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, 1997
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: (920) 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
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
[X] 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 definitive 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 13, 1998, there were outstanding 8,702,429 shares of
Class A Common Stock and 1,177,357 shares of Class B Common
Stock, of which 8,317,695 shares and 687,696 shares,
respectively, were held by non-affiliates of the registrant.
Based upon the closing sales price as of March 13, 1998, the
aggregate market value of the Class A Common Stock held by non-
affiliates was $328,548,953. The Class B Common Stock is no
longer listed or quoted on any established trading market, but it
is convertible into Class A Common Stock on a share-for-share
basis. Based on that conversion right, the value of Class B
Common Stock held by non-affiliates was $27,163,992.
DOCUMENTS INCORPORATED BY REFERENCE
OshKosh B'Gosh, Inc. definitive Proxy Statement for its annual
meeting to be held on May 1, 1998 (or such later date as the
directors may determine), incorporated into Part III.
INDEX
PART I PAGE
Item 1. Business 5
(a) General Development of Business 5
(b) Financial Information About Industry Segments 6
(c) Narrative Description of Business 7
Products 7
Raw Materials, Manufacturing and Sourcing 8
Sales and Marketing 10
International Licensing and Distribution 11
Trademarks 11
Seasonality 11
Working Capital 12
Backlog 12
Competitive Conditions 12
Environmental Matters 13
Employees 13
Item 2. Properties 14
Item 3. Legal Proceedings 15
Item 4. Submission of Matters to a Vote of Security
Holders 15
PART II
Item 5. Market for the Registrant's Common Stock and
Related Stockholder Matters 15
Item 6. Selected Financial Data 16
Item 7. Management's Discussion and Analysis of Results
of Operations and Financial Conditions 17
Item 8. Financial Statements and Supplemenatary 27
Item 9. Disagreements on Accounting and Financial
Disclosure 49
PART III
Item 10. Directors and Executive Officers of the Registrant 49
Item 11. Executive Compensation 49
Item 12. Security Ownership of Certain Beneficial Owners
and Management 49
Item 13. Certain Relationships and Related Transactions 49
PART IV
Item 14. Exhibits, Financial Statement Schedule, and Reports
on Form 8-K 49
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 markets apparel for the children's wear, youth wear, and
men's wear markets. The Company also offers a children's
footwear collection. While its heritage is in the men's work
wear market, the Company is currently best known for its line of
high quality children's wear. It is the Company's vision to
become the dominant global marketer of branded products for
children ages newborn to ten through leverage of the existing
brand franchise in OshKosh B'Gosh and Baby B'Gosh and utilization
of the Company's core competencies to supply the market with all
appropriate product for children where quality, durability, and
fashion innovation are important. The Company is also pursuing
niche opportunities in adult apparel, where the Company's century
old heritage can provide meaningful differential advantage to
address the needs of the marketplace.
The children's wear and youth wear business represented
approximately 95% of consolidated Company revenues for 1997. 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 strategically extends the product line and
also leverages the economic value of the OshKosh B'Gosh name via
both domestic and international licensing agreements.
In addition to the Company's wholesale business, the Company
also operates a chain of 119 domestic OshKosh B'Gosh branded
stores, including 111 factory outlet stores and eight specialty
stores. In 1994, the Company opened an OshKosh B'Gosh showcase
store in New York City to feature a full line of OshKosh product
in a signature environment designed to reinforce brand awareness
among consumers. In the past two years, the Company opened seven
first quality retail stores in regional mall locations. During
1997, the Company expanded its retail product line in its OshKosh
B'Gosh branded stores by offering youth wear sizes for girls and
boys under the trade names Genuine Girl (girls sizes 7-16) and
Genuine Blues (boys sizes 8-16). Based on the sales performance
of the Genuine Girl line in the OshKosh B'Gosh operated retail
stores, the Company is expanding the distribution of this product
line by including it as part of the product offering to wholesale
customers beginning with the Spring 1998 season.
During 1996, the Company completed a comprehensive strategic
planning initiative. As part of this initiative and combined
with management's commitment to more efficient utilization of
working capital, the Company has taken steps to improve product
marketability, streamline operations, reduce its capital base and
cost structure and improve delivery performance. These actions
included limiting distribution of its children's wear product by
narrowing the distribution channels in which the Company's
products are sold, discontinuing under-performing business units
and closing certain domestic manufacturing facilities based on an
on-going review of the Company's manufacturing capacity and
alternative sourcing opportunities.
In accordance with the strategic planning initiative, the
Company discontinued the Genuine Kids brand which was used to
market a line of children's and youth apparel through a chain of
Company owned Genuine Kids retail stores. The wind-down of the
Genuine Kids store chain was completed in January 1997. See
Item 7, "Management's Discussion and Analysis of Results of
Operations and Financial Conditions" and "Special Charges" in the
Notes to the Consolidated Financial Statements, included in Item
8.
The Company expanded into the European market in the early
1990's by establishing subsidiaries in France, Germany, and the
United Kingdom. While the operation of these subsidiaries
increased the distribution of the Company's product in the
European marketplace, they were unprofitable, and were closed in
1996. The Company entered into a licensing arrangement for the
European marketplace on January 1, 1997. The Company transferred
the operation of its businesses in Europe to the licensee in
conjunction with the license agreement. The Company also
operates a foreign sales corporation to expand the distribution
of the Company's product through exporting.
The Company designs and arranges for the manufacture of
substantially all of its apparel and footwear. Company designers
develop fabrication, trim accessories, and detailed manufacturing
specifications. The product is then manufactured according to
detailed Company specifications and production schedules in
Company-owned manufacturing facilities or at third party
contractor locations worldwide. Product sourcing is based on
manufacturing capacity, quality, and lead times, in addition to
capabilities of specific manufacturing facilities.
The Company leverages its name and brand equity into a wide
variety of children's products including sleep wear, outerwear,
socks, eye wear, educational toys, bedding, and other juvenile
products. The Company regularly reviews the seasonal offerings
of all related products both locally and internationally for
consistency, brand image and quality. The Company earns
royalties for use of its name on children's and men's wear
products throughout the world, and from related accessories
distributed in the United States and worldwide.
(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, footwear and men's casual clothing under the OshKoshr,
OshKosh B'Goshr, Baby B'Goshr, Genuine Girlr and Genuine Bluesr
labels. The products are distributed primarily through better
quality department and specialty stores, 119 Company owned
domestic stores, and foreign retailers. The children's wear and
youth wear business, which is the largest segment of the
business, accounted for approximately 95% of 1997 sales compared
to approximately 93% of such sales in 1996 and 92% in 1995.
The children's wear and youth wear business is targeted to
reach the middle to upper middle segment of the sportswear
market, through the use of innovative designs, quality fabrics
and classic styling. The Company believes that its trade name is
a valuable asset in the marketing of its apparel, signifying
apparel that is classic in design and of high quality
construction. The Company tradename and trademarks are generally
displayed prominently on OshKosh product. Children's wear is
marketed in size ranges from layette/newborn and infant/toddler
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, which are offered
in two main groups: Fashion and Classics. The Fashion group is
organized primarily in a collection format of seasonal themes,
developed by an in-house product development staff. The products
in a collection share a primary design theme which is carried out
through fabric design and the distinctive use of colors,
screenprint, embroidery, and trim applications. These
collections are presented as three to five small groups within
each merchandising season.
The Company also offers a Classics product line, consisting
primarily of staple denim products with multiple wash treatments.
The Classics 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. This product line is developed to
be relatively seasonless, with signature OshKosh B'Gosh classic
styling. These styles are available to retail customers for
replenishment throughout the year. Some Classics items are also
designed to serve as a foundation for the Fashion group, with
seasonal colors and styles to complement the Company's Fashion
product offering.
The men's wear line is the original business that started
the Company in 1895. The original line focused primarily on work
wear products. During 1997, the Company repositioned the men's
wear product line to better align it with the attributes and
distribution channels of the children's wear line. This approach
also closely mirrors the men's wear product lines offered by the
Company's licensees in Europe and Japan, where the focus of the
line is casual or sportswear. By transitioning out of the
traditional work wear channels, refining the product offering and
upgrading packaging, the Company's goal is to maintain and
promote the heritage of OshKosh B'Gosh men's wear, while
positioning it for future profitable growth.
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. While the Company's products are generally
traditional in nature and not intended to be "designer" items,
the Company attempts to incorporate current trends and consumer
preferences in its designs.
In selecting fabric 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, for a
limited period of time, with some protection from imitation by
competitors.
Raw Materials, Manufacturing, and Sourcing
All raw materials used in the manufacture of Company
products are purchased from unaffiliated suppliers. The Company
purchases its raw materials directly for its owned manufacturing
facilities and may also procure and retain ownership of fabric
related 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 1997, 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 34% 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 domestic and
foreign sources, based on quality, pricing, and availability.
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.
Product development and administration are primarily
coordinated from the Company's headquarters facility in Oshkosh,
WI or its regional office in New York City. The majority of the
product engineering and sample making, allocation of production
among plants and independent contractors, material purchases and
invoice payments is done through the Company's Oshkosh
headquarters. Substantially all designs and specifications
utilized by independent manufacturers are provided by the
Company.
Approximately 47% of the Company's product line (excluding
footwear) is produced at Company-owned facilities, with the
remainder produced by numerous third party contractors throughout
the world, in accordance with the Company's specifications. Most
domestic production takes place in the Company's four Tennessee
and two Kentucky plants. The Company also leases a sewing plant
in Honduras, where cut apparel pieces are received from the
United States and are reimported by OshKosh B'Gosh as finished
goods under Section 9802 (previously Section 807). In 1997, as
part of the Company's review of manufacturing capacity and
utilization, the Company completed the closure of certain
domestic manufacturing facilities and continued to expand its use
of offshore manufacturing capabilities. These actions were part
of the Company's on-going effort to improve its product cost
structure. The Company has established guidelines for each of
its third party manufacturers in order to monitor product
quality, labor practices and financial viability. It also
employs agents, based in regional locations abroad, to monitor
compliance with design specifications and quality standards. The
Company believes that its overall global manufacturing strategy
gives the Company maximum flexibility to properly balance the
need for timely shipments, high quality products and competitive
pricing.
While no long-term, formal arrangements exist with its third-
party manufacturers, the Company considers these relationships to
be satisfactory. The Company believes it could, over a period of
time, obtain adequate alternative production capacity if any of
its independent manufacturers become unavailable. As part of the
Company's product sourcing strategy, it routinely contracts for
apparel products produced by contractors in Asia. If the current
financial and related difficulties were to adversely impact the
Company's contractors in Asia, it could disrupt the supply of
products contracted for by the Company. A sustained disruption
of such sources of supply could, particularly on a short-term
basis, have an adverse impact on the Company's operations.
Because higher quality apparel manufacturing is generally
labor intensive (sewing, pressing, finishing and quality
control), the Company has continually sought to take advantage of
time saving 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 one of the
Company's six plants, with all domestic 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.
Sales and Marketing
In order to meet the diverse needs of its broad customer
base, the Company uses a wide variety of distribution channels to
market its products. Wholesale distribution is made primarily
through better quality department and specialty stores, although
sales are also made through direct mail catalog companies,
foreign retailers and other outlets. In 1997, the Company's
products were sold to approximately 2,400 wholesale customers
(approximately 9,900 stores) throughout the United States, and a
sizable number of international accounts.
Product sales to better quality department and specialty
stores are made primarily by an employee sales force with the
balance of sales made by manufacturer's representatives or
through 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.
In addition to its wholesale activities, OshKosh B'Gosh
products are also sold through 119 Company-owned domestic retail
stores, operating under two formats: factory outlet stores and
mall-based specialty stores. The Company operates 111 domestic
factory outlet stores, which carry a large selection of first
quality Company branded apparel at a discount to conventional
retail prices. The factory outlet stores also provide a means of
distributing excess and out-of-season product, reducing the
amount of such product sold to discounters at excessively low
prices. In addition, the Company operates seven regional mall-
based stores and one showcase store. These full price, full
service stores feature a full line of OshKosh B'Gosh product in a
signature environment designed to convey the total OshKosh image
and build brand recognition among customers. The stores are also
used to test new styles and merchandising strategies.
The Company's broad distribution base insulates the Company
from reliance on any one customer. The Company's largest
wholesale customer accounted for 11% of the Company's 1997 sales,
while the Company's largest ten and largest 100 customers
accounted for approximately 41% and 56% of 1997 sales,
respectively.
Domestic marketing programs are aimed at both the Company's
retail accounts and ultimate consumers, with a main goal of
increasing overall brand awareness. A national marketing program
includes advertising in both consumer and trade publications,
local cooperative advertising, promotions and in-store
merchandising. The Company also offers a cooperative
advertising program to its retail customers, paying a portion of
its retail customers' advertising expenditures up to a maximum
percentage of qualifying sales.
International Licensing and Distribution
The Company's products are distributed worldwide through
approximately 40 licensees and distributors in over 80 countries.
Licensing and distribution agreements allow the Company to
develop international markets without the need to maintain a
capital commitment in localized warehousing, offices, personnel
and inventory.
The Company provides design assistance to its licensees to
insure products are appropriate to each foreign market and
consistent with the Company's brand image. The licensees and
distributors either purchase fabric or finished product directly
from the Company, manufacture their own product, or contract the
production of the product from third-party manufacturers. Each
licensee and distributor is responsible for the marketing and
distribution of specific product categories within defined
regions specified in the licensing or distribution agreement.
Distribution must be through marketing channels consistent with
the Company's domestic operations and as approved by the Company.
The Company also provides advertising guidelines and support in
the development of localized marketing programs.
Trademarks
The Company utilizes the OshKoshr, OshKosh B'Goshr, Baby
B'Goshr, Genuine Girlr or Genuine Bluesr trademarks on most of
its products. Other significant trademarks include a white
triangular patch on the back of bib garments and the Genuine
Articler. The Company currently has approximately 40 trademark
registrations and 6 pending trademark applications in the United
States and has trademark registrations in 94 countries outside
the U.S. These trademarks and universal awareness of the OshKosh
B'Gosh name are significant in marketing the products.
Therefore, it is the Company's policy to vigorously defend its
trademarks against infringement under the laws of the U.S. and
other countries. The Company is not aware of any material
infringing uses.
Seasonality
Products are designed and marketed primarily for three
principal selling seasons:
PRIMARY
RETAIL SALES SEASON 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 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 store sales during this period. The Company
anticipates this seasonality trend to continue to impact 1998
quarterly sales and income.
Working Capital
Working capital needs are affected primarily by inventory
levels, outstanding accounts receivable and trade payables. 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, 2000. There were no outstanding
borrowings against these credit arrangements at December 31,
1997. Letters of credit of approximately $28 million were
outstanding at December 31, 1997.
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 companies.
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 to a lesser extent on the basis of service and price. The
Company is focusing attention on the issues of price and service
and has taken and will continue to take steps to reduce costs,
become more competitive in the eyes of value conscious consumers
and deliver the service expected by its customers.
The Company's share of the overall children's wear market is
quite small. This is due to the diverse structure of the market
where there is no truly dominant producer of children's garments
across all size ranges and garment types. The Company believes
that in its 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, 1997, the Company employed approximately
4,000 persons. Approximately 22% of the Company's personnel are
covered by collective bargaining agreements with the United
Garment Workers of America.
ITEM 2. PROPERTIES
Approximate
Floor Area in
Location Square Feet Principal Use
Albany, KY 20,000 Manufacturing
Byrdstown, TN 32,000 Manufacturing
Celina, TN 38,250 Vacant
Celina, TN 90,000 Laundering/Pressing
Dallas, TX (1) 1,995 Sales Offices/Showroom
Gainesboro, TN 61,000 Manufacturing
Jamestown, TN 43,000 Manufacturing
Liberty, KY 218,000 Manufacturing/Warehousing
Liberty, KY (2) 32,000 Sub-leased to Outside Party
New York City, NY (3) 18,255 Sales Offices/Showroom
Oshkosh, WI 99,000 Exec. & Operating Offices
Oshkosh, WI 88,000 Leased to Outside Party
Oshkosh, WI 128,000 Distribution/Warehousing
Red Boiling Springs, TN 41,000 Leased to Outside Party
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 adequate for current production. The Company determined that
it no longer required the manufacturing capacity of its plants in
Celina TN, Columbia KY, Oshkosh WI and Red Boiling Springs TN.
These facilities were closed in 1996 or early 1997. In 1996, the
carrying value of these facilities was written down to their net
realizable value. In 1997, the Columbia, KY facility and a
portion of the Celina, TN facility were sold to outside parties.
During 1996, the Company experienced increasing difficulties
in selling its idle manufacturing facilities and equipment,
necessitating that the Company reevaluate the fair market value
of its remaining manufacturing property and equipment. The
Company recorded significant special charges during the fourth
quarter of 1996 related to the impairment of assets. All
impacted manufacturing assets being used in production have been
written down to management's estimate of fair value. See Item 7,
" Management's Discussion and Analysis of Results of Operations
and Financial Conditions" and "Special Charges" in the Notes to
the Consolidated Financial Statements included in Item 8.
Substantially all of the Company's retail stores occupy
leased premises, with lease terms generally in the range of 5 - 7
years. During 1996, the Company reached agreements concerning
the termination of substantially all Genuine Kids retail store
leases. Costs incurred to settle the remaining lease obligations
were included in the special charges recorded by the Company in
1996. For further information regarding the terms of the leases
and rental payments thereunder, refer to "Leases" in the Notes
to the Consolidated Financial Statements included in Item 8 of
this filing.
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.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
Quarterly Common Stock Data
1997 1996
Dividends Dividends
High Low per share High Low per share
Class A Common Stock
1st $17-1/8 $13-3/4 $ 0.07 $17-1/2 $14-1/8 $0.07
2nd 21-3/4 15-1/2 0.07 18-1/4 14-1/8 0.07
3rd 28-1/8 21-1/8 0.07 18-1/4 15-1/2 0.07
4th 35-9/16 26-3/4 0.07 17 14 0.07
Class B Common Stock
1st $19-1/2 $19-1/8 $0.06 $19-1/2 $18-1/2 $0.06
2nd 19-1/8 19-1/8 0.06 19-3/8 18-3/4 0.06
3rd --- --- 0.06 19-1/4 18-3/4 0.06
4th --- --- 0.06 19 18-7/8 0.06
The Company's Class A common stock trades on the Over-The-Counter
market and is quoted on NASDAQ under the symbol GOSHA. 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. Prior to June 30,
1997, the Company's Class B common stock traded on the Over-The-
Counter market and was quoted on NASDAQ under the symbol GOSHB.
As of February 10, 1998, there were 1,322 Class A common stock
shareholders of record and 157 Class B common stock shareholders
of record.
ITEM 6. SELECTED FINANCIAL DATA
Financial Highlights
(Dollars in thousands, except per share amounts)
Year ended December 31,
1997 1996 1995 1994 1993
Financial results
Net sales $395,196 $444,766 $432,266 $363,363 $340,186
Net income 22,558 1,119 10,947 7,039 4,523
Return on sales 5.7% 0.3% 2.5% 1.9% 1.3%
Financial condition
Working capital $ 82,762 $104,641 $ 95,414 $101,946 $111,794
Total assets 174,788 196,033 208,579 217,211 229,131
Shareholders' equity 113,157 138,077 150,078 158,814 171,998
Data per common share
Net income
Basic $ 2.05 $ .09 $ .85 $ .50 $ .31
Diluted 2.03 .09 .85 .50 .31
Cash dividends
declared
Class A .28 .28 .28 .3775 .5125
Class B .24 .24 .24 .33 .45
Shareholders' equity 11.48 11.72 12.05 11.76 11.79
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.
As a Percentage of Net Sales
for the Years Ended
December 31,
1997 1996 1995
Net sales 100.0% 100.0% 100.0%
Cost of products sold 63.5% 67.6% 68.2%
Gross profit 36.5% 32.4% 31.8%
Selling, general and administrative expenses 29.2% 27.4% 27.9%
Special charges -- 7.4% 0.6%
Royalty income, net (2.0%) (1.4%) (1.3%)
Operating income (loss) 9.3% (1.0%) 4.6%
Other income--net 0.3% 0.1% 0.1%
Income (loss) before income taxes 9.6% (0.9%) 4.7%
Income taxes (benefit) 3.9% (1.2%) 2.2%
Net income 5.7% 0.3% 2.5%
1997 Compared to 1996
Net Sales
Net sales in 1997 were $395.2 million, a $49.6 million (11.2%)
decrease as compared to 1996 net sales of $444.8 million. A
summary of the Company's net sales for the years ended December
31, 1997 and 1996 follows:
Net Sales
(in millions)
Domestic
Wholesale Retail International Other Total
1997 $214.1 $173.9 $ 7.2 -- $395.2
1996 257.1 160.5 24.5 2.7 444.8
Increase decrease) (43.0) 13.4 (17.3) (2.7) (49.6)
Percent increase
(decrease) (16.7%) 8.3% (70.6%) -- (11.2%)
The Company's 1997 domestic wholesale unit shipments were down
approximately 19.2% from 1996. This decrease in unit shipments
for 1997 resulted primarily from a combination of the Company's
strategic decision to reduce distribution and a significant
reduction in unit shipments of close-out merchandise. Shipments
of first quality garments during 1997 were down approximately
14.7% as compared to 1996.
The Company's retail sales for the years ended December 31, 1997
and 1996 are summarized as follows:
Retail Net Sales Summary
(in millions)
OshKosh Genuine Kids Total
Stores Stores
1997 $ 173.9 $ -- $ 173.9
1996 126.6 33.9 160.5
Increase (decrease) 47.3 (33.9) 13.4
Percent increase 37.4% -- 8.3%
Comparable store
sales increase 24.5% --
The Company's 1997 increased retail sales at its OshKosh B'Gosh
stores resulted from both the conversion and combination of a
total of 22 Genuine Kids stores in early January 1997, as well as
comparable store sales gains. The 24.5% comparable store sales
gain reported in 1997 reflected both an increase in sales of
OshKosh B'Gosh branded products, along with the introduction of
an expanded retail product line to include bigger sizes under the
labels Genuine Girl (girls sizes 7-16) and Genuine Blues (boys
sizes 8-16). Net sales of Genuine labeled products were
approximately $22.1 million during 1997, representing
approximately 12.7% of total Company retail sales at Company
operated stores.
During 1997, the Company opened 10 OshKosh B'Gosh stores,
converted 15 Genuine Kids stores to OshKosh stores, combined 7
Genuine Kids stores into an existing OshKosh store (the Genuine
Kids store was immediately adjacent to the OshKosh store), closed
6 OshKosh stores and closed the remaining 36 Genuine Kids stores
(all Genuine Kids stores were closed in early January). At
December 31, 1997, the Company operated 119 domestic OshKosh
retail stores, including 111 outlet stores and 8 showcase stores.
Gross Profit
The Company's gross profit margin as a percent of net sales
increased to 36.5% in 1997 compared with 32.4% in 1996. This
gross profit margin improvement was due to continued
implementation and execution of the Company's sourcing strategy,
improved operating efficiencies at the Company's five remaining
domestic sewing facilities, a substantial reduction in the sale
of close-out merchandise during 1997, and the impact of the
Company's increased retail sales at higher gross margins as
compared to the wholesale business. During 1997, approximately
47% of units sourced were in the Company's domestic facilities as
compared to 65% in 1996.
Selling, General & Administrative Expenses (S,G&A)
The Company's S,G&A expenses for 1997 of $115.4 million were $6.7
million less than 1996 S,G&A expenses of $122.1 million
(excluding special charges). This decrease was directly
attributable to the discontinuance of the Company's direct
operations in Europe, elimination of the Genuine Kids retail
store chain, and decreased volume in the Company's wholesale
business. As a percent of net sales, S,G&A expenses were 29.2%
in 1997 as compared to 27.4% in 1996 (excluding special charges).
The primary reasons for the increased S,G&A expenses as a percent
of net sales were the decrease in 1997 net sales without a
proportionate decrease in the fixed element of the Company's
S,G&A cost structure, combined with the impact of the Company's
increased retail volume and related higher S,G&A costs as
compared to the wholesale business.
Special Charges
During 1996, the Company recorded special charges related to the
discontinuance of the Genuine Kids retail store chain and
European subsidiaries, the closing of three domestic sewing
facilities, and the write-down of the Company's remaining
manufacturing facilities and related assets to management's
estimate of fair value. During 1997, the Company continued to
execute its plan to eliminate underperforming elements of the
Company's business and to adjust its domestic manufacturing
capacity to improve manufacturing efficiency. The Company has
completed substantially all strategic changes related to the
special charges, and is not currently anticipating any increase
in the amount of special charges recorded during 1996.
In total, cash outlays of approximately $7.2 million related to
these 1996 special charges were more than offset by the cash
generated from the corresponding income tax benefit and asset
sales. No additional material cash outlays are anticipated
related to the 1996 special charges.
Royalty Income
The Company licenses the use of its trade name to selected
licensees in the U.S. and in foreign countries. The Company's
net royalty income was $7.9 million in 1997, a $1.8 million
increase over 1996 net royalty income of $6.1 million. Royalty
income from domestic licensees was approximately $2.6 million in
1997 as compared to $2.8 million in 1996. Royalty income from
foreign licensees was approximately $5.3 million in 1997 as
compared to $3.3 million in 1996. The Company's 1997 increase in
royalty income related to foreign licensees was due primarily to
the Company's conversion of its European business to a licensee,
along with growth in other foreign markets.
Operating Income
The Company's 1997 operating income of $36.9 million compares to
a 1996 operating loss of $4.6 million. Excluding the impact of
the special charges recorded in 1996, the Company's operating
income was $28.3 million in 1996.
Other Income--Net
The Company's 1997 interest expense decreased to $0.3 million as
compared to $1.1 million in 1996. Interest income increased to
$1.8 million in 1997 as compared to $1.3 million in 1996. The
decrease in interest expense and increase in interest income both
relate to the significantly higher level of cash and short-term
investments carried by the Company throughout the first ten
months of 1997 as compared to 1996.
Income Taxes
The Company's 1997 effective tax rate was approximately 41%. For
1996, the Company recorded a $5.2 million income tax benefit,
which included an approximate $4.5 million income tax benefit
resulting from the recognition of previously unrecorded U.S. tax
benefits related to the discontinuance of the Company's European
subsidiaries. The remaining 1996 tax benefit related to the
Company's net loss from operations.
Net Income
Net income for the year ended December 31, 1997 of $22.6 million
was a $21.5 million increase over net income for the year ended
December 31, 1996 of $1.1 million. Excluding the special charges
recorded by the Company in 1996, the Company's 1997 net income
increase was $6.3 million (38.7%) over 1996. 1997 diluted
earnings per share of $2.03 compares to $.09 per share in 1996.
1996 Compared to 1995
Net Sales
Net sales in 1996 were $444.8 million, an increase of $12.5
million (2.9%) over 1995 net sales of $432.3 million. The
Company's 1996 domestic wholesale business of approximately
$250.5 million was 1.8% less than 1995 sales of approximately
$255 million. Shipments for 1996 were up 1.9% over 1995 unit
shipments. The decrease in dollar sales in 1996 was due
primarily to lower fall back-to-school (shipped primarily during
the Company's third quarter) and holiday (shipped during the
Company's third and fourth quarters) season order bookings,
combined with higher than anticipated order cancellations. Order
cancellations during the second half of 1996 resulted from a
combination of relatively weak retail "sell-thrus" at the
Company's retail customers (which occurred during the first half
of 1996), along with the implementation of the Company's
strategic direction to limit wholesale distribution. Actual unit
shipments during 1996 were slightly higher than in 1995 due to
higher shipments of close-out merchandise at significantly lower
prices.
The Company experienced a 29.8% increase in retail sales at its
OshKosh B'Gosh branded stores in 1996 over 1995 amounts due to a
combination of new store openings, conversion of and combination
with certain Genuine Kids stores into OshKosh stores, as well as
a 13.1% increase in comparable store sales.
During 1996, the Company opened 15 OshKosh B'Gosh stores,
converted 4 Genuine Kids stores to OshKosh stores, combined 1
Genuine Kids store into an OshKosh store (the Genuine Kids store
was immediately adjacent to the OshKosh store), and closed 29
Genuine Kids stores. At December 31, 1996, the Company operated
100 domestic OshKosh retail stores, including 95 outlet stores
and 5 showcase stores. At December 31, 1996, the Company was
also operating 58 Genuine Kids stores.
Gross Profit
The Company's gross profit margin as a percent of net sales
increased to 32.4% in 1996 compared with 31.8% in 1995. 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, offset in part by lower
domestic wholesale business gross profit margins. The Company's
gross profit margins for its domestic wholesale business during
1996 were adversely affected by a much higher sales level of
close-out merchandise.
Selling, General & Administrative Expenses
Selling, general and administrative expenses (excluding special
charges) for 1996 increased $1.5 million over 1995. As a percent
of net sales, these costs decreased to 27.4% as compared to 27.9%
in 1995 due to increased sales. The increase in selling, general
and administrative expenses in dollars relates primarily to
continued expansion of the Company's retail operations, offset in
part by the discontinuance of the Company's catalog business in
late 1995.
Special Charges
During the second quarter of 1996, the Company recorded pre-tax
special charges of $20.9 million which, net of income tax
benefits, reduced net income by $8 million ($.65 per share). The
special charges related to the discontinuance of the Company's
Genuine Kids retail store chain, the wind-down of the Company's
European subsidiaries and transfer of the European business to a
licensee, and the closing of the Red Boiling Springs and Celina,
Tennessee sewing facilities. These actions eliminated the under
performing Genuine Kids and European components of the Company's
business. The plant closings are a part of the Company's on-
going review of its manufacturing capacity, operational
effectiveness, and alternative sourcing opportunities.
During the second half of 1996, the Company began to execute its
plan to discontinue the Company's Genuine Kids retail store
chain, wind-down the Company's European subsidiaries and transfer
the European business to a licensee, and close its manufacturing
facilities in Red Boiling Springs and Celina, Tennessee.
Severance and related benefits for approximately 1,100 affected
employees total approximately $3.9 million.
The second quarter 1996 special charges included approximately
$6.9 million related to other exit costs, including estimated
lease settlements and anticipated costs to dispose of certain
operating assets as part of the exit plan, and $2.0 million
related to anticipated losses on inventory disposals. The second
quarter 1996 special charges also included approximately $8.1
million related to impaired assets, recognized in accordance with
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets
and Long-Lived Assets to be Disposed Of." The Company's decision
to implement the aforementioned changes resulted in unamortized
retail leasehold improvements and excess manufacturing space in
Tennessee. All assets held for sale but not disposed of were
written down to management's estimate of fair value as part of
the special charges.
The wind-down of the European entities permitted the recognition
of certain U.S. tax deductions previously unrecognized, resulting
in an approximate $4.5 million income tax benefit. This income
tax benefit, along with the $8.4 million income tax credit
resulting from the special charges, reduced the net impact on
Company earnings by $12.9 million.
During the second half of 1996, the Company experienced
increasing difficulties in selling its idle manufacturing
facilities and equipment. In addition, in October 1996 a long-
standing customer contract for apparel finishing services was not
renewed, creating significant excess capacity in the Company's
garment finishing facility. These events along with related
adverse changes in the economic environment affecting U.S.
apparel manufacturers necessitated that the Company reevaluate
the fair market value of its remaining manufacturing property and
equipment in the fourth quarter of 1996.
As a result of this analysis, and a decision to close the
Company's Columbia, Kentucky sewing facility, the Company
recorded pre-tax special charges of $12 million in the fourth
quarter which, net of income tax benefits, reduced net income by
$7.2 million ($.58 per share). The special charge included asset
impairments of approximately $9.5 million and severance and
related benefits for approximately 500 manufacturing employees
totaling approximately $2.5 million. All impacted manufacturing
assets being used in production were written down to management's
estimate of fair value as part of this special charge.
During the third quarter of 1995, the Company recorded a pre-tax
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. The $2.7 million pre-tax
charge for plant closings included approximately $1.9 million of
severance and related costs pertaining to work force reductions
as well as $0.8 million for facility closings and the write-down
of related assets.
These plant closings were completed in early 1996, with no
material changes in cost to fully effect these actions. The
Company's cash expenditures (net of income tax benefit) to carry
out these plant closings were approximately $1 million.
Royalty Income
The Company licenses the use of its trade name to selected
licensees in the U.S. and in foreign countries. The Company's
net royalty income was $6.1 million in 1996, a $0.4 million
increase over 1995 net royalty income of $5.7 million. Royalty
income from domestic licensees was approximately $2.8 million in
both 1996 and 1995. Royalty income from foreign licensees was
approximately $3.3 million in 1996 as compared to $2.9 million in
1995.
Operating Income
The Company's 1996 operating loss of $4.6 million was $24.5
million lower than 1995 operating income. Excluding the impact
of the special charges recorded in 1996 and 1995, the Company's
operating income increased to $28.3 million as compared to $22.6
million in 1995.
Income Taxes
The Company recorded a $5.2 million income tax benefit during
1996, which includes an approximate $4.5 million income tax
benefit resulting from the recognition of previously unrecorded
U.S. tax benefits related to the discontinuance of the Company's
European subsidiaries. The remaining 1996 tax benefit relates to
the Company's net loss from operations during 1996. The
Company's effective tax rate for 1995 was 45.8%. This relatively
high effective tax rate resulted primarily from the Company's
foreign operating losses (principally in Europe) which provided
no tax benefit.
