10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

þ	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the Fiscal Year Ended January 1, 2005
	OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the Transition Period From           to

Commission file number 0-13365

OshKosh B’Gosh, Inc.

(Exact name of registrant as specified in its charter)

Delaware	39-0519915
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification Number)

112 Otter Avenue

Oshkosh, Wisconsin 54901

(Address of principal executive offices)

(920) 231-8800

(Registrant’s telephone number, including area code)

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 Company (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 Company was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes þ          No o

      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 the Company’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.     o

      Indicate by check mark whether the Company is an accelerated filer (as defined in Rule 12b-2 of the Act).     Yes þ          No o

      As of July 3, 2004, the last day of the Company’s fiscal second quarter, there were outstanding 9,568,904 shares of Class A Common Stock and 2,183,076 shares of Class B Common Stock, of which 8,102,964 shares and 112,766 shares, respectively, were held by non-affiliates of the Company. Based upon the closing sales price as of July 3, 2004, the aggregate market value of the Class A Common Stock held by non-affiliates was $193,417,751. 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 rate, the value of Class B Common Stock held by non-affiliates was $2,691,724.

      As of February 15, 2005, there were outstanding 9,603,304 shares of Class A Common Stock and 2,182,926 shares of Class B Common Stock.

DOCUMENTS INCORPORATED BY REFERENCE

      Certain portions of the OshKosh B’Gosh, Inc. Proxy Statement for its annual meeting to be held on May 3, 2005 (or such later date as the directors may determine), have been incorporated by reference into Part III.

INDEX

		Page
PART I
Item 1.	Business		3
	(a) General Development of Business		3
	(b) Financial Information About Segments		3
	(c) Narrative Description of Business		4
	Products		4
	Product Design		4
	Product Sourcing		5
	Merchandise Distribution		6
	Wholesale Business		6
	Retail Business		7
	Licensing		7
	International Licensing and Distribution		8
	Trademarks		8
	Seasonality		8
	Working Capital		8
	Backlog		9
	Competitive Conditions		9
	Environmental Matters		9
	Employees		9
	Business Risks		9
	(d) Financial Information About Geographic Areas		13
	(e) Available Information		13
Item 2.	Properties		14
Item 3.	Legal Proceedings		14
Item 4.	Submission of Matters to a Vote of Security Holders		14
PART II
Item 5.	Market for the Company’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		15
Item 6.	Selected Financial Data		16
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		16
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		29
Item 8.	Financial Statements and Supplementary Data		31
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		55
Item 9A.	Controls and Procedures		55
Item 9B.	Other Information		55
PART III.
Item 10.	Directors and Executive Officers of the Registrant		55
Item 11.	Executive Compensation		55
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		55
Item 13.	Certain Relationships and Related Transactions		56
Item 14.	Principal Accountant Fees and Services		56
PART IV.
Item 15.	Exhibits and Financial Statement Schedules		56
Signatures			57
Exhibit Index			58
401(K) Plan, as amended, effective January 1, 2004
Pension Plan, as amended, effective January 1, 2005
Officers Medical and Dental Reimbursement lan, as amended
List of Subsidiaries
Consent of Deloitte & Touche LLP
Certification by the Chief Executive Officer
Certification by the VP Finance, Treasurer and CFO
Section 906 Certification by the CEO
Section 906 Certification by the VP Finance, Treasurer and CFO

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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, sources and markets apparel primarily for the children’s wear and youth wear markets. While its heritage began 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.

      The success of the children’s wear business can be attributed to the Company’s core themes: quality, durability, style, trust and its heartland image. These themes have propelled the Company to the position of a 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, including a sub-brand, Genuine Kids from OshKosh, that is sold exclusively in Target stores.

      The Company has recently hired a financial advisor to assist the Company in evaluating strategic alternatives. Internally, the Company continues to take steps to improve its product value proposition, by revitalizing the OshKosh brand, while maintaining its cost structure. These actions include analysis of product extensions, commitment to the wholesale customer base, strategic retail growth, periodic review of significant licensee arrangements and continued development of an effective global sourcing strategy.

      The Company designs and sources substantially all of its OshKosh B’Gosh and related trademark apparel products that are marketed and sold in the United States. Company designers develop fabrication, trim accessories and detailed manufacturing specifications. The product is then manufactured according to detailed Company specifications and production schedules at third-party contractor locations worldwide or in Company-operated manufacturing facilities located in Mexico and Honduras. Product sourcing is based predominantly on quality, timeliness of delivery, cost and capabilities of specific manufacturing facilities.

      The Company leverages its name and brand equity into a wide variety of children’s products including children’s apparel accessory items such as socks, sleepwear, footwear and outerwear, as well as certain non apparel brand extensions. 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. The Company also successfully leverages its design talent and overall brand recognition through use of the Genuine Kids from Oshkosh sub-brand.

