18 shall be restored and
paid to the applicable Participant or Beneficiary upon
the making of a valid claim by such person in accordance
with Plan Section 9.05. The amount to be restored shall
3/15/96 39
equal the vested amount in the Account as of the
Valuation Date coincident with or immediately preceding
the forfeiture under Section 4.03, then from the
Employer's discretionary contribution for a
Plan Year, and finally, if necessary from a special one-
time Employer contribution made solely for this purpose.
3/15/96 40
CHAPTER XIV
EMPLOYER STOCK SAVINGS ACCOUNTS AND INVESTMENTS
14.01 Stock Savings Accounts. The Employer contribution and
forfeitures, if any, for the Plan Year ending
December 31, 1990, and for each subsequent Plan Year
shall be allocated to Participants' Regular Accounts as
provided in Article III. Any amounts accumulated in a
Participant's Stock Savings Account (pursuant to
Employer contributions and forfeitures, if any,
allocated on or after December 31, 1984 but before
January 1, 1990) will continue to be held in such
Account. Any income, loss, appreciation, and/or
depreciation attributable to amounts held in Stock
Savings Accounts will be allocated only to such Stock
Savings Accounts.
14.02 Employer Stock Defined. For purposes of this Article
XIV, the term "Employer Stock" means any common stock of
Oshkosh B'Gosh, Inc. The Trustee, or any investment
manager or any Special Investment Committee appointed by
the Employer under Section 2.05 or Section 2.06 of the
Trust, may invest up to 100% of the fair market value of
the Trust Fund in Employer Stock ("qualifying employer
securities" of the Company, as that term is defined by
ERISA).
14.03 Distributions from Stock Savings Accounts. To the
extent Employer Stock is held in Participants' Stock
Savings Accounts, a terminating Participant shall be
entitled to request, in writing on a form acceptable to
the Plan Administrator, that the full value of his Stock
Savings Account (or any portion thereof) that becomes
distributable under Article VII be distributed in full
shares of Employer Stock (any partial share will be paid
in cash).
14.04 Employer Stock Valuation. For purposes of any
distribution under the Plan, valuation of the Stock
Savings Account shall be made as of the Valuation Date
coincident with or immediately preceding the date of
distribution. Valuation of any Employer Stock
distributed pursuant to an election under Section 14.03
shall be based on the closing price reported by NASDAQ
on the last day immediately preceding the date of
distribution during which a sale of the Employer Stock
was completed.
3/15/96 41
EXHIBIT 10.12
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 $12,000,000 20.0%
Bank
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
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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
-3-
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
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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
-5-
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
-6-
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
-7-
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.
-8-
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:
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(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.
-10-
(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
-11-
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.
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(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
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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
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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),
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(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;
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(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:
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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.
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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
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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,
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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
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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.
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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
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(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
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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;
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(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
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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
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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
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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;
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(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
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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.
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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
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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
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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
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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
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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).
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(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
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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 extraordinary losses and losses upon
the disposition of investments 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;
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(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 ground 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.
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(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
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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.
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(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
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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
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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
-44-
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;
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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
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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: /S/ STEVE CARLTON
Title: Assistant Vice President
BANK ONE, MILWAUKEE, NA
By: /S/ A.F. MAGGORIE
Title: Vice President
HARRIS TRUST AND SAVINGS BANK
By: /S/ GEORGE M. DELUHY
Title: Vice President
NORWEST BANK WISCONSIN,
NATIONAL ASSOCIATION
By: /S/ DANIEL G. FRAZIER
Title: Vice President
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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
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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: /S/ DAVID L. OMACHINSKI
Vice President of Finance
(Corporate Seal)
Agreed to as of the date first above written.
FIRSTAR BANK MILWAUKEE,
NATIONAL ASSOCIATION
By: /S/ STEVE CARLTON
Title: Assistant Vice
President
BANK ONE, MILWAUKEE, NA
By: /S/ A.F. MAGGIORE
Title: Vice President
HARRIS TRUST AND SAVINGS BANK
By: /S/ GEORGE M. DELUHY
Title: Vice President
NORWEST BANK WISCONSIN,
NATIONAL ASSOCIATION
By: /S/ DANIEL G. FRAZIER
Title: Vice President
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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 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) 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
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.