Seasonality of Business
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 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 1998 quarterly sales and
income.
Change in Fiscal Year
Effective January 1, 1998, the Company has changed its fiscal
year to a 52/53 week period ending on the Saturday closest to
December 31. Accordingly, for 1998 the quarter end dates will be
April 4, July 4, October 3 and January 2, 1999. The Company does
not currently anticipate that this change will have any material
impact on the comparability of its quarterly and full year
earnings in 1998 as compared to 1997.
Year 2000 Considerations
The Company is undertaking actions to determine that its computer
related systems are capable of processing periods for the year
2000 and beyond. The Company has assessed and continues to
assess the impact of Year 2000 considerations on its operations.
To date, the Company has determined that costs related to
programming and related changes will not have a material impact
on its ongoing results of operations. The Company is also in the
process of assessing the impact of its vendors' and customers'
compliance to Year 2000 issues and the potential impact on the
Company's ongoing results of operation.
Financial Position, Capital Resources and Liquidity
The Company's financial position remains strong, as demonstrated
by its balance sheet. The Company had no outstanding long-term
debt at December 31, 1997 or 1996. At December 31, 1997, the
Company's cash, cash equivalents and short-term investments were
$22.5 million, compared to $41.2 million at the end of 1996.
This reduction is attributable to the Company's stock
repurchases, offset in part by cash generated from operations
combined with modest capital expenditures and proceeds from the
disposal of assets. Net working capital at the end of 1997 was
$82.8 million compared to $104.6 million at December 31, 1996,
and $95.4 million at 1995 year end. Cash provided by operations
amounted to approximately $35.9 million in 1997, compared to
$55.6 million in 1996 and $19.5 million in 1995.
Accounts receivable at December 31, 1997 were $23.3 million
compared to $20.5 million at December 31, 1996. This increase is
primarily attributable to increased wholesale shipments in
December 1997 as compared to December 1996. Inventories at
December 31, 1997 were $68.2 million, compared to $66.8 million
at the end of 1996. Management believes that year end 1997
inventory levels are generally appropriate for anticipated 1998
business activities. Capital expenditures were $6.6 million in
1997, compared with $7.3 million in 1996 and $9.7 million in
1995.
In August, 1997 the Company purchased approximately 1,657,000
shares of its Class A common stock and approximately 42,000
shares of its Class B common stock under the terms of its Dutch
auction tender offer for approximately $37.7 million. Under the
terms of the Dutch auction tender offer, all shares were
purchased at $22 per share.
On August 25, 1997, the Company's Board of Directors authorized
an additional 500,000 share repurchase program of the Company's
Class A common stock. Through December 31, 1997, the Company
repurchased 141,500 shares of its Class A common stock under this
program for approximately $4.6 million.
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, 2000. 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 special charges, 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 1997
and 1996.
Inflation
The effects of inflation on the Company's operating results and
financial condition were not significant.
Outlook
The information contained in this outlook section is based on
current assumptions and expectations. This information is
forward-looking and as such, is subject to certain risks and
uncertainties. Actual results may differ materially.
The Company's 1996 comprehensive strategic planning initiative
identified, among other things, that the Company's children's
wear products had become widely distributed in the United States.
Management then reached a strategic decision to shrink
distribution over a two year period and continues to complete the
process of reducing its distribution. As a result, the Company
anticipates a slight reduction in its wholesale business for the
first quarter of 1998. Preliminary order bookings for the
Company's fall back-to-school season indicate that the Company's
wholesale unit shipments for the third quarter of 1998 are
estimated to be up approximately 4% over the third quarter of
1997. Actual unit shipments during these periods are contingent
on a number of factors, including the Company's ability to
manufacture or source products in a time frame which permits on-
time shipments, the financial strength of the retail industry,
the level of consumer spending for apparel, particularly in the
children's wear segment, as well as overall consumer acceptance
of the Company's product styling.
Current Company plans for 1998 call for the addition of
approximately 8 new OshKosh B'Gosh retail stores. For 1998, the
Company currently anticipates comparable store sales gains in the
middle single digit range.
The Company's gross profit margin is impacted by a number of
factors, including product mix, the competitive pricing
environment within the children's wear segment of the apparel
industry, unit volume of products "closed out" at significantly
reduced prices, and the Company's ability to successfully move
labor intensive segments of the manufacturing process offshore.
The Company currently anticipates continued modest improvement in
its gross profit margin during 1998 as compared to 1997.
The Company licenses the use of its trade name to selected
licensees in the U.S. and in foreign countries. The Company
currently anticipates an increase in its net royalty income from
licensees of approximately 15%.
The Company currently expects its effective tax rate to be
approximately 40% for 1998. This estimate is based on current
tax law and is subject to change.
Capital expenditures for 1998 are currently budgeted at
approximately $13.0 million, including an approximate $8.0
million related to an upgrade of the Company's distribution
systems and White House, Tennessee distribution facilities.
Depreciation and amortization expense is currently estimated to
be approximately $9.0 million.
The Company's future results of operations and the other forward-
looking statements contained in this outlook section involve a
number of risks and uncertainties. In addition to the factors
discussed above, other factors could cause actual results to
differ materially. Such factors include, but are not limited to,
business conditions and the general economy, competitive factors,
risk of non-payment of accounts receivable, failure of Company
suppliers to timely deliver needed raw materials, as well as
risks associated with foreign operations. In addition, the
inability to ship Company products within agreed time frames due
to unanticipated manufacturing delays or the failure of Company
contractors to deliver products within scheduled time frames, are
risk factors in ongoing business. As a part of the Company's
product sourcing strategy, it routinely contracts for apparel
products produced by contractors in Asia. If the current
financial and related difficulties were to adversely impact the
Company's contractors in the Asia region, it could disrupt the
supply of products contracted for by the Company.
The forward-looking statements included herein are only made as
of the date of this report. The Company undertakes no obligation
to publicly update such forward-looking statements to reflect
subsequent events or circumstances.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Page
Financial Statements:
Report of Independent Auditors 28
Consolidated Balance Sheets - December 31, 1997 and 1996 29
Consolidated Statements of Income - years ended December 31,
1997, 1996 and 1995 30
Consolidated Statements of Changes in Shareholders' Equity -
years ended December 31, 1997, 1996 and 1995 31
Consolidated Statements of Cash Flows - years ended December 31,
1997, 1996 and 1995 32
Notes to Consolidated Financial Statements 33
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, 1997 and 1996, 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, 1997. Our audits also included the financial statement
schedule listed in the Index at Item 14(a). 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 overal financial statement presentation. We believe that our
audits provide a reasonable basis of 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, 1997 and 1996,
and the consolidated results of its operations and its cash
flows for each of the three years in the period ended December
31, 1997, 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.
ERNST & YOUNG LLP
Milwaukee, Wisconsin
January 30, 1998
OSHKOSH B'GOSH, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in thousands, except share and per share amounts)
December 31,
1997 1996
ASSETS
Current assets
Cash and cash equivalents $ 13,779 $ 31,201
Short-term investments 8,700 10,040
Accounts receivable, less allowances of
$4,225 in 1997 and $5,474 in 1996 23,278 20,504
Inventories 68,226 66,799
Prepaid expenses and other current assets 1,265 1,890
Deferred income taxes 15,800 18,500
Total current assets 131,048 148,934
Property, plant and equipment, net 32,955 41,782
Deferred income taxes 5,500 3,400
Other assets 5,285 1,917
Total assets $174,788 $196,033
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 10,273 $ 5,408
Accrued liabilities 38,013 38,885
Total current liabilities 48,286 44,293
Employee benefit plan liabilities 13,345 13,663
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 -- 8,672,903 shares
in 1997, 10,525,571 shares in 1996 87 105
Class B, authorized -- 3,750,000 shares;
Issued and outstanding -- 1,182,282 shares
in 1997, 1,260,704 shares in 1996 12 13
Retained earnings 113,058 137,349
Cumulative foreign currency
ranslation adjustments -- 610
Total shareholders' equity 113,157 138,077
Total liabilities and shareholders' equity $174,788 $196,033
See notes to consolidated financial statements.
OSHKOSH B'GOSH, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(Dollars in thousands, except per share amounts)
Year ended December 31,
1997 1996 1995
Net sales $395,196 $444,766 $432,266
Cost of products sold 250,815 300,495 294,770
Gross profit 144,381 144,271 137,496
Selling, general and administrative
expenses 115,439 122,055 120,589
Special charges and plant closings -- 32,900 2,700
Royalty income, net (7,945) (6,100) (5,737)
Operating income (loss) 36,887 (4,584) 19,944
Other income (expense):
Interest expense (305) (1,088) (1,772)
Interest income 1,797 1,326 1,383
Miscellaneous (192) 249 633
Other income - net 1,300 487 244
Income (loss) before income taxes 38,187 (4,097) 20,188
Income taxes (benefit) 15,629 (5,216) 9,241
Net income $ 22,558 $ 1,119 $ 10,947
Net income per common share
Basic $ 2.05 $ .09 $ .85
Diluted 2.03 .09 .85
See notes to consolidated financial statements.
<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, 1994 12,234 $122 1,268 $13 $ -- $158,933 $(254)
Net income -- -- -- -- -- 10,947 --
Dividends
- Class A ($.28 per share) -- -- -- -- -- (3,260) -- )
- Class B ($.24 per share) -- -- -- -- -- (304) --
Foreign currency translation
adjustments -- -- -- -- -- -- 487
Conversions of common shares 2 -- (2) -- -- -- --
Repurchase of common shares,
net (1,046) (10) -- -- -- (16,596) --
Balance-December 31, 1995 11,190 112 1,266 13 -- 149,720 233
Net income -- -- -- -- -- 1,119 --
Dividends
- Class A ($.28 per share) -- -- -- -- -- (3,091) --
- Class B ($.24 per share) -- -- -- -- -- (303) --
Foreign currency translation
adjustments -- -- -- -- -- -- 377
Conversions of common shares 5 -- (5) -- -- -- --
Stock options exercised 3 -- -- -- 45 -- --
Repurchase of common shares,
net (673) (7) -- -- (45) (10,096) --
Balance-December 31, 1996 10,525 105 1,261 13 -- 137,349 610
Net income -- -- -- -- -- 22,558 --
Dividends
- Class A ($.28 per share) -- -- -- -- -- (2,698) --
- Class B ($.24 per share) -- -- -- -- -- (293) --
Foreign currency translation
adjustments -- -- -- -- -- -- (610)
Conversions of common shares 37 -- (37) -- -- -- --
Stock options exercised 9 -- -- -- 126 -- --
Repurchase of common shares (1,898) (18) (42) (1) (126) (43,858) --
Balance-December 31, 1997 $8,673 $ 87 $1,182 $12 $-- $113,058 $ --
</TABLE>
See notes to consolidated financial statements
OSHKOSH B'GOSH, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Dollars in thousands)
Year Ended December 31,
1997 1996 1995
Cash flows from operating activities
Net income $ 22,558 $ 1,119 $ 10,947
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation 12,301 10,998 10,591
Amortization 707 712 765
Loss on disposal of assets 275 242 79
Provision for deferred
income taxes 600 (13,200) (59)
Benefit plan expense, net of
contributions (318) 1,827 (1,331)
Special charges and plant
closings -- 32,900 2,700
Changes in operating assets
and liabilities:
Accounts receivable (2,774) 4,187 (834)
Inventories (1,427) 28,944 (1,827)
Prepaid expenses and other
current assets 625 1,237 (617)
Accounts payable 4,865 (8,502) 4,474
Accrued liabilities (1,482) (4,847) (5,416)
Net cash provided by operating
activities 35,930 55,617 19,472
Cash flows from investing activities
Additions to property, plant
and equipment (6,602) (7,274) (9,728)
Proceeds from disposal of assets 2,853 3,246 3,722
Sale (purchase) of short-term
investments, net 1,340 (10,040) --
Changes in other assets (4,075) 731 (1,392)
Net cash used in investing activities (6,484) (13,337) (7,398)
Cash flows from financing activities
Dividends paid (2,991) (3,394) (3,564)
Repurchase of common shares, net (43,877) (10,103) (16,606)
Net cash used in financing
activities (46,868) (13,497) (20,170)
Net increase (decrease) in cash
and cash equivalents (17,422) 28,783 (8,096)
Cash and cash equivalents at
beginning of year 31,201 2,418 10,514
Cash and cash equivalents at end
of year $ 13,779 $ 31,201 $ 2,418
Supplementary disclosures
Cash paid for interest $ 178 $ 948 $ 1,547
Cash paid for income taxes $ 13,565 $ 5,213 $ 8,544
See notes to consolidated financial statements.
OSHKOSH B'GOSH, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollars in thousands, except share and per share amounts)
Note 1. Significant accounting policies
Business - OshKosh B'Gosh, Inc. and its wholly-owned
subsidiaries (the Company) are engaged primarily in the
design, sourcing, and marketing of apparel to wholesale
customers and through Company owned retail stores.
Principles of consolidation - The consolidated financial
statements include the accounts of all wholly-owned subsidiaries.
All significant intercompany accounts and
transactions have been eliminated in consolidation.
Cash equivalents - Cash equivalents consist of highly
liquid debt instruments such as money market accounts and
commercial paper with original maturities of three months
or less. The Company's policy is to invest cash in
conservative instruments as part of its cash management
program and to evaluate the credit exposure of any
investment. Cash and cash equivalents are stated at cost,
which approximates market value.
Short-term investments - Short-term investments are
classified as available-for-sale securities and are highly
liquid debt instruments. These securities have a put
option feature that allows the Company to liquidate the
investments at their discretion and are backed by a letter
of credit from financial institutions. These investments
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 99.8% of total 1997 and 99.0% of
total 1996 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 or at management's estimate
of fair market value if considered impaired under the
provisions of Statement of Financial Accounting Standards
(SFAS) No. 121. 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 3 to 10
Foreign currency translation - The functional currency for
certain foreign subsidiaries was the local currency.
Accordingly, assets and liabilities were translated at
year end exchange rates, and income statement items were
translated at average exchange rates prevailing during the
year. Such translation adjustments were recorded as a
separate component of shareholders' equity.
Revenue recognition - Revenue within wholesale operations
is recognized at the time merchandise is shipped to
customers. Retail store revenues are recognized at the
time of sale.
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.
Advertising - Advertising costs are expensed as incurred
and totaled $11,165, $11,448, and $12,213 in 1997, 1996,
and 1995, respectively.
Earnings per share - In February, 1997 the Financial
Accounting Standards Board (FASB) issued SFAS No. 128,
"Earnings per Share," which specifies the computation,
presentation and disclosure requirements of earnings per
share. All earnings per share amounts for all periods have
been presented to conform to SFAS No. 128 disclosure
requirements. The numerator for the calculation of basic
and diluted earnings per share is net income. The
denominator is computed as follows (in thousands):
1997 1996 1995
Denominator for basic earnings
per share--weighted average shares 11,017 12,339 12,865
Employee stock options (treasury
stock method) 75 8 4
Denominator for diluted earnings
per share 11,092 12,347 12,869
Fiscal year - In November, 1997 the Company approved a
change in its fiscal year from a calendar year to a 52/53
week year ending on the Saturday closest to December 31,
beginning in 1998.
Pending accounting standard - In June, 1997 the FASB
issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." SFAS No. 131
establishes the standards for the manner in which public
enterprises are required to report financial and
descriptive information about their operating segments.
The statement defines operating segments as components of
an enterprise for which separate financial information is
available and evaluated regularly as a means for assessing
segment performance and allocating resources to segments.
A measure of profit or loss, total assets and other
related information are required to be disclosed for each
operating segment. In addition, this statement requires
the annual disclosure of information concerning revenues
derived from the enterprise's products or services,
countries in which it earns revenue or holds assets, and
major customers. SFAS No. 131 is effective for fiscal
years beginning after December 15, 1997. The adoption of
SFAS No. 131 will not affect the Company's results of
operations or financial position, but may affect the
disclosure of segment information.
Note 2. Special charges
During the second half of 1996, the Company experienced
increasing difficulties in selling its idle manufacturing
facilities and equipment. In addition, in October 1996 a
long standing customer contract for apparel finishing
services was not renewed, creating significant excess
capacity in the Company's garment finishing facility.
These events along with related adverse changes in the
economic environment affecting U.S. apparel manufacturers
necessitated that the Company reevaluate the fair market
value of its remaining manufacturing property and
equipment in the fourth quarter of 1996.
As a result of this analysis, and a decision to close the
Company's Columbia, Kentucky sewing facility, the Company
recorded pre-tax special charges of $12,000 in the fourth
quarter of 1996 which, net of income tax benefits, reduced
net income by $7,200 ($.58 per share). The special charge
included asset impairments of approximately $9,500 and
severance and related benefits for approximately 500
manufacturing employees totaling approximately $2,500.
All impacted manufacturing assets being used in production
were written down to management's estimate of fair value
(approximately $10,900) as part of this special charge.
During the second quarter of 1996, the Company recorded
special charges of $20,900 which amounted to $8,000 ($.65
per share), net of tax benefits, related to the
discontinuance of the Company's Genuine Kids retail store
chain, wind-down of the Company's European subsidiaries
and transfer of the European business to a licensee, and
the closing of its Red Boiling Springs and Celina,
Tennessee sewing facilities. These actions eliminate the
underperforming Genuine Kids and European components of
the Company's business. The plant closings accelerated
the Company's strategic direction to source product based
solely on price, quality and delivery factors, which has
resulted in more product being sourced outside of the
United States.
These decisions affected approximately 1,100 employees,
including approximately 500 retail store employees
throughout the United States, approximately 550
manufacturing employees from the Company's plants in
Tennessee, and approximately 50 employees from the
Company's European subsidiaries. This special charge
included severance and related benefits totaling
approximately $3,900.
The second quarter special charges included approximately
$6,900 related to other exit costs, including estimated
lease settlements and anticipated costs to dispose of
certain operating assets as part of the exit plan and
$2,000 related to anticipated losses on inventory
disposals. Through December 31, 1997, approximately
$5,500 of these other exit costs have been incurred. The
special charges also included approximately $8,100 related
to impaired assets, recognized in accordance with SFAS No.
121. The Company's decision to implement the
aforementioned changes resulted in unamortized retail
leasehold improvements and excess manufacturing space in
Tennessee. In 1997, the Company sold or entered into
agreements to sell its excess manufacturing space.
The wind-down of the European entities permitted the
recognition of certain U.S. tax deductions previously
unrecognized, resulting in an approximate $4,500 income
tax benefit. This income tax benefit, along with the
$8,400 income tax credit resulting from the special
charges, reduced the net impact on Company earnings in
1996 by $12,900.
The Company has completed substantially all of the
strategic changes related to these special charges,
and is not currently anticipating any increase in
the amount of special charges recorded in 1996.
In total, all 1996 special charges cash outlays of $7,200
were more than offset by the cash generated from the
income tax benefit and asset sales. No additional
material cash outlays are anticipated related to the 1996
special charges.
During the third quarter of 1995, the Company recorded a
pre-tax 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. The
$2,700 pre-tax charge for plant closings included
approximately $1,900 of severance and related costs
pertaining to workforce reductions as well as $800 for
facility closings and the write-down of the related
assets.
These plant closings were completed in early 1996, with no
material changes in previously estimated costs to fully
effect these plant closings. The Company's cash
expenditures (net of income tax benefit) to carry out
these plant closings were approximately $1,000. The
remaining reserve at December 31, 1997 of approximately
$500 is expected to be settled in cash.
These special charges and plant closings are based on
management's best estimates of costs related to these
decisions. The actual costs the Company will ultimately
incur are dependent on certain risks and uncertainties and
could differ from the amounts used to record the estimated
effect of these decisions.
Note 3. Inventories
A summary of inventories follows:
December 31,
1997 1996
Finished goods $49,400 $51,584
Work in process 14,782 10,698
Raw materials 4,044 4,517
Total $68,226 $66,799
The replacement cost of inventory exceeds the above LIFO
costs by $14,138 and $15,100 at December 31, 1997 and
1996, respectively.
Partial liquidation of certain LIFO layers in 1997 and
1996 increased net income by approximately $577 and $660,
respectively.
Note 4. Property, plant and equipment
A summary of property, plant and equipment follows:
December 31,
1997 1996
Land and improvements $ 3,677 $ 3,910
Buildings 15,035 17,999
Leasehold improvements 14,036 15,231
Machinery and equipment 27,630 30,607
Construction in progress 1,814 --
Total 62,192 67,747
Less: accumulated depreciation and
amortization 29,237 25,965
Property, plant and equipment, net $32,955 $41,782
Note 5. Lines of credit
The Company maintains an unsecured 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, 2000.
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.
There were no outstanding borrowings against these credit
arrangements at December 31, 1997. Letters of credit of
approximately $28,000 were outstanding at December 31,
1997, with $72,000 of the unused credit facilities
available for borrowing.
Note 6. Accrued liabilities
A summary of accrued liabilities follows:
December 31,
1997 1996
Compensation $ 4,526 $ 5,063
Workers' compensation 10,250 10,750
Income taxes 6,936 5,292
Restructuring costs 7,938 10,694
Other 8,363 7,086
Total $38,013 $38,885
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,
1998 $ 11,611
1999 10,498
2000 8,339
2001 5,966
2002 4,743
Thereafter 8,230
Total minimum lease payments 49,387
Total rent expense charged to operations for all operating
leases is as follows:
Year Ended December 31,
1997 1996 1995
Minimum rentals $15,005 $17,691 $15,760
Contingent rentals 800 493 279
Total rent expense $15,805 $18,184 $16,039
Note 8. Income taxes
Income tax expense (benefit) is comprised of the
following:
Year Ended December 31,
1997 1996 1995
Current:
Federal $12,396 $ 7,224 $ 7,440
State and local 2,633 760 1,860
15,029 7,984 9,300
Deferred 600 (13,200) (59)
Total $15,629 $(5,216) $ 9,241
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,
1997 1996
[Assets (Liabilities)]
Current deferred taxes
Accounts receivable allowances $ 1,026 $ 1,552
Inventory valuation 5,112 5,562
Accrued liabilities 5,412 5,595
Restructuring costs 3,670 5,188
Other 580 603
Total net current deferred tax
assets $ 15,800 $ 18,500
Non-current deferred taxes
Depreciation $ (115) $ (2,583)
Deferred employee benefits 5,259 5,438
Trademark 498 545
Other (142) --
Total net non-current deferred tax
assets $ 5,500 $ 3,400
For financial reporting purposes, income (loss) before
income taxes includes the following components:
Year Ended December 31,
1997 1996 1995
Income (loss) before
income taxes:
United States $ 37,263 $ 6,308 $ 24,513
Foreign 924 (10,405) (4,325)
Total $ 38,187 $ (4,097) $ 20,188
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,
1997 1996 1995
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 (4.6) 4.7
Tax effect of foreign losses -- 13.6 7.5
U.S. tax deductions related
to European subsidiaries -- (109.8) --
Other 1.2 8.5 (1.4)
Total 40.9% (127.3%) 45.8%
As discussed in Note 2, the wind-down of the Company's
European subsidiaries permitted the recognition of certain
U.S. tax deductions previously unrecognized, resulting in
a 1996 income tax benefit of approximately $4,500.
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 plans
totaled $2,950, $3,795, and $4,002 for 1997, 1996, and
1995, 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,
1997 1996 1995
Discount rate 7.0% 7.5% 7.0%
Expected long-term rate of
return on assets 9.0% 8.0% 8.0%
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,
1997 1996 1995
Service cost - benefits earned
during the period $1,685 $2,315 $1,923
Interest cost on projected
benefit obligations 2,004 2,230 1,947
Actual return on plan assets (4,444) (2,572) (4,818)
Net amortization and deferral 2,457 1,047 3,982
Net periodic pension cost $1,702 $3,020 $3,034
In conjunction with the special charges discussed in Note
2, the Company curtailed defined benefit plans for the
affected plants in 1996 and settled the plan obligations
in 1997. Curtailment and settlement costs of
approximately $655 are included in the special charges
originally recorded in 1996.
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,
1997 1996
Assets ABO Assets ABO
Exceed Exceeds Exceed Exceeds
ABO Assets ABO Assets
Actuarial present value of
benefit obligations:
Vested benefits $19,215 $ 1,247 $ 16,397 $ 4,686
Nonvested benefits 788 -- 633 86
Total accumulated
benefit obligation $20,003 1,247 17,030 4,772
Projected benefit
obligation $29,096 $ 2,156 $ 25,974 $ 5,364
Plan net assets at fair
value 27,864 -- 22,888 3,186
Projected benefit
obligation in excess
of plan net assets (1,232) (2,156) (3,086) (2,178)
Unamortized transition
asset (927) -- (1,125) (13)
Unrecognized prior service
cost 2,751 80 2,336 941
Unrecognized net (gain)
loss (6,291) 185 (4,883) (193)
Accrued pension liability
at December 31 $(5,699)$(1,891) $ (6,758)$(1,443)
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 $828, $627, and
$923 for 1997, 1996, and 1995, respectively.
In 1996, the Company initiated a profit-sharing plan
covering certain salaried and hourly employees pursuant to
Section 401(k) of the Internal Revenue Code, whereby
participants may contribute a percentage of compensation,
but not in excess of the maximum allowed under the Code.
The plan provides for a matching contribution by the
Company which amounted to approximately $376 and $89 for
1997 and 1996, 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 $44, $59, and $45 for
1997, 1996, and 1995, 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,
1997 1996
Accumulated postretirement
benefit obligation:
Retirees $ 159 $ 112
Fully eligible active plan
participants 226 297
Other active plan participants 1,063 808
1,448 1,217
Plan assets -- --
Unrecognized net gain 180 249
Accrued postretirement benefit
cost $1,628 $1,466
Net periodic postretirement benefit cost was comprised
of:
Year Ended December 31,
1997 1996 1995
Service cost-benefits
attributed to employee
service during the year $ 117 $ 78 $ 42
Interest cost on accumulated
postretirement
benefit obligation 90 84 48
Net amortization and deferral (4) (8) (34)
Net periodic postretirement
benefit cost $ 203 $ 154 $ 56
The discount rate used in determining the accumulated
postretirement benefit obligation was 7.0% in 1997, 7.5%
in 1996, and 7.0% in 1995. 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, 1997 by approximately
$67 and the aggregate of the service and interest cost
components of net periodic postretirement benefit cost
for 1997 by approximately
$11.
Note 10. Common stock
The Company maintains 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.
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 August, 1997 the Company purchased approximately
1,657,000 shares of its Class A common stock and
approximately 42,000 shares of its Class B common stock
under the terms of its Dutch auction tender offer for
approximately $37.7 million. Under the terms of the
Dutch auction tender offer, all shares were purchased at
$22 per share.
On August 25, 1997, the Company's Board of Directors
authorized an additional 500,000 share repurchase program
of the Company's Class A common stock. Through December
31, 1997, the Company repurchased 141,500 shares of its
Class A common stock under this program for approximately
$4.6 million. On August 6, 1996, the Company's Board of
Directors authorized a one million share repurchase
program of the Company's Class A common stock. The
Company repurchased 772,600 shares of its Class A common
stock under this program for approximately $11.7 million
during 1996 and 1997 to conclude this program.
The Company has elected to follow Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to
Employees" (APB 25), in accounting for its employee stock
options. Under APB 25, because 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.
The Company's 1994 Incentive Stock Option Plan has
authorized the grant of options to management personnel
and directors for up to 1,470,000 shares of the Company's
common stock. As of December 31, 1997, 976,400 shares
are available for grant. Options granted generally have
10 year terms and vest ratably over a four year period
following date of grant.
The following pro forma information regarding net income
and net income per share required by SFAS No. 123,
"Accounting for Stock Based Compensation," has been
determined as if the Company had accounted for its
employee stock options under the fair value method of
that statement. The fair value for these options was
estimated at the date of grant using a Black-Scholes
option pricing model with the following weighted-average
assumptions for 1997, 1996, and 1995, respectively: risk-
free interest rates of 6.42%, 5.81%, and 7.47%;
dividends of $.28 per share in all years; volatility
factors of the expected market price of the Company's
common stock of .406, .409, and .415; and a weighted-
average expected life of the option of approximately 8
years. Changes in these subjective assumptions can
significantly affect the fair value calculations.
The estimated fair value of the options is amortized to
expense over the options' vesting period:
Year Ended December 31,
1997 1996 1995
Net income as reported $ 22,558 $ 1,119 $ 10,947
Pro forma net income 22,230 880 10,814
Net income per share as
reported
Basic 2.05 .09 .85
Diluted 2.03 .09 .85
Pro forma net income per
share
Basic 2.02 .07 .84
Diluted 2.01 .07 .84
A summary of the Company's stock option activity and
related information follows:
<TABLE>
<CAPTION>
Year Ended December 31,
1997 1996 1995
Options Weighted-average Options Weighted-average Options Weighted-average
(000) exercise price (000) exercise price (000) exercise price
<S> <C> <C> <C> <C> <C> <C>
Outstanding-beginning of year 302 $ 15 156 $ 15 -- $ --
Granted 170 15 162 16 161 15
Exercised (9) 15 (3) 15 -- --
Forfeited (31) 15 (13) 15 (5) 15
Outstanding-end of year 432 15 302 15 156 15
Exerciseable at end of year 103 15 45 15 -- --
Weighted-average fair value
of options granted during year $ 4.94 $ 5.12 $ 5.01
</TABLE>
Exercise prices for options outstanding as of December
31, 1997 ranged from $14 to $17. The weighted-average
remaining contractual life of those options is
approximately 8.1 years.
Note 11. Business and credit concentrations
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.
In 1997, sales to a customer, as a percentage of net
sales, amounted to approximately 11%.
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 1, 1998.
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 1, 1998.
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 1, 1998.
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 1, 1998.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, 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 are filed as part of this
Annual Report.
(2) Financial Statement Schedule:
Schedule II - Valuation and Qualifying Accounts
Schedules not included have been omitted because
they are not applicable, immaterial, or the
required information is included in the consolidated
financial statements or notes thereto.
(3) Index to Exhibits
(b) Reports on Form 8-K
A Form 8-K was filed on November 12, 1997 to
disclose the Company's change to a 52/53
week fiscal year.
(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 0-13365, is incorporated herein by
reference.
3.2 By-laws of OshKosh B'Gosh, Inc., as amended
through the date hereof.
*10.1 Employment Agreement dated July 7, 1980,
between OshKosh B'Gosh, Inc. and Charles F. Hyde
as extended by "Request For Later Retirement"
dated April 15, 1986 and accepted by the 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 November 4, 1997.
*10.4 OshKosh B'Gosh, Inc. Restated Excess Benefit
Plan, as amended on March 1, 1997.
*10.5 OshKosh B'Gosh, Inc. Executive Deferred
Compensation Plan, as amended on March 1, 1997.
*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 0-13365, is
incorporated herein by reference.
10.7 Acknowledgment of Guaranty Agreement between
City of Liberty, Casey County, Kentucky and
OshKosh B'Gosh, Inc., dated October 4, 1984, and
related Contract of Lease and Rent dated as of
November 26, 1968, previously filed as Exhibit
10.14 to the Registrant's Registration
Statement No. 2-96586 on Form S-1, is incorporated
herein by reference.
10.8 Indemnity Agreement between OshKosh B'Gosh,
Inc. and William P. Jacobsen (former 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: Douglas W. Hyde, Michael D.
Wachtel and Kenneth H. Masters).
*10.9 OshKosh B'Gosh, Inc. Executive Non-Qualified
Profit Sharing Plan, as amended on March 1, 1997.
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 0-13365, 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 0-13365, 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
November 21, 1997.
*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 0-13365, is incorporated herein by
reference.
10.14 OshKosh B'Gosh, Inc. 1995 Outside Director's
Stock Option Plan, as amended February 26,
1997.
*10.15 OshKosh B'Gosh, Inc. Flexible Nonstandardized
401(k) Adoption Agreement and Smith
Barney Prototype Defined Contribution Plan
Document #05 previously filed as Exhibit 10.15 to the
Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996,
Commission File Number 0-13365, is incorporated
herein by reference.
* Represents a plan that covers compensation, benefits
and/or related arrangements for executive management.
21. The following is a list of subsidiaries of the
Company as of December 31, 1997. The
consolidated financial statements reflect the
operations of all subsidiaries as they existed
on December 31, 1997.