      (b) Financial Information About Segments

      The Company designs, sources and markets apparel products using primarily the OshKosh B’Gosh brand. The apparel products are marketed in two distinct distribution channels: domestic wholesale and through Company-owned retail stores. The Company designs and sources product to meet the needs of these distribution channels through a single procurement business unit.

      The Company manages its business operations by periodic analysis of business unit operating results. For this purpose, domestic wholesale, retail and procurement are separately identified for management reporting and are considered business segments. Licensing activities are currently combined in the “All Other” category. See Note entitled “Segment Reporting” in the Notes to the Consolidated Financial Statements for additional information about the Company’s business segments.

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      (c) Narrative Description of Business

Products

      The Company designs, sources and markets a broad range of children’s clothing as well as lines of youth wear under the OshKosh®, OshKosh B’Gosh®, OshKosh Est. 1895® and OshKosh Blue® labels. The Company’s product line includes OshKosh branded product in sizes from newborn to girls 16 and to boys 16. The Company’s product offering also currently includes an assortment of men’s and women’s products which are only sold through Company-owned retail stores and its internet site. Children’s products are distributed primarily through department and specialty stores, Company-owned retail stores, the internet and foreign retailers. The Company also designs product sold under the Genuine Kids from OshKosh label, available exclusively at Target stores.

      The children’s wear and youth wear business is targeted to reach the middle to upper middle segment of the children’s playwear 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 classic design and high quality construction. The Company tradename and trademarks are generally displayed on OshKosh product or on the hang tags accompanying the product on the retail shelves.

      The Company’s children’s wear and youth wear business includes a broad range of product categories, including monthly Fashion collections and certain Replenishment products. The Fashion collection is formatted in 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 generally presented as three to five small groups within each merchandising season. The Company’s design efforts are led by an experienced and talented design team in New York. This team brings luster to our product offering by reinforcing our reputation for style and quality.

      Replenishment products consist primarily of staple denim products with multiple wash treatments and coordinating garments. These products are developed to be somewhat less seasonal, with signature OshKosh B’Gosh classic styling, and are available for replenishment throughout the year. Some replenishment items are also designed to serve as a foundation to support the Fashion group, with seasonal colors and styles to complement the Company’s Fashion product offering.

Product Design

      The Company operates a design studio in New York City’s SoHo neighborhood that allows the design team direct access to the more creative and compelling trends in children’s wear. This design team is responsible for identifying trends in the apparel industry which can be translated into fresh fashion-relevant designs for our children’s wear product, expanding the Company’s presence as a premier children’s brand.

      Once the design direction has been established by the creative design team, the OshKosh-based product development group is responsible for fabric development, pattern design, consistency of the merchandising plan with the Company’s wholesale and retail customers and consideration of the financial viability of each product design. The merchandising process includes a detailed review of historical business performance by type of product, and considers the current style trends and creative designs developed by the design team. The product development team also works closely with the Company’s sourcing department to identify cost-effective production capabilities for the manufacture of this product, while meeting Company quality and manufacturing specifications.

      In selecting fabric and prints for its products, the Company seeks, where possible, to obtain exclusive rights to unique fabric designs from its suppliers in order to provide the Company, for a limited period of time, with some protection from imitation by competitors.

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Product Sourcing

      Substantially all of the Company’s product line is sourced in accordance with the Company’s specifications from numerous third-party contractors in Asia and throughout the world, including Company-operated facilities in Mexico and Honduras. The elimination of quota in certain product categories, beginning in 2005, may result in strategic shifts in the Company’s sourcing plan. The Company continues to make sourcing decisions on the basis of quality, timeliness of delivery and price, including the impact of quota and duty under the North American Free Trade Act, the United States-Caribbean Basin Trade Partnership Act and the African Growth and Opportunity Act. The Company utilizes contractors outside of the U.S. with expertise in any of the five major manufacturing functions — cutting fabric, screenprinting, embroidery, sewing and finishing. In 2004, approximately 27% of the Company’s sourced units were from Company-operated facilities, with the remaining units sourced from third-party contractors. Approximately 28% of total units sourced from unrelated contractors in 2004 were from the Company’s largest five contractors, with the largest contractor accounting for approximately 7% of total units sourced.

      For product sourced in Mexico or Central America, the Company generally arranges for the purchase of necessary raw materials. All raw materials used in the manufacture of Company products are purchased from unaffiliated suppliers. The Company purchases its raw materials directly for its 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 2004, approximately 64% of the Company’s direct expenditures for raw materials (fabric) were from its five largest suppliers, with the largest such supplier accounting for approximately 33% 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 becomes unavailable.