-55-
Very truly yours,
OSHKOSH B'GOSH, INC.
By: /S/ DAVID L. OMACHINSKI
Vice President of Finance
(Corporate Seal)
Agreed to as of the date first above written.
FIRSTAR BANK MILWAUKEE,
NATIONAL ASSOCIATION
By: /S/ STEVE CARLTON
Title: Assistant Vice
President
BANK ONE, MILWAUKEE, NA
By: /S/ A.F. MAGGORIE
Title: Vice President
HARRIS TRUST AND SAVINGS BANK
By: /S/ GEORGE M. DELUHY
Title: Vice President
NORWEST BANK WISCONSIN,
NATIONAL ASSOCIATION
By: /S/ DANIEL G. FRAZIER
Title: Vice President
-56-
AMENDMENT NO. 3 TO CREDIT AGREEMENT
As of December 21, 1995
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 through
Amendment No. 2 thereto dated as of December 31, 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 during each period 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 period:
Consolidated Fixed
Period Charge Coverage Ratio
1. From December 31, 2.0:1.0
1994 through and
including December
31, 1996
2. From January 1, 2.5:1.0
1997 through and
including
September 30, 1997
3. From October 1, 3.0:1.0
1997 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
-58-
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: /S/ DAVID L. OMACHINSKI
Vice President of Finance
(Corporate Seal)
-59-
Agreed to as of the date first above written.
FIRSTAR BANK MILWAUKEE,
NATIONAL ASSOCIATION
By: /S/ STEVE CARLTON
Title: Assistant Vice
President
BANK ONE, MILWAUKEE, NA
By: /S/ A. F. MAGGORIE
Title: Vice President
HARRIS TRUST AND SAVINGS BANK
By: /S/ GEORGE M. DELUHY Title:
Vice President
NORWEST BANK WISCONSIN,
NATIONAL ASSOCIATION
By: /S/ DANIEL G. FRAZIER
Title: Vice President
-60-
AMENDMENT NO. 4 TO CREDIT AGREEMENT
As of January 30, 1996
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
The First National Bank of Boston
100 Federal Street
Boston, Massachusetts 02110
Gentlemen:
OshKosh B'Gosh, Inc., a Delaware
corporation (the "Company"), hereby agrees with each of you as
follows:
1.Definitions. Reference is
made to that certain Credit Agreement
dated as of June 24, 1994, as amended through Amendment No. 3
thereto dated as of December 21, 1995 (the "Credit Agreement")
between the Company and each of you other than The First
National Bank of Boston, pursuant to which the Company has
issued (i) its Revolving Credit Notes to each of you other
than The First National Bank of Boston in the aggregate
principal amount of $60,000,000, and (ii) its Demand Notes to
each of you other than The First National Bank of Boston in
the aggregate principal amount of $40,000,000, each dated as
of June 24, 1994 (collectively, the "Existing Notes"). All
capitalized terms used and not otherwise defined herein shall
have the meanings given to such terms by the Credit Agreement
as amended hereby.
2.Addition of The First National
Bank of Boston; New Notes. The
Company has informed each of you that it wishes, and The First
National Bank of Boston has informed the Company and each of
you other than itself that it wishes, that The First National
Bank of Boston become a party to the Credit Agreement on the
terms and conditions herein and therein set forth. On the
effective date of this Amendment, all loans made or continued
pursuant to the Credit Agreement, including the unpaid
balances of the Existing Notes, shall be evidenced by (i) new
Revolving Credit Notes of the Company in the form of Exhibit
1.1 annexed hereto in the aggregate principal amount of
$60,000,000, and (ii) new Demand Notes of the Company in the
form of Exhibit 1.2 annexed hereto in the aggregate principal
amount of $40,000,000, each to be dated as of the date hereof
(collectively, the "New Notes"). The New Notes shall be
executed by the Company and delivered to each of you on the
date hereof against the return of the Existing Notes to the
Company. Accrued interest on the Existing Notes outstanding
on the date of issuance of the New Notes shall be included in
the interest due on the New Notes issued in replacement of
such Existing Notes on the first interest payment date
specified therein.