State or Other
Jurisdiction of
Incorporation or
Name of Subsidiary Organization
Grove Industries, Inc. Delaware
Manufacturera International Apparel, S.A. Honduras
OshKosh B'Gosh International Sales, Inc. Virgin Islands
OshKosh B'Gosh Europe, SNC (Inactive) France
OshKosh B'Gosh Asia/Pacific Ltd. (Inactive) Hong Kong
OshKosh B'Gosh U.K. Ltd. (Inactive) United Kingdom
OshKosh B'Gosh Deutschland GmbH (Inactive) Germany
23. Consent of Ernst & Young LLP, Independent Auditors
27. Financial Data Schedule
SIGNATURES
Date: March 31, 1998
Pursuant to the requirements of Section 13 of 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-Finance, 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
/S/ DAVID L. OMACHINSKI Vice President-Finance, Treasurer
and Chief Financial Officer
/S/ STEVEN R. DUBACK Secretary and Director
/S/ WILLIAM F. WYMAN Vice President Domestic Licensing
Date: March 31, 1998
OSHKOSH B'GOSH, INC. AND SUBSIDIARIES
Schedule II
Valuation and Qualifying Accounts
(Dollars in Thousands)
Year Ended December 31,
1997 1996 1995
Accounts receivable - allowances:
Balance at beginning of period $ 5,474 $ 3,970 $ 3,700
Charged to costs and expenses 11,836 10,392 8,084
Deductions - bad debts written off,
net of recoveries and other
allowances (13,085) (8,088) (7,814)
Year Ended December 31,
1997 1996 1995
Restructuring costs - allowances:
Balance at beginning of period $ 10,694 $ 334 $ 2,381
Charged to cost and expenses - 15,300 -
Actual restructuring costs incurred (2,756) (4,940) (2,047)
Balance at end of period $ 7,938 $ 10,694 $ 334
EXHIBIT 23
Consent of Ernst & Young LLP, Independent Auditors
We consent to the incorporation by reference in the Registration
Statements (Forms S-8 No. 333-01051 and No. 333-01053) of OshKosh
B'Gosh, Inc. of our report dated January 30, 1998, with respect
to the consolidated financial statements and schedule of OshKosh
B'Gosh, Inc. and Subsidiaries included in this Annual Report
(Form 10-K) for the year ended December 31, 1997.
ERNST & YOUNG LLP
Milwaukee, Wisconsin
March 24, 1998
BYLAWS
OF
OSHKOSH B'GOSH, INC.
APPROVALS/AMENDMENTS
11/04/85 First Approval of Amended and Restated Bylaws
02/03/86 Final Approval of Amended and Restated Bylaws
05/08/87 New Section 49 Adopted - (Indemnification)
02/01/88 Amended Section 11 - (Increase in Number of
Directors)
02/01/90 Repealed old Sections 23-24 and created new
Sections 23.01 - 23.16
08/03/90 Amended Section 41 (formerly Section 30)
05/03/91 Amended Section 15 to create Sections 15.01 -
15.06
07/01/91 Amended Sections 23.01, 23.05, 23.07 and 23.09
05/01/92 Amended Sections 23.05, 23.07, 23.08 and 23.10
02/20/95 Amended Section 15.03
11/04/97 Amended Section 43 (effective 01/01/98)
BYLAWS
OF
OSHKOSH B'GOSH, INC.
STATED TO INCLUDE ALL AMENDMENTS
ADOPTED THROUGH NOVEMBER 4, 1997
TABLE OF CONTENTS
Page
OFFICES 1
SEAL 1
STOCKHOLDERS' MEETING 1
Place of Meeting 1
Annual Meeting 1
Notice of Annual Meeting 1
Quorum 2
Voting of Shares 2
Special Meetings 2
Notice of Special Meetings 3
DIRECTORS 3
General Powers 3
Number 3
Office 3
Vacancies 3
Removal 4
COMMITTEES 4
Executive Committee 4
Audit Committee 4
Nominating Committee 5
Retirement Plan Committee 6
Compensation Committee 6
Other Committees 6
COMPENSATION OF DIRECTORS 7
MEETINGS OF DIRECTORS 7
Annual Meeting 7
Regular Meeting 7
Special Meetings 7
Quorum 7
Action By Written Consent of Directors 8
Participation By Conference Telephone 8
OFFICERS 8
Number 8
Election and Term of Office 8
Removal 9
Vacancies 9
Chairman of the Board 9
Vice-Chairman of the Board 9
President 9
Executive Vice President 10
The Vice Presidents 10
Shared Functions 10
The Secretary 10
The Treasurer 11
Assistant Secretaries and Assistant Treasurers 11
Other Assistants and Acting Officers 11
Additional Officers 11
Salaries 11
CERTIFICATES OF STOCK AND THEIR TRANSFER 12
Certificates 12
Facsimile Signatures 12
Transfers of Stock 12
CLOSING OF TRANSFER BOOKS 13
In General 13
List of Stockholders Available for Inspection 13
REGISTERED STOCKHOLDERS 13
LOST CERTIFICATES 14
CHECKS 14
FISCAL YEAR 14
DIVIDENDS 14
DIRECTORS' ANNUAL STATEMENT 15
NOTICES 15
Notice 15
Waiver of Notice 15
AMENDMENTS 15
INDEMNIFICATION OF OFFICERS AND DIRECTORS 16
Mandatory Indemnification 16
Right to Indemnification: How Determined 19
Termination of an Action is Nonconclusive 21
Advance Payment 21
Partial Indemnification: Interest 22
Nonexclusivity of Section 49 23
Insurance 23
Witness Expenses 24
Contribution 24
Severability 25
Amendment 25
BYLAWS
OF
OSHKOSH B'GOSH, INC.
OFFICES
1. The registered office shall be in the City of
Wilmington, County of New Castle, State of Delaware, and the name
of the resident agent in charge thereof is the Corporation Trust
Company.
The corporation may also have an office in the City of
Oshkosh, State of Wisconsin, and also offices at such other
places as the Board of Directors may from time to time appoint or
the business of the corporation may require.
SEAL
2. The corporate seal shall have inscribed thereon the
name of the corporation, the year of its organization and the
words "Corporate Seal, Delaware." Said seal may be used by
causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise.
STOCKHOLDERS' MEETINGS
3. Place of Meeting. All meetings of the stockholders for
the election of directors shall be held at such place either
within or without the State of Delaware as shall be designated
from time to time by the board of directors and stated in the
notice of the meeting. Meetings of shareholders for any other
purpose may be held at such time and place, within or without the
State of Delaware, as shall be stated in the notice of the
meeting or in duly executed waiver of notice thereof.
4. Annual Meeting. Annual meetings of stockholders shall
be held on the first Friday of May if not a legal holiday and if
a legal holiday, then on the next business day following, at 2:00
p.m., local time, or at such other date and time as shall be
designated from time to time by the Board of Directors and stated
in the notice of the meeting, at which the stockholders shall
elect a Board of Directors, and transact such other business as
may properly be brought before the meeting.
5. Notice of Annual Meeting. Written notice stating the
date, place and hour of the annual meeting shall be mailed to
each stockholder entitled to vote thereat at such address as
appears on the records of the corporation, at least fifteen days
prior to the meeting.
6. Quorum. The holders of a majority of the shares of
stock issued and outstanding and entitled to vote at the meeting
of stockholders on a particular matter, present in person or
represented by proxy, shall constitute a quorum for the decision
with respect to such matter except as otherwise provided by
statute or by the certificate of incorporation. If, however,
such quorum shall not be present or represented at any meeting of
the stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall
be present or represented, any business may be transacted which
might have been transacted at the meeting as originally notified.
If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting,
a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
7. Voting of Shares. At every meeting of the
stockholders, each stockholder having the right to vote on a
particular matter shall be entitled to vote on a particular
matter shall be entitled to vote on such matter in person, or by
proxy, appointed by an instrument in writing subscribed by such
stockholder and bearing a date not more than three years prior to
said meeting, unless such proxy provides for a longer period.
Each stockholder shall have one vote on a particular matter for
each share of stock having voting power with respect to such
matter, registered in his or her name on the books of the
corporation, except that no share of stock shall be voted at any
election for directors which has been transferred on the books of
the corporation within twenty days next preceding such election.
The vote for directors, and, upon the demand of any stockholder,
the vote upon any question before the meeting, shall be by
ballot. When a quorum of stockholders entitled to vote on a
particular matter brought before any meeting is present at such
meeting, the vote of the holders of a majority of the shares of
stock having voting power with respect to such matter, present in
person or represented by proxy, shall decide such matter, unless
the matter is one upon which by express provision of the statutes
or of the certificate of incorporation, a different vote is
required in which case such express provision shall govern and
control the decision of such matter.
8. Special Meetings. Special meetings of the
stockholders, for any purpose or purposes, unless otherwise
prescribed by statute or by the Certificate of Incorporation, may
be called by the president and shall be called by the president
or secretary at the request in writing of a majority of the Board
of Directors, or at the request in writing of stockholders owning
a majority in amount of the entire capital stock of the
corporation issued and outstanding and entitled to vote. Such
request shall state the purpose or purposes of the proposed
meeting.
9. Notice of Special Meetings. Written notice stating the
time and place of a special meeting of stockholders, and the
purpose of purposes for which the meeting is called shall be
mailed, postage prepaid, at least ten (10) but not more than
sixty (60) days before the date of such meeting, to each
stockholder entitled to vote thereat at such address as appears
on the records of the corporation. Business transacted at any
special meeting of stockholders shall be confined to the purposes
stated in the notice.
DIRECTORS
10. General Powers. The business of the corporation shall
be managed by or under the direction of its Board of Directors
which may exercise all such powers of the corporation and do all
such lawful acts and things as are not by statute or by the
certificate of incorporation or by these bylaws directed or
required to be exercised or done by the stockholders or by
others.
11. Number. The number of directors which shall constitute
the whole board shall be nine (9). The directors shall be
elected at the annual meeting of the stockholders, except as
provided in Section 13 of these Bylaws, and each director elected
shall hold office until his or her successor is elected and
qualified. The number of directors may be increased or decreased
from time to time by amendment to this Section, adopted by the
stockholders or Board of Directors, but no decrease shall have
the effect of shortening the term of any incumbent director.
12. Office. The directors may hold their meetings and have
one or more offices outside of Delaware, at the office of the
corporation in the City of Oshkosh, Wisconsin, or at such other
places as they may from time to time determine.
13. Vacancies. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors
may be filled by a majority of the directors then in office,
though less than a quorum, or by a sole remaining director, and
the directors so chosen shall hold office until the next annual
election and until their successors are duly elected and shall
qualify, unless sooner displaced. If there are not directors in
office, then an election of directors may be held in the manner
provided by statute. If, at the time of filling any vacancy or
any newly created directorship, the directors then in office
shall constitute less than a majority of the whole board (as
constituted immediately prior to any such increase), the Court of
Chancery may, upon application of any stockholder or stockholders
holding at least ten percent of the total number of the shares at
the time outstanding having the right to vote for such directors,
summarily order an election to be held to fill any such vacancies
or newly created directorships, or to replace the directors
chosen by the directors then in office.
14. Removal. Unless otherwise restricted by the
certificate of incorporation or by law, any director or the
entire Board of Directors may be removed, with or without cause,
by the holders of a majority of shares entitled to vote at an
election of directors. The provisions of this Section 14 shall
apply, in respect to the removal without cause of a director or
directors elected by the holders of any class of stock voting as
a separate class, to the vote of the holders of the outstanding
shares of that class and not to the vote of the outstanding
shares as a whole.
COMMITTEES
15.01 Executive Committee. The Board of Directors, by
resolution passed by a majority of the whole board, shall elect
the Executive Committee, composed of five (5) or more members,
all of whom shall be directors of the corporation. The board may
designate one or more directors as alternate members, who may
replace any absent or disqualified member at any meeting of the
committee. In the absence or disqualification of a member of a
committee, the member or members thereof present at any meeting
and not disqualified from voting, whether or not he or they
constitute a quorum, may unanimously appoint another member of
the Board of Directors to act at the meeting in the place of any
such absent or disqualified member. The Executive Committee
shall have and may exercise all powers and authority of the Board
of Directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation, if
any, to be affixed to all papers which may require it, except
that the Executive Committee shall not have the power or
authority in reference to amending the certificate of
incorporation, adopting an agreement of merger or consolidation,
recommending to the shareholders the sale, lease or exchange of
all or substantially all of the corporation's property and
assets, recommending to the stockholders a dissolution of the
corporation or a revocation of a dissolution, or amending the by-
laws of the corporation; and, unless a resolution of the Board of
Directors adopted within the preceding 12 months shall expressly
so provide, the Executive Committee shall not have the power or
authority to declare a dividend or to authorize the issuance of
stock.
15.02 Audit Committee. The Board of Directors, by
resolution passed by a majority of the whole board, shall elect
the Audit Committee, composed of three (3) members, all of whom
shall be directors, and at least two (2) of whom shall be persons
who are not officers or employees of the corporation and who are
free of any relationship that, in the opinion of the Board of
Directors, would interfere with the exercise of their independent
judgment as members of the Audit Committee. A majority of the
members of the Audit Committee shall constitute a quorum for the
transaction of all business of the committee. The Audit
Committee shall provide assistance to the directors in fulfilling
their responsibilities relating to corporate accounting,
reporting practices of the corporation, and the quality and
integrity of the financial reports of the corporation. In
assisting the directors in carrying out these responsibilities,
the Audit Committee shall have the following powers, duties and
functions:
(a) To review the corporation's accounting functions,
operations and management;
(b) To consider and review the adequacy and
effectiveness of the corporation's internal auditing methods
and procedures;
(c) To consider and recommend to the board of
directors for appointment independent auditors for the
corporation;
(d) To meet and consult with the independent auditors
and with the corporation's financial and accounting personnel
and internal auditors;
(e) To review and approve the scope of the annual
independent audit and the budget for independent audit fees;
(f) To review with the independent auditors their
report of the audit; and
(g) To report, from time to time, to the board of
directors on the activities and findings of the Audit Committee
and to make recommendations to the board based on such
findings.
15.03 Nominating Committee. The Board of Directors, by
resolution passed by a majority of the whole board, shall elect
the Nominating Committee, composed of at least five (5) members,
all of whom shall be directors and at least two (2) of whom shall
be persons who are not officers or employees of the corporation.
A majority of the members of the Nominating Committee shall
constitute a quorum for the transaction of all business of the
committee. The Nominating Committee shall have the following
powers, duties and functions:
(a) To seek out and consider individuals to serve as
directors of the corporation;
(b) To make recommendations to the Board of Directors
regarding the total size and frequency of meetings of the Board
of Directors;
(c) To recommend to the Board of Directors candidates
for election to the board and to fill any vacancies that occur
between annual meetings; and
(d) To make recommendations to the Board of Directors
regarding compensation of board members for serving on the board
and for board and committee meetings attended.
15.04 Retirement Plan Committee. The Board of
Directors, by resolution passed by a majority of the whole board,
shall elect the Retirement Plan Committee, composed of at least
three (3) members, all of whom shall be directors of the
corporation. A majority of the members of the Retirement Plan
Committee shall constitute a quorum for the transaction of all
business of the committee. The Retirement Plan Committee shall
have general oversight responsibilities with respect to (a) the
administration of all employee welfare benefit plans and all
employee pension and profit sharing retirement benefit plans of
this corporation (the "Welfare and Pension Plans"), and (b) the
investment management of all funded Welfare and Pension Plans.
15.05 Compensation Committee. The Board of Directors,
by resolution passed by a majority of the whole board, shall
elect the Compensation Committee, composed of at least three (3)
members, all of whom shall be directors and at least a majority
of whom shall be persons who are not employees of the
corporation. A majority of the members of the Compensation
Committee shall constitute a quorum for the transaction of all
business of the committee. The Compensation Committee shall make
recommendations to the Board of Directors concerning the
compensation of officers and corporate department directors.
15.06 Other Committees. The Board of Directors, by
resolution passed by a majority of the whole board, may designate
other committees, each committee to consist of three (3) or more
directors of the corporation and to have such duties and powers
as the resolutions may specify.
COMPENSATION OF DIRECTORS
16. Unless otherwise restricted by the certificate of
incorporation or these bylaws, the Board of Directors shall have
the authority to fix the compensation of directors. The
directors may be paid their expenses, if any, of attendance at
each meeting of the Board of Directors and may be paid a fixed
sum for attendance at each meeting of the Board of Directors or a
stated salary as director. No such payment shall preclude any
director from serving the corporation in any other capacity and
receiving compensation therefor. Members of special or standing
committees may be allowed like compensation for attending
committee meetings.
MEETINGS OF DIRECTORS
17. Annual Meeting. The first meeting of each newly
elected Board of Directors shall be held at such time and place
as shall be fixed by the vote of the stockholders at the annual
meeting and no notice of such meeting shall be necessary to the
newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present. In the event of the
failure of the stockholders to fix the time or place of such
first meeting of the newly elected Board of Directors, or in the
event such meeting is not held at the time and place so fixed by
the stockholders, the meeting may be held at such time and place
as shall be specified in a notice given as hereinafter provided
for special meeting of the Board of Directors, or as shall be
specified in a written waiver signed by all of the directors.
18. Regular Meetings. Regular meetings of the Board of
Directors may be held within or without the State of Delaware,
without notice, at such time and place as shall from time to time
be determined by the board.
19. Special Meetings. Special meetings of the board may be
held within or without the State of Delaware and may be called by
the president on forty-eight (48) hours notice to each director,
either personally or by mail or by telegram; special meetings
shall be called by the president or secretary in like manner and
on like notice on the written request of two directors.
20. Quorum. At all meetings of the board, a majority of
the number of the directors elected in accordance with these
bylaws shall be necessary and sufficient to constitute a quorum
for the transaction of business at such meeting, and the act of a
majority of the directors present at any meeting at which there
is a quorum shall be the act of the Board of Directors, except as
may be otherwise specifically provided by statute or by the
certificate or incorporation or by these bylaws. If a quorum
shall not be present at any meeting of the Board, the directors
present thereat may adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a
quorum shall be present.
21. Action By Written Consent of Directors. Unless
otherwise restricted by the certificate of incorporation or these
bylaws, any action required or permitted to be taken at any
meeting of the Board of Directors, or of any committee thereof,
may be taken without a meeting if all members of the board or
committee, as the case may be, consent thereto in writing, and
the writings are filed with the minutes of proceedings of the
board or committee.
22. Participation By Conference Telephone. Unless
otherwise restricted by the certificate of incorporation or these
bylaws, members of the Board of Directors, or any committee
designated by the Board of Directors, or any committee, by means
of conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear
each other, and such participation in a meeting shall constitute
presence in person at the meeting.
OFFICERS
23.01 Number. The principal officers of the corporation
shall be a Chairman of the Board, a Vice-Chairman of the Board, a
President, an Executive Vice President, one or more other Vice
Presidents (the number thereof to be determined by the Board of
Directors), a Secretary and a Treasurer, each of whom shall be
elected by the Board of Directors. The Board of Directors may
designate one or more of the Vice Presidents as Senior Vice
Presidents. Such other officers and assistant officers and
agents as may be deemed necessary may be elected or appointed by
the Board of Directors. Any two or more offices may be held by
the same person unless the certificate of incorporation or these
Bylaws otherwise provide.
23.02 Election and Term of Office. The officers of the
corporation to be elected by the Board of Directors shall be
elected annually at the first meeting of the Board of Directors
held after each annual meeting of the shareholders. If the
election of officers shall not be held at such meeting, such
election shall be held as soon thereafter as conveniently may be.
Each officer shall hold office until his successor shall have
been duly elected or until his prior death, resignation or
removal.
23.03 Removal. Any officer or agent may be removed by
the Board of Directors whenever in its judgment the best
interests of the corporation will be served thereby, but such
removal shall be without prejudice to the contract rights, if
any, of the person so removed. Election or appointment shall not
of itself create contract rights.
23.04 Vacancies. A vacancy is any principal office
because of death, resignation, removal, disqualification or
otherwise, shall be filled by the Board of Directors for the
unexpired portion of that term.
23.05 Chairman of the Board. The Chairman of the Board
shall call meetings of the Board of Directors, and he shall, when
present, preside at all meetings of the shareholders and of the
Board of Directors. Specifically, he shall have the power to
supervise the activities of and to prescribe the powers and
duties of the Vice Chairman of the Board, he shall be responsible
for providing high-level support to the President and the
Executive Vice President as and when requested, and he shall
perform such other duties as may be prescribed by the Board of
Directors from time to time.
23.06 Vice-Chairman of the Board. The Vice-Chairman of
the Board shall preside at all meetings of the Board of Directors
when the Chairman of the Board is absent. In addition he shall
be responsible for providing high-level support for special
projects and activities, he shall represent the corporation in
various civic and trade organizations, and shall perform such
other duties as may from time to time be assigned to him by the
Chairman of the Board and the Board of Directors.
23.07 President. The President shall be the chief
executive officer of the corporation and subject to the control
and direction of the Board of Directors, shall have general
direction and control over the policies and affairs of the
corporation. Specifically, he shall have the power to supervise
the activities of and to prescribe the powers and duties of the
Executive Vice President (except as the Executive Vice
President's powers and duties are hereinafter specifically
defined), the Vice President of Finance, the Vice President of
International Sales and Marketing, the Director of Licensed
Products, the Director of Retail Operations, the Director of
Corporate Marketing and Planning, the President of Essex
Outfitters, Inc. and Vice President and General Manager of
Absorba, Inc. He shall report to the Board and keep the Board
informed concerning the affairs and conditions of the
corporation's business. He shall, in the absence or incapacity
of the Chairman of the Board, perform the functions of the
Chairman of the Board except those functions assigned to the Vice
Chairman of the Board by these Bylaws.
23.08 Executive Vice President. The Executive Vice
President shall be the chief operating officer of the
corporation. He shall report directly to the President.
Specifically, he shall have the power to supervise the activities
and to prescribe the powers and duties of the Vice President of
Manufacturing, the Vice President of Sales, the Vice President of
Human Resources, the Vice President of Management Information
Systems and the Directors of Distribution and Finishing Services,
Manufacturing Support, Quality, and Merchandising. He shall be
primarily responsible for achieving the short-term and
operational objectives of the corporation. He shall also perform
such other duties as from time to time may be assigned to him by
the President or the Board of Directors. He shall, in the
absence or incapacity of the President, perform all duties and
functions and exercise all powers of the President.
23.09 The Vice Presidents. Each Vice President shall
perform such duties as from time to time may be assigned to him
by that officer who has supervisory power over him. Vice
Presidents may by their election have charge and supervision of
designated divisions, departments or portions of the
corporation's business.
23.10 Shared Functions. Except in cases where the
signing and execution thereof is expressly delegated by the Board
of Directors or these Bylaws to some other officer or agent of
the corporation, or is required by law to be otherwise signed or
executed, the President and the Executive Vice President shall
each have authority to sign, execute and acknowledge, on behalf
of the corporation, all deeds, mortgages, bonds, stock
certificates, contracts, leases, reports and all other documents
or instruments necessary or proper to be executed in the course
of the corporation's regular business, or which shall be
authorized by resolution of the Board of Directors; and, except
as otherwise provided by law or the Board of Directors, each of
them acting alone may authorize any Vice President or other
officer or agent of the corporation to sign, execute and
acknowledge such documents or instruments in his place and stead.
23.11 The Secretary. The Secretary shall: (a) keep the
minutes of the shareholders' and of the Board of Directors'
meetings in one or more books provided for that purpose; (b) see
that all notices are duly given in accordance with the provisions
of these Bylaws or as required by law; (c) be custodian of the
corporate records and of the seal of the corporation and see that
the seal of the corporation is affixed to all documents, the
execution of which on behalf of the corporation under its seal is
duly authorized; (d) sign with another appropriate officer,
certificates for shares of the corporation, the issuance of which
shall have been authorized by resolution of the Board of
Directors; and (e) in general perform all duties incidental to
the office of the Secretary and such other duties as from time to
time may be assigned to him by the Chairman of the Board, the
President or the Board of Directors.
23.12 The Treasurer. The Treasurer shall: (a) have
charge and custody of and be responsible for funds and securities
of the corporation; (b) receive and give receipts for moneys in
the name of the corporation in such banks, trust companies or
other depositories as shall have been duly selected; and (c) in
general perform all of the duties incidental to the office of
Treasurer. The Treasurer shall also perform such other duties
and exercise such other authority as from time to time may be
assigned to him by the Chairman of the Board or the President or
by the Board of Directors. If required by the Board of
Directors, the Treasurer shall give a bond for the faithful
discharge of his duties in such sum and with such surety or
sureties as the Board of Directors shall determine.
23.13 Assistant Secretaries and Assistant Treasurers.
The Assistant Secretaries, when authorized by the Board of
Directors, may sign with another appropriate officer,
certificates for shares of the corporation the issuance of which
shall have been authorized by resolution of the Board of
Directors. The Assistant Treasurer shall, respectively, if
required by the Board of Directors, give bonds for the faithful
discharge of their duties in such sums and with such sureties as
the Board of Directors shall determine. The Assistant
Secretaries and Assistant Treasurers, in general, shall perform
such duties as shall be assigned to them by the Secretary or the
Treasurer, respectively, or by the Chairman of the Board, the
President or the Board of Directors.
23.14 Other Assistants and Acting Officers. The Board
of Directors shall have the power to appoint any person to act as
assistant to any officer, or to perform the duties of such
officer whenever for any reason it is impracticable for such
officer to act personally, and such assistant or acting officer
so appointed by the Board of Directors shall have the power to
perform all the duties of the office to which he is so appointed
to be assistant, or as to which he is so appointed to act, except
as such power may be otherwise defined or restricted by the Board
of Directors.
23.15 Additional Officers. Any additional officers not
specified above shall have only such authority, duties and
responsibilities as shall be specifically authorized and
designated by the Board of Directors.
23.16 Salaries. The salaries of the principal officers
shall be fixed from time to time by the Board of Directors or by
a committee of the Board of Directors and no officer shall be
prevented from receiving such salary by reason of the fact that
he is also a director of the corporation.
[Sections 24-34 are intentionally omitted.]
CERTIFICATES OF STOCK AND THEIR TRANSFER
35. Certificates. Every holder of stock in the corporation
shall be entitled to have a certificate, signed by, or in the
name of the corporation by, the chairman or vice-chairman of the
Board of Directors, or the president or a vice-president and the
treasurer or an assistant treasurer, or the secretary or an
assistant secretary of the corporation, representing the number
of shares owned by him or her in the corporation. The powers,
designations, preferences and relative, participating, optional
or other special rights of the various classes of stock or series
thereof and the qualifications, limitations or restrictions of
such rights shall be set forth in full or summarized on the face
or back of the certificates which the corporation shall issue to
represent such stock, provided that, except as otherwise provided
by statute, in lieu of the foregoing requirements, there may be
set forth on the face or back of the certificate which the
Corporation shall issue to represent such class or series of
stock, a statement that the corporation will furnish without
charge to each stockholder who so requests, the power,
designations, preferences and relative, participating, optional
or other special rights of each class of stock or series thereof
and the qualifications, limitations or restrictions on such
preferences and/or rights.
36. Facsimile Signatures. Any of or all the signatures on
the certificate may be facsimile. In case any officer, transfer
agent or registrar who has signed or whose facsimile signature
has been placed upon a certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect
as if he or she were such officer, transfer agent or registrar at
the date of issue.
37. Transfers of Stock. Upon surrender to a corporation or
the transfer agent of the corporation of a certificate for shares
duly endorsed or accompanied by proper evidence of succession,
assignation or authority to transfer, it shall be the duty of the
corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction
upon its books.
38. In General. The Board of Directors shall have power to
close the stock transfer books of the corporation for a period
not exceeding sixty days preceding the date of any meeting of
stockholders, or adjournment thereof, or to express consent to
corporate action in writing without a meeting, or the date of
payment of any dividend or the date for the allotment of rights
or the date when any change or conversion or exchange of capital
stock shall go into effect; provided, however, that in lieu of
closing the stock transfer books as aforesaid, the Board of
Directors may fix in advance a date, not exceeding sixty days
preceding the date of any meeting or adjournment or action by
consent of stockholders or the date for the payment of any
dividend, or the date for the allotment of rights, or the date
when any change or conversion or exchange of capital stock shall
go into effect, as a record date for the determination of the
stockholders entitled to notice of, and to vote at, any such
meeting, or entitled to receive payment of any such dividend, or
to any such allotment of rights, or to exercise the rights in
respect of any such change, conversion or exchange of capital
stock, and in such case only such stockholders as shall be
stockholders of record on the date so fixed shall be entitled to
such notice of, and to vote at, such meeting, or to receive
payment of such dividend, or to receive such allotment of rights,
or to exercise such rights, as the case may be, notwithstanding
any transfer of any stock on the books of the corporation after
any such record date fixed as aforesaid.
39. List of Stockholders Available for Inspection. The
officer who has charge of the stock ledger of the corporation
shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to
vote at the meeting, arranged in alphabetical order, and showing
the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be
open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a
period of at least ten days prior to the meeting, either at a
place within the city where the meeting is to be held, which
place shall be specified in the notice of the meeting, or, if not
so specified, at the place where the meeting is to be held. The
list shall also be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by
any stockholder who is present.
REGISTERED STOCKHOLDERS
40. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to
hold liable for calls and assessments a person registered on its
books as the owner of shares, and shall not be bound to recognize
any equitable or other claim to or interest in such share or
shares on the part of any other person, whether or not it shall
have express or other notice thereof, except as otherwise
provided by the laws of Delaware.
LOST CERTIFICATES
41. The corporation, acting by its President or any Senior
Vice President or its Vice President of Finance may direct a new
certificate or certificates to be issued in place of any
certificate or certificates theretofore issued by the corporation
alleged to have been lost, stolen or destroyed, upon the making
of an affidavit of that fact by the person claiming the
certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the
corporation, acting by its President or any Senior Vice President
or its Vice President of Finance may, as a condition precedent to
the issuance thereof, require the owner of such lost, stolen or
destroyed certificate or certificates, or his legal
representative, to advertise the same in such manner as the
corporation shall require and/or to give the corporation a bond
in such sum as the corporation may direct as indemnity against
any claim that may be made against the corporation with respect
to the certificate alleged to have been lost, stolen or
destroyed.
CHECKS
42. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such
other person or persons as the Board of Directors may from time
to time designate.
FISCAL YEAR
43. The fiscal year of the corporation shall be a 52-53
week fiscal year ending on the Saturday nearest December 31.
DIVIDENDS
44. Dividends upon the capital stock of the corporation,
subject to the provisions of the certificate of incorporation, if
any, may be declared by the Board of Directors at any regular or
special meeting, pursuant to law. Dividends may be paid in cash,
in property, or in shares of the capital stock.
Before payment of any dividend, there may be set aside
out of funds of the corporation available for dividends such sum
or sums as the directors from time to time, in their absolute
discretion, think proper as a reserve fund to meet contingencies,
or for equalizing dividends, or for repairing or maintaining any
property of the corporation, or for such other purpose as the
directors shall think conducive to the interests of the
corporation; and the directors may modify or abolish any such
reserve in the manner in which it was created.
DIRECTORS' ANNUAL STATEMENT
45. The Board of Directors shall present at each annual
meeting, and at any special meeting of the stockholders when
called for by vote of the stockholders, a full and clear
statement of the business and condition of the corporation.
NOTICES
46. Notice. Whenever, under the provisions of the Delaware
Statutes or of the certificate of incorporation or these bylaws,
notice is required to be given to any director, officer or
stockholder, it shall not be construed to mean personal notice,
but such notice may be given in writing, by mail, by depositing
the same in the United States mail with postage prepaid thereon,
addressed to such stockholder, officer or director at such
address as appears on the records of the corporation, or in
default of other address, to such director, officer or
stockholder at the General Post Office in the City of Wilmington,
Delaware, and such notice shall be deemed to be given at the time
when the same shall be thus mailed. Notice to directors may also
be given by telegram.
47. Waiver of Notice. Whenever any notice is required to
be given under the provisions of the statutes or of the
certificate of incorporation or of these bylaws, a waiver thereof
in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be
deemed equivalent thereto.