      The Company has established guidelines for each of its third-party manufacturers in order to monitor product quality, labor practices and financial viability. These guidelines include on-site facility evaluations for all new suppliers, an expectation that the third-party manufacturers become WRAP certified and that they allow for random on-site facility inspections to observe working conditions. The Company also employs agents based in regional locations abroad to monitor compliance with design specifications and quality standards. The Company has a quality department which is responsible for reviewing product manufacturing processes at third-party contractor locations, periodically observing working conditions and reviewing the quality of incoming products at the Company’s distribution center. This quality team is responsible for ensuring that all product arriving at the distribution center meets the Company’s strict quality standards. The Company believes that its overall global manufacturing strategy gives the Company reasonable 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 becomes unavailable. As part of the Company’s product sourcing strategy, it routinely contracts for apparel products produced by contractors in Asia, Mexico and Central America and has also used contractors in Europe, Africa and the Middle East. If financial, political or other related difficulties were to adversely impact the Company’s contractors in these regions, 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 and its contract manufacturers have continually sought to take advantage of

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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. Quality control inspections of both semi-finished and finished products are required at manufacturing locations to assure compliance.

      Customer orders for Fashion products are booked from three to six months in advance of shipping. Because a majority of the Company’s 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, in certain instances, make substantial advance commitments prior to receipt of customer orders. Inventory levels therefore depend on Company judgment of market demand.

Merchandise Distribution

      The Company’s product is primarily shipped in ocean containers arriving at a variety of ports in the United States. From these ports, it is shipped via rail or truck to the Company’s distribution centers located in White House, Tennessee and Liberty, Kentucky. Contract manufacturers have specific shipping windows in which the product must be made available for ocean cargo to help ensure receipt at the distribution center in time for shipment of each month’s product collection. This shipping schedule allows the Company to rely primarily on lower cost ocean freight transportation of product to the United States.

      The Company’s product clears customs upon entry into the United States. Upon receipt in the warehouse, product is stored until called for by the Company’s warehouse management system. This warehouse management system matches outstanding customer purchase orders with available product to most efficiently support the Company’s distribution process.

      A significant portion of product destined for the Company’s retail stores is sent directly to the Company’s retail distribution center in Liberty, Kentucky in pre-packs for immediate distribution to retail stores. This pre-pack of product from the factory results in a reasonably efficient distribution network to the Company’s retail stores. Additional retail orders are picked from available stock through the Company’s warehouse management system in its White House, Tennessee facility.

Wholesale Business

      In 2004, the Company’s products were sold to approximately 300 wholesale customers with over 3,500 retail store locations throughout the United States. The Company’s wholesale customers included national chain retailers (Kohl’s, Babies R Us, JC Penney, Sears and Costco), national department stores, regional department stores and specialty stores.

      The Company’s broad distribution base insulates the Company from reliance on any one customer. While no single customer accounted for more than 10% of the Company’s 2004 total net sales, the Company’s largest ten customers accounted for approximately 30% of 2004 total Company net sales.

      The Company’s marketing program works cooperatively with wholesale accounts to enhance brand awareness. Elements of the Company’s wholesale marketing program include print media and in-store signage.

      The Company’s sales force continues to adjust to meet the demands of its customer base. A centralized sales management team focuses on the unique requirements of each major customer. The Company’s sales force is supported by a product planning team located in Oshkosh that monitors current product sell-through as a basis for future demand planning at the account level. This type of planning helps to ensure that the proper product will be placed with the correct customer at the optimum time to increase sell-through. This sales planning process also lends discipline and accuracy to the forecasting required for raw material commitments and production capacity.

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Retail Business

      As of January 1, 2005, the Company operated 175 retail stores. In January 2005, five underperforming outlet stores were closed, leaving the Company with 170 retail stores operated under two formats: outlet stores and Lifestyle stores. The Company operates 155 domestic outlet stores located throughout the United States in outlet malls. These stores carry a wide assortment of OshKosh product that is consistently value-priced.

      During 2004, the Company opened 14 family Lifestyle stores and operated a total of 15 Lifestyle stores as of January 1, 2005. These family Lifestyle stores included children’s and adult apparel, as well as home accessories in product categories where the OshKosh label provides value. In 2005, these 15 stores will transition to focus 100% on children. This transition was based on extensive market research which identified a customer who was looking for a children’s “Headquarters” store for young parents that would provide for a full range of children’s wardrobing needs, including children’s apparel, gifts and accessories. The Company hopes to create an emotional bond with its consumers who will think of the OshKosh brand first.

      The Company maintains an e-commerce site (www.oshkoshbgosh.com), offering a comprehensive collection of the Company’s current product at pricing comparable to its Lifestyle stores. The Company is also affiliated with Amazon.com as an alternative e-commerce location.