3.Amendments to Credit
Agreement. 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 in the
Credit Agreement to the Notes issued thereunder and the loans
evidenced thereby shall refer to the New Notes issued
hereunder and the loans evidenced thereby (including the
unpaid balances of the Existing Notes).
(b) All references to the
Credit Agreement in the Credit Agreement and in any other
agreements relating thereto shall refer to the Credit
Agreement as amended hereby.
(c) The first page of the
Credit Agreement is amended by adding The First National Bank
of Boston, at its address set forth on the first page of this
Amendment, as an additional addressee. The First National
Bank of Boston shall be included as one of the Banks for all
purposes of the Credit Agreement, and all references to the
Banks in the Credit Agreement and all other agreements
relating thereto shall hereafter be deemed to refer
collectively to Firstar Bank Milwaukee, National Association,
Bank One, Milwaukee, NA, Harris Trust and Savings Bank,
Norwest Bank Wisconsin, National Association, and The First
National Bank of Boston.
(d) The table set forth in
Section 1.1 of the Credit Agreement (Revolving Credit) is
amended to read in its entirety as follows:
-62-
Percentage
Name of Bank Commitment Interest
Firstar Bank Milwaukee,
National Association $18,000,000 30.0%
Bank One, Milwaukee, NA $12,000,000 20.0%
Harris Trust and Savings Bank $10,500,000 17.5%
Norwest Bank Wisconsin,
National Association $10,500,000 17.5%
The First National Bank of
Boston $ 9,000,000 15.0%
TOTAL $60,000,000 100%
(e) The table set forth in Section 1.2 of the
Credit Agreement (Demand Line of Credit) is amended to read in
its entirety as follows:
Name of Bank Demand Line
Firstar Bank Milwaukee,
National Association $12,000,000
Bank One, Milwaukee, NA $ 8,000,000
Harris Trust and Savings Bank $ 7,000,000
Norwest Bank Wisconsin,
National Association $ 7,000,000
The First National Bank of
Boston $ 6,000,000
TOTAL $40,000,000
(f) The first clause of the definition of "Business
Day" (prior to the semicolon) set forth in Section 10.1(b) of
the Credit Agreement is hereby amended to read in its entirety
as follows:
(b) the term "Business Day" means any day
other than a Saturday or Sunday on which banks in
the States of Wisconsin, Illinois and Massachusetts
are open for the transaction of substantially all of
their banking functions;
4. Representations. The Company repeats and
<PAGE>
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
-63-
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.
5. Related Transactions; Computations. Upon
issuance of the New Notes, (i) The First National Bank of
Boston shall become a party to the Credit Agreement as amended
hereby with the same force and effect as if a signatory
thereto and shall have (a) the Commitment and Percentage
Interest in the revolving credit loans to be made under the
Credit Agreement set forth opposite its name in Section 1.1 of
the Credit Agreement as amended hereby, and (b) its respective
share of the Demand Line set forth in Section 1.2 of the
Credit Agreement as amended hereby, (ii) each of you will make
such adjustments among yourselves as are necessary so that
after giving effect to such adjustments, the Percentage
Interest of each of you in the revolving credit loans
outstanding under the Credit Agreement will be the Percentage
Interest set forth under Section 1.1 of the Credit Agreement
as amended hereby, and your respective shares of the
outstanding portion of the Demand Line will be as set forth
under Section 1.2 of the Credit Agreement as amended hereby,
and (iii) the obligations of the Company to The First National
Bank of Boston under the Credit Agreement as amended hereby
shall begin to accrue. The interest and commitment fees due
each of you other than The First National Bank of Boston with
respect to periods prior to the date hereof shall be
determined in accordance with the Credit Agreement as in
effect prior to the date hereof, and the interest and
commitment fees due each of you with respect to the periods
beginning on or after the date hereof shall be determined in
accordance with the Percentage Interests in effect on and
after the date hereof.