AMENDMENTS
48. These bylaws may be altered, amended or repealed or new
bylaws may be adopted by the shareholders or by the Board of
Directors, when such power is conferred upon the Board of
Directors by the certificate of incorporation at any regular
meeting of the shareholders or of the Board of Directors or at
any special meeting of the shareholders or of the Board of
Directors if notice of such alteration, amendment, repeal or
adoption of new by-laws be contained in the notice of such
special meeting. If the power to adopt, amend or repeal by-laws
is conferred upon the Board of Directors by the certificate of
incorporation it shall not divest or limit the power of the
shareholders to adopt, amend or repeal by-laws.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
49. A. Mandatory Indemnification
(1) Subject to the conditions and limitations set forth
hereinafter in this Section 49 and the corporation's certificate
of incorporation, the corporation shall, to the fullest extent
permitted by the Delaware General Corporation Law as it may then
be in effect, indemnify and hold harmless any person who is or
was a party, or is threatened to be made a party, to any
threatened, pending or completed action, claim, litigation, suit
or proceeding, whether civil, criminal, administrative or
investigative, whether predicated on foreign, federal, state or
local law and whether formal or informal (collectively,
"action(s)"),by reason of his status as, or the fact that he is,
was or has agreed to become, a director and/or an executive
officer (collectively, "executive(s)") of the corporation, and/or
is or was serving or has agreed to serve as an executive of
another corporation, partnership, joint venture, employee benefit
plan, trust or other similar enterprise affiliated with the
corporation, except with respect to any executive who is serving
or has agreed to serve as an executive of any subsidiary of the
corporation which is excluded from this Section 49 from time to
time or at any time by the board of directors of the corporation
(any and/or all of which are referred to in this Section 49 as an
"affiliate"), and as to acts performed in the course of such
executive's duty to the corporation and/or to an affiliate,
against:
(i) expenses, fees, costs and charges including,
without limitation, attorneys' fees and disbursements
(collectively, "expenses") reasonably incurred by or on
behalf of an executive in connection with any action
(including, without limitation, in connection with the
investigation, defense, settlement or appeal of such action:),
no matter by whom brought, including, without limitation,
actions brought under and/or predicated upon the Securities Act
of 1933, as amended, and/or their respective state
counterparts and/or any rule or regulation promulgated
thereunder (collectively, "securities law action(s)"); provided,
that it is not determined pursuant to Paragraph B of this
Section 49, or by the court before which such action was
brought, that:
(A) the executive engaged in criminal,
fraudulent or intentional misconduct in the performance of
his duty to the corporation,
(B) with respect to criminal actions, the
executive had reasonable cause to believe his conduct was
unlawful, and
(C) with respect to securities law action,
the executive did not act in good faith and in a
manner he reasonable believed to be in or not opposed
to the best interests of the corporation and
its stockholders;
(ii) subject to the restrictions set forth in
Subparagraph (3) hereof, amounts incurred by an executive in
settlement of any action, no matter by whom brought, including,
without limitation, securities law actions; provided, that it
is not determined pursuant to Paragraph B of this Section 49,
or by the court before which such action was brought, that:
(A) such settlement was not in the best
interests of the corporation and its stockholders,
(B) the amount incurred by the executive in
such settlement was unreasonable (to a material extent) in
light of all of the circumstances of such action, or
intentional misconduct in the performance of his duty to
the corporation, and
(C) the executive engaged in criminal,
fraudulent or intentional misconduct in the
performance of his duty to the corporation, and
(D) with respect to securities law action,
the executive did not act in good faith and in a
manner he reasonably believed to be in or not opposed to
the best interests of the corporation and its stockholders; and
(iii) subject to the restrictions set forth in
Subparagraph (3) hereof, judgments, fines, penalties or other
amounts incurred by an executive pursuant to an adjudication of
liability in connection with any action, including, without
limitation, securities law action; provided, that it is not
determined pursuant to Paragraph B of this Section 49, or by
the court before which such action was brought, that:
(A) the executive engaged in criminal, a
fraudulent or intentional misconduct in the performance
of his duty to the corporation,
(B) with respect to securities law actions,
the executive did not act in good faith and in a manner he
reasonably believed to be in or not opposed to the best
interests of the corporation and its stockholders, and
(c) with respect to criminal actions, the
executive had reasonable cause to believe his conduct was
unlawful and that he otherwise did not act in good faith
and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation and its stockholders.
(2) To the extent an executive of the corporation and/or of
an affiliate has been successful on the merits or otherwise in
connection with any action, no matter by whom brought (including,
without limitation, the settlement, dismissal, abandonment or
withdrawal of any such action where the executive does not pay,
incur or assume any material liability) or in connection with any
claim, issue or matter therein, he shall be indemnified by the
corporation against expenses reasonably incurred by or on behalf
of him in connection therewith. The corporation shall pay such
amounts (net of all amounts, if any, previously advanced to the
executive pursuant to Paragraph D) to the executive (or to such
other person or entity as such executive may designate in writing
to the corporation) upon the executive's written request therefor
without regard to the provisions of Paragraph B.
(3) Notwithstanding the provisions of Subparagraph (1)
hereof, no indemnification shall be made to an executive by the
corporation for monetary damages incurred by the executive
pursuant to an action brought by or in the right of the
corporation to procure a judgment in its favor (sometimes
hereinafter referred to as "derivative actions(s)") or an action
brought by a stockholder of the corporation if it is determined
pursuant to Paragraph B of this Section 49, or by the court
before which such action was brought, that:
(i) The executive breached his duty of loyalty to
the corporation or its stockholders;
(ii) The executive committed acts or omissions in
bad faith or which involve intentional misconduct or a
knowing violation of the law;
(iii)The executive engaged in any willful or
negligent conduct in paying dividends or repurchasing stock of
the corporation out of other than lawfully available funds; or
(iv) The executive derived any improper personal
benefit from any transaction, unless such improper personal
benefit is determined to be immaterial in light of all the
circumstances of such action.
(4) In the event an executive is or was serving as an
executive, trustee, fiduciary, administrator, employee or agent
of an employee benefit plan sponsored by or otherwise associated
with the corporation and incurs expenses, amounts in settlement
or judgments, fines, penalties or other amounts, including,
without limitation, any excise tax or penalty assessed with
respect to the employee benefit plan by reason of such action
having been brought, or having been threatened, against such
executive because of his status as such an executive, trustee,
fiduciary, administrator, employee or agent of such plan or by
reason of his performing duties in any such capacity, the
corporation shall indemnify and hold harmless the executive
against any and all of such reasonable amounts; provided, it is
not determined pursuant to Paragraph B of this Section 49, or by
the court before which such action was brought, that the
executive's conduct with respect to such employee benefit plan
was for a purpose he did not reasonably believe to be in the
interests of the participants in and beneficiaries of such plan.
B. Right to Indemnification: How Determined.
(1) Except as otherwise set forth in this Paragraph B, any
indemnification to be provided to an executive by the corporation
under Paragraph A of this Section 49 upon the final disposition
or conclusion of an action (or a claim, issue or matter
associated with such an action), unless otherwise ordered by the
court before which such action was brought, shall be paid by the
corporation (net of all amounts, if any, previously advanced to
the executive pursuant to Paragraph D) to the executive (or to
such other person or entity as the executive may designate in
writing to the corporation) within sixty (60) days after the
receipt of the executive's written request therefor, which
request shall include a comprehensive accounting of amounts for
which indemnification is being sought and shall reference the
provision(s) of this Section 49 pursuant to which such claim is
being made.
Notwithstanding the foregoing, the payment of such
requested amounts may be denied by the corporation in the event:
(i) the Board of Directors of the corporation by
a majority vote thereof determines that such payment, in whole
or in part, would not be in the best interests of the
corporation and its stockholders and would contravene the terms
and conditions of this Section 49,or
(ii) a majority of the directors of the corporation
are a party in interest to such an action.
In either of such events, the Board of Directors of the
corporation shall immediately authorize and direct, by
resolution, that an independent determination be made as to
whether the executive has met the applicable standard(s) of
conduct under Paragraph A of this Section 49 and, therefore,
whether indemnification of the executive is proper pursuant to
this Section 49. Such independent determination shall be made by
a panel of three arbitrators in Oshkosh, Wisconsin, in accordance
with the rules then prevailing of the American Arbitration
Association, or, at the option of the executive, by an
independent legal counsel mutually selected by the Board of
Directors of the corporation and the executive (such panel of
arbitrators and/or independent legal counsel being hereinafter
referred to as "authority").
In any such determination there shall exist a rebuttable
presumption that the executive has met such standard(s) of
conduct and is therefore entitled to indemnification hereunder.
The burden of rebutting such presumption by clear and convincing
evidence shall be on the corporation.
If a panel of arbitrators is to be employed hereunder, one
of such arbitrators shall be selected by the Board of Directors
of the corporation by a majority vote of a quorum thereof
consisting of directors who were not parties in interest to such
action (or, if such a quorum is not obtainable, by an independent
legal counsel chosen by the Board of Directors of the
corporation), the second by the executive(s) who claim
entitlement to indemnification under this Section 49 and the
third by the previous two arbitrators.
The authority shall make its determination within sixty (60)
days of being selected and shall simultaneously submit a written
opinion of its conclusions to both the corporation and the
executive and, in the event the authority determines that the
executive is entitled to be indemnified for any amounts pursuant
to this Section 49, the corporation shall pay such amounts (net
of all amounts, if any, previously advanced to the executive
pursuant to Paragraph D), including interest thereon as provided
in Paragraph E, to the executive (or to such other person or
entity as the executive may designate in writing to the
corporation), within ten (10) days of receipt of such opinion.
(2) An executive may, either before or within two years
after a determination, if any, has been made by the authority
petition any court of competent jurisdiction to determine whether
the executive is entitled to indemnification under this Section
49 and such court shall thereupon have the exclusive authority to
make such determination unless and until such court dismisses or
otherwise terminates such proceeding without having made such
determination.
The court shall make an independent determination of whether
the executive is entitled to indemnification as provided under
this Section 49, irrespective of any prior determination made by
the authority; provided, however, that there shall exist a
rebuttable presumption that the executive has met the applicable
standard(s) of conduct and is therefore entitled to
indemnification hereunder. The burden of rebutting such
presumption by clear and convincing evidence shall be on the
corporation.
In the event the court determines that the executive is
entitled to be indemnified for any amounts pursuant to the terms
and conditions of this Section 49, unless otherwise ordered by
such court, the corporation shall pay such amounts (net of all
amounts, if any, previously advanced to the executive pursuant to
Paragraph D), including interest thereon as provided in Paragraph
E, to the executive (or to such other person or entity as the
executive may designate in writing to the corporation) within ten
(10) days of the rendering of such determination.
The executive shall pay all expenses incurred by such
executive in connection with the judicial determination provided
in this Subparagraph (2), unless it shall ultimately be
determined by the court that he is entitled to be indemnified, in
whole or in part, by the corporation as authorized in this
Section 49. All expenses incurred by the executive in connection
with any subsequent appeal of the judicial determination provided
for in this Subparagraph (2) shall be paid by the executive
regardless of the disposition of such appeal.
(3) Except as otherwise set forth in this Paragraph B, the
expenses associated with the indemnification process set forth in
this Paragraph B, including, without limitation, the expenses of
the authority selected hereunder, shall be paid by the
corporation.
C. Termination of an Action is Nonconclusive. The
termination of any action, no matter by whom brought, including,
without limitation, securities law actions, by judgment, order,
settlement, conviction, or upon a plea of no contest or its
equivalent, shall not, of itself, create a presumption that the
executive has not met the applicable standard(s) of conduct set
forth in Paragraph A.
D. Advance Payment.
(1) Expenses reasonably incurred by or on behalf of an
executive in connection with any action (or claim, issue or
matter associated with such action), no matter by whom brought,
including, without limitation, securities law actions, shall be
paid by the corporation to the executive (or to such other person
or entity as the executive may designate in writing to the
corporation) in advance of the final disposition or conclusion of
such action (or claim, issue or matter associated with such
action) upon the receipt of the executive's written request
therefor; provided, the following conditions are satisfied:
(i) the executive has first requested in advance
of such expenses in writing (and delivered a copy of such
request to the corporation) from the insurance carrier(s) to
whom a claim has been reported under an insurance policy
purchased by the corporation, if any, as provided under
Paragraph G of this Section 49 and each such insurance
carrier has declined to make such an advance;
(ii) the executive furnishes to the corporation an
executed written certificate affirming his good faith belief
that he has met the applicable standard(s) of conduct set
forth in Paragraph A of this Section 49;
(iii)the executive furnished to the corporation an
executed written agreement to repay any advances made under this
Paragraph D if it is ultimately determined that such executive
is not entitled to be indemnified by the corporation for such
amounts pursuant to this Section 49.
(2) In the event the corporation makes an advance of
expenses to an executive pursuant to this Paragraph D, the
corporation shall be subrogated to every right of recovery the
executive may have against any insurance carrier from whom the
corporation has purchased insurance for such purpose.
E. Partial Indemnification: Interest.
(1) In the event it is determined by the authority pursuant
to Paragraph B of this Section 49, or by the court before which
such action was brought, that an executive is entitled to
indemnification as to some claims, issues or matters, but not as
to other claims, issues or matters, involved in any action, no
matter by whom brought, including, without limitation, securities
law actions, the authority (or the court) shall authorize the
reasonable proration (and payment by the corporation) of such
expenses, judgments, penalties, fines and/or amounts incurred in
settlement with respect to which indemnification is sought by the
executive, among such claims, issues or matters as the authority
(or the court) shall deem appropriate in light of all of the
circumstances of such action.
(2) In the event it is determined by the authority, or by
the court before which such action was brought pursuant to
Paragraph B of this Section 49, that certain amounts incurred by
or on behalf on an executive are for whatever reason unreasonable
in amount, the authority (or the court) shall authorize
indemnification to be paid by the corporation to the executive
for only such amounts as the authority (or the court) shall deem
reasonable in light of all of the circumstances of such action.
(3) To the extent deemed appropriate by the authority
pursuant to Paragraph B, or by the court before which such action
was brought, interest shall be paid by the corporation to an
executive, at a reasonable interest rate, for amounts for which
the corporation indemnifies the executive.
F. Nonexclusivity of Section 49. The right to
indemnification provided to an executive by this Section 49 shall
not be deemed exclusive of any other rights to indemnification or
the advancement of expenses to which any executive may be
entitled under any charter provision, by-law, agreement,
resolution, vote of stockholders or disinterested directors of
the corporation or otherwise, including, without limitation,
under Delaware General Corporation Law Section 145 as it may then
be in effect, both as to acts in his official capacity as such
executive or other employee or agent of the corporation or of an
affiliate or as to acts in any other capacity while holding such
office or position, and the terms and provisions of this Section
49 shall continue as to any executive who has ceased to be an
executive or other employee or agent of the corporation and/or of
an affiliate, and such terms and provisions shall inure to the
benefit of the heirs executors and administrators of such
executive.
G. Insurance.
(1) The corporation may purchase and maintain insurance on
behalf of an executive, against any liability asserted against
him and/or incurred by or on behalf of him, or arising out of his
status as such, whether or not the corporation would have the
power to indemnify him against such liability under the
provisions of this Section 49 or under Delaware General
Corporation Law Section 145 as it may then be in effect. The
purchase and maintenance of such insurance shall not in any way
limit or affect the rights and obligations of the corporation or
any executive under this Section 49. Such insurance may, but
need not, be for the benefit of all executives of the corporation
and those serving as an executive of an affiliate.
(2) In the event an executive shall receive payment from
any insurance carrier or from the plaintiff in any action against
such executive in respect of indemnified amounts after payments
on account of all or part of such indemnified amounts have been
made by the corporation pursuant to this Section 49, such
executive shall promptly reimburse the corporation for the
amount, if any, by which the sum of such payment by such
insurance carrier or such plaintiff and payments by the
corporation to such executive exceeds such indemnified amounts;
provided, however, that such portions, if any, of such insurance
proceeds that are required to be reimbursed to the insurance
carrier under the terms of its insurance policy, such as
deductible or co-insurance payments, shall not be deemed to be
payments to such executive hereunder.
In addition, upon payment of indemnified amounts under this
Section 49, the corporation shall be subrogated to such
executive's rights against any insurance carrier in respect of
such indemnified amounts and the executive shall execute and
deliver any and all instruments and/or documents and perform any
and all other acts or deeds which the corporation shall deem
necessary or advisable to secure such rights. The executive
shall do nothing to prejudice such rights of recovery or
subrogation.
H. Witness Expenses. Upon an executive's written request,
the corporation shall pay (in advance or otherwise) or reimburse
any and all expenses reasonable incurred by an executive in
connection with his appearance as a witness in any action at a
time when he has not been formally named a defendant or
respondent to such an action.
I. Contribution.
(1) In the event the indemnity provided for in Paragraph A
of this Section 49 is unavailable to an executive for any reason
whatsoever, the corporation, in lieu of indemnifying the
executive, shall contribute to the amount reasonably incurred by
or on behalf of the executive, whether for judgments, fines,
penalties, amounts incurred in settlement and/or for expenses, in
connection with any action, no matter by whom brought, including
without limitation, securities law actions, in such proportion as
deemed fair and reasonable by the authority pursuant to Paragraph
B hereof, or by the court before which such action was brought,
taking into account all of the circumstances of such action, in
order to reflect:
(i) the relative benefits received by the
corporation and the executive as a result of the event(s) and/or
transaction(s) giving cause to such action, and/or
(ii) the relative fault of the corporation (and its
other executives, employees and/or agents) and the executive
in connection with such event(s) and/or transaction(s).
(2) An executive shall not be entitled to contribution from
the corporation under this Paragraph I in the event it is
determined by the authority pursuant to Paragraph B, or by the
court before which such action was brought, that the executive
engaged in criminal, fraudulent or intentional misconduct in the
performance of his duty to the corporation or otherwise violated
the provisions of Paragraph A(3) of this Section 49.
(3) The corporation's payment of, and an executive's right
to, contribution under this Paragraph I shall be made and
determined in accordance with the provisions in Paragraph B of
this Section 49 relating to the corporation's payment of, and the
executive's right to, indemnification under this Section 49.
J. Severability. If any provision of this Section 49
shall be deemed invalid or inoperative, or in the event a court
of competent jurisdiction determines that any of the provisions
of this Section 49 contravene public policy, this Section 49
shall be construed so that the remaining provisions shall not be
affected, but shall remain in full force and effect, and any such
provisions which are invalid or inoperative or which contravene
public policy shall be deemed, without further action or deed by
or on behalf of the corporation, be modified, amended and/or
limited, but only to the extent necessary to render the same
valid and enforceable, and the corporation shall indemnify an
executive as to reasonable expenses, judgments, fines and amounts
incurred in settlement with respect to any action, no matter by
whom brought, including securities law actions, to the full
extent permitted by an applicable provision of this Section 49
that shall not have been invalidated and to the full extent
otherwise permitted by the Delaware General Corporation Law as it
may then be in effect.
K. Amendment. This Section 49 may only be altered or
repealed by the affirmative vote of not less than two-thirds of
the stockholders of the corporation so entitled to vote;
provided, however, that stockholder approval shall not be
required if any such alteration or amendment;
(1) is made in order to conform to any amendment or
revision of the Delaware General Corporation Law which expands an
executive's rights to indemnification thereunder or is otherwise
beneficial to the executive, or
(2) in the sole judgment and discretion of the board of
directors, does not materially adversely affect the rights and
protections of the stockholders of the corporation.
EXHIBIT 10.3
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. DEFINITIONS
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
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 Rollover 21
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
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
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.
CHAPTER 1
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 are 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(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 or
more than 500 Hours of Service with the Employer or
Affiliated Employers.
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 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
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 accred
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,
1998, 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 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 period 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 to 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.
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
covered by the Employer's security code
classification number 220, 320, 370, 710 (but only
if a regional sales manager), 750 or 850.
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
coincident 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 a190 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 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 of 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, an 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.
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
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.
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.
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
Contributions 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 1.011.) 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.
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.
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 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 an 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
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 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.
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 specifications 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
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.
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.
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
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.
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
terminates 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 as 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 of 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
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
distributed 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 as 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 that 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
distributions shall be made as if the spouse
has 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 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
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 includable 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 limitation;
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.
(ii) Eligible Retirement Plan: An
Eligible Retirement Plan is an
individual retirement account
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(s) 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 Employee's
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 and
former spouse.
(iv) Direct Rollover: A Direct Rollover
is a payment by the Plan to the
Eligible Retirement Plan specified
by the Distributee.
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 Employees: 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 Play 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)(1) 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. 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 accred 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),
determined 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 Ratio 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 benefit
plan or plans for all Participants as
determined in accordance with Section 416 of
the Code and the regulations thereunder. The
account balances under a defined contribution
plan and the Present Value of accrued
benefits under a defined 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 the 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 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 the
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
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 provided 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 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 Service Vested 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.
CHAPTER IX
ADJUSTMENT OF ACCOUNTS
9.01 Allocation of Trust Earnings. As of each Valuation
Dated, 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.
CHAPTER X
DESIGNATION OF BENEFICIARY
10.01Benficiary Designation. Each Participant may name, or
change the name of his Benificiary(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.
10.02Priority if no Designated Beneficiary. If there is no
Beneficiary designation form on file, or if the
designated 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.
CHAPTER XI
AMENDMENT OF THE PLAN
11.01Amendment 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.
d. No amendment may reduce the Vested percentage of a
Participant.
e. No amendment may reduce the Account balance of a
Participant.
11.02Conformance 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.
11.03Right 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 termination) will then become 100%
Vested in his Accounts. In the event that the Plan is
terminated or contributions are discontinued as
provided above, all distributions 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.
11.04Merger, 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
immediately after such action (if the Plan was then
terminated) 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.
CHAPTER XII
CLAIMS PROCEDURE
12.01Written 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.
12.01Claim 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.
12.03Request for Review of Denial. The Participant or
Beneficiary(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.
12.04Decision 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.
12.05Additional 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 Beneficiary(ies) will be informed by the
Committee, in writing, of the need for such additional time
prior to the date such extension begins.
CHAPTER XIII
MISCELLANEOUS PROVISIONS
13.01Reversion 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.
13.02Equitable 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.
13.03Reasonable 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.
13.04Indemnification. To the extent permitted by law, the
Employer will indemnify each member of the Committee
and 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.
13.05Protection 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.
13.06Protection 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 form 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).
13.07Adoption 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
whatever 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.
13.08Assignment of Benefits. A Participant's interest in
this Plan may not be assigned or alienated, either
voluntarily or involuntarily. This shall not preclude
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
requiring deduction from the benefits of a Participant
for alimony, child support, or marital property
payments.
Notwithstanding any restrictions on the timing of
distributions and withdrawals under this Plan,
distribution 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)).
13.09Mental Competency. Every person receiving or claiming
benefits under the Plan and Trust will be presumed to
e 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.
13.10Authentication. The Employer, Committee, Plan
Administrator and Trustee will be fully protected in
acting and relying upon such certificate, affidavit,
document or 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 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.
13.11Not 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.
13.12Appointment 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.
13.13Uniform Treatment. All interpretations made in
connection with this Plan and Trust are intended to be
exercised in a nondiscriminatory manner so that all
Employees in similar circumstances are treated alike.
13.14Interpretation. 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.
13.15Plural 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.
13.16Headings. 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.
13.17Expenses. 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.
13.18Unclaimed 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 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.
CHAPTER XIV
EMPLOYER STOCK SAVINGS ACCOUNTS AND INVESTMENTS
14.01Stock 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.
14.02Employer 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).
14.03Distributions from Stock Savings Accounts. To the
extent Employer Stock is held in Participant's 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).
14.04Employer 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.
EXHIBIT 10.4
OSHKOSH B'GOSH, INC.
RESTATED EXCESS BENEFIT PLAN
(As Amended and Restated as of March 1, 1997)
PREAMBLE
WHEREAS, Oshkosh B'Gosh, Inc., a Delaware corporation (the
"Company"), has heretofore maintained the Oshkosh B'Gosh, Inc.
Profit Sharing Plan (the "Profit Sharing Plan"), and the Oshkosh
B'Gosh Pension Plan (the "Pension Plan") as tax-qualified
retirement plans for the benefit of its eligible employees and
their beneficiaries; and
WHEREAS, the Company has heretofore established the Oshkosh
B'Gosh, Inc. Excess Benefit Plan, effective as of January 1, 1983
(the "Excess Benefit Plan") to provide make whole benefits for
participants in either or both of the Profit Sharing Plan or the
Pension Plan which would have otherwise become payable thereunder
but for Section 415 of the Internal Revenue Code which places
certain limitations on the amount of annual additions to any
participant's account(s) in the Profit Sharing Plan, on the
amount of benefits receivable by any participant in the Pension
Plan and on the total combined amount of both such annual
additions and benefits receivable in the case of an individual
who is a participant in both such Plans; and
WHEREAS, effective as of January 1, 1989, Section 401(a)(17)
of the Internal Revenue Code limits the amount of annual
compensation which may be taken into account in the calculation
of contributions to such Plans; and
WHEREAS, effective January 1, 1989, the Company established
the Oshkosh B'Gosh Executive Non-Qualified Profit Sharing Plan
(the "Non-Qualified Plan") to provide benefits to certain
employees who were excluded from further participation in the
Profit Sharing Plan in an amount equal to the benefits such
excluded employees otherwise would have been entitled to under
the Profit Sharing Plan; and
WHEREAS, effective as of January 1, 1991, "accrued"
compensation is no longer included in the calculation of benefits
under the Pension Plan, or the calculation of contributions to be
credited under the Profit Sharing Plan or Non-Qualified Plan; and
WHEREAS, the Company wishes to maintain such levels of
retirement benefits for its employees who are eligible to
participate in the Profit Sharing Plan, the Pension Plan, or the
Non-Qualified Plan as would otherwise become payable, but for the
limitations under Sections 415 and 401(a)(17) of the Internal
Revenue Code, by means of supplementary unfunded payments made by
the Company under the Excess Benefit Plan as herein amended and
restated; and
WHEREAS, the Company wishes to maintain such levels of
retirement benefits for its employees who are eligible to
participate in the Pension Plan or the Non-Qualified Plan as
would otherwise become payable, but for the limitations related
to "accrued" compensation by means of supplementary unfunded
payments made by the Company under the Excess Benefit Plan as
herein amended and restated;
NOW, THEREFORE, the Company hereby amends and restates the
Excess Benefit Plan as of January 1, 1991, upon the following
terms and conditions:
ARTICLE I
Definitions
1.1 "Account" shall mean the bookkeeping reserve
account for a Participant which shall be established by
the Company under Article IV hereof solely as a device
for determining the amount of supplementary profit
sharing benefits under either the Profit Sharing Plan
or Non-Qualified Plan which may become payable
thereunder.
1.2 "Actuarial Equivalent" shall have the same meaning
as used in the Pension Plan.
1.3 "Beneficiary" shall be any person or persons
(including, but not limited to, a trust) designated by
the Participant. Such designation shall be effected by
filing written notification with the Company in the
form prescribed by it and may be changed from time to
time by similar action. If no Beneficiary is
designated, the benefits shall be distributed to the
Participant's estate.
1.4 "Effective Date" means January 1, 1983.
1.5 "IRS Limitations" means the limits on
contributions or benefits imposed under Sections 415
and 401(a)(17) of the Internal Revenue Code and any
reduction in benefits under the Pension Plan or
decrease in the amount credited under the Non-Qualified
Plan (but not the Profit Sharing Plan) due to the
exclusion of accrued compensation in 1991 including,
but not limited to, bonuses under the Key Employee
Incentive Bonus Plan.
1.6 "Firstar Bank Milwaukee, N.A. Prime Rate" means
the rate of interest adopted by the Firstar Bank
Milwaukee, N.A., from time to time, as the base rate
for interest rate determinations.
1.7 "Non-Qualified Plan" means the Oshkosh B'Gosh,
Inc. Executive Non-Qualified Profit Sharing Plan
established January 1, 1989.
1.8 "Normal Form of Benefit" shall have the same
meaning as used in the Pension Plan.
1.9 "Joint and Survivor Annuity" shall have the same
meaning as used in the Pension Plan.
1.10 "Participant" shall have the same meaning as used
in the Profit Sharing Plan, the Pension Plan or the Non-
Qualified Plan as the case may be.
ARTICLE II
Purpose
2.1 This Plan is intended to provide benefits to eligible
persons in a manner so as to maintain the level of total
retirement benefits which, but for the IRS Limitations, would
otherwise have been payable under the Profit Sharing Plan,
Pension Plan or Non-Qualified Plan. This Plan shall maintain
such total retirement benefit levels by means of supplementary
unfunded payments made by the Company to the individuals eligible
for such payments, as set forth in Articles III and IV hereof.
ARTICLE III
Supplementary Pension Benefits
3.1 Any Participant or Beneficiary who qualifies for
commencement of a benefit under the terms of the Pension Plan on
or after the Effective Date and whose benefit pursuant thereto is
less than what it otherwise would be because of the IRS
Limitations shall be eligible to receive supplementary pension
benefits hereunder.
3.2 The amount of such supplementary pension benefits shall
be an amount equal in value to the reduction in the benefits
payable under the terms of the Pension Plan resulting from the
application of IRS Limitations calculated as if payable in the
Normal Form of Benefit.
3.3 Payment of such supplementary pension benefits shall be
accomplished by unfunded payments directly from the Company to
the Participant or the Beneficiary (as the case may be) in one of
the forms determined by the Company, in its sole discretion, as
follows:
(a) in the Normal Form of Benefit if the
Participant is not married on the later of the
date such Participant first receives a benefit
from the Pension Plan or the date of the
Participant's termination of service with the
Company, or
(b) as a Joint and Survivor Annuity if such
Participant is married on such date or if such
Participant is married and dies while in the
employ of the Company under circumstances such
that such Participant's spouse is his Beneficiary
and such spouse becomes entitled to a benefit
under the terms of the Pension Plan because of
such Participant's death, or
(c) in a single lump sum of Actuarial
Equivalent value, but only if Termination of
Employment is due to retirement, death, or
disability (but under circumstances where small
amount lump sums are the automatic form of
distribution from the Pension Plan or would be if
the supplementary pension benefit were the only
benefit considered, such small amount lump sum
payments may also be made hereunder, even if the
Participant or Beneficiary has not yet qualified
for commencement of a benefit under the terms of
the Pension Plan), or
(d) a term certain annuity for 120 months,
or 180 months.
All forms of payment of supplementary pension benefits under
this Plan shall be Actuarial Equivalents in value.
ARTICLE IV
Supplementary Profit Sharing Benefits
4.1 Any Participant or Beneficiary who qualifies for
commencement of a benefit under the terms of the Profit Sharing
Plan or Non-Qualified Plan on or after the Effective date whose
benefit pursuant thereto is less than what it otherwise would be
because of the IRS Limitations shall be eligible to receive
supplementary profit sharing benefits hereunder.
4.2 The amount of such supplementary profit sharing
benefits shall be an amount equal to the difference between the
aggregate amount of Company contributions and forfeitures which
would have been allocated to the Participant's account in the
Profit Sharing Plan or to the Company bookkeeping account for
purposes of the Non-Qualified Plan if the IRS Limitations had
been disregarded. The amount of such difference for a
Participant shall be determined annually and shall be credited to
his Account as of the end of the fiscal year quarter during which
the amount of such difference can first be determined. The
amount so credited to such Participant's Account shall be further
credited as of the end of each succeeding quarter with an amount
equal to interest at the average Firstar Bank Milwaukee, N.A.
Prime Rate in effect during such quarter (an "Interest Equivalent
Credit") and all amounts standing to the credit of the
Participant's Account as of the end of each fiscal year quarter
including any prior Interest Equivalent Credits, shall receive an
Interest Equivalent Credit.
4.3 Payment of such supplementary profit sharing benefits
shall be accomplished by unfunded payments directly from the
Company to the Participant or the Beneficiary (as the case may
be) in one of the following methods:
(a) in annual installments to commence on
about March 15th of the year following the year in
which the Participant's service terminates, with
one-tenth of the balance in his Account becoming
then payable and with the remaining installments
being paid on each anniversary thereof according
to the following schedule:
Anniversary of First Portions of Participant's
Payment Date Account To Be Paid
1st 1/9
2nd 1/8
3rd 1/7
4th 1/6
5th 1/5
6th 1/4
7th 1/3
8th 1/2
9th Remainder
Interest Equivalent Credits shall continue to be
applied on the balance in the Participant's
Account in accordance with Section 4.2 until final
payment thereof has been made.
(b) in any other payment plan approved by
the Company in its sole discretion.
It shall be the obligation of any Participant
under this Section 4.3 hereof to keep the Company
advised of his current address and the Company shall
have no obligation to commence payout of such
Participant's Account unless and until it shall have
received the written request therefor specifying his
current address.
ARTICLE V
Amendment or Termination
5.1 The Board of Directors of the Company reserves the
right to amend, terminate or discontinue this Plan at any time;
provided, however, no such action shall reduce or eliminate any
supplementary pension benefits under Article III hereof or
supplementary profit sharing benefits under Article IV hereof
which are in pay status or which have accrued hereunder prior to
the date of such action and which also would otherwise ultimately
have become payable hereunder.
5.2 It is recognized and acknowledged that as cost of
living adjustments are made from time to time in the IRS
Limitations under the provisions of the Internal Revenue Code,
accruals of what otherwise would have been needed supplementary
pension benefits under Article III hereof may be eliminated in
whole or in part because the same can be provided under the terms
of the Pension Plan, but that under present law, future cost of
living changes in those parts of the IRS Limitations dealing with
the Profit Sharing Plan will not eliminate or reduce the need for
any otherwise required accruals of supplementary profit sharing
benefits under Article IV hereof. No Participant or Beneficiary
shall ever be entitled to any benefit payments whatsoever under
this Plan unless and until such Participant or Beneficiary first
qualifies for a benefit under the Pension Plan (as required by
Section 3.1 hereof), under the Profit Sharing Plan (as required
by Section 4.1 hereof) or under the Non-Qualified Plan (as
required by Section 4.1 hereof).
ARTICLE VI
Miscellaneous
6.1 Any amount payable to a Participant or Beneficiary
hereunder shall not be subject in any manner to alienation, sale,
transfer, assignment, pledge, attachment, garnishment or
encumbrance of any kind, by will, or by inter vivos instrument.
Any attempt to alienate, sell, transfer, assign, pledge or
otherwise encumber any such payment, whether present or
thereafter payable, shall not be recognized by the Company. Any
payment due hereunder shall not in any manner be subject to the
debts or liabilities of the Participant or Beneficiary. If the
Participant or Beneficiary shall attempt to alienate, sell,
transfer, assign, pledge or otherwise encumber his or her
payments under this Plan or any part thereof, or if by reason of
his or her bankruptcy or other event happening at any time, such
payments would devolve upon anyone else or would not be enjoyed
by him or her, then the Company, in its sole discretion, may
terminate his or her interest in any such benefit, and hold or
apply it to or for the benefit of the Participant or Beneficiary,
his or her spouse, children, or other dependents, or any of them,
in such manner as the Company may deem proper.