      In evaluating potential retail store sites, the Company generally looks for 4,000-6,000 square foot locations in lifestyle centers, regional malls or outlet centers across the country. The Company considers the surrounding trade area, location and visibility of the center, placement of the store within the center, tenant mix, performance of other tenants if the center has already opened, landlord reputation and the economic terms of the lease in making a determination of new store locations. The Company also considers lease renewals based on similar factors, in addition to its own performance in the location. The Company generally commits to five-year lease terms on its retail store leases across the country.

      The Company’s retail store strategy includes having a substantial collection of the Company’s product offering available in all size ranges to meet the needs of our consumers. The retail store environment is designed for easy access for a mother with children, and displays the Company’s fashion offerings along with classic products. In Lifestyle stores, the store environment focused on a family theme, and highlights the quality and fashion content of the product. In the outlet environment, products are more promotionally priced to clearly demonstrate the value proposition of obtaining the OshKosh B’Gosh product in an outlet environment. The Company’s retail staff focuses on customer service to provide a level of assistance a shopper is requesting, with an aim of both satisfying the shopper and increasing the potential sale of coordinating pieces to enhance the Company’s sales. Staff levels at stores are carefully monitored and correlated with anticipated sales to provide a cost efficient level of staffing in the store at all times with suitable sales staff available to assist all shoppers.

      The Company spends considerable effort on the visual presentation of its products. The products are neatly and carefully displayed on retail fixtures to provide a positive brand image to the consumer. The Company uses retail prototypes for both Lifestyle and outlet stores to ensure every store across the country will have an inviting and pleasant appearance. The Company ensures that the retail store facilities are well-maintained to enhance the brand presentation. The Company also uses appropriate signage, graphics and other point of sale displays to highlight the Company’s product offering on a seasonal basis.

      The combination of a complete product offering, a pleasant store environment and an appropriate level of customer service creates the environment for enhanced success of a fashion-right product that is sold with a proper value equation to the primary consumer, a mother age 28-44. The Company’s return and exchange policy eases the return process when the purchase of apparel does not meet the size requirements of the intended user.

Licensing

      The Company licenses its OshKosh and related trademarks into a number of related products, including sleepwear, outerwear, underwear and shoes. The Company is involved in the product design approval process and receives royalties based on sales of its licensed products.

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      The Company also licenses the Genuine Kids from OshKosh brand, sold exclusively at Target stores. The Company receives a royalty from Target based on actual retail sales of the Genuine Kids products at Target stores. Company personnel design Genuine Kids products, including fabrication, trim accessories, use of screen prints or embroidery and manufacturing design specifications. This product design package is provided to Target, who arranges for the product sourcing. While the Company is responsible for the design element, the Company does not currently source or arrange for the manufacture of this product.

International Licensing and Distribution

      The Company’s products are distributed worldwide through approximately 36 licensees and distributors in approximately 50 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 ensure products are appropriate to each foreign market and consistent with the Company’s brand image. The licensees and distributors may purchase 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 OshKosh®, OshKosh B’Gosh®, OshKosh Est. 1895® or Genuine Kids® trademarks on most of its products. Other significant trademarks include a white triangular patch on the back of bib garments and the Genuine Article®. The Company currently has approximately 36 trademark registrations and 50 pending trademark applications in the United States and has trademark registrations in approximately 113 countries outside the U.S. These trademarks and 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 current material infringement.

Seasonality

      Products are designed and marketed primarily for four principal selling seasons:

RETAIL SALES SEASON	PRIMARY BOOKING PERIOD	SHIPPING PERIOD
Spring	July-August	December-March
Summer	October-November	April-May
Fall/ Back-to-School	January-February	June-August
Winter/ Holiday	April-May	September-November

      The Company’s business continues to be seasonal, with highest sales and income in the second half of the year, which includes significant wholesale shipping periods and a major retail selling season at its retail stores. Sales and income during the first half of the year are less than the second half of the year because of 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 2005 quarterly sales and income.

Working Capital

      Working capital needs are affected primarily by inventory levels, outstanding accounts receivable, trade payables and the level of other current liabilities. The Company’s unsecured credit agreement with a number of banks provides a $60 million revolving credit facility available for general corporate purposes, including cash

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borrowings and issuances of letters of credit. The revolving credit facility expires April 28, 2006. There were no outstanding borrowings against the revolving credit arrangement at January 1, 2005.

      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 generally offers net 30 day terms.

      The Company believes that its working capital requirements and financing resources are comparable with those of other major, financially sound, like-sized apparel companies.

Backlog

      As of the end of 2004, the Company had outstanding customer orders of approximately $45 million, compared to approximately $44 million of such orders at the end of 2003. These amounts include orders that are confirmed or based on industry practice and prior experiences will be confirmed. The amount of outstanding customer orders at a particular time is influenced by numerous factors, including the product mix, timing of the receipt and processing of customer orders, shipping schedules for the product and specific customer shipping windows. Due to these factors, a comparison of outstanding customer orders from period to period is not necessarily meaningful and may not be indicative of eventual actual shipments.