6. Conditions. Without limiting any of the other
terms of the Credit Agreement as amended hereby, this
Amendment shall not become effective, and the Banks shall not
be required to make any further loans to the Company unless
and until:
(a) No Default or Event of Default shall have
occurred and be continuing and neither the business nor the
assets nor the financial condition of the Company shall have
been materially adversely affected as the result of any event
or development since December 31, 1994.
(b) The Banks shall have received such documents
concerning the corporate status of the Company and the
authorization of the transactions contemplated hereby as may
be reasonably requested, and such other matters as the Banks
shall reasonably require; and
-64-
(c) All proceedings taken in connection with the
transactions contemplated by this Amendment and all
instruments, authorizations and other documents applicable
thereto shall be satisfactory in form and substance in the
reasonable opinion of the Banks and their counsel.
7. Confirmation of Credit Agreement. Except as
expressly provided above, the Credit Agreement shall remain in
full force and effect.
8. 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.
9. 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: /S/ DAVID L. OMACHINSKI
Vice President of Finance
(Corporate Seal)
Agreed to as of the date first above written.
FIRSTAR BANK MILWAUKEE,
NATIONAL ASSOCIATION
By: /S/ STEVE CARLTON
Title: Vice President
-65-
BANK ONE, MILWAUKEE, NA
By: /S/ A.F. MAGGORIE
Title: Vice President
HARRIS TRUST AND SAVINGS BANK
By: /S/ GEORGE M. DELUHY
Title: Vice President
NORWEST BANK WISCONSIN,
NATIONAL ASSOCIATION
By: /S/ DANIEL G. FRAZIER
Title: Vice President
THE FIRST NATIONAL BANK OF
BOSTON
By: /S/ PETER GRISWOLD
Title: Director
-66-
EXHIBIT 1.1
PROMISSORY NOTE
$____________ _____________, 19__
FOR VALUE RECEIVED, OshKosh B'Gosh, Inc., a Delaware
corporation, promises to pay to the order of
____________________ ________________________, the principal
sum of __________________ Dollars ($____________) 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, as amended, 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
$____________ _____________, 19__
FOR VALUE RECEIVED, OshKosh B'Gosh, Inc., a Delaware
corporation, promises to pay to the order of
____________________ ________________________, the principal
sum of __________________ Dollars ($____________) 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 hereof
(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 of America.
This Note constitutes one of the Demand Notes issued
under a Credit Agreement dated as of June 24, 1994, as
amended, 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 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 23
Consent of Ernst & Young LLP, Independent Auditors
We consent to the incorporation by reference in Registration Statements
(Forms S-8 No. 333-01051 and No. 333-01053) of Oshkosh B'Gosh, Inc.
of our report dated February 2, 1996, with respect to the consolidated
financial statements of Oshkosh B'Gosh, Inc. included in this Annual
Report (Form 10-K) for the year ended December 31, 1995.
/S/ ERNST & YOUNG LLP
Milwaukee, Wisconsin Ernst & Young, LLP
March 22, 1996
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<PERIOD-END> DEC-31-1995
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<SECURITIES> 0
<RECEIVABLES> 28661000
<ALLOWANCES> 3970000
<INVENTORY> 95743000
<CURRENT-ASSETS> 137379000
<PP&E> 65011000
<DEPRECIATION> 0
<TOTAL-ASSETS> 208579000
<CURRENT-LIABILITIES> 41965000
<BONDS> 0
0
0
<COMMON> 125000
<OTHER-SE> 149953000
<TOTAL-LIABILITY-AND-EQUITY> 208579000
<SALES> 432266000
<TOTAL-REVENUES> 432266000
<CGS> 294770000
<TOTAL-COSTS> 121995000
<OTHER-EXPENSES> 4687000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1772000
<INCOME-PRETAX> 20188000
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