6.2 Every person receiving or claiming payments under this
Plan shall be conclusively presumed to be mentally competent
until the date on which the Company receives a written notice, in
form and manner acceptable to it, that such person is incompetent
and that a guardian, conservator, or other person legally vested
with the care of his estate has been appointed. In the event a
guardian or conservator of the estate of any person receiving or
claiming payments under the Plan shall be appointed by a court of
competent jurisdiction, payments may be made to such guardian or
conservator provided that proper proof of appointment and
continuing qualification is furnished in a form and manner
acceptable to the Company. Any such payment so made shall be a
complete discharge of any liability therefor.
6.3 Participation in this Plan, or any modifications
thereof, or the payments of any benefits hereunder, shall not be
construed as giving to the Participant any right to be retained
in the service of the Company, limiting in any way the right of
the Company to terminate the Participant's employment at any
time, evidencing any agreement or understanding, express or
implied, that the Company will employ the Participant in any
particular position or at any particular rate of compensation
and/or guaranteeing the Participant any right to receive a salary
increase in any fiscal year, such increase being granted only at
the sole discretion of the Board of Directors of the Company.
6.4 All payments hereunder shall be paid in cash from the
general funds of the Company and no special or separate fund
shall be established and no other segregation of assets shall be
made to assure the payment of benefits hereunder. A Participant
or Beneficiary shall have no right or title or interest whatever
in or to any investments which the Company may make to aid it in
meeting its obligations hereunder. Nothing in this Plan and no
action taken pursuant hereto shall create or be construed to
create a trust of any kind or a fiduciary relationship between
the Company and any Participant or Beneficiary. To the extent
that any person acquires a right to receive payments from the
Company under this Plan, such right shall be no greater than the
right of an unsecured creditor.
6.5 To the extent not pre-empted by the laws of the United
States, this document shall be construed, administered and
governed under and by the internal laws of the State of
Wisconsin.
6.6 Neither the Company nor any officer or director of the
Company or any other person shall be liable for any act or
failure to act hereunder, except for gross negligence or fraud.
6.7 Any benefits payable under the Pension Plan and the
Profit Sharing Plan shall be paid solely in accordance with the
terms of such Plans and nothing in this document shall operate or
be construed in any way to modify, amend or affect the terms of
such Plans.
6.8 The claims procedure provided in the Profit Sharing
Plan shall apply in full to this Excess Benefits Plan.
EXHIBIT 10.5
OSHKOSH B'GOSH, INC.
EXECUTIVE DEFERRED COMPENSATION PLAN
(As Amended and Restated as of March 1, 1997)
WHEREAS, Oshkosh B'Gosh, Inc., a Delaware corporation (the
"Company") wishes to establish a deferred compensation program
for certain of its key management employees in order to aid the
Company in attracting and retaining qualified personnel upon
whose efforts the continued successful operation of the Company
will depend,
NOW, THEREFORE, the Company hereby establishes such a
program, to be known as the Oshkosh B'Gosh, Inc. Executive
Deferred Compensation Plan (the "Plan"), upon the following terms
and conditions:
ARTICLE I
Definitions
1.1 "Account" means the bookkeeping reserve account
for each Participant which shall be established by the
Company solely as a device for determining the amounts
which may become payable to the Participant hereunder.
Such Account shall not constitute or be treated as a
trust fund of any kind, it being expressly provided
that the amounts credited to such Account shall at all
times be and remain the sole property of the Company.
The Participant shall have no proprietary rights of any
nature whatsoever with respect thereto, unless and
until such time as a payment thereof is made to the
Participant (or his beneficiaries) as provided in this
Plan.
1.2 "Deferred Compensation" means the portion of a
Participant's compensation for any Fiscal Year, or part
thereof that has been deferred pursuant to this Plan.
1.3 "Officer" means an employee of the Company who is
either an elected or appointed officer of the Company.
1.4 "Fiscal Year" means the fiscal year of the
Company.
1.5 "Interest Equivalent Credits" means such amounts
as shall have been credited to a Participant's Account
pursuant to Article III hereof.
1.6 "Participant" means an Officer participating in
this Plan whose Deferred Compensation amounts,
Supplemental Contributions (as defined in Section 2.2
hereof) and Interest Equivalent Credits have not been
wholly distributed.
1.7 "Early Retirement Date" and "Disability" shall
have the same meanings as used in the Company's
qualified pension plan covering Participants, as the
same exists from time to time.
ARTICLE II
Deferred Compensation Election
2.1 Each Officer may elect to have a designated amount or a
percentage (subject to Company approval) of his total
compensation, including bonuses, if any, otherwise receivable by
him or paid to him on account of services performed, during any
Fiscal Year commencing on or after January 1, 1984 deferred in
accordance with the terms of this Plan. An Officer desiring to
exercise such election as to any such Fiscal Year shall, prior to
the beginning of such Fiscal Year (or prior to the beginning of
the Officer's initial employment if such employment is to
commence other than at the beginning of a Fiscal Year), notify
the Company in writing of his election of the amount or
percentage of such total compensation for such Fiscal Year that
he elects to be so deferred by completing, signing and delivering
to the Company a deferral election form substantially in the form
attached hereto as Exhibit A. The Officer may revoke or change
any prior deferral election form by giving at least 30 days prior
written notice of such revocation or change to the Company. Any
such revocation or change will be given prospective effect only
and will not affect prior deferrals.
2.2 The Company shall make a contribution for each Fiscal
Year, which shall be credited to each Participant's Account, of
an amount equal to the decrease, if any, in the amount of
contributions and forfeitures allocable to the Participant's
account under any defined contribution plan (e.g., a profit
sharing plan) of the Company (or which would have been allocated
as a contribution or forfeiture but for the fact that the
Participant is excluded from continuing or commencing
participation in such defined contribution plan because of the
exclusions in the definition of the eligible class of employees
made by the Company in 1989), resulting from the fact that
compensation which the Participant elects to defer under this
plan is not taken into account as "wages," "salary" or
"compensation" in determining the amount of the Company's
contribution under such a defined contribution plan and the
allocation of that contribution to the Participant's account
under such plan. The amount to be so credited is hereinafter
referred to as a "Supplemental Contribution." Such Supplemental
Contribution shall become nonforfeitable pursuant to the vesting
schedule, if any, provided under the Company's defined
contribution plan for which the Supplemental Contribution is
made.
2.3 The amount of a Participant's Deferred Compensation
shall be credited to his Account as of the date, absent an
election under this Plan, on which he would have received such
amount. The amount of any Supplemental Contribution for a
Participant shall be credited to his Account once a year as of
the end of the quarter during which the proper amount of such
Supplemental Contribution can be determined.
ARTICLE III
Interest Equivalent Credits
3.1 Any and all amounts of Deferred Compensation,
Supplemental Contributions and previously credited interest
standing to the credit of each Participant's Account as of the
end of each quarter of the Fiscal Year shall receive an Interest
Equivalent Credit based upon the average Firstar Bank Milwaukee,
N.A. prime rate of interest in effect during such quarter. In
calculating such quarterly Interest Equivalent Credit, the
amounts which comprise Participant's Account balance as of the
end of such quarter shall earn interest commencing with the date
such amounts were credited to the Participant's Account (but in
no event earlier than the first day of such quarter). By way of
illustration, if a Participant's Account had been credited with
Deferred Compensation on January 15 of a Fiscal Year, such
Deferred Compensation would be entitled to be credited with
interest on March 31 of such year based on the period between
January 15 and March 31 of such year. The phrase "average
Firstar Bank Milwaukee, N.A. prime rate of interest in effect
during each quarter" means the weighted average rate of interest
adopted by the Firstar Bank Milwaukee, N.A., from time to time
during such quarter, as the base rate for interest rate
determinations.
ARTICLE IV
Payments From Account
4.1 The Participant shall become entitled to commence
receiving the nonforfeitable amounts credited to his Account upon
his termination of employment with the Company at or after his
Early Retirement Date or because of his death or Disability.
4.2 The nonforfeitable amounts credited to a Participant's
Account shall be paid to him in one of the following methods:
(a) In annual installments, to commence on
or about March 15th of the year following the year
of termination of service, with one-tenth of the
balance in his Account becoming then payable and
with the remaining installments being paid on each
anniversary thereof according to the following
schedule:
Anniversary of First Portion of Participant's
Payment Date Account To Be Paid
1st 1/9
2nd 1/8
3rd 1/7
4th 1/6
5th 1/5
6th 1/4
7th 1/3
8th 1/2
9th Remainder
(b) Any other payment plan approved by the
Company in it sole discretion.
4.3 Should the Participant's employment with the Company
terminate for reasons other than specified in Section 4.1 above
or other than because of death while in the employ of the
Company, the Participant shall become entitled to commence
receiving the nonforfeitable amounts credited to his Account on
or after his attainment of age 65 in the manner described in
Section 4.2 above. Notwithstanding the foregoing, the Company,
in its sole discretion, may commence an earlier payout of such
Participant's Account. It shall be the obligation of any
Participant under this Section 4.3 to keep the Company advised of
his current address and the Company shall have no obligation to
commence payout of such Participant's Account unless and until it
shall have received the written request therefor specifying his
current address.
4.4 Interest Equivalent Credits shall continue to be
applied on the balance in the Participant's Account in accordance
with Section 3.1 until the Participant or his designated
beneficiary or beneficiaries have received the final payment of
such balance.
4.5 The Participant shall have the right to designate a
beneficiary or beneficiaries to receive any portion of his
Account remaining unpaid at his death. Such designation shall be
effected by filing a written notification with the Company in the
form prescribed by it and may be changed from time to time by
similar action. If the Participant fails to make such
designation, any such unpaid portion of his Account shall be paid
to his estate. The nonforfeitable balance in a Participant's
Account shall become distributable in accordance with this
Section 4.5 upon a Participant's death while in the Company's
employ or upon his death after termination of employment with the
Company.
4.6 The Company may, in its sole discretion, on request of
a Participant who remains in the Company's employ, determine to
make a distribution and the manner of the distribution to such
Participant of a portion or all of his nonforfeitable Account, on
the basis of personal financial hardship. In the case of
personal financial hardship, distribution may be made only when
such Participant has established to the satisfaction of the
Company that a severe personal financial hardship exists
necessitating his request. Without limitation, such a personal
financial hardship may arise from unusual or extraordinary
medical expenses not covered by insurance of the Participant, of
other persons who rely upon the Participant for financial support
or education expenses. The purchase or maintenance of a
principal residence for the Participant, or other investment
opportunities will not be considered financial hardship.
ARTICLE V
Supplemental Payments
5.1 By way of a payment supplemental to the payments
provided for by Article IV hereof, the Company agrees to also pay
to a Participant (or to anyone else entitled thereto as a
beneficiary of the Participant under the terms of any defined
benefit plan (e.g., a pension plan of the Company) an amount or
amounts equal to the decrease, if any, in the amounts payable
under any such defined benefit plan, resulting from the fact that
compensation which the Participant elects to defer under this
Plan is not taken into account as "wages," "salary" or
"compensation" in determining the amount of any benefit payment
under such a defined benefit plan. The Company shall determine,
in its sole discretion, the method of payment under this Section
5.1. The purpose of this provision is to assure to a Participant
that he receive the same total pension benefits that he would
have received had he not elected to defer any of his compensation
under this Plan.
ARTICLE VI
Miscellaneous
6.1 Any amount payable from the Participant's Account shall
not be subject in any manner to alienation, sale, transfer,
assignment, pledge, attachment, garnishment or encumbrance of any
kind, by will, or by inter vivos instrument (other than permitted
beneficiary designations under Section 4.5 hereof). Any attempt
to alienate, sell, transfer, assign, pledge or otherwise encumber
any such payment, whether presently or thereafter payable, shall
not be recognized by the Company. Any payment due hereunder
shall not in any manner be subject to the debts or liabilities of
the Participant. If the Participant shall attempt to alienate,
sell, transfer, assign, pledge or otherwise encumber his payments
under this Plan or any part thereof, or if by reason of his
bankruptcy or other event happening at any time, such payments
would devolve upon anyone else or would not be enjoyed by him,
then the Company, in its sole discretion, may terminate his
interest in any such benefit, and hold or apply it to or for the
benefit of the Participant, his spouse, children, or other
dependents, or any of them, in such manner as the Company may
deem proper. Notwithstanding the foregoing, the Plan shall
recognize an ownership interest on the part of the Participant's
spouse in any portion of the Participant's Account, if such
ownership interest is created under any marital or community
property law or similar law, or any marital or community property
agreement executed pursuant to such law.
6.2 Every person receiving or claiming payments under this
Plan shall be conclusively presumed to be mentally competent
until the date on which the Company receives a written notice, in
form and manner acceptable to it, that such person is incompetent
and that a guardian, conservator, or other person legally vested
with the care of his estate has been appointed. In the event a
guardian or conservator of the estate of any person receiving or
claiming payments under the Plan shall be appointed by a court of
competent jurisdiction, payments may be made to such guardian or
conservator provided that proper proof of appointment and
continuing qualification is furnished in a form and manner
acceptable to the Company. Any such payment so made shall be a
complete discharge of any liability therefor.
6.3 Participation in this Plan, or any modifications
thereof, or the payments of any benefits hereunder, shall not be
construed as giving to the Participant any right to be retained
in the service of the Company, limiting in any way the right of
the Company to terminate the Participant's employment at any
time, evidencing any agreement or understanding, express or
implied, that the Company will employ the Participant in any
particular position or at any particular rate of compensation
and/or guaranteeing the Participant any right to receive a salary
increase in any Fiscal Year, such increase being granted only at
the sole discretion of the Board of Directors of the Company.
6.4 By electing to participate in this Plan, the Officer
agrees that any of his compensation which he elects to defer
under this Plan will not be taken into account as "wages,"
"salary" or "compensation" in determining the amount of any
payment or allocation, or for any other purpose, under any
pension, retirement or deferred profit sharing plan of the
Company.
6.5 The Plan shall be construed, administered and governed
in all respects under and by the laws of the State of Wisconsin.
6.6 Neither the Company nor any officer or director of the
Company or any other person shall be liable for any act or
failure to act hereunder, except for gross negligence or fraud.
6.7 The Board of Directors of the Company reserves the
right to amend, modify, terminate, or discontinue this Plan at
any time; provided, however, no such action shall reduce the
amount then credited to the Participant's Account or change the
time and manner of payment of such amount, without the consent of
the Participant, if living, or his designated beneficiary or
beneficiaries, if the Participant is not living.
6.8 The claims procedure provided in the Oshkosh B'Gosh,
Inc. Profit Sharing Plan shall apply in full to this Plan.
EXHIBIT A
OSHKOSH B'GOSH, INC. EXECUTIVE DEFERRED COMPENSATION PLAN
DEFERRAL ELECTION
In accordance with the terms and conditions of the Oshkosh
B'Gosh, Inc. Executive Deferred Compensation Plan I hereby elect
that the following percentages (or amount) of any salary and
bonuses which may become payable to me on account of services
performed for Oshkosh B'Gosh, Inc. during the calendar year
19____ and future calendar years, shall be deferred for payment
at a later time, and credited to the Account established in my
name, in accordance with and subject to the terms and conditions
of such Plan:
______% or $_____* of regular gross salary to be taken
out of each monthly paycheck.
_____% or $_____** of any bonus which may be declared
by Oshkosh B'Gosh, Inc. and which is payable to me.
I understand that this deferral election shall remain in
full force and effect until I revoke and/or change it by properly
executing the filing a new deferral election in accordance with
the terms and conditions of the Plan.
I hereby expressly revoke all prior deferral elections by me
and reserve the right to revoke and/or change this deferral
election in the manner provided under the terms and conditions of
the Plan.
Date
Received by Oshkosh B'Gosh, Inc. on , 19____.
By:
_______________________________
*You may choose either a % or a specific dollar amount to be
withheld from each paycheck.
**You may choose either a % or a specific dollar amount of any
bonus that may de declared; if you choose a dollar amount it
will, of course, be subject to a top limit of the actual total
amount of any bonuses declared to you on account of services
performed by you during the calendar year.
EXHIBIT 10.9
OSHKOSH B'GOSH, INC.
EXECUTIVE NON-QUALIFIED PROFIT SHARING PLAN
(As Amended and Restated As Of March 1, 1997)
WHEREAS, Oshkosh B'Gosh, Inc. (the "Company") maintains the
Oshkosh B'Gosh, Inc. Profit Sharing Plan (the "Profit Sharing
Plan"), a tax-qualified deferred profit sharing plan, and amended
such Profit Sharing Plan effective as of January 1, 1989 to
exclude certain classes of employees formerly eligible from
continuing participation therein including the President, all
Vice Presidents and any employee whose title includes designation
as a director of a particular aspect of the Company's business
(the "Excluded Key Employee Group"), and
WHEREAS, the members of the Excluded Key Employee Group will
continue to have their account balances held in the Profit
Sharing Plan pending ultimate distribution upon their separation
of service from the Company or otherwise in accordance with the
terms of such Plan and such accounts will continue to share in
the investment experience of the Plan until such distribution,
but after January 1, 1989, will no longer receive any further
allocations of Company contributions or forfeitures, and
WHEREAS, the Company wishes to provide by means of this
document both (i) a "make whole" non-qualified plan that will
provide for payments to certain identified members of the
Excluded Key Employee Group equivalent to the additional sums
they would have been able to accrue under the Profit Sharing Plan
but for their exclusion from continuing participation as of
January 1, 1989, or beginning participation at any later date;
and (ii) a non-qualified profit sharing plan for certain
identified key management or highly compensated employees who are
not otherwise eligible for participation in the Profit Sharing
Plan,
NOW, THEREFORE, the Company hereby establishes such a "make
whole" program, to be known as the Oshkosh B'Gosh, Inc. Executive
Non-Qualified Profit Sharing Plan (the "Non-Qualified Plan"), as
follows:
1. Objectives. This Non-Qualified Plan is intended to
provide for a "make whole" payment to certain members of the
Excluded Key Employee Group and to certain other key management
or highly compensated employees who are not otherwise eligible
for participation in the Profit Sharing Plan identified on
Exhibit A attached hereto, including such executives and key
employees as the Board of Directors or Executive Committee may
determine to add from time to time (the "Participants").
2. Bookkeeping Accounts. The Company shall cause
bookkeeping reserve accounts (the "Account") to be established
for each participant which shall be established solely as a
device for determining the amounts which may become payable to a
Participant hereunder. Such Account shall not constitute or be
treated as a trust fund of any kind, it being expressly provided
that the amounts credited to the Account shall at all times be
and remain the sole property of the Company. The Participant
shall have no proprietary rights of any nature with respect
thereto, unless and until such time as a payment thereof is made
to the Participant (or beneficiary) as provided herein. Amounts
shall be credited (or debited, as the case may be) to each
Participant's Account as follows:
(a) For each Plan Year from and after
January 1, 1989, for which a Participant would
have received an allocation of Company
contribution or forfeiture or both under the terms
of the Profit Sharing Plan if such Participant had
not been excluded therefrom (the "Prevented
Allocations"), such Participant's Account shall be
credited with a dollar amount equal to such
Prevented Allocations.
(b) For each Plan Year from and after
January 1, 1989, for which a Participant's Account
has been credited with Prevented Allocations such
Account shall also be adjusted to reflect the
additions or subtractions that would have resulted
from actual investment experience under the Profit
Sharing Plan had the Prevented Allocations been
made under that Plan (the "Prevented Investment
Adjustments").
The intent hereof is that the balance in each Participant's
Account under this Non-Qualified Plan from time to time shall be
equal to the balance that would have existed in the Profit
Sharing Plan from time to time reflecting post-January 1, 1989
Company contributions, forfeitures and investment adjustments
thereon that would have occurred under the terms of the Profit
Sharing Plan if the Participant had been able to continue
thereunder or, as the case may be, begin participation thereunder
at any later date and continue until the date of termination of
service with the Company.
3. Vesting. All individuals who are Participants as of
December 31, 1996 shall at all times have a 100% vested interest
in the Account balance established for them under this Non-
Qualified Plan. All individuals who become Participants on or
after January 1, 1997 shall become vested in their Account
balances established hereunder on the same terms and conditions
as apply in the Profit Sharing Plan, all of which are hereby
incorporated by reference."
4. Incorporation by Reference of Profit Sharing Plan. The
terms and conditions of the Profit Sharing Plan, as amended from
time to time, are hereby incorporated by reference into this Non-
Qualified Plan (subject however to the 100% vesting provision for
accounts as set forth in paragraph 3 above). It is intended that
the Accounts in this Non-Qualified Plan be subject to all of the
terms and conditions of the Profit Sharing Plan, subject only to
the following special limitations:
(a) Prevented Allocations and Prevented
Investment Adjustments shall be determined and
credited or debited to Accounts hereunder, as the
case may be, at the same time and in like amount
as if the Account were held under the Profit
Sharing Plan.
(b) The Company shall commence payments of
the vested Account balances under this Non-
Qualified Plan on or about March 15th of the year
following the year in which the Participant's
service terminates, in accordance with (c) below.
(c) Account balances under the Non-Qualified
Plan shall be paid to the Participant (or
Beneficiary, as the case may be), in one of the
following methods:
(i) In annual installments, to
commence on or about March 15th of the year
following the year of termination of service,
with one-tenth of the balance in the Account
becoming then payable and with the remaining
installments being paid on each anniversary
thereof according to the following schedule:
Anniversary of Portion of Participant's
First Payment Date Account to Be Paid
1st 1/9
2nd 1/8
3rd 1/7
4th 1/6
5th 1/5
6th 1/4
7th 1/3
8th 1/2
9th Remainder
(ii) Any other payment plan
approved by the Company on its sole
discretion."
(d) Participants may designate any person or
persons (including, but not limited to, a trust)
to be the "Beneficiary" hereunder. Such
designation shall be effected by filing written
notification with the Company in the form
prescribed by it and may be changed from time to
time by similar action. If no Beneficiary is
designated, the benefits shall be distributed to
the Participant's estate.
5. Claims Procedure. The claims procedure in the Profit
Sharing Plan shall apply in full to this Non-Qualified Plan.
6. Company or Committee to Administer. The Company or the
Committee (as defined under the Profit Sharing Plan) shall have
full and complete discretionary power and authority to construe
and interpret this Non-Qualified Plan and to resolve all
questions hereunder. Neither the Company nor any member of the
Committee or any other person shall be liable for any act or
failure to act hereunder, except for gross negligence or fraud.
7. Unsecured Creditor. To the extent that any person
acquires a right to receive payments from the Company under this
Plan, such right shall be no greater than the right of an
unsecured creditor.
8. Amendment or Termination. The Board of Directors of
the Company reserves the right to amend, terminate or discontinue
this Non-Qualified Plan at any time; provided, however, no such
action shall reduce or eliminate any amounts accrued in any
Accounts hereunder prior to the date of such action and which
also would otherwise ultimately have become payable hereunder.
EXHIBIT A
The following is a listing of employees currently (as of
3/1/97) participating in the Oshkosh B'Gosh, Inc. Executive Non-
Qualified Profit Sharing Plan.
Participants as of Participants Added On
December 31, 1996 Or After January 1, 1997
(LIST) (LIST)
EXHIBIT 10.12
OshKosh B'Gosh, Inc.
112 Otter Avenuen
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 Ave.
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
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 (E)
the Aggregate Commitment. The Demand Line shall be
unused for at least 90 consecutive days during each
twelve-month period commencing July I of a given year
and ending June 30 the following year. Each advance
under the Demand Line from the Banks collectively shall
be in a multiple of $100,000 (except that any such
advance subject to a LIBOR Pricing Option shall be in
an amount of $1,000,000 or any multiple of $100,000 in
excess of such amount). The advances under the Demand
Line from each Bank shall be evidenced by a single
promissory note of the Company (each a "Demand Note",
and collectively with the Revolving Credit Notes,
sometimes called the "Notes"), payable on demand to the
order of the lending Bank in the form of Exhibit 1.2
attached hereto. The Company acknowledges that all
amounts due under the Demand Notes are payable on
demand, regardless of whether the Company has breached
any of the terms, covenants and conditions set forth in
this Agreement, the Notes, any Collateral Document or
any other document or agreement applicable to the loans
described herein.
1.3 Notes. The Notes shall be executed by
the Company and delivered to the Banks prior to the
initial loans. Although the Notes shall be expressed
to be payable in the full amounts specified above, the
Company shall be obligated to pay only the amounts
actually disbursed to or for the account of the
Company, together with interest on the unpaid balance
of sums so disbursed which remains outstanding from
time to time, at the rates and on the dates specified
in the Notes, together with the other amounts provided
therein.
1.4 Letters of Credit.
(a) Firstar Bank Milwaukee, N.A. and such
other Bank or Banks as the Company may from time to
time designate with the consent of the Agent (each an
"LOC Bank") shall from time to time when so requested
by the Company issue standby and import letters of
credit, respectively (each a "Letter of Credit" and
collectively the "Letters of Credit") for the account
of the Company up to an aggregate face amount equal to
the amount by which (i) the sum of (A) the Aggregate
Commitment and (B) the Demand Line from time to time in
effect exceeds (ii) the sum of (A) the outstanding
principal amount of loans made pursuant to sections 1.1
and 1.2, (B) the aggregate amount of all unpaid
Reimbursement obligations (as defined in section
lo.l(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!k) per
annum of the face amount of such standby Letter of
Credit. Such fees shall be payable quarterly in
arrears on the first day of each calendar quarter.
(c) The Company hereby unconditionally promises
to pay to the appropriate LOC Bank upon demand, without
defense, setoff or counterclaim, the amount of each
drawing under Letters of Credit issued by such LOC Bank
plus interest on the foregoing from the date due at the
Prime Rate (as defined in section 2.2(b)(2)).
(d) Reliance on Documents. Delivery to the LOC Banks
of any documents strictly complying on their face with
the requirements of any Letter of Credit shall be
sufficient evidence of the validity, genuineness and
sufficiency thereof and of the good faith and proper
performance of drawers and users of such Letter of
Credit, their agents and assignees; and the LOC Banks
may rely thereon without liability or responsibility
with respect thereto, even if such documents should in
fact prove to be in any or all respects invalid,
fraudulent or forged.
(e) Non-Liability for Other Matters. The LOC Banks
shall not be liable to the Company for (i)
honoring any requests for payment under any Letter
of Credit which strictly comply on their face with
the terms of such Letter of Credit, (ii) any delay
in giving or failing to give any notice, (iii)
errors, delays, misdeliveries or losses in
transmission of telegrams, cables, letters or
other communications or documents or items
forwarded in connection with any Letter of Credit
or any draft, (iv) accepting and relying upon the
name, signature or act of any party who is or
purports to be acting in strict compliance with
the terms of any Letter of Credit; or (v) any
other action taken or omitted by the LOC Banks in
good faith in connection with any Letter of Credit
or any draft; except only that the Company shall
have a claim against an LOC Bank, and such LOC
Bank shall be liable to the Company, to the extent
of damages suffered by the Company which the
Company proves were caused by (A) the LOC Bank's
willful misconduct or gross negligence or (B) the
LOC Bank's willful and wrongful failure to pay
under any Letter of Credit after the presentation
to it of documents strictly complying with the
terms and conditions of the Letter of Credit.
1.5 Use of Proceeds. The Company
represents, warrants and agrees that:
(a) The proceeds of the loans made hereunder
will be used solely for the following purposes:
(i) contemporaneously with the making of the
initial loan hereunder, the proceeds of such
initial loan shall be used to the extent necessary
to pay all indebtedness of Company outstanding
under its demand lines of credit with Firstar Bank
Milwaukee, N.A. and Norwest Bank Wisconsin; and
(ii) all other proceeds shall be used (A) for the
repayment at maturity of outstanding Commercial
Paper (to the extent necessary), and (B) for
working capital and other lawful corporate
purposes.
(b) No part of the proceeds of any loan made
hereunder will be used to "purchase" or "carry"
any "margin stock" or to extend credit to others
for the purpose of "purchasing" or "carrying" any
"margin stock" (as such terms are defined in the
Regulation U of the Board of Governors of the
Federal Reserve System), and the assets of the
Company and its Subsidiaries do not include, and
neither the Company nor any Subsidiary has any
present intention of acquiring, any such security.
1.6 Commitment Fee. The Company shall pay to the
Agent for the account of the Banks, pro rata according
to their respective Percentage Interests, a commitment
fee computed at the rate of one-eighth of one percent
(1/8W) per annum on the Aggregate Commitment (as
reduced pursuant to section 1.7). Such commitment fees
shall accrue during the period from the date of this
Agreement to and including the Termination Date and be
payable quarterly in advance on the date of the initial
loan and on the first day of each calendar quarter
thereafter.
1.7 Termination or Reduction.
(a) The Company shall have the right, upon
five business days' prior written notice to each
Bank, to ratably reduce in part the Commitments,
provided, however, that (i) each partial reduction
of the Aggregate Commitment shall be in the amount
of $100,000 or an integral multiple thereof, and
(ii) no reduction shall reduce the Aggregate
Commitment to an amount less than the sum of (A)
the aggregate principal amount of outstanding
revolving credit loans made under Section 1.1, (B)
the aggregate amount of Letter of Credit
obligations, and (C) the aggregate face amount of
outstanding Commercial Paper, including for this
purpose all Nicolet Funding Corp. Loans. Subject
to the limitations of the preceding sentence, the
entire Commitments of all of the Banks may be
terminated in whole at any time upon five Business
Days, prior written notice to each Bank.
(b) Each Bank in its sole discretion may at
any time reduce or terminate its individual Demand
Line by giving written notice of such reduction or
termination to the Agent and the Company. If any
Bank shall decline to make additional advances
pursuant to the Demand Line or shall demand
payment of any amount outstanding under its Demand
Note, the aggregate Demand Line shall
automatically be reduced by an amount equal to
such Bank's individual Demand Line.
1.8 Optional Prepayment. The Notes may be
prepaid in whole or in part at the option of the
Company at any time without premium or penalty except
as otherwise provided in section 2.2(d)(3). All
prepayments shall be applied as set forth in section
2.4(b) pro rata among the Banks in accordance with
their respective Percentage Interests. All prepayments
shall be accompanied by interest accrued on the amount
prepaid through the date of prepayment.
1.9 Commercial Paper.
(a) The Company may issue Commercial Paper
from time to time, including sales of Commercial Paper
through one or more of the Banks acting as placement
agent pursuant to separate agreements between the
Company and such Bank or Banks. The aggregate face
amount of all outstanding Commercial Paper (but not
including for this purpose any Nicolet Funding Corp.
Loans) shall not at any time exceed the lesser of (i)
$60,000,000 and (ii) the amount by which (A) the sum of
(1) the Aggregate Commitment and (2) the Demand Line in
effect from time to time, exceeds (B) the sum of (1)
the outstanding principal amount of loans made pursuant
to sections 1.1 and 1.2, (2) the aggregate amount of
Letter of Credit Obligations and (3) the outstanding
principal amount of all Nicolet Funding Corp. Loans.
No Commercial Paper shall have a term to maturity
greater than 100 days.
(b) The Company shall pay a Commercial Paper
placement fee in respect of Commercial Paper placed by
any of the Banks computed at a rate of one-quarter of
one percent (1/4%) per annum of the aggregate face
amount of such Commercial Paper, payable at the time
such Commercial Paper is issued as follows: (i) one-
eighth of one percent (1/8%) to the Bank acting as
placement agent for the sale of such Commercial Paper
and (ii) one-eighth of one percent (1/8%) to the Agent
for the pro rata benefit of the Banks.
(c) The Company will give written notice to
the Agent in the form of Part 1 to Exhibit 2.1 hereto
on each Business Day on which there is any change in
the aggregate outstanding face amount of Commercial
Paper and Nicolet Funding Corp. Loans, setting forth
the aggregate principal amount of all Commercial Paper
and Nicolet Funding Corp. Loans then outstanding after
giving effect to the issuance or repayment of
Commercial Paper and Nicolet Funding Corp. Loans (as
the case may be) taking place on such Business Day.
(d) For all purposes of this Agreement, the
outstanding face amount of all Commercial Paper
(but not including for this purpose any Nicolet
Funding Corp. Loans) shall be deemed to be use of
the Aggregate Commitment. The principal amount of
outstanding loans (including Nicolet Funding Corp.
Loans) and the face amount of outstanding Letters
of Credit shall be deemed to be use of the
Aggregate Commitment to the extent that the
Aggregate Commitment exceeds the face amount of
outstanding Commercial Paper (but not including
for this purpose any Nicolet Funding Corp. Loans)
from time to time, and otherwise shall be deemed
to be use of the Demand Line.
(e) The Company may also obtain direct
loans from Nicolet Funding Corp. ("Nicolet Funding
Corp. Loans") from time to time. The aggregate
principal amount of such loans at any time
outstanding shall not exceed the lesser of (i)
$20,000,000 and (ii) the sum of (A) the amount by
which the Aggregate Commitment exceeds the
aggregate principal amount of Commercial Paper
from time to time outstanding, plus (B) the amount
available to be borrowed from time to time under
the Demand Line provided by Norwest Bank
Wisconsin, National Association. Such loans shall
have maturities not exceeding 100 days, and shall
bear interest at rates to be agreed upon by the
Company and Nicolet Funding Corp.