Competitive Conditions

      The children’s apparel industry is highly competitive and consists of a number of branded products in addition to private labels. The Company’s primary branded competitors include Carter’s, Baby Gap, Gap Kids, Gymboree, Old Navy, The Children’s Place, including Disney licensed apparel products, in addition to private label product offerings carried by certain retailers, including our wholesale customers.

      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 consumer brand recognition, quality, price, service and style. The Company is focusing attention on each of these issues and has taken, and will continue to take steps to reinvigorate the brand while remaining competitive in the eyes of value conscious consumers.

      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.

Environmental Matters

      The Company’s compliance with Federal, State and local environmental laws and regulations in recent years had no material affect 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 January 1, 2005, the Company employed approximately 5,100 persons. This includes approximately 1,700 production employees at the Company’s manufacturing facilities in Mexico and Honduras, and 700 full time and 1,900 part-time retail store sales associates. Approximately 10% of the Company’s personnel are covered by collective bargaining agreements with the United Food and Commercial Workers Union.

Business Risks

      The following discussion highlights some of the risks that affect the financial success of the Company. Because it is not possible to determine the impact of these factors or changes in these factors, these risks and uncertainties may affect the Company’s operating results in future periods.

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Brand Risks

The acceptance of our product in the market place is affected by consumer tastes and preferences, along with fashion trends.

      The OshKosh B’Gosh brand has represented quality, style and a proper value proposition to its consumers for over a century. We believe that continued success depends on our ability to deliver trend-relevant merchandise that embodies the OshKosh brand essence, and provides a unique and compelling value proposition for our consumers in the Company’s distribution channels. The Company conducts its design activities from a design studio in New York. There can be no assurance that the demand for OshKosh B’Gosh product will not decline, or that we will be able to successfully evaluate and adapt our product to be aware of fashion trends, consumer tastes and preferences. If consumers’ taste and preferences are not aligned with our product offering, promotional pricing may be required to move seasonal merchandise. Increased use of promotional pricing would have a material adverse affect on our sales, gross margin, and results of operations.

The Company’s licensing income is greatly impacted by the Company’s brand reputation.

      The Company’s brand image as a consumer product with outstanding quality and name recognition makes it valuable as a license source. The Company is able to license complementary products and obtain license income from use of the OshKosh, OshKosh B’Gosh and related trademarks. The Company is able to obtain substantial amounts of foreign license income as the OshKosh label carries an international reputation for quality and American style. While the Company takes significant steps to ensure the reputation of its brand is maintained through its license agreements, there can be no guarantee the Company’s brand image will be enhanced or potentially be deteriorated through its association with products outside of the core OshKosh B’Gosh apparel products.

The Company’s reputation may be severely harmed if contractors used to manufacture its clothing engage in practices that our consumers believe are unethical.

      The Company regularly uses contractors located outside the United States. Accordingly, the labor laws and business practices in these countries may vary from those generally accepted in the United States. The Company requires its independent manufacturers to operate their businesses in compliance with local laws and regulations. However, due to their status as independent manufacturers, the Company cannot assure compliance with applicable local laws and cannot be certain that these laws are not different than those generally accepted in the United States. The Company could experience negative publicity as a result of media attention focused on international apparel manufacturing operations. Any negative publicity received by the Company could have a detrimental impact on its net sales and results of operations.

The Company licenses the Genuine Kids from OshKosh® label exclusively to Target®.

      The Company has licensed the Genuine Kids from OshKosh label exclusively to Target, for use in Target stores. The license agreement makes the Company responsible for substantially all design activities and Target responsible for sourcing and sales of this product in its stores. Due to the exclusive nature of this arrangement, the Company is dependent on the results of the sourcing, distribution and product presentation processes, which are done by Target. Further, the overall retail traffic and acceptance of this product offering by Target shoppers will have a significant impact on the Company’s royalty income.

Sales Risks

The Company’s wholesale distribution channel is dependent upon a number of key wholesale accounts.

      The Company sells its products to a number of key wholesale accounts, including Kohl’s, Babies R Us and JC Penney. The success of the Company’s wholesale business is, in part, aligned with the success of these retailers and the levels of customer traffic in these department stores. While the Company believes that its target consumers will stay aligned with target customers of these stores, further prospects for growth of the Company’s wholesale business depend upon the success of these companies. The inability of these distribution

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channels to grow or achieve sales targets for the Company’s products may have a significant material adverse affect on the Company’s sales and results of operations.

There are deflationary pressures on the selling price of apparel products.

      In part due to the actions of discount retailers, and in part due to the worldwide supply of low cost garment sourcing, the average selling price of children’s apparel continues to decrease. To the extent these deflationary pressures are offset by reductions in manufacturing costs, there is modest affect on the gross margin percentage. However, the inability to leverage certain fixed costs of the Company’s design, sourcing, distribution, and support costs over a smaller gross sales base could have an adverse impact on the Company’s operating income.

Our business is sensitive to overall levels of consumer spending, particularly in the apparel segment.

      The Company believes that spending on children’s apparel is somewhat discretionary. While certain apparel purchases are less discretionary due to size changes as children grow, the amount of clothing consumers desire to purchase, specifically name brand apparel products, is impacted by the overall level of consumer spending. Overall economic conditions that affect discretionary consumer spending include employment levels, business conditions, tax rates, interest rates, overall levels of consumer indebtedness and other factors that affect consumer spending. Reductions in the level of discretionary spending or shifts in consumer spending to other products may have a material adverse affect on the Company’s sales and results of operations.

The children’s wear apparel business is highly competitive.

      The children’s apparel segment of the retail business is highly competitive. There are a number of brands, including Baby Gap, Gap Kids, Gymboree, Carter’s, Old Navy, The Children’s Place, including Disney licensed apparel products and a variety of private label brands that compete with our product offering. There are also a number of competitors in the private label and discount channels that indirectly compete with the Company’s product. Increased competition may reduce our sales and gross margins, therefore impacting our Company’s operating results.

The Company’s sales are seasonal with the Fall/Back-to-School season as the key selling season.

      A significant amount of our retail sales and shipments to wholesale customers for the Fall/Back-to-School season occur in the months of July, August and September. Changes in consumer spending or buying habits during key marketing periods could have a major impact on the Company’s profitability. Consumer spending during any season may be influenced by weather conditions. For example, if the country were to experience unseasonably warm weather during the Fall/Back-to-School season, consumers may reduce their purchases of heavier and long-sleeve apparel. If the Company’s product offering for a particular season was not well received due to consumer spending factors unforeseen by the Company, the Company would have a substantial increase in obsolete product which would require significant markdowns out of season. If the Company was unable to meet its forecasted sales levels for the Fall/Back-to-School season, this would have a material affect on the Company’s sales, gross margin and results of operations for the year.

Gross Margin Risks

The Company’s gross margins are influenced by the success of its wholesale customers and consumer acceptance of its products.

      The retail industry is rapidly evolving due to the influences of discount retailers. As consumers place pressure on retailers to deliver quality products at a discount from traditional selling prices, the retailers’ margins are adversely affected. The retailers, in turn, are placing significant pressure on their suppliers to support their margins through price discounts and negotiated margin support agreements. The Company is under constant pressure to support its wholesale customers, which causes the Company’s gross margin to be reduced. The Company’s ability to withstand these influences continues to relate to its ability to deliver

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market-right product at competitive selling prices. If the Company is unable to offer market-right product at compelling retail prices, the Company’s margin and operating results will be adversely impacted.

The Company must continue to reduce the cost of it products.

      Due to the impact of deflationary pressure on selling prices, the Company must continue to reduce or control the cost of sourcing or manufacturing its products. The cost of apparel products is influenced by many factors, including raw material cost (especially cotton), the transportation infrastructure to import garments manufactured overseas, and the labor cost in worldwide labor markets. If any of these costs were to increase, the Company would find it difficult to increase its selling price to maintain its gross margin, resulting in reduced operating income.

The Company’s products are imported into the United States in accordance with international trade and U.S. customs procedures.

      The Company is dependent upon a variety of seaports for the importation of the Company’s products, and is responsible for compliance with procedures established by U.S. customs for the importing of products. Changes in U.S. customs procedures concerning the importation of apparel products could have a material adverse impact on the Company’s ability to utilize its global sourcing matrix. Further, the complications and stringent regulations that may be developed as part of the Homeland Security Program may result in delays or further costs in importing the Company’s products. Unforeseen delays in customs clearance of any goods could have material adverse impact on our ability to deliver shipments in accordance with customer shipping specifications, resulting in material adverse affects on the Company’s sales and profitability.

The majority of the Company’s products are sourced outside of the United States. This sourcing matrix creates risks associated with international business.

      The Company routinely sources its product in Asia, Mexico, Central America, and to a lesser degree, other areas of the world. Due to the inability of the Company to forecast or control these countries’ political environments, labor climates or infrastructures, there is inherent risk associated with this product sourcing plan. Our business is subject to risks associated with foreign international business, including foreign governmental regulation and intervention, foreign currency fluctuation, social or political unrest, natural disasters, health and disease management, shipping and customs clearance in foreign countries and in the U.S., local business practices and economic conditions in countries outside of the United States. If any of these factors hinder the Company’s ability to obtain products on a timely basis, there could be a significant disruption in the Company’s operations.

The Company is dependent upon a global transportation network to import its products.