ARTICLE II
ADMINISTRATION OF CREDIT
2.1 Borrowing Procedure. Loans hereunder shall he
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
thefunds received from the Banks for the making of
the loans hereunder, the Agent will make a loan to the
Company in such amount on behalf of such Banks. Notes
and other required documents delivered to the Agent for
the account of each Bank shall be promptly delivered to
such Bank, or in accordance with instructions received
from it, together with copies of such other documents
received in connection with the borrowing as such Bank
shall request.
2.2 Interest Calculation.
(a) Interest. The principal amount of the
indebtedness from time to time evidenced by the Notes
shall accrue and bear interest at a rate per annum
which shall at all times equal the Applicable Rate (as
defined in section 2.2(b)). To the extent that any
portion of the indebtedness evidenced by the Notes
bears interest at the Prime Rate (defined below), the
Company will pay such interest monthly in arrears on
the last day of each month. On the last day of each
LIBOR Interest Period or on any earlier termination of
any LIBOR Pricing Option, the Company will pay the
accrued and unpaid interest on the indebtedness
evidenced by the Notes which was subject to the LIBOR
Pricing Option which expired or terminated on such
date. On any stated or accelerated maturity of the
indebtedness evidenced by the Notes all accrued and
unpaid interest on such indebtedness shall be forthwith
due and payable, including without limitation any
accrued and unpaid interest on such indebtedness which
is subject to a LIBOR Pricing Option. In addition, the
Company will, on demand, pay interest on any overdue
installments of principal and pay interest during the
continuance of any Event of Default both at a rate per
annum which is at all times equal to the sum of (a) the
Applicable Rate (or, if more than one Applicable Rate
is then in effect, the weighted average of the
Applicable Rates then in effect), plus (b) 2%r per
annum.
(b) Applicable Rate. The term "Applicable Rate"
shall mean:
(1) With respect to any portion of the
indebtedness evidenced by the Notes which is at
the time subject to an effective LIBOR Pricing
Option, the applicable LIBOR Rate set forth in
section 2.2(c)(1)(D).
(2) With respect to any portion of the
indebtedness evidenced by the Notes which is not
at the time subject to an effective LIBOR Pricing
Option, the rate announced by Firstar Bank
Milwaukee, N.A. from time to time as its prime
rate (changing as and when such prime rate
changes) (the "Prime Rate").
(c) The LIBOR Pricing Options. The following
provisions shall apply to the LIBOR Pricing Options:
(1) Certain Definitions. For purposes of
this Agreement:
(A) The term "Basic LIBOR Rate" as applied to any
LIBOR Interest Period shall mean the per annum rate of
interest determined by the Agent (which shall be
applicable to all of the Banks) to be the average
(rounded up, if necessary, to the nearest 1/16 of 1%)
of the offered rates for deposits in U.S. dollars for
the applicable LIBOR Interest Period which appear on
the Reuters Screen LIBO Page (or such other page on
which the appropriate information may be displayed), on
the electronic communications terminals in the Agent's
money center as of 11:00 a.m. (London time) on the day
which is two Business Days prior to the first day of
such LIBOR Interest Period ("Calculation Date"), except
as provided below. if fewer than two offered rates
appear for the applicable LIBOR Interest Period or if
the appropriate screen is not accessible as of such
time, the term "Basic LIBOR Rate" shall mean the per
annum rate of interest determined by the Agent (but
which shall be applicable to all of the Banks) to be
the average (rounded up, if necessary, to the nearest
1/16 of 1%) of the rates at which deposits in U.S.
dollars are offered to the Agent by four major banks in
the London interbank market, as selected by the Agent
("Reference Banks"), at approximately 11 a.m., London
time, on the Calculation Date for the applicable LIBOR
Interest Period and in an amount equal to the principal
amount of the loans subject to the applicable LIBOR
Pricing Option. The Agent will request the principal
London office of each of the Reference Banks to provide
a quotation of its rate. If at least two such
quotations are provided, the applicable rate will be
the mean of the quotations. If fewer than two
quotations are provided as requested, the applicable
rate will be the mean of the rates quoted by major
banks in New York City, selected by the Agent, at
approximately 11 a.m., New York City time, on the
Calculation Date for loans in U.S. dollars to leading
European banks for the applicable LIBOR Interest Period
and in an amount equal to the principal amount of the
loans subject to the applicable LIBOR Pricing Option.
(B)The term "LIBOR Interest Period" shall mean any
period, selected as provided below in this section
2.2(c) of one, two or three months, each commencing on
any Business Day. Such LIBOR Interest Period shall
end on the day in the succeeding calendar month which
corresponds numerically to the beginning day of such
LIBOR Interest Period, provided, however, that if there
is no such numerically corresponding day in such
succeeding month, such LIBOR Interest Period shall end
on the last Business Day of such succeeding month. If
any LIBOR Interest Period so selected would otherwise
end on a date which is not a Business Day, such LIBOR
Interest Period shall instead end on the immediately
succeeding Business Day, provided, however, that if
said next succeeding Business Day falls in a new month,
such LIBOR Interest Period shall end on the immediately
preceding Business Day.
(C) The term "LIBOR Pricing Options" shall mean
the options granted pursuant to this section 2.2(c) to
have the interest on all or any portion of the
principal amount of indebtedness evidenced by the Notes
computed with reference to a LIBOR Rate.
(D) The term "LIBOR Rate" for any LIBOR Interest
Period shall mean a rate per annum equal to the sum of
(i) the quotient of (A) the Basic LIBOR Rate applicable
to that LIBOR Interest Period divided by (B) one minus
the LIBOR Reserve Requirement (expressed as a decimal)
applicable to that LIBOR Interest Period, plus (ii)
five-eighths of one percent (5/8%). The LIBOR Rate
shall be rounded, if necessary, to the next higher 1/16
of 1%.
(E) The term "LIBOR Reserve Requirement" shall
mean, with respect to each LIBOR Interest Period,
the stated rate of all reserve requirements
(including all basic, supplemental, marginal and
other reserves and taking into account any
transitional adjustments or other scheduled
changes in reserve requirements during such LIBOR
Interest Period) that is specified on the first
day of such LIBOR Interest Period by the Board of
Governors of the Federal Reserve System for
determining the maximum reserve requirement with
respect to eurocurrency funding (currently
referred to as "Eurocurrency liabilities" in
Regulation D of such Board of Governors)
applicable to the Agent.
(F)The term "Regulatory Change" means any change
enacted or issued after the date of this Agreement
of any (or the adoption after the date of this
Agreementof any new) federal or state law,
regulation, interpretation, direction, policy or
guideline, or any court decision, which in any
case has general application to banks of the class
of which any Bank is a member and which affects
the treatment of any loans of such Bank, all as
set forth below.
(2) Election of LIBOR Pricing Options. Subject to
all the terms and conditions hereof, the
Company may, by notice to the Agent received
not later than 10:30 a.m. (Milwaukee time) on
the day which is three Business Days prior to
the first day of the LIBOR Interest Period
selected in such notice, elect to have all or
such portion of the principal amount of
indebtedness then evidenced (or to be evidenced
at the commencement of such LIBOR Interest
Period) by the Notes as the Company may specify
in such notice (in the minimum amount of
$1,000,000 or any multiple of $100,000 in
excess of such amount) accrue and bear daily
interest during the LIBOR Interest Period so
selected at a per annum rate equal to the LIBOR
Rate for such LIBOR Interest Period; provided,
however, that no such election shall become
effective if the Agent determines (which
determination shall be binding and conclusive
on all parties) that (i) by reason of
circumstances affecting the London interbank
market adequate and reasonable means do not
exist for ascertaining the applicable LIBOR
Rate; (ii) the LIBOR Rate does not accurately
reflect the cost to the Banks of making or
maintaining LIBOR-based loans in general; or
(iii) any Default or Event of Default has
occurred and is continuing. Each notice of
election of a LIBOR Pricing Option shall be
irrevocable.
(d) Special Provisions.
(1) Increased Costs. If any Regulatory Change,
(A) shall subject any Bank to any tax, duty
or other charge with respect to any of its loans,
Letters of Credit or participations therein, or
Reimbursement Obligations owed to it hereunder, or
shall change the basis of taxation of payments to
any Bank of the principal of or interest on its
loans hereunder or Reimbursement Obligations owed
to it, or any other amounts due under this
Agreement in respect of such loans or
Reimbursement obligations, or its obligation to
make loans hereunder or issue Letters of Credit or
participate therein (except for changes in the
rate of tax on the overall net income of such
Bank);
(B) shall impose, modify or make applicable
any reserve (including, without limitation, any
reserve imposed by the Board of Governors of the
Federal Reserve System, but excluding any reserve
included in the determination of the LIBOR Rate),
special deposit or similar requirement against
assets of, deposits with or for the account of, or
credit extended by, any Bank; or
(C) shall impose on any Bank any
other condition affecting its loans,
Letters of Credit or participations
therein, or any Reimbursement Obligation
owed to it hereunder; and the result of
any of the foregoing is to increase the
cost to (or in the case of Regulation D or
any other analogous law, rule or regulation, to
impose a cost on) such Bank of making or
maintaining any loans, issuing or maintaining any
Letter of Credit, or participating therein, or to
reduce the amount of any sum received or
receivable by such Bank under this Agreement and
any document or instrument related hereto, then
after 30 days' notice from such Bank (which notice
shall be sent to the Agent and the Company and
shall be
accompanied by a statement setting forth in
reasonable detail the basis of such increased cost
or other effect on the loans, Letters of Credit or
Reimbursement obligations), the Company shall pay
directly to such Bank, on demand, such
additional amount or amounts as will compensate
such Bank for such increased cost or such
reduction incurred on or after the date of the
giving of such notice to the Agent and the
Company.
Each of the Banks represents to the Company
that, as of the date hereof, it is not aware of
any fact or circumstance that would give rise to
any increased cost under this section 2.2(d)(1).
Each Bank further agrees that, for purposes of
this section 2.2(d)(1), it will not treat the
Company in a manner different from its other
commercial loan customers having similar loan
relationships with the Bank.
(2) Changes in Law Rendering Certain
Loans Unlawful. In the event that any Regulatory
Change should make it (or, in the good faith judgment
of a Bank, should raise substantial questions as to
whether it is) unlawful for a Bank to make, maintain or
fund a loan subject to a LIBOR Rate, then (i) such Bank
shall promptly notify each of the other parties hereto,
(ii) the obligation of all Banks to make such loan
shall, upon the effectiveness of such event, be
suspended for the duration of such unlawfulness, and
(iii) to the extent that it is unlawful for such Bank
to maintain an outstanding loan subject to a LIBOR
Rate, such loan shall thereafter bear interest at the
Prime Rate or such other lower rate as may be agreed
upon by the Company and the Bank.
(3) Funding Losses. The Company hereby agrees
that upon demand by any Bank (which demand shall be
sent to the Agent and the Company and shall be
accompanied by a statement setting forth in reasonable
detail the basis for the calculations of the amount
being claimed) the Company will indemnify such Bank
against any net loss or expense which such Bank may
sustain or incur (including, without limitation, any
net loss or expense incurred by reason of the
liquidation or reemployment of
deposits or other funds acquired by such Bank to fund
or maintain loans hereunder), as reasonably determined
by such Bank, as a result of (i) any payment or
prepayment of any loan subject to a LIBOR Rate of such
Bank on a date other than the last day of a LIBOR
Interest Period for such loan whether or not required
by any other provision of this Agreement, or (ii) any
failure of the Company to borrow any loans on a date
specified therefor in a notice of borrowing pursuant to
this Agreement.
(4) Discretion of Banks as to Manner of
Funding. Notwithstanding any provision of this
Agreement to the contrary, each Bank shall be
entitled to fund and maintain its funding of all or any
part of its loans hereunder in any manner it sees fit.
(5) Capital Adequacy. If any Regulatory Change
affects the treatment of any loan, Letter of Credit or
participation therein of a Bank as an asset or other
item included for the purpose of calculating the
appropriate amount of capital to be maintained by such
Bank or any corporation controlling such Bank and has
the effect of reducing the rate of return on such
Bank's or such corporation's capital as a consequence
of the obligations of such Bank hereunder to a level
below that which such Bank or such corporation could
have achieved but for such Regulatory Change (taking
into account such Bank's or such corporation's policies
with respect to capital adequacy) by an amount deemed
in good faith by such Bank to be material, then after
30 days' notice from such Bank to the Company and the
Agent of such Regulatory Change, the Company shall pay
to such Bank, on demand, such additional amount or
amounts as will compensate such Bank or such
corporation, as the case may be, for such reduction
incurred on or after the date of the giving of such
notice to the Agent and the Company. Such Bank shall
submit, to the Agent and the Company, a statement as to
the amount of such compensation, prepared in good faith
and in reasonable detail. Each of the Banks represents
to the Company that, as of the date hereof, it is not
aware of any fact or circumstance that would give rise
to a claim for compensation under this section
2.2(d)(5).
(6) Conclusiveness of Statements; Survival of Prov
isions.Determinations and statements of any Bank pursuant to
sections
2.2(d)(1), (2), (3) and (5) shall be rebuttably
presumptive evidence of the correctness of the
determinations and statements and shall be conclusive
absent manifest error if the Company fails to deliver
written notice to the Agent within 30 days of (i) the
date of mailing of such statement or (ii) the giving of
notice of such determination if no such statement is
mailed. The provisions of section 2.2(d)(1),
(3) and (5) shall survive the obligation of the Banks
to extend credit under this Agreement and the repayment
of the loans and Reimbursement obligations.
2.3 Computations; Non-Business Days. All fees, and
all interest payable on the Notes, shall be computed for the
actual number of days elapsed using a daily rate determined by
dividing the annual rate by 360. Whenever any payment to be made
hereunder or under any Note shall be stated to be due on a non-
Business Day, such payment may be made on the next succeeding
Business Day, and such extension of time shall be included in the
computation of interest under the Notes, or fees payable
hereunder, as the case may be.
2.4 Application of Payments.
(a) All payments of principal, interest and
fees under this Agreement and the Notes shall be made to the
Agent in immediately available funds for the ratable account
of the Banks and the holders of the Notes then outstanding,
as appropriate, in respect of amounts then due hereunder.
The Agent shall promptly distribute to each such Bank or
holder pro rata the amount of principal, interest or fees
received by the Agent for the account of such holder. Any
payment to the Agent for the account of a Bank or a holder
of a Note under this Agreement shall constitute a payment by
the Company to such Bank or holder of the amount so paid to
the Agent, and any Notes or portions thereof so paid shall
not be considered outstanding for any purpose after the date
of such payment to the Agent.
(b) All payments received by the Agent under this
Agreement from any source shall be applied to the
obligations of the Company hereunder in the following order
of priority:
(i) First, to the payment of all unreimbursed
fees and expenses due hereunder;
(ii) Second, to the repayment of all outstanding loans
under the Demand Line and all accrued interest thereon;
(iii) Third, to the payment of all
outstanding loans under the Aggregate
Commitment, to the extent then due and
payable, and all accrued interest thereon;
(iv) Fourth, to secure reimbursement of
the outstanding face amount of all Letters of
Credit issued against the Demand Line;
(v) Fifth, to secure reimbursement of
the outstanding face amount of all Letters of
Credit issued against the Aggregate
Commitment; and
(vi) Sixth, to secure payment at
maturity of all outstanding Commercial Paper,
including for this purpose all Nicolet
Funding Corp. Loans.
2.5 Pro Rata Treatment. All payments or
prepayments of principal, interest or fees shall be
made pro rata in accordance with the amounts of the
Notes then due. In the event that any Bank shall
receive from the Company or any other source (other
than the sale of a participation to another commercial
lender pursuant to section 10.10) any payment of, on
account of, or for any obligation of the Company
hereunder or under the Notes (whether pursuant to the
exercise of any right of set off, banker's lien,
realization upon any security held for or appropriated
to such obligation, counterclaim or otherwise) other
than as above provided, then such Bank shall
immediately purchase, without recourse and for cash, an
interest in the obligations of the same nature held by
the other Banks so that each Bank shall thereafter have
a percentage interest in all of such obligations eclual
to the percentage interest which such Bank held in the
Notes outstanding immediately before such payment;
provided, that if any payment so received shall be
recovered in whole or in part from such purchasing
Bank, the purchase shall be rescinded and the purchase
price restored to the extent of such recovery, but
without interest. The Company specifically
acknowledges and consents to the preceding sentence.
2.6 Set Off. In the event that the unpaid
principal balance of the Notes or any other amount
becomes immediately due and payable pursuant to section
7.2, each Bank may offset and apply any monies,
balances, accounts and deposits (including certificates
of deposit) of the Company
then at such Bank toward the payment of the Note or
Notes held by such Bank or other amounts owed to it
hereunder. Promptly upon its charging any account of
the Company pursuant to this section, the Bank shall
give the Company notice thereof, provided that failure
to give such notice shall not affect the obligations of
the Company hereunder.
ARTICLE III
CONDITIONS OF BORROWING
Without limiting any of the other terms of
this Agreement, none of the Banks shall be required to
make any loan to the Company hereunder or issue any
Letter of Credit unless each of the following
conditions has been satisfied:
3.1 Representations. The representations
and warranties contained in Article IV hereof continue
to be true and correct on the date of such loan and no
Default or Event of Default hereunder shall have
occurred and be continuing.
3.2 Insurance Certificate. Prior to the
initial loan the Banks shall have received satisfactory
evidence that the Company maintains hazard and
liability insurance coverage reasonably satisfactory to
the Banks.
3.3 Form U-1. Prior to the initial loan the
Company shall have executed and delivered to the Banks
a Federal Reserve Form U-1 provided for in Regulation U
of the Board of Governors of the Federal Reserve
System, and the statements made therein shall be such,
in the reasonable opinion of the Banks, as to permit
the transactions contemplated hereby without violation
of Regulation U.
3.4 Counsel opinion. Prior to the initial
loan the Banks shall have received from their special
counsel and from Company's counsel, satisfactory
opinions as to such matters relating to the Company and
its Subsidiaries, the validity and enforceability of
this Agreement, the loans to be made hereunder and the
other documents required by this Article III as the
Banks shall reasonably require. The Company shall
execute and/or deliver to the Banks or their respective
counsel such documents concerning its corporate status
and the authorization of such transactions as may be
requested.
3.5 Proceedings Satisfactory. All
proceedings taken in connection with the transactions
contemplated by this Agreement, and all instruments,
authorizations and other documents applicable thereto,
shall be satisfactory in form and substance to the
Banks and their respective counsel.
3.6 Violation of Environmental Laws. In the
reasonable opinion of the Banks there shall not exist
any uncorrected violation by the Company or any
Subsidiary of an Environmental Law or any condition
which requires, or may require, a cleanup, removal or
other remedial action by the Company or any Subsidiary
under any Environmental Laws costing $2,500,000 or more
in the aggregate.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
In order to induce the Banks to make the
loans as provided herein, the Company represents and
warrants to the Banks as follows, except as set forth
in a letter (the "Information and Exceptions Letter")
delivered to the Banks not later than three (3)
Business Days prior to the date of this Agreement.
4.1 Organization. The Company and each of
its Subsidiaries is a corporation duly organized and
existing in good standing under the laws of the
jurisdiction under which it was incorporated, and has
all requisite power and authority, corporate or
otherwise, to conduct its business and to own its
properties. Set forth in the Information and
Exceptions Letter is a complete and accurate list of
all of its Subsidiaries, showing as of the date hereof
(as to each such Subsidiary) the jurisdiction of its
incorporation, the percentage of the outstanding shares
of each class of capital stock owned (directly or
indirectly) by the Company and the number of shares
covered by all outstanding options, warrants, rights of
conversion or purchase, and similar rights. All of the
outstanding stock of all of the Subsidiaries has been
legally and validly issued, is fully paid and non-
assessable except as provided by section 180.0622(2)(b)
of the Wisconsin Business Corporation Law and its
predecessor statute, as judicially interpreted, and is
owned by the Company or one or more other Subsidiaries
free and clear of all pledges, liens, security
interests and other charges or encumbrances. The
Company is duly licensed or qualified to do business in
all jurisdictions in which such qualification is
required, and failure to so qualify could have a
material adverse effect on the property, financial
condition or business operations of the Company.
4.2 Authority. The execution, delivery and
performance of this Agreement, the Notes and the
documents required by Article III (the "Collateral
Documents") are within the corporate powers of the
Company, have been duly authorized by all necessary
corporate action and do not and will not (i) require
any consent or approval of the stockholders of the
Company, (ii) violate any provision of the articles of
incorporation or by-laws of the Company or of any law,
rule, regulation, order, writ, judgment, injunction,
decree, determination or award presently in effect
having applicability to the Company or any Subsidiary;
(iii) require the consent or approval of, or filing or
registration with, any governmental body, agency or
authority; or (iv) result in a breach of or constitute
a default under, or result in the imposition of any
lien, charge or encumbrance upon any property of the
Company or any Subsidiary pursuant to, any indenture or
other agreement or instrument under which the
Company or any Subsidiary is a party or by which it or
its properties may be bound or affected. This
Agreement constitutes, and each of the Notes and
each of the Collateral Documents when executed and
delivered hereunder will constitute, legal, valid and
binding obligations of the Company or other signatory
enforceable in accordance with its terms, except as
such enforceability may be limited by bankruptcy or
similar laws affecting the enforceability of creditors'
rights generally.
4.3 Investment Company Act of 1940. Neither the
Company nor any Subsidiary is an "investment company"
or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of
1940, as amended.
4.4 Employee Retirement Income Security Act.
All Plans are in compliance in all material respects
with the applicable provisions of ERISA. Neither the
Company nor any Subsidiary has incurred any material
"accumulated funding deficiency" within the meaning of
section 302(a)(2) of ERISA in connection with any Plan.
There has been no Reportable Event for any Plan, the
occurrence of which would have a materially adverse
effect on the Company or any Subsidiary, nor has the
Company or any Subsidiary incurred any material
liability to the Pension Benefit Guaranty Corporation
under section 4062 of ERISA in connection with any
Plan. The Unfunded Liabilities of all Plans do not in
the aggregate exceed $2,500,000.
4.5 Financial Statements. The consolidated and
consolidating balance sheets of the Company and its
Subsidiaries as of December 31, 1993, and the
consolidated and consolidating statements of profit and
loss and surplus of the Company and its Subsidiaries
for the year ended on that date, as prepared by the
Company and certified by Ernst & Young and heretofore
furnished to the Banks, present fairly the financial
condition of the Company and such Subsidiaries as of
that date, and the results of their operations for the
fiscal year ended on that date. Since December 31,
1993, there has been no material adverse change in the
property, financial condition or business operations of
the Company or any Subsidiary.
4.6 Liens. The Company and each Subsidiary
has good and marketable title to all of its assets,
real and personal, free and clear of all liens,
security interests, mortgages and encumbrances of any
kind, except Permitted Liens. To the best of the
Company's knowledge and belief, all owned and leased
buildings and equipment of the Company and its
Subsidiaries are in good condition, repair and working
order in all material respects and conform in all
material respects to all applicable laws, regulations
and ordinances.
4.7 Contingent Liabilities. Neither the
Company nor any Subsidiary has any guarantees or other
contingent liabilities outstanding (including, without
limitation, liabilities by way of agreement, contingent
or otherwise, to purchase, to provide funds for
payment, to supply funds to or otherwise invest in the
debtor or otherwise to assure the creditor against
loss), except those permitted by section 5.7 hereof.
4.8 Taxes. Except as expressly disclosed in the
financial statements referred to in section 4.5 above,
neither the Company nor any Subsidiary has any material
outstanding unpaid tax liability (except for taxes
which are currently accruing from current operations
and ownership of property, which are not delinquent),
and no tax deficiencies have been proposed or assessed
against the Company or any Subsidiary. The most recent
completed audit of the Company's federal income tax
returns was for the Company's income tax year ending
December 31, 1989, and all taxes shown by such returns
(together with any adjustments arising out of such
audit, if any) have been paid.
4.9 Absence of Litigation. Neither the Company nor
any Subsidiary is a party to any litigation or
administrative proceeding, nor so far as is known by
the Company is any litigation or administrative
proceeding threatened against it or any Subsidiary,
which in either case (i) relates to the execution,
delivery or performance of this Agreement, the Notes,
or any of the Collateral Documents, (ii) could, if
adversely determined, cause any material adverse change
in the property, financial condition or the conduct of
the business of the Company and its Subsidiaries taken
as a whole, (iii)asserts or alleges the Company or
any Subsidiary violated Environmental Laws, (iv)
asserts or alleges that Company or any Subsidiary is
required to cleanup, remove, or take remedial or other
response action due to the disposal, depositing,
discharge, leaking or other release of any hazardous
substances or materials, or (v) asserts or alleges that
Company or any Subsidiary is required to pay all or a
portion of the cost of any past, present or future
cleanup, removal or remedial or other response action
which arises out of or is related to the disposal,
depositing, discharge, leaking or other release of any
hazardous substances or materials by Company or any
Subsidiary, except with respect to violations,
cleanups, removals and other remedial and response
actions referred to clauses (iii), (iv) and (v) above
which will cost the Company and its Subsidiaries less
than $2,500,000 in the aggregate.
4.10 Absence of Default. No event has
occurred which either of itself or with the lapse of
time or the giving of notice or both, would give any
creditor of the Company or any Subsidiary the right to
accelerate the maturity of any indebtedness of the
Company or any Subsidiary for borrowed money. Neither
the Company nor any Subsidiary is in default under any
other lease, agreement or instrument, or any law, rule,
regulation, order, writ, injunction, decree,
determination or award, non-compliance with which could
materially adversely affect its property, financial
condition or business operations.
4.11 No Burdensome Agreements. Neither the Company nor
any Subsidiary is a party to any agreement, instrument
or undertaking, or subject to any other restriction,
(i) which materially adversely affects the property,
financial condition or business operations of the
Company and its Subsidiaries taken as a whole, or (ii)
under or pursuant to which the Company or any
Subsidiary is or will be required to place (or under
which any other person may place) a lien upon any of
its properties securing indebtedness either upon demand
or upon the happening of a condition, with or without
such demand, other than Permitted Liens.
4.12 Trademarks, etc. The Company and its
Subsidiaries possess adequate trademarks, trade names,
copyrights, patents, permits, service marks and
licenses, or rights thereto, for the present and
planned future conduct of their respective businesses
substantially as now conducted, without any known
conflict with the rights of others which might result
in a material adverse effect on the Company and its
Subsidiaries taken as a whole.
4.13 Partnerships; Joint Ventures. Neither
the Company nor any Subsidiary is a member of any
partnership or joint venture except as permitted under
section 5.4.
4.14 Full Disclosure. No information,
exhibit or report furnished by the Company or any
Subsidiary to any Bank in connection with the
negotiation or execution of this Agreement contained
any material misstatement of fact as of the date when
made or omitted to state a material fact or any fact
necessary to make the statements contained therein not
misleading as of the date when made.
4.15 Fiscal Year. The fiscal year of the Company
and each Subsidiary ends on December 31 of each year.
4.16 Environmental Conditions. To the Company's
knowledge after reasonable investigation, there are no
conditions existing currently or likely to exist during
the term of this Agreement which would subject the
Company or any Subsidiary to damages, penalties,
injunctive relief or cleanup costs under any
Environmental Laws or which require or are likely to
require cleanup, removal, remedial action or other
response pursuant to Environmental Laws by the Company
or any Subsidiary, except for such matters which will
cost the Company and its Subsidiaries less than
$2,500,000 in the aggregate.
4.17 Environmental Judgments, Decrees and
orders. Neither the Company nor any Subsidiary is
subject to any judgment, decree, order or citation
related to or arising out of Environmental Laws and
neither the Company nor any Subsidiary has been named
or listed as a potentially responsible party by any
governmental body or agency in a matter arising under
any Environmental Laws, except for such matters which
will cost the Company and its Subsidiaries less than
$2,500,000 in the aggregate.
ARTICLE V
NEGATIVE COVENANTS
While any part of the credit granted to the
Company is available and while any part of the
principal of or interest on any Note remains unpaid or
any Letter of Credit Obligation remains outstanding,
the Company shall not do any of the following, or
permit any Subsidiary to do any of the following,
without the prior written consent of the Required
Banks:
5.1 Restriction of Indebtedness. Create,
incur, assume or have outstanding any indebtedness for
borrowed money or the deferred purchase price of any
asset (including obligations under Capitalized Leases),
except:
(a) the Notes issued under this Agreement;
(b) outstanding indebtedness in respect of
industrial revenue bond financing shown on the
financial statements referred to in section 4.5 above,
provided that such indebtedness shall not be renewed,
extended or increased;
(c) additional long-term indebtedness
incurred pursuant to an offering of long-term notes,
bonds or similar obligations of the Company; provided
that, simultaneously with the closing of such debt
offering, the Aggregate Commitment shall be reduced by
an amount equal to the net proceeds to the Company of
such long-term indebtedness;
(d) indebtedness described in section
lo.l(p)(iv), provided such indebtedness does not exceed
an aggregate of $5,000,000 outstanding at any one time;
(e) Commercial Paper in an aggregate face
amount of not more than the amount permitted by section
1.9(a);
(f) Nicolet Funding Corp. Loans in aggregate
principal amount of not more than the amount permitted
by section 1.9(e);
(g) unsecured indebtedness which is
subordinated to the prior payment of the Company's
obligations under this Agreement in a manner
satisfactory to the Banks;
(h) indebtedness in respect of Capitalized
Leases, provided that the aggregate lease payments
thereunder do not exceed $1,000,000 in any fiscal year
of the Company; and
(i) other indebtedness not exceeding
$5,000,000 in aggregate principal amount at any time
outstanding.
5.2 Restriction on Liens. Create or permit
to be created or allow to exist any mortgage, pledge,
encumbrance or other lien upon or security interest in
any property or asset now owned or hereafter acquired
by the Company or any Subsidiary, except Permitted
Liens.
5.3 Sale and Leaseback. Enter into any
agreement providing for the leasing by the Company or
a Subsidiary of property which has been or is to be
sold or transferred by the Company or a Subsidiary to
the lessor thereof, or which is substantially similar
in purpose to property so sold or transferred, except
for agreements relating to sales of property not
exceeding $5,000,000 (in gross sales proceeds to the
Company) in the aggregate.
5.4 Acquisitions and Investments. Acquire any
other business or make any loan, advance or extension
of credit to, or investment in, any other person,
corporation or other entity (including without
limitation Subsidiaries, partnerships and joint
ventures), including investments acquired in exchange
for stock or other securities or obligations of any
nature of the Company or any Subsidiary, except:
(a) investments in (i) bank repurchase
agreements; (ii) savings accounts or certificates
of deposit in a financial institution of
recognized standing; (iii) obligations issued or
fully guaranteed by the United States; and (iv)
prime commercial paper maturing within 90 days of
the date of acquisition by the Company or a
Subsidiary;
(b) loans and advances made to employees and
agents in the ordinary course of business, such as
travel and entertainment advances and similar
items;
(c) investments in the Company by a
Subsidiary;
(d) credit extended to customers in the
ordinary course of business;
(e) other investments outstanding on
December 31, 1993, and shown on the financial
statements referred to in section 4.5 above,
provided that such investments shall not be
increased; and
(f)additional acquisitions and investments in
present and future Subsidiaries and joint
ventures, provided that all such acquisitions and
investments (valued at original cost without
regard to subsequent increases or decreases in the
value thereof) shall not exceed (i)$15,000,000 in
the aggregate and (ii)$5,000,000 with respect to
any single entity.
5.5 Liquidation; Merger; Disposition of
Assets. Liquidate or dissolve; or merge with or into
or consolidate with or into any other corporation or
entity except a merger of a wholly-owned Subsidiary
into the Company or another wholly-owned Subsidiary; or
sell, lease, transfer or otherwise dispose of all or
any substantial part of its property, assets or
business (other than sales made in the ordinary course
of business), or any stock of any Subsidiary.
5.6 Accounts Receivable. Discount or sell with
recourse, or sell for less than the face amount
thereof, any of its notes or accounts receivable,
whether now owned or hereafter acquired.
5.7 Contingent Liabilities. Guarantee or
become a surety or otherwise contingently liable
(including, without limitation, liable by way of
agreement, contingent or otherwise, to purchase, to
provide funds for payment, to supply funds to or
otherwise invest in the debtor or otherwise to assure
the creditor against loss) for any obligations of
others, except (i) pursuant to the deposit and
collection of checks and similar items in the ordinary
course of business, (ii) in connection with letters of
credit issued for the account of the Company from time
to time by Republic National Bank of New York, provided
that (A) such letters of credit shall not exceed
$10,000,000 in aggregate face amount at any time
outstanding and (B) none of such letters of credit
shall remain outstanding on or after June 1, 1995, and
(iii) other contingent liabilities in respect of third
party obligations not exceeding an aggregate of
$5,000,000 outstanding at any one time.
5.8 Affiliates. Suffer or permit any
transaction with any Affiliate, except on terms not
less favorable to the Company or Subsidiary than would
be usual and customary in similar transactions with non-
affiliated persons.