      Since the majority of the Company’s products are imported, the Company is dependent upon a fleet of international ocean carriers to deliver product on a timely basis. If this global transportation matrix were to be disrupted by factors such as a port strike, world trade restrictions or war, the Company would be unable to timely receive product sourced overseas. This could have a material adverse affect on the Company’s sales and results of operations.

Operating Risks

The Company’s retail success and future growth is dependent upon identifying locations and negotiating appropriate lease terms for retail stores.

      The Company’s retail stores are located in leased retail locations across the country. Successful operation of a retail store depends in part on the overall acceptance of the retail location to attract a customer base sufficient to make store sales volume profitable. If the Company is unable to identify new retail locations with anticipated consumer traffic sufficient to support a profitable sales level, retail growth may consequently be limited. Further, if existing outlet centers do not maintain a sufficient customer base to obtain a reasonable sales volume, that could have a material adverse impact on the Company’s sales, gross margin and results of

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operations. The Company invests significant cost related to the initial build out of each retail locations. If the Company determined that a certain retail store location was not successful, additional impairment of the retail build out and related fixtures may be necessary to reflect the reduced ongoing market value of these improvements. This would have an adverse affect on the Company’s results of operations and financial position.

The Company’s success is dependent upon retaining key individuals within the organization to execute the Company’s strategic direction.

      The Company’s ability to attract and retain qualified design, sourcing and sales personnel, executive management and support function staff is key to the Company’s success. If the Company were unable to attract and retain qualified individuals in these areas, an adverse impact on the Company’s growth and results of operations may result.

The Company has made significant financial commitments to its Lifestyle stores.

      In conjunction with the rollout of its Lifestyle stores in 2004, the Company made significant financial commitments including dedicated personnel, lease commitments, and retail store build out costs. In 2005, the Company is transitioning its Lifestyle store concept to exclusively offer children’s wear products in a specialty retail environment. If this venture is ultimately not successful, the value of certain assets might be impaired and certain financial commitments will remain, having an adverse impact on operating profit.

      (d) Financial Information About Geographic Areas

      Substantially all of the Company’s sales are to customers located in the United States. As more fully described in the “International Licensing and Distribution” section of this report, the Company does export its product on a limited basis, and obtains licensing income from licenses throughout the world. OshKosh B’Gosh product is available in over 50 countries under this network of licensing and distribution agreements.

      (e) Available Information

      The Company maintains a website with the address www.oshkoshbgosh.com. The Company is not including the information contained on the Company’s website as a part of, or incorporating it by reference into, this Annual Report on Form  10-K. The Company makes available free of charge (other than an investor’s own Internet access charges) through its website its Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements, director and executive officer code of ethics, director and officer reports on Forms 3, 4 and 5 and amendments to these reports, as soon as reasonably practicable after the Company electronically files such material with, or furnishes such material to, the Securities and Exchange Commission.

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ITEM 2. PROPERTIES

	Approximate
	Floor Area in
Location	Square Feet		Principal Use
Celina, TN		38,250	Laundering
Choloma, Honduras(2)		47,000	Manufacturing
Gainesboro, TN		61,000	Available for Sale
Liberty, KY		218,000	Distribution/Warehousing
New York City, NY(1)		18,255	Sales Offices/Showroom
New York City, NY(4)		14,000	Design Center
Oshkosh, WI		99,000	Exec. and Operating Offices
Uman, Mexico(3)		134,000	Manufacturing
White House, TN		284,000	Distribution/Warehousing

All properties are owned by the Company with the exception of:

(1)  Lease expiration date — 2007, (2) Lease expiration date — 2006, (3) Lease expiration date — 2006, (4) Lease expiration date — 2008.

      The Company believes that its properties are well maintained and its manufacturing and distribution equipment is in good operating condition and adequate for current production and distribution requirements. The Company’s retail store locations are leased with lease terms generally in the range of five to seven years, frequently with renewal options. The Company’s retail stores have an average size of approximately 5,000 square feet. These leasehold interests are generally well suited for the Company’s retail operations. For information regarding the terms of the leases and rental payments thereunder, refer to the note to the consolidated financial statements of this Form 10-K entitled “Leases”.

ITEM 3. LEGAL PROCEEDINGS

      The Company is subject to various legal actions and proceedings in the normal course of business. Although litigation is subject to many uncertainties and the ultimate exposure with respect to these matters cannot be ascertained, management does not believe the final outcome will have a significant effect on the consolidated financial statements.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

      None.