ARTICLE VI
AFFIRMATIVE COVENANTS
While any part of the credit granted to the
Company is available and while any part of the
principal of or interest on any Note remains unpaid or
any Letter of Credit Obligation is outstanding, and
unless waived in writing by the Required Banks, the
Company shall:
6.1 Financial Status. Maintain:
(a) At all times a Consolidated Current Ratio
of at least 2.00 to 1.00;
(b) A ratio of Consolidated Total
Liabilities to Consolidated Tangible Net Worth of
(i) not more than 1.00 to 1.00 at all times prior
to January 1, 1996 and (ii) not more than 0.85 to
1.00 at all times after December 31, 1995; and
(c) At the end of each fiscal quarter a
Consolidated Fixed Charge Coverage Ratio for the
four consecutive fiscal quarters then ended of at
least 3.00 to 1.00.
6.2 Insurance. Maintain insurance in such
amounts and against such risks as is customary by
companies engaged in the same or similar businesses and
similarly situated.
6.3 Corporate Existence; Obligations. Do,
and cause each Subsidiary to do, all things necessary
to: maintain its corporate existence (except for
mergers permitted by section 5.5) and all rights and
franchises necessary or desirable for the conduct of
its business; (ii) comply in all material respects with
all applicable laws, rules, regulations and ordinances,
and all restrictions imposed by governmental
authorities, including those relating to environmental
standards and controls; and (iii) pay, before the same
become delinquent and before penalties accrue thereon,
all taxes, assessments and other governmental charges
against it or its property, and all of its other
liabilities, except to the extent and so long as the
same are being contested in good faith by appropriate
proceedings in such manner as not to cause any material
adverse effect upon its property, financial condition
or business operations, with adequate reserves provided
for such payments.
6.4 Business Activities. Continue to carry
on its business activities in substantially the manner
such activities are conducted on the date of this
Agreement and not make any material change in the
nature of its business.
6.5 Properties. Keep and cause each
Subsidiary to keep its properties (whether owned or
leased) in good condition, repair and working order,
ordinary wear and tear and obsolescence excepted, and
make or cause to be made from time to time all
necessary repairs thereto (including external or
structural repairs) and renewals and replacements
thereof consistent with the exercise of its reasonable
business judgment.
6.6 Accounting Records; Reports. Maintain and cause
each Subsidiary to maintain a standard and modern
system for accounting in accordance with generally
accepted principles of accounting consistently applied
throughout all accounting periods and consistent with
those applied in the preparation of the financial
statements referred to in section 4.5; and furnish to
the Agent such information respecting the business,
assets and financial condition of the Company and its
Subsidiaries as any Bank may reasonably request and,
without request, furnish to the Agent:
(a) Within 45 days after the end of each of the
first three quarters of each fiscal year of
the Company (i) consolidated and
consolidating balance sheets of the Company
and all of its Subsidiaries as of the close
of such quarter and of the comparable
quarter in the preceding fiscal year; and
(ii) consolidated and consolidating
statements of income and surplus of the
Company and all of its Subsidiaries for such
quarter and for that part of the fiscal year
ending with such quarter and for the
corresponding periods of the preceding
fiscal year; all in reasonable detail and
certified as true and correct (subject to
audit and normal year-end adjustments) by
the chief financial officer of the Company;
and
(b) As soon as available, and in any event
within 90 days after the close of each fiscal year
of the Company, a copy of the audit report for such
year and accompanying consolidated and consolidating
financial statements of the Company and its
Subsidiaries, as prepared by independent public
accountants of recognized standing selected by the
Company and reasonably satisfactory to the Required
Banks, which audit report shall be accompanied by an
opinion of such accountants, in form reasonably
satisfactory to the Required Banks, to the effect that
the same fairly present the financial condition of the
Company and its Subsidiaries and the results of its and
their operations as of the relevant dates thereof; and
(c) As soon as available, copies of all reports
or materials submitted or distributed to shareholders
of the Company or filed with the Securities and
Exchange Commission or other governmental agency having
regulatory authority over the Company or any Subsidiary
or with any national securities exchange; and
(d) Promptly, and in any event within 10 days after an
officer of the Company has actual knowledge thereof a
statement of the chief financial officer of the Company
describing: (i) any Default or Event of Default
hereunder, or any other event which, either of itself
or with the lapse of time or the giving of notice or
both, would constitute a default under any other
material agreement to which the Company or any
Subsidiary is a party, together with a statement of the
actions which the Company proposes to take with respect
thereto; (ii) any pending or threatened litigation or
administrative proceeding of the type described in
section 4.9; and (iii) any fact or circumstance which
is materially adverse to the property, financial
condition or business operations of the Company and its
Subsidiaries taken as a whole; and
(e)(i) Promptly, and in any event within 30 days, after
an officer of the Company acquires actual
knowledge that any Reportable Event with respect
to any Plan has occurred, a statement of the chief
financial officer of the Company setting forth
details as to such Reportable Event and the action
which the Company proposes to take with respect
thereto, together with a copy of any notice of
such Reportable Event given to the Pension Benefit
Guaranty Corporation if a copy of such notice is
available to the Company, (ii) promptly after the
filing thereof with the Internal Revenue Service,
copies of each annual report with respect to each
Plan administered by the Company and (iii)
promptly after receipt thereof, a copy of any
notice (other than a notice of general
application) the Company, any Subsidiary or any
member of the Controlled Group may receive from
the Pension Benefit Guaranty Corporation or the
Internal Revenue Service with respect to any Plan
administered by the Company.
The financial statements referred to in (a)
and (b) above shall be accompanied by a certificate by
the chief financial officer of the Company
demonstrating compliance with the covenants in section
6.1 during the relevant period and stating that, as of
the close of the last period covered in such financial
statements, no condition or event had occurred which
constitutes a Default hereunder or which, after notice
or lapse of time or both, would constitute a Default
hereunder (or if there was such a condition or event,
specifying the same). The audit report referred to in
(b) above shall be accompanied by a certificate by the
accountants who prepared the audit report, as of the
date of such audit report, stating that in the course
of their audit, nothing has come to their attention
suggesting that a condition or event has occurred which
constitutes a Default hereunder or which, after notice
or lapse of time or both, would constitute a Default
hereunder (or if there was such a condition or event,
specifying the same); but such accountants shall not be
liable for any failure to obtain knowledge of any such
condition or event. The Agent shall promptly furnish
to each of the Banks (i) copies of the certificates
delivered to the Agent pursuant to this paragraph, and
(ii) copies of any statements delivered to the Agent
pursuant to section 6.6(d) or (e) above.
6.7 Inspection of Records. Permit representatives
of the Banks at their own expense to visit and inspect
any of the properties and examine any of the books and
records of the Company and its Subsidiaries at any
reasonable time and as often as may be reasonably
desired.
6.8 Compliance with Environmental Laws. Timely comply in all
material respects, and cause each Subsidiary to comply in all
material respects, with all applicable Environmental Laws.
6.9 Environmental Audit. Permit, at its expense, at
the request of the Required Banks, an Environmental Audit solely
for the benefit of the Banks, to be conducted by the Banks or an
independent agent selected by the Banks, but only in the event of
a circumstance or condition of the nature described in section
6.10 below which, in the reasonable judgment of the Required
Banks, will cost the Company $2,500,000 or more in the aggregate.
This provision shall not relieve the Company or any Subsidiary
from conducting its own Environmental Audits or taking any other
steps necessary to comply with Environmental Laws.
6.10 Orders, Decrees and other Documents. Provide to
the Agent, immediately upon receipt, copies of any
correspondence, notice, pleading, citation, indictment,
complaint, order, decree, or other document from any source
asserting or alleging a circumstance or condition which requires
or may recfuire a financial contribution by the Company or any
Subsidiary or a cleanup, removal, remedial action, or other
response by or on the part of the Company or any Subsidiary under
Environmental Laws or which seeks damages or civil, criminal or
punitive penalties from the Company or any Subsidiary for an
alleged violation of Environmental Laws; provided, however, such
documentation need not be delivered to the Agent unless and until
the circumstances or conditions referred to therein will,
individually or in the aggregate with any other such matters,
likely result in costs to the Company and its Subsidiaries of
$1,000,000 or more.
ARTICLE VII
DEFAULTS
7.1 Defaults. The occurrence of any one or more of the following
events shall constitute an "Event of Default":
(a) The Company shall fail to pay (i) any interest due on
any Revolving Credit Note, or any other amount payable
hereunder (other than a principal payment on any Note or a
Reimbursement Obligation) by five days after the same
becomes due; or (ii) any principal amount due on any
Revolving Credit Note or any Reimbursement Obligation when
due;
(b) The Company shall default in the performance or observance
of any agreement, covenant, condition, provision or
term contained in Article V (other than section 5.8) or
section 6.1 of this Agreement;
(c) The Company shall default in the performance
or observance of any of the other agreements,
covenants, conditions, provisions or terms in this
Agreement or any Collateral Document and such default
continues for a period of thirty days after written
notice thereof is given to the Company by any of the
Banks;
(d) Any representation or warranty made by the
Company herein or any certificate delivered pursuant
hereto, or any financial statement delivered to any
Bank hereunder, shall prove to have been false in any
material respect as of the time when made or given;
(e) The Company or any Subsidiary shall fail to
pay as and when due and payable (whether at maturity,
by acceleration or otherwise) all or any part of the
principal of or interest on any indebtedness of or
assumed by it (including without limitation the Demand
Notes), or of the rentals due under any lease or
sublease, or of any other obligation for the payment of
money, in each case where such payments aggregate
$1,000,000 or more, and such default shall not be cured
within the period or periods of grace, if any,
specified in the instruments governing such
obligations; or default shall occur under any evidence
of, or any indenture, lease, sublease, agreement or
other instrument governing such obligations, and such
default shall continue for a period of time sufficient
to permit the acceleration of the maturity of any such
indebtedness or other obligation or the termination of
such lease or sublease, unless the Company or such
Subsidiary shall be contesting such default in good
faith by appropriate proceedings;
(f) A final judgment which, together with all
other outstanding final judgments against the Company
and its Subsidiaries, or any of them, exceeds an
aggregate of $100,000 shall be entered against the
Company or any Subsidiary and shall remain outstanding
and unsatisfied, unbonded, unstayed or uninsured after
60 days from the date of entry thereof;
(g) The Company or any Subsidiary shall: (i)
become insolvent; or (ii) be unable, or admit in
writing its inability to pay its debts as they
mature; or (iii) make a general assignment for the
benefit of creditors or to an agent authorized to
liquidate any substantial amount of its property; or
(iv) become the subject of an "order for relief" within
the meaning of the United States Bankruptcy Code; or
(v) become the subject of a creditor's petition for
liquidation, reorganization or to effect a plan or
other arrangement with creditors; or (vi) apply to a
court for the appointment of a custodian or receiver
for any of its assets; or (vii) have a custodian or
receiver appointed for any of its assets (with or
without its consent); or (viii) otherwise become the
subject of any insolvency proceedings or propose or
enter into any formal or informal composition or
arrangement with its creditors;
(h) This Agreement, any Note or any Collateral
Document shall, at any time after their respective
execution and delivery, and for any reason, cease to be
in full force and effect or be declared null and void,
or be revoked or terminated, or the validity or
enforceability thereof or hereof shall be contested by
the Company, or the Company shall deny that it has any
or further liability or obligation thereunder or
hereunder, as the case may be; or
(i) Any Reportable Event, which the Required
Banks determine in good faith to constitute grounds for
the termination of any Plan by the Pension Benefit
Guaranty Corporation or for the appointment by the
appropriate United States District Court of a trustee
to administer any Plan, shall have occurred, or any
Plan shall be terminated within the meaning of Title IV
of ERISA, or a trustee shall be appointed by the
appropriate United States District Court to administer
any Plan, or the Pension Benefit Guaranty Corporation
shall institute proceedings to terminate any Plan or to
appoint a trustee to administer any Plan, and in case
of any event described in the preceding provisions of
this subsection (i) the Required Banks determine in
good faith that the aggregate amount of the Company's
liability to the Pension Benefit Guaranty Corporation
under ERISA shall exceed $1,000,000 and such liability
is not covered, for the benefit of the Company, by
insurance.
7.2 Termination of Aggregate Commitment and
Acceleration of Obligations. Upon the occurrence of
any Event of Default:
(a) As to any Event of Default under section
7.1(a) and at any time thereafter, and in each
case, the Required Banks (or the Agent with the
written consent of the Required Banks) may, by
written notice to the Company, immediately
terminate the obligation of the Banks to make
revolving credit loans and issue Letters of Credit
hereunder and declare the unpaid principal balance
of the Revolving Credit Notes, together with all
interest accrued thereon, to be immediately due
and payable; and the unpaid principal balance of
such Notes and all unreimbursed amounts drawn on
Letters of Credit, together with all interest
accrued thereon, shall thereupon be due and
payable without further notice of any kind, all of
which are hereby waived, and notwithstanding
anything to the contrary herein or in the Notes
contained;
(b) As to any Event of Default under section
7.1(g), the obligation of the Banks to make
revolving credit loans and issue Letters of Credit
hereunder shall immediately terminate and the
unpaid principal balance of all Revolving Credit
Notes and all unreimbursed amounts drawn on
Letters of Credit, together with all interest
accrued thereon, shall immediately and forthwith
be due and payable, all without presentment,
demand, protest, or further notice of any kind,
all of which are hereby waived, notwithstanding
anything to the contrary herein or in the Notes
contained;
(c) As to any Event of Default other than an
Event of Default under section 7.1(a) or section
7.1(g) and at any time thereafter, and in each
case, the Required Banks, with the written consent
of all Banks that have acted as placement agent in
the sale of any Commercial Paper then outstanding
(or the Agent with the written consent of such
Banks) may take the actions and exercise the
remedies provided by this section 7.2.
(d) As to each Event of Default, subject to
the limitations set forth in section 7.2(c) above,
the Banks shall have all the remedies for default
provided by the Collateral Documents, as well as
applicable law.
(e) In the event that the unpaid principal balance of
the Revolving Credit Notes becomes immediately due
and payable pursuant to this section 7.2, the
Company shall pay (i) to the appropriate LOC Bank
the sum of the largest drafts which could then or
thereafter be drawn under all outstanding Letters
of Credit, which sum the LOC Bank may hold for the
account of the Company, without interest, for the
purpose of paying any draft presented, with the
excess, if any, to be returned to the Company upon
termination or expiration of such Letters of
Credit, and (ii) to the Agent the aggregate face
amount of all Commercial Paper (including for this
purpose all Nicolet Funding Corp. Loans) then
outstanding, which amount may be held by the
Agent, without interest, to secure the payment in
full of all such Commercial Paper at maturity,
with the excess, if any, to be returned to the
Company upon payment in full of all such
Commercial Paper.
ARTICLE VIII
DEMAND NOTES
8.1 Right of each Bank to Demand Payment.
All amounts outstanding under each of the Demand Notes
are due ON DEMAND by the holder thereof in its sole
discretion; provided that such holder shall give at
least three Business Days' prior written notice of its
intention to make such demand to the Company and the
Agent. Notwithstanding the foregoing, the unpaid
principal balance of the Demand Notes, together with
all interest accrued thereon, shall automatically
become immediately due and payable, without
presentment, demand, protest or further notice of any
kind, all of which are hereby waived, if an Event of
Default under section 7.1(g) shall occur.
Notwithstanding reference to any Event of Default or
termination in this Agreement or any Collateral
Document (except for automatic acceleration provisions
referred to above), such provisions shall have no
application to, or otherwise restrict, each Bank's
right to demand payment under its Demand Note at any
time.
8.2 Cash Collateral. If at any time when
demand for payment is made on any Demand Note, the
aggregate outstanding face amount of all Letters of
Credit shall exceed the Aggregate Commitment (net of
all outstanding Commercial Paper and Nicolet Funding
Corp. Loans issued by the Company thereunder), the
Company shall immediately pay the amount of such excess
to the Agent, which amount (together with all accrued
interest thereon) may be held by the Agent in an
interest-bearing account as cash collateral for the
purpose of securing the repayment of any draft
presented in respect of outstanding Letters of Credit,
with the excess, if any, to be returned to the Company
as and when such Letters of Credit terminate or expire.
ARTICLE IX
THE AGENT
9.1 Appointment and Powers. Each of the
Banks hereby appoints Firstar Bank Milwaukee, National
Association as Agent for the Banks hereunder, and
authorizes the Agent to take such action as Agent on
its behalf and to exercise such powers as are
specifically delegated to the Agent by the terms
hereof, together with such powers as are reasonably
incidental thereto. The duties of the Agent shall be
entirely ministerial; the Agent shall not have any duty
to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions
of this Agreement, the Notes or any related document,
or to enforce such performance, or to inspect the
property (including the books and records) of the
Company or any of its subsidiaries; and the Agent shall
not be required to take any action which exposes the
Agent to personal liability (unless indemnification
with respect to such action satisfactory to the Agent
in its sole discretion is provided to the Agent by the
Required Banks) or which is contrary to this Agreement
or the Notes or applicable law. Firstar Bank
Milwaukee, National Association agrees to act as Agent
upon the express terms and conditions contained in this
Article IX.
9.2 Responsibility. The Agent (i) makes no
representation or warranty to any Bank and shall not be
responsible to any Bank for any oral or written
recitals, reports, statements, warranties or
representations made in or in connection with this
Agreement or any Note; (ii) shall not be responsible
for the due execution, legality, validity,
enforceability, genuineness, sufficiency,
collectibility or value of this Agreement or any Note
or any other instrument or document furnished pursuant
thereto; (iii) may treat the payee of any Note as the
owner thereof until the Agent receives written notice
of the assignment or transfer thereof signed by such
payee and in form satisfactory to the Agent; (iv) may
execute any of its duties under this Agreement by or
through employees, agents and attorneys in fact and
shall not be answerable for the default or misconduct
of any such employee, agent or attorney in fact
selected by it with reasonable care; (v) may (but shall
not be required to) consult with legal counsel
(including counsel for the Company), independent public
accountants and other experts selected by it and shall
not be liable for any action taken or omitted to be
taken in good faith by it in accordance with advice of
such counsel, accountants or experts; (vi) shall be
entitled to rely upon any note, notice, consent,
waiver, amendment, certificate, affidavit, letter,
telegram, telex, cable or other document or
communication believed by it to be genuine and signed
or sent by the proper party or parties, and may rely on
statements contained therein without further inquiry or
investigation. Neither the Agent nor any of its
directors, officers, agents, or employees shall be
liable for any action taken or omitted to be taken by
it or them under or in connection with this Agreement
or the Notes, except for its or their own gross
negligence or willful misconduct.
9.3 Agent's Indemnification. The Banks
agree to indemnify and reimburse the Agent (to the
extent not reimbursed by the Company), ratably from and
against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by, or
asserted against the Agent as such in any way relating
to or arising out of this Agreement or any action taken
or omitted by the Agent under this Agreement, provided
that no Bank shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or
disbursements resulting from the Agent's gross
negligence or willful misconduct. Without limitation
of the foregoing, each Bank agrees to reimburse the
Agent promptly upon demand for its ratable share of any
out-of-pocket expenses (including counsel fees)
incurred by the Agent in connection with the
preparation, execution, administration or enforcement
of, or the preservation of any rights under, this
Agreement to the extent that the Agent is not
reimbursed for such expenses by the Company.
9.4 Rights as a Lender. With respect to its
Commitment and the Notes issued to it, Firstar Bank
Milwaukee, National Association, in its individual
capacity as a Bank, shall have, and may exercise, the
same rights and powers under this Agreement and the
Notes payable to it as any other Bank has under this
Agreement and Notes, and the terms "Bank" and "Banks",
unless the context otherwise requires, shall include
Firstar Bank Milwaukee, National Association in its
individual capacity as a Bank. Firstar Bank Milwaukee,
National Association and its affiliates may accept
deposits from, lend money to, act as trustee under
indentures of, and generally engage in any kind of
banking or trust business with, the Company or any of
its subsidiaries and any person, firm or corporation
who may do business with or own securities of the
Company or any subsidiary, all as if it were not the
Agent, and without any duty to account therefor to the
Banks.
9.5 Credit Investigation. Each of the Banks severally
represents and warrants to each of the other Banks and
to the Agent that it has made its own independent
investigation and evaluation of the financial condition
and affairs of the Company and its Subsidiaries in
connection with such Bank's execution and delivery of
this Agreement and the making of its loans and has not
relied on any information or evaluation provided by any
other Bank or the Agent in connection with any of the
foregoing (other than information provided by the
Company to the Agent for transmittal to the Banks in
connection with the foregoing); and each Bank
represents and warrants to each other Bank and to the
Agent that it shall continue to make its own
independent investigation and evaluation of the credit-
worthiness of the Company and its Subsidiaries while
the Commitments and/or the Notes are outstanding.
9.6 Compensation. The Agent shall receive
such compensation for its services as Agent under this
Agreement as may be agreed from time to time by the
Company and the Agent.
ARTICLE X
MISCELLANEOUS
10.1 Accounting Terms; Definitions. Except
as otherwise provided, all accounting terms shall be
construed in accordance with generally accepted
accounting principles consistently applied and
consistent with those applied in the preparation of the
financial statements referred to in section 4.5, and
financial data submitted pursuant to this Agreement
shall be prepared in accordance with such principles.
As used herein:
(a) the term "Affiliate,, means any person,
firm or corporation, which, directly or
indirectly, controls, is controlled by, or is
under common control with, the Company or a
Subsidiary.
(b) the term "Business Day" means any day
other than a Saturday or Sunday on which banks in
the States of Wisconsin and Illinois are open for
the transaction of substantially all of their
banking functions; provided, however, that for
purposes of calculating the Basic LIBOR Rate, the
LIBOR Interest Periods, and the election of LIBOR
Pricing Options, the term "Business Day" shall
mean in addition only those days on which dealings
in U.S. dollar deposits are carried out by U.S.
financial institutions in the London interbank
market.
(c) the term "Capitalized Lease,, means any
lease which is capitalized on the books of the
lessee, or should be so capitalized under
generally accepted accounting principles.
(d) the term "Commercial Paper" means (i) all commercial paper
issued by the Company from time to time, including sales of
commercial paper through one or more of the Banks acting as
placement agent pursuant to separate agreements between the
Company and such Bank or Banks, and (ii) where expressly so
included by the terms of this Agreement, all Nicolet Funding
Corp. Loans described in section 1.9(e).
(e) the term "Consolidated Current Ratio,, means the
relationship, expressed as a numerical ratio, between:
(i) the amount of all assets which under generally
accepted principles of accounting would appear as current
assets on the consolidated balance sheet of the Company and
its Subsidiaries, excluding prepaid expenses which are not
refundable on the date the determination is made,
And
(ii) the amount of all liabilities which under generally
accepted principles of accounting would appear as current
liabilities on such balance sheet, including all indebtedness
payable on demand or maturing (whether by reason of specified
maturity, fixed prepayments, sinking funds or accruals of any
kind, or otherwise) within 12 months or less from the date of
the relevant statement, including all lease and rental
obligations due in 12 months or less under leases, whether or
not Capitalized Leases, and including customers' advances and
progress billings on contracts.
(f) the term "Consolidated Fixed Charge Coverage Ratio" means,
for any period, the relationship, expressed as a numerical
ratio, between:
(i) the Consolidated Net Earnings of the Company for such
period plus the sum of (A) depreciation, amortization and
all other noncash deductions arising in the normal course
of operations and shown on the Company's financial
statements for such period, (B) net interest expense on
indebtedness of the Company (including the interest
component of Capitalized Leases) for such period and (C)
rental expense under leases other than Capitalized
Leases for such period; and
(ii) the sum of (A) net interest expense on
indebtedness of the Company (including the
interest component of Capitalized Leases) for such
period, (B) scheduled principal payments on
indebtedness of the Company during such period,
(C) the principal component of required payments
in respect of Capitalized Leases during such
period and (D) rental expense under leases other
than Capitalized Leases for such period.
(g) the term "Consolidated Total Liabilities,,
means all liabilities of the Company and its
Subsidiaries properly appearing on a consolidated
balance sheet of the Company and its Subsidiaries in
accordance with generally accepted accounting
principles.
(h) the term "Consolidated Net Earnings" means
the excess of:
(i) all revenues and income derived
from operation in the ordinary course of business
(excluding extraordinary gains and profits upon the
disposition of investments and fixed assets),
Over:
(ii) all expenses and other proper
charges against income (including payment or provision
for all applicable income and other taxes, but
excluding 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:
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;
any write-up in the book value of
any such assets resulting from a revaluation thereof
subsequent to December 31, 1993;
(iii) all reserves, including
reserves for depreciation, obsolescence, depletion,
insurance, and inventory valuation, but excluding
contingency reserves not allocated for any particular
purpose and not deducted from assets;
(iv) the amount, if any, at which any
shares of stock of the Company or any Subsidiary appear
on the asset side of such consolidated balance sheet;
(v) all liabilities of the Company and
its Subsidiaries shown on such balance sheet; and
(vi) all investments in foreign
affiliates and nonconsolidated domestic affiliates.
(j) the term "Controlled Group" means a
controlled group of corporations as defined in section
1563 of the Internal Revenue Code of 1986, as amended,
of which the Company is a part.
(k) The term "Default" means any event or
condition which with the passage of time, the giving of
notice or both would constitute an Event of Default.
(1) 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.
(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 "ERISAII means the Employee
Retirement Income Security Act of 1974, as the same may
be in effect from time to time.
(o) the term "Letter of Credit Obligations" means
the aggregate undrawn face amounts of all outstanding
Letters of Credit and all unpaid Reimbursement
obligations.
(p) the term "Permitted Liens" means:
(i) liens on property financed with
the proceeds of industrial revenue bonds permitted
by section 5.1(b) given to secure indebtedness
evidenced by such bonds and other obligations of the
Company directly relating thereto;
(ii) liens for taxes, assessments or
governmental charges, and liens incident to
construction, which are either not delinquent or are
being contested in good faith by the Company or a
Subsidiary by appropriate proceedings which will
prevent foreclosure of such liens, and against which
adequate reserves have been provided; and easements,
restrictions, minor title irregularities and similar
matters which have no adverse effect as a practical
matter upon the ownership and use of the affected
property by the Company or any Subsidiary;
(iii) liens or deposits in
connection with worker's compensation or other
insurance or to secure customs, duties, public or
statutory obligations in lieu of surety, stay or appeal
bonds, or to secure performance of contracts or bids
(other than contracts for the payment of money
borrowed), or deposits required by law or governmental
regulations or by any court order, decree, judgment or
rule as a condition to the transaction of business or
the exercise of any right, privilege or license; or
other liens or deposits of a like nature made in the
ordinary course of business; provided that the
aggregate amount of liabilities (including interest and
penalties, if any) of the Company secured by any stay
or appeal bond shall not exceed $10,000,000 at any one
time outstanding; and
(iv) purchase money liens on property
acquired in the ordinary course of business, to finance
or secure a portion of the purchase price thereof, and
liens on property acquired existing at the time of
acquisition; provided that in each case such lien shall
be limited to the property so acquired, the liability
secured by such lien does not exceed either the
purchase price or the fair market value of the asset
acquired, and the indebtedness secured by such lien is
permitted by section 5.1.
(q) the term "Plan" means any employee pension
benefit plan subject to Title IV of ERISA maintained by
the Company, any of its Subsidiaries, or any member of
the Controlled Group, or any such plan to which the
Company, any of its Subsidiaries, or any member of the
Controlled Group is required to contribute on behalf of
any of its employees.
(r) the term "Reimbursement obligations" means
all obligations of the Company to reimburse each LOC
Bank for all drawings under Letters of Credit.
(s) the term "Reportable Event" means a
reportable event as that term is defined in Title iv of
ERISA.
(t) The term "Required Banks" means Banks
holding at least 66 2/3% of the Aggregate
Commitment, or if the Aggregate Commitment has
been terminated, Banks holding at least 66 2/3% in
aggregate principal amount of the loans and Letter
of Credit Obligations outstanding hereunder.
(u) the term "Subsidiary" means a
corporation of which the Company owns, directly or
through another Subsidiary, at the date of
determination, more than 50% of the outstanding
stock having ordinary voting power for the
election of directors, irrespective of whether or
not at such time stock of any other class or
classes might have voting power by reason of the
happening of any contingency.
(v) The term "Unfunded Liabilities" means,
with regard to any Plan, the excess of the current
value of the Plan's benefits guaranteed under
ERISA over the current value of the Plan's assets
allocable to such benefits.
10.2 Amendments, Etc. No waiver, amendment,
settlement or compromise of any of the rights of any
Bank under this Agreement, any Note or any of the
Collateral Documents shall be effective for any purpose
unless it is in a written instrument executed and
delivered by the parties authorized to act by this
section 10.2. Subject to the provisions of this section
10.2, the Required Banks (or the Agent with the written
consent of the Required Banks) and the Company may
enter into agreements supplemental hereto for the
purpose of adding or modifying any provisions to this
Agreement, the Notes, or the Collateral Documents or
changing in any manner the rights of the Banks or the
Company hereunder or thereunder or waiving any Event of
Default hereunder; provided, however, that no such
supplemental agreement shall, without the consent of
all of the Banks:
(a) Extend the maturity of any Note or
reduce the principal amount thereof, or reduce the
rate or amount or change the time of payment of
interest or fees payable on any Note or otherwise
under this Agreement.
(b) Amend the definition of Required Banks.
(c) Extend the Termination Date, or increase
the amount of the Commitment of any Bank
hereunder, or permit the Company to assign its
rights under this Agreement.
(d) Alter the provisions of section 2.5 of
this Agreement.
(e) Amend any provision of this Agreement
requiring a pro rata sharing among the Banks.
(f) Amend this section 10.2.
No amendment of any provision of this Agreement
relating to the Agent shall be effective without the
written consent of the Agent.
10.3 Expenses; Indemnity.
(a) The Company shall pay, or reimburse each Bank for
(i) all reasonable out-of-pocket costs and expenses
(including, without limitation, reasonable attorneys'
fees and expenses) paid or incurred by such Bank in
connection with the negotiation, preparation,
execution, delivery, and administration of this
Agreement, the Notes, the Collateral Documents and any
other document required hereunder or thereunder,
including without limitation any amendment, supplement,
modification or waiver of or to any of the foregoing;
provided that such costs and expenses of each Bank
(other than the Agent) in connection with the
negotiation, preparation, execution and delivery of
this Agreement, the Notes and the Collateral Documents
shall not exceed $2,500; (ii) all reasonable out-of-
pocket costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses)
paid or incurred by such Bank after Default, before and
after judgment, in enforcing, protecting or preserving
its rights under this Agreement, the Notes, the
Collateral Documents and any other document required
hereunder or thereunder, including without limitation
the enforcement of rights against, or realization on,
any collateral or security therefor; and (iii) any and
all recording and filing fees and any and all stamp,
excise, intangibles and other taxes, if any,
(including, without limitation, any sales, occupation,
excise, gross receipts, franchise, general corporation,
personal property, privilege or license taxes, but not
including taxes levied upon the net income of such Bank
by the federal government or the state (or political
subdivision of a state) where such Bank's principal
office is located), which may be payable or determined
to be payable in connection with the negotiation,
preparation, execution, delivery, administration or
enforcement of this Agreement, the Notes, the
Collateral Documents or any other document required
hereunder or thereunder or any amendment, supplement,
modification or waiver of or to any of the foregoing,
or consummation of any of the transactions contemplated
hereby or thereby, including all costs and expenses
incurred in contesting the imposition of any such tax,
and any and all liability with respect to or resulting
from any delay in paying the same, whether such taxes
are levied upon such Bank, the Company or otherwise.
(b) The Company agrees to indemnify each Bank
against any and all losses, claims, damages,
liabilities and expenses, (including, without
limitation, reasonable attorneys' fees and expenses)
incurred by such Bank arising out of, in any way
connected with, or as a result of (i) any acquisition
or attempted acquisition of stock or assets of another
person or entity by the Company or any subsidiary, (ii)
the use of any of the proceeds of any loans made
hereunder by the Company or any subsidiary for the
making or furtherance of any such acquisition or
attempted acquisition, (iii) the construction or
operation of any facility owned or
operated by the Company or any Subsidiary, or
resulting from any pollution or other environmental
condition on the site of, or caused by, any such
facility, (iv) the negotiation, preparation, execution,
delivery, administration, and enforcement of this
Agreement, the Note, the Collateral Documents and any
other document required hereunder or thereunder,
including without limitation any amendment, supplement,
modification or waiver of or to any of the foregoing or
the consummation or failure to consummate the
transactions contemplated hereby or thereby, or the
performance by the parties of their obligations
hereunder or thereunder, (v) any claim, litigation,
investigation or proceedings related to any of the
foregoing, whether or not any Bank is a party thereto;
provided, however, that such indemnity shall not apply
to any ouch losses, claims, damages, liabilities or
related expenses arising from (A) any unexcused breach
by such Bank of its obligations under this Agreement or
any Collateral Document, (B) any commitment made by
such Bank to a person other than the Company or any
Subsidiary which would be breached by the performance
of such Bank's obligations under this Agreement or (C)
gross negligence or willful misconduct of such Bank.
(c) The foregoing agreements and indemnities
shall remain operative and in full force and
effect regardless of termination of this
Agreement, the consummation of or failure to
consummate either the transactions contemplated by
this Agreement or any amendment, supplement,
modification or waiver, the repayment of any loans
made hereunder, the termination of the Letter of
Credit Obligations, the invalidity or
unenforceability of any term or provision of this
Agreement or any of the Notes or any Collateral
Document, or any other document required hereunder
or thereunder, any investigation made by or on
behalf of any Bank, the Company or any Subsidiary,
or the content or accuracy of any representation
or warranty made under this Agreement, any
Collateral Document or any other document required
hereunder or thereunder.
(d) The foregoing indemnities shall remain
operative and in full force and effect regardless
of the termination of this Agreement, the
consummation of the transactions contemplated by
this Agreement, the repayment of the loans made
hereunder, the invalidity or unenforceability of
any term or provision of this Agreement or any of
the Notes, any investigation made by or on behalf
of the Bank or the Company, and the content of
accuracy of any representation or warranty made
under this Agreement.
10.4 Securities Act of 1933. Each Bank
represents that it is acquiring the Notes payable to it
without any present intention of making a sale or other
distribution of such Notes, provided each Bank reserves
the right to sell its Notes or participations therein.
10.5 No Agency. Except as expressly provided
herein, nothing in this Agreement and no action taken
pursuant hereto shall cause any Bank to be treated as
the agent of any other Bank, or shall be deemed to
constitute the Banks a partnership, association, joint
venture or other entity.
10.6 Successors. The provisions of this
Agreement shall inure to the benefit of any holder of
one or more of the Notes, and shall inure to the
benefit of and be binding upon any successor to any of
the parties hereto. This Agreement shall not create
any rights in favor of any other party (including
without limitation any holder of Commercial Paper,
including for this purpose Nicolet Funding Corp. Loans)
and the Banks shall have no liability whatsoever to any
holder of Commercial Paper as a result of this
Agreement. No delay on the part of any Bank or any
holder of any of the Notes in exercising any right,
power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise of any
right, power or privilege hereunder preclude other or
further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies
herein specified are cumulative and are not exclusive
of any rights or remedies which the Banks or the holder
of any of the Notes would otherwise have.
10.7 Survival. All agreements,
representations and warranties made herein shall
survive the execution of this Agreement, the making of
the loans hereunder and the execution and delivery of
the Notes.
10.8 Wisconsin Law. This Agreement and the
Notes issued hereunder shall be governed by and
construed in accordance with the internal laws of the
State of Wisconsin, except to the extent superseded by
federal law.
10.9 Counterparts. This Agreement may be
signed in any number of counterparts with the same
effect as if the signatures thereto and hereto were
upon the same instrument.
10.10 Notices. All communications or
notices required under this Agreement shall be deemed
to have been given on the date when deposited in the
United States mail, postage prepaid, and addressed as
follows (unless and until any of such parties advises
the other in writing of a change in such address): (a)
if to the Company, with the full name and address of
the Company as shown on this Agreement below;
and (b) if to any of the Banks with the full name and
address of such Bank as shown on this Agreement above,
to the attention of the officer of the Bank executing
the form of acceptance of this Agreement.
10.11 Participations. With the prior written
consent of the Company and the Agent, each Bank may
sell to another financial institution or institutions
interests in its Notes (except that each Bank may sell
such interests without such consent to other financial
institutions owned directly or indirectly by it or by
its controlling corporation) and, in connection with
each such sale, and thereafter, disclose to any
purchaser or potential purchaser of such interest any
financial information such Bank may have concerning the
Company and its Subsidiaries.
10.12 Entire Agreement; No Agency. This
Agreement and the other documents referred to herein
contain the entire agreement between the Banks and the
Company with respect to the subject matter hereof,
superseding all previous communications and
negotiations, and no representation, undertaking,
promise or condition concerning the subject matter
hereof shall be binding upon the Banks unless clearly
expressed in this Agreement or in the other documents
referred to herein. Nothing in this Agreement or in
the other documents referred to herein and no action
taken pursuant hereto shall cause the Company to be
treated as an agent of any Bank, or shall be deemed to
constitute the Banks and the Company a partnership,
association, joint venture or other entity.
10.13 Consent to Jurisdiction. The
Company hereby consents to the jurisdiction of any
state or federal court situated in Milwaukee County,
Wisconsin, and waives any objection based on lack of
personal jurisdiction, improper venue or forum non
conveniens, with regard to any actions, claims,
disputes or proceedings relating to this Agreement, any
Note, any of the Collateral Documents, or any other
document delivered hereunder or in connection herewith,
or any transaction arising from or connected to any of
the foregoing. Nothing herein shall affect the right
of the Banks, or any of them, to serve process in any
manner permitted by law, or limit the right of any
Banks, or any of them, to bring proceedings against the
Company or its property or assets in the competent
courts of any other jurisdiction or jurisdictions.
If the foregoing is satisfactory to you, please sign
the form of acceptance below and return a signed
counterpart hereof to the Company. When this
instrument has been executed and delivered by all of
the Banks, it will evidence a binding agreement between
the Banks and the Company.
Very truly yours,
OSHKOSH BIGOSH, 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
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 BIGOSH, INC.
By:
Vice President of Finance
(CORPORATE SEAL)
EXHIBIT 1.2
DEMAND NOTE
$ 19-
FOR VALUE RECEIVED, OshKosh B'Gosh, Inc., a
Wisconsin corporation, promises to pay to the order of
the principal sum of Dollars ($ ) at the Main
Office of Firstar Bank Milwaukee, National Association,
in Milwaukee, Wisconsin, ON DEMAND. The unpaid principal
balance hereof shall bear interest, payable on the dates
specified in the Credit Agreement referred to below,
computed at the Applicable Rate as defined in such Credit Agreement.
Principal amounts unpaid at the maturity thereof (whether by
fixed maturity or acceleration) shall bear interest from and
after demand until paid computed at a rate equal to 2% per annum
plus the rate otherwise payable hereunder. Principal of and
interest on this Note shall be payable in lawful money of the United States.
This Note constitutes one of the Demand Notes issued
under a Credit Agreement dated as of June 24, 1994 among the
undersigned and Firstar Bank Milwaukee, National Association,
for itself and as Agent, and the other banks party thereto, to
which Agreement reference is hereby made for a statement of the
terms and conditions on which loans in part evidenced hereby
were made and for a description of the terms and conditions upon
which this Note may be prepaid, in whole or in part, or its
maturity accelerated.
OSHKOSH B'GOSH, INC.
By:
Vice President of Finance
(CORPORATE SEAL)
EXHIBIT 2.1
COMMERCIAL PAPER REPORT/LOAN REQUEST
19-
Memorandum to:
Firstar Bank Milwaukee,
National Association, as Agent
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Re: Credit Agreement Dated as of June 24, 1994
(the "Credit Agreement")
Part 1: Commercial Paper Report
The aggregate principal amount of all Commercial
Paper (including for this purpose all Nicolet Funding Corp.
Loans) of the Company now outstanding is $
Part 2: Loan Request
The Company hereby applies to the Agent for a loan under the
Credit Agreement to be made on 19 in the principal amount of
$ . If such loan is to be subject to a LIBOR Pricing Option,
the LIBOR Interest Period is months.
The Company hereby certifies as follows:
(a) All of the representations and
warranties set forth in Article IV of the Credit
Agreement continue to be true on the date hereof,
except that the financial statements referred to in
section 4.5 of the Credit Agreement shall be deemed to
be the most recent consolidated financial statements of
the Company delivered pursuant to section 6.6(a) or (b)
of the Credit Agreement.
(b) At the date hereof, no Default or Event
of Default under the Credit Agreement has occurred and
is continuing.
OSHKOSH B'GOSH, INC.
By:
Title:
AMENDMENT NO. 1 TO CREDIT AGREEMENT
As of June 30, 1994
Firstar Bank Milwaukee,
National Association
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Bank one, Milwaukee, NA
111 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Harris Trust and Savings Bank
111 West Monroe Street
Chicago, Illinois 60603
Norwest Bank Wisconsin,
National Association
100 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Gentlemen:
Please refer to that certain Credit Agreement
dated as of June 24, 1994 (the "Credit Agreement")
between the undersigned Oshkosh B'Gosh, Inc., a
Delaware corporation (the "Company") and you (the
"Banks"). All capitalized terms used and not otherwise
defined herein shall have the meanings given to such
terms by the Credit Agreement.
1. Amendments to Credit Agreement. The Company
requests that the Banks agree to amend the Consolidated Fixed
Charge Coverage Ratio covenant set forth in section 6.1(c) of the
Credit Agreement as set forth below. Subject to all of the terms
and conditions hereof, the Banks agree to amend such covenant as
set forth below.
Therefore, subject to the terms and conditions set forth
herein, the Credit Agreement shall be amended, as of the date
first written above, as follows:
(a) All references to the Credit Agreement in the
Credit Agreement and in any of the Collateral Documents shall
refer to the Credit Agreement as amended hereby.
(b) Section 6.1(c) of the Credit Agreement is amended
to read in its entirety as follows:
(c) At the end of each fiscal quarter set forth in the table
below, a Consolidated Fixed Charge Coverage Ratio for the four
consecutive fiscal quarters then ended of at least the amount set
forth opposite such fiscal quarter:
Consolidated Fixed
Fiscal Quarter Ending Charge Coverage Ratio
1. June 30, 1994 and 1.5:1.0
September 30, 1994
2. December 31, 1994, 2.0:1.0
March 31, 1995,
June 30, 1995 and
September 30, 1995
3. December 31, 1995, 2.5:1.0
March 31, 1996,
June 30, 1996 and
September 30, 1996
4. December 31, 1996 3.0:1.0
and thereafter
2. Representations. The Company repeats and reaffirms the
representations and warranties set forth in Article IV of the
Credit Agreement. The Company also represents and warrants that
the execution, delivery and performance of this Amendment are
within the corporate powers of the Company, have been duly
authorized by all necessary corporate action and do not and will
not (i) violate any provision of the certificate of incorporation
or by-laws of the Company or of any law, regulation, order, or
judgment presently in effect having applicability to the Company
or (ii) require the consent or approval of, or filing or
registration with, any governmental body, agency or authority; or
(iii) result in any breach of or constitute a default under any
indenture or other agreement or instrument under which the
Company is a party.
3. Confirmation of Credit Agreement. Except as
expressly provided above, the Credit Agreement shall
remain in full force and effect.
4. Fees and Expenses. The Company shall be
responsible for the payment of all fees and out-of-
pocket disbursements incurred by the Banks in
connection with the preparation, execution, delivery,
administration and enforcement of this Amendment and
including without limitation the reasonable fees and
disbursements of counsel for the Agent.
5. Miscellaneous. The provisions of this Amendment
shall inure to the benefit of and be binding upon any
successor to any of the parties hereto. All
agreements, representations and warranties made herein
shall survive the execution of this Amendment and the
extension of credit under the Credit Agreement, as so
amended. This Amendment shall be governed by and
construed in accordance with the internal laws of the
State of Wisconsin. This Amendment may be signed in
any number of counterparts with the same effect as if
the signatures thereto and hereto were upon the same
instrument.
If the foregoing is satisfactory to you, please
sign the form of acceptance below and return a signed
counterpart hereof to the Company.
Very truly yours,
OSHKOSH BIGOSH, 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
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.
I.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.
Very truly yours,
OSHKOSH BIGOSH, 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
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 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 BIGOSH, 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
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
ill 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:
I. 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:
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 l0.l(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
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.
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
(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 BIGOSH, 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
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
AMENDMENT NO. 5 TO CREDIT AGREEMENT
As of June 28, 1996
Firstar Bank Milwaukee, NA
777 East Wisconsin Ave.
Milwaukee, WI 53202
Bank One, Milwaukee, NA
111 East Wisconsin Ave.
Milwaukee, WI 53202
Harris Trust and Savings Bank
111 West Monroe Street
Chicago, IL 60603
Norwest Bank Wisconsin, NA
100 East Wisconsin Ave.
Milwaukee, WI 53202
The First National Bank of Boston
100 Federal Street
Boston, MA 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. 4 thereto dated as of January 30, 1996
(the "Credit Agreement") between the Company and each of
you, pursuant to which the Company has issued its Revolving
Credit Notes to each of you in the aggregate principal
amount of $60,000,000, each dated as of January 20, 1996
(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. New Notes. The Company has informed each of you
that it wishes to (I) extend the Termination Date to June
24, 1999, (ii) incorporate Competitive Bid Loans (as defined
below) into the Credit Agreement, and (iii) make certain
other changes in the Credit Agreement as set forth below.
Subject to all of the terms and conditions hereof, you have
agreed to such amendments to the Credit Agreement as
provided below. On the effective date of this Amendment,
all loans made or continued pursuant to the Revolving Credit
established pursuant to section 1.1 of the Credit Agreement,
including the unpaid balances of the Existing Notes, shall
be evidenced by 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, 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 specifed 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
Revolving Credit Notes issue 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 date of June 24, 1997 set forth in Section 1.1
of the Credit Agreement is amended to June 24, 1999.
(d) The amount of $35,000,000 set forth in Section
1.4(a) of the Credit Agreement (relating to import Letters
of Credit) is amended to $50,000,000.
(e) The letter of credit fee of three-quarters of one
percent (3/4%) per annum set forht in Section 1.4(b) of the
Credit Agreement is amended to five-eighths of one percent
(5/8%) per annum.
(f) Section 1.9(e) is deleted from the Credit
Agreement in its entirety. In addition, all references to
"Nicolet Funding Corp. Loans" throughout the Credit
Agreement are deleted and shall be of no further force or
effect.
(g) A new Section 1.10 is hereby added to the Credit
Agreement reading in its entirety as follows:
1.10 Competitive Bid Loans. The Company may obtain
loans under Sections 1.1 and 1.2 pursuant to the competitive
bid procedures set forth in the Section 1.10 ("Competitive
Bid Loans"), subject to the terms and conditions of Section
1.1 or 1.1 (as the case may be), except as otherwise
provided in this Section 1.10. Each Bank may make such
Competitive Bid Loans to the Company, subject to the terms
and conditions hereof, in such amounts as such Bank, in its
sole discretion, desires to make to the Company.
Notwithstanding any contrary provision of Section 1.1, the
aggregate outstanding amount of Competitive Bid Loans made
against the Aggregate Commitment shall reduce each Bank's
Commitment pro rata in accordance with its respective
Percentage Interest, regardless of which Bank makes such
Competitive Bid Loans. Any Competitive Bid Loan made under
the Demand Line shall be due and payable upon demand in
accordance with the terms of this Agreement, notwithstanding
any of the terms of such Competitive Bid Loan. The
procedure for making Competitive Bid Loans shall be as
follows:
(a) The Company may make requests for bids from the
Banks to make Competitive Bid Loans ("Competitive Bids") not
later than 9:00 a.m., Milwaukee time, on the proposed
borrowing date for one or more Competitive Bid Loans. Each
such request shall be given directly to each of the Banks,
shall be given in writing (which may be a facsimile
transmission) signed by the Company, and shall specify (I)
the proposed borrowing date, which shall be a Business Day,
(ii) the aggregate amount of the requested Competitive Bid
Loans, which shall not be less than $1,000,000 or, for
amounts in excess thereof, an integral multiple of $100,000,
(iii) the interest period for each Competitive Bid Loan
("Loan Period"), which shall commence on the applicable
borrowing date and end on a specified date thereafter not
exceeding 180 days from such borrowing date (up to three (3)
Loan Periods may be requested pursuant to each Competitive
Bid), and the last day of each such Loan Period, and (iv) if
more than one Loan Period is so specified, the principal
amount allocable to each such Loan Period.
(b) Each Bank in its sole discretion may (but is not
obligated to) submit one or more Competitive Bids to the
Company not later than 11:00 a.m., Milwaukee time, on the
proposed borrowing date specified in such request for
Competitive Bids (such 11:00 a.m. time being herein called
the "Submission Deadline") by facsimile or in writing, and
thereby irrevocably offer to make all or any part (any such
part referred to as a "Portion") of any Competitive Bid Loan
described in the relevant request for Competitive Bids at a
fixed rate of interest per annum (each a "Bid Rate")
specified therein, without reference to the LIBOR Rate or
other basis for interest rates, in an aggregate principal
amount of not less than $1,000,000 and, for amounts in
excess thereof, an integral multiple of $100,000. Multiple
Competitive Bids may be delivered by any Bank.
(c) The Company shall, in its sole discretion but
subject to paragraph (d) below, irrevocably accept or reject
any such Competitive Bid (or any Portion thereof) not later
than 12:00 noon on the proposed borrowing date by notice to
the appropriate Bank by telephone (confirmed in writing
promptly delivered to such Bank and the Agent the same day).
If a Bank fails to receive notice from the Company of its
acceptance or rejection of any Competitive Bids made by such
Bank at or prior to 12:00 noon on such day, all such
Competitive Bids shall be deemed to have been rejected by
the Company. The Company's written acceptance of any
Competitive Bid shall constitute a borrowing notice of the
Company, and shall specify the amount, maturity date and Bid
Rate for each Competitive Bid Loan. The Company will give
written notice to the Agent in the form of Part 3 to Exhibit
2.1 hereto on each Business Day on which there is any change
in the aggregate outstanding principal amount of Competitive
Bid Loans, setting forth the aggregate principal amount of
all Competitive Bid Loans then outstanding after giving
effect to any Competitive Bid Loans made on such Business
Day.
(d) If the Company accepts a Portion of a proposed
Competitive Bid Loan for a single Loan Period at the Bid
Rate provided therefor in a Bank's Competitive Bid, such
Portion shall be in a principal amount of $1,000,000 or, for
amounts in excess thereof, an integral multiple of $100,000.
If the Company accepts any Competitive Bid Loan or Portion
offered in any Competitive Bid, the Company must accept
Competitive Bids (and Competitive Bid Loans and Portions
thereby offered) based exclusively upon the successively
lowest Bid Rates within each Loan Period an no other
criteria. If two (2) or more Banks submit Competitive Bids
with identical Bid Rates for the same Loan Period and the
Company accepts any thereof, the Company shall accept all
such Competitive Bids as nearly as possible in proportion to
the amounts of such Banks' respective Competitive Bids with
identical Bid Rates for such Loan Period, provided, that if
the amount of Competitive Bid Loans to be so allocated is
not sufficient to enable each such Bank to make such
Competitive Bid Loan (or Portions thereof) in an aggregate
principal amount of $1,000,000, or for amounts in excess
thereof, an integral multiple of $100,000, the Company shall
round the Competitive Bid Loans (or Portions thereof)
allocated to such Bank or Banks as the Company shall select
as necessary to a minimum of $1,000,000 and, if greater than
$1,000,000 the nearest multiple of $100,000, or select the
Competitive Bid of only one of such Banks.
(e) Not later than 1:30 p.m., Milwaukee time, on the
relevant borrowing date, each Bank whose Competitive Bid was
accepted by the Company shall make available to the Agent,
in immediately available funds, the proceeds of such Bank's
Competitive Bid Loan(s). Upon fulfillment of the applicable
borrowing conditions, the Agent shall deposit in the
Company's account maintained with the Agent or as the
Company may otherwise direct in writing on the relevant
borrowing date the proceeds of such Competitive Bid Loans,
in immediately available funds.
(h) Section 2.2(b) of the Credit Agreement is amended
by adding an additional subparagraph (3) thereto, reading in
its entirety as follows:
(3) With respect to any portion of the
indebtedness evidenced by the Notes which consists of
Competitive Bid Loans made pursuant to Section 1.10, the
applicable Bid Rate determined pursuant to the procedure set
forth in Section 1.10.
(i) Section 5.4 of the Credit Agreement is amended by
adding an additional clause (v) at the end of subparagraph
(a) thereor, reading in its entirety as follows:
and (v) other short-term fixed income investments of
high credit quality selected by the Company;
(j) Section 6.1(c) of the Credit Agreement is
amended to read in its entirety as follows:
(k) 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 Charge
Period Coverage Ratio
From December 31, 1994 through and
including December 31, 1997 2.0:1.0
From January 1, 1998 through and
including December 31, 1998 2.5:1.0
From January 1, 1999 and thereafter 3.0:1.0
(1) Clause (i) of Section 10.1(f) of the Credit
Agreement (definition of "Consolidated Fixed Charge Coverage
Ratio") is amended to read in its entirety as follows:
(i) the Consolidated Net Earnings of the Company for
such period (without taking into account any effects of the
$20.9 million pre-tax charge against income taken by the
Company in the fiscal quarter ending June 30,1996) 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 (including the interest component of Capitalized
Leases) for such period and (C) rental expense under leases
other than Capitalized Leases for such period; and
(m) Exhibit 2.1 to the Credit Agreement is amended to
read as set forth in Exhibit 2.1 attached to this Amendment.
4. 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 of (ii) require 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. 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 adversely affected as the result of any event or
development since December 31, 1995.
(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
(c) All proceedings taken in condition 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.
6. Confirmation of Credit Agreement. Except as
expressly provided above, the Credit Agreement shall remain
in full force and effect.
7. 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.
8. 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 fist above written.
FIRSTAR BANK MILWAUKEE, NA
BY: /s/Stephen Carlton
Title: Vice President
BANK ONE, MILWAUKEE, NA
BY: /s/A.F. Maggiore
Title: Vice President
HARRIS TRUST AND SAVINGS BANK
BY:
Title: Vice President
NORWEST BANK WISCONSIN, NA
BY: /s/Daniel Frazier
Title: Vice President
THE FIRST NATIONAL BANK OF BOSTON
BY:
Title: Director
EXHIBIT 1.1
PROMISSORY NOTE
$ , 19
FOR THE 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,
Wisbonsin, on June 24, 1999. 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 2.1
COMMERCIAL PAPER AND COMPETITIVE BID LOAN
REPORT/LOAN REQUEST
, 19
Memorandum to:
Firstar Bank Milwaukee, NA, as Agent
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Re: Credit Agreement Dated as of June 24, 1994, as
amended (the "Credit Agreement")
Part 1: Commercial Paper Report
The aggregate principal amount of all Commercial
Paper 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.
Part 3: Competitive Bid Loan Report
The aggregate principal amount of all Competitive
Bid Loans now outstanding is $ . The
Portions of outstanding Competitive Bid Loans held by each
of the Banks are as follows:
Firstar Bank Milwaukee, NA $
Bank One, Milwaukee, NA $
Harris Trust and Savings Bank $
Norwest Bank Wisconsin, NA $
The First National Bank of Boston $
OSHKOSH B'GOSH, INC.
By:
Title:
AMENDMENT NO. 6 TO CREDIT AGREEMENT
As of November 21, 1997
Firstar Bank Milwaukee,
National Association
777 East Wisconsin Avenue
Milwaukee, WI 53202
Bank One, Wisconsin
111 East Wisconsin Avenue
Milwaukee, WI 53202
Harris Trust and Savings Bank
111 West Monroe Street
Chicago, IL 60603
Norwest Bank Wisconsin,
National Association
100 East Wisconsin Avenue
Milwaukee, WI 53202
BankBoston, N.A.
100 Federal Street
Boston, MA 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. 5 thereto dated as of June 28, 1996 (the "Credit Agreement")
between the Company and each of you, pursuant to which the
Company has issued its Revolving Credit Notes to each of you in
the aggregate principal amount of $60,000,000, each dated as of
June 28, 1996 (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. New Notes. The Company has informed each of you that
it wishes to (I) extend the Termination Date to June 24, 2000,
and (ii) make certain other changes in the Credit Agreement as
set forth below. Subject to all of the terms and conditions
hereof, you have agreed to such amendments to the Credit
Agreement as provided below. On the effective date of this
Amendment, all loans made or continued pursuant to the Revolving
Credit established pursuant to Section 1.1 of the Credit
Agreement, including the unpaid balances of the Existing Notes,
shall be evidenced by 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, 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
Revolving Credit 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 date of June 24, 1999 set forth in Section 1.1
of the Credit Agreement is amended to June 24, 2000.
(d) 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:
Period Consolidated Fixed
Charge Coverage Ratio
1. From December 31, 1994 2.0:1.0
through and including
December 31, 1997.
2. From January 1, 1998 2.5:1.0
through and including
December 31, 1999.
3. From January 1, 2000 and 2.75:1.0
thereafter.
4. 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.
5. 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, 1996.
(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
(c) All proceedings taken in conjunction 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.
6. Confirmation of Credit Agreement. Except as expressly
provided above, the Credit Agreement shall remain in full force
and effect.
7. 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.
8. 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:
Title:
BANK ONE, WISCONSIN
By:
Title:
EXHIBIT 10.14
OSHKOSH B'GOSH, INC.
1995 OUTSIDE DIRECTOR'S STOCK OPTION PLAN
I. INTRODUCTION
1.01 Purpose. This plan shall be known as the OshKosh
B'Gosh, Inc. 1995 Outside Directors' Stock Option Plan. The
purpose of the Plan is to provide an incentive for Outside
Directors of OshKosh B'Gosh, Inc. to improve corporate
performance on a long-term basis. It is intended that the Plan
and its operation comply with the provisions of Rule 16b-3 under
the Securities Exchange Act of 1934 (or any successor rule).
1.02 Effective Date. The Plan shall be effective upon its
approval by shareholders at the Company's 1995 annual meeting.
If the Plan is approved by shareholders, the first option grants
will automatically be made at the Board meeting immediately
following the 1995 annual meeting.
II. PLAN DEFINITIONS.
2.01 Definitions. For Plan purposes, except where the
context clearly indicates otherwise, the following terms shall
have the meanings set forth below:
(a) "Board" shall mean the Board of Directors of the
Company.
(b) "Company" shall mean OshKosh B'Gosh, Inc., a Wisconsin
corporation.
(c) "Company Stock" shall mean the Company's Class A Common
Stock and such other stock and securities as may be
substituted therefore pursuant to Section 3.02.
(d) "Director" shall mean a director of the Company.
(e) "Fair Market Value" on any date shall mean, with
respect to Company stock, if the stock is then listed
and traded on a registered national securities
exchange, or is quoted in the NASDAQ National Market
System, the mean of the high and low sale prices
recorded in composite transactions as reported in the
Wall Street Journal (Midwest Edition) for such date or
the preceding business day if such date is not a
business day. In the absence of reported sales or if
the stock is not so listed or quoted, but is traded in
the over-the-counter market, Fair Market Value shall be
the mean of the closing bid and asked prices for such
shares on the relevant date.
(f) "Grantee" shall mean any person who has been granted an
option under the Plan.
(g) "Outside Director" shall mean a Director who is not
also an active full-time employee of the Company or a
corporation in which the Company owns, directly or
indirectly, a voting stock interest of more than fifty
percent (50%).
III. SHARES SUBJECT TO OPTION
3.01 Available Shares. The total number of share of Company
Stock that may be issued under the Plan shall not exceed Seventy
Thousand (70,000) shares. Shares subject to and not issued under
an option which expires, terminates, or is canceled for any
reason under the Plan shall again become available for the
granting of options.
3.02 Changes in Common Stock. If any stock dividend is
declared upon the Company stock, or if there is any stock split,
stock distribution, or other recapitalization of the Company with
respect to the Company Stock, resulting in a split or combination
or exchange of shares, the aggregate number and kind of shares
which may thereafter be granted under the Plan shall be
proportionately and appropriately adjusted and the number and
kind of shares then subject to options under the Plan and the per
share option price therefore shall be proportionately and
appropriately adjusted, without any change in the aggregate
purchase prices to be paid therefor.
IV. ADMINISTRATION
4.01 Administration by the Committee. The Plan shall be
administered by the Compensation Committee of the Board which
shall have the power, subject to and within the limits of the
express provisions of the Plan, to exercise such powers and to
perform such acts as are deemed necessary or expedient to promote
the best interests of the Company with respect to the Plan. The
Committee shall have no discretion as to the amount, price or
timing of any option granted under the Plan.
V. STOCK OPTIONS
5.01 Option Agreements. Each option granted under the Plan
shall be evidenced by a stock option agreement between the
Company and the Grantee which shall contain the terms and
conditions required by this Article V, and such other terms and
conditions, not inconsistent herewith, as the Committee may deem
appropriate in each case. The holder of an option shall not have
any rights as a stockholder with respect to the shares covered by
an option until such shares have been delivered to him or her.
5.02 Option Grant Size and Grant Date.
(a) Annual Grant. Each year, upon the first meeting of the
Board following the Company's annual meeting of shareholders,
each person then serving the Company as an Outside Director shall
automatically be granted a nonqualified stock option to purchase
Three Thousand (3,000) shares, subject to adjustment under
Section 3.02 hereof.
(b) Special Rule. If at any time there are not sufficient
available shares under the Plan to grant each Outside Director an
option to purchase the number of shares identified above, each
Outside Director shall receive an option to purchase an equal
number of the remaining available shares, determined by dividing
the remaining available shares by the number of Outside
Directors.
5.03 Exercise Price. The price at which each share of
Company Stock covered by an option may be purchased shall be one
hundred percent (100%) of the Fair Market Value of the Company
Stock on the date the option is granted.
5.04 Period for Exercise of Options. Each stock option
granted under this Plan shall become exerciseable six months from
the date of grant, regardless of whether the Grantee is still a
Director on such date. All rights to exercise an option shall
terminate upon the earlier or (a) ten (10) years from the date
the option is granted, or (b) two years from the date the Grantee
ceases to be a Director.
5.05 Method of Exercise. Subject to Section 5.04, each
option may be exercised in whole or in part from time to time as
specified in the stock option agreement. Each Grantee may
exercise an option by giving written notice of the exercise to
the Company, specifying the number of shares to be purchased,
accompanied by paying in full of the exercise price therefor. The
exercise price may be paid in cash, by check, or by delivering
shares of Company Stock which have been beneficially owned by the
Grantee, the Grantee's spouse, or both of them for a period of a
least six months prior to the time of exercise ("Delivered
Stock") or a combination of cash and Delivered Stock. Delivered
Stock shall be valued at its Fair Market Value determined as of
the date of exercise of the option. No Grantee shall be under
any obligation to exercise any option hereunder.
5.06 Merger, Consolidation or Reorganization. In the event
of a merger, consolidation or reorganization with another
corporation in which the Company is not the surviving
corporation, the Committee shall, subject to the approval of the
Board of Directors of the Company, or the board of directors of
any corporation assuming the obligations of the Company
hereunder, take action regarding each outstanding and unexercised
option to protect such optioin by the substitution on an equitble
basis of appropriate shares of the surviving corporation,
provided that the excess of the aggregate Fair Market Value of
the shares subject to such option immediately before such
substitution over the exercise price thereof is not more than the
excess of the aggregate fair market value of the substituted
shares made subject to option immediately after such substitution
over the exercise price thereof.
5.07 Dissolution or Liquidation. Anything contained herein
to the contrary notwithstanding, on the effective date of any
dissolution or liquidation of the Company, the Company shall pay
the holder of each then outstanding and unexercised option an
amount of cash equal to the excess of the highest Fair Market
Value per share of the Company Stock during the 60-day period
immediately preceding the dissolution or liquidation over the
option exercise price, multiplied by the number of shares subject
to such option. Such option shall then be canceled.
VI. GENERAL
6.01 Nontrasferability. No option granted under the Plan
shall be transferable or assignable except by last will and
testament or the laws of descent and distribution. During the
Grantee's lifetime, options shall be exerciseable only by the
Grantee or by the Grantee's guardian or legal representative. In
the event of the Grantee's death, the personal representative of
the Grantee's estate or the person or persons to whom the option
is transfered by will or the laws of descent and distribution may
exercise the option in accordance with its terms.
6.02 General Restriction. Each option shall be subject to
the requirement that if at any time the Board shall determine, in
its discretion, that the listing, registration, or qualification
of securities upon any securities exchange or under any state or
federal law, or the consent or approval of any government
regulatory body, is necessary or desireable as a condition of, or
in connection with, the granting of such option or the issue or
purchase of securities thereunder, such option may not be
exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Board.
6.03 Expiration and Termination of the Plan. Options may be
granted under the Plan at any time and from time to time, prior
to December 31, 2004, the date on which the Plan will expire,
except as to options then outstanding under the Plan, which shall
remain in effect until they have been exercised or have expired.
The Plan may be abandoned or terminated at any time by the Board
except with respect to any options then outstanding under the
Plan.
6.04 Amendments. The Board may from time to time, amend,
modify, suspend or terminate the Plan; provided, however, that no
such action shall (a) impair without the Grantee's consent any
option theretofore granted under the Plan or (b) be made without
shareholder approval where such approval would be required as a
condition of compliance with Rule 16b-3 under the Securities
Exchange Act of 1934.
6.05 Withholding Taxes. If the Company is required to
collect withholding taxes upon exercise of an option, the Company
may require, as a condition to such exercise, that the Grantee
concurrently pay to the Company the entire amount or a portion of
any taxes which the Company is required to withhold by reason of
such exercise. In lieu of part or all of such payment, the
Grantee may elect, subject to such rules as the Board may adopt
from time to time, to have the Company withhold from the shares
to be issued upon exercise of the option that number of shares
having a Fair Market Value equal to the amount which the Company
is required to withhold.
6.06 Construction. Except as otherwise required by
applicable federal laws, the Plan shall be governed by, and
construed in accordance with, the laws of the State of Wisconsin.
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<PERIOD-END> DEC-31-1997
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<RECEIVABLES> 27503000
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<INVENTORY> 68226000
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