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PART II

ITEM 5. MARKET FOR THE COMPANY’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Quarterly Common Stock Data

	2004						2003
	Stock Price						Stock Price
					Dividends						Dividends
	High		Low		per Share		High		Low		per Share
Class A Common Stock
1st	$	23.55		20.89	$	0.11	$	28.90	$	22.65	$	0.07
2nd		25.28		20.45		0.11		30.38		23.95		0.07
3rd		24.25		18.53		0.11		27.00		23.81		0.11
4th		22.85		17.08		0.11		27.97		20.45		0.11
Class B Common Stock
1st		—		—	$	0.095		—		—	$	0.06
2nd		—		—		0.095		—		—		0.06
3rd		—		—		0.095		—		—		0.095
4th		—		—		0.095		—		—		0.095

      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. The Company’s Class B common stock is not publicly traded, but it is convertible into Class A common stock on a one-for-one basis.

      As of February 15, 2005, there were approximately 5,600 Class A common stock beneficial owners and shareholders of record and approximately 200 Class B common stock beneficial owners and shareholders of record.

Issuer Purchases of Equity Securities

      On December 6, 1999, the Company’s Board of Directors authorized a repurchase program for up to 1.5 million shares of its Class A common stock. On December  11, 2000, the Company’s Board of Directors authorized an addition of 1.0 million shares to this repurchase program. The Company did not repurchase any shares during 2004, leaving 151,200 shares authorized for future repurchases under this program.

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ITEM 6. SELECTED FINANCIAL DATA

Financial Highlights

(Dollars in thousands, except per share amounts)

			Year Ended
			January 1,			January 3,			December 28,			December 29,			December 30,
			2005			2004			2002			2001			2000
Financial results
	Net sales		$	398,740		$	417,272		$	436,989		$	463,069		$	453,062
	Net income			13,819			7,189			32,045			32,808			32,217
	Return on sales			3.5	%		1.7	%		7.3	%		7.1	%		7.1	%
Financial condition
	Working capital		$	77,776		$	70,586		$	71,023		$	75,423		$	54,601
	Total assets			164,390			152,525			156,045			161,340			158,256
	Long-term debt (including current portion)			—			—			—			24,000			44,000
	Shareholders’ equity			97,734			87,765			92,389			73,700			44,473
Data per common share
	Net income
		Basic — Class A	$	1.21		$	0.62		$	2.65		$	2.76		$	2.68
		Basic — Class B		1.05			0.54			2.30			2.40			2.33
		Diluted — Class A		1.17			0.60			2.54			2.61			2.58
		Diluted — Class B		1.04			0.54			2.26			2.33			2.30
	Cash dividends declared
		Class A		0.44			0.36			0.26			0.22			0.20
		Class B		0.38			0.31			0.225			0.19			0.17
	Shareholders’ equity			8.31			7.55			7.73			6.03			3.65

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

      During 2004, the Company experienced an increase in its operating income and net income. While the Company experienced a reduction in its net sales, a substantial improvement in its gross margin percentage and control over selling, general and administrative costs contributed to the increase in operating income.

      The Company’s wholesale business was adversely affected by the loss of a major customer and reduced bookings from other customers, who remain cautious in their approach to managing inventory purchases. However, the Company more closely matched its sourcing plan with customer expectations and reduced the number of units sold as close-out units, which are sold at significantly reduced selling prices. This factor enhanced the gross profit margin attributable to the Company’s wholesale business. While the Company continued to support its wholesale customers through margin support, better inventory management and a reduction in close-out units sold resulted in an improved wholesale gross margin percentage.

      Primarily as a result of strong sales in the fourth quarter of the year, comparable store sales increases totaled 2.7% for 2004 in the Company’s retail business. This increase in comparable store sales is primarily attributable to an increase in the average selling price of our products. This increase in sales price is attributable to better acceptance of the Company’s fashion product offering, combined with better inventory management which allowed the Company’s retail stores to be merchandised with a more profitable mix of current season and promotional priced products. The Company opened 14 Lifestyle stores during the year, in

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addition to one outlet store. Seven Lifestyle stores were opened in the second half of the year and there were 175 stores in operation at the end of 2004. The increase in selling, general and administrative expenses associated with the additional retail stores was offset by cost reductions in several of the Company’s support functions.

      Royalty income increased in 2004, primarily attributable to a full year of royalty income from the Genuine Kids from OshKosh product, sold exclusively at Target stores. Sales of licensed products at Target stores began in July 2003 with the Back-to-School season, and continued throughout 2004. This license agreement contributed $4.2 million of royalty income to the Company in 2004. The Company also received royalty income of $8.8 million from use of the OshKosh B’Gosh label domestically and internationally during 2004, which is similar to prior-year royalty income.

      The increase in operating profit and reduction in working capital (other than cash and investment balances) resulted in a strong balance sheet with no long-term debt, despite the 2004 investment in the build-out of the Company’s Lifestyle store concept. The Company enters 2005 with cash on hand and investments of $37.7 million.

      A more detailed analysis of the Company’s results of operations and financial condition follows.

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 Year
	Ended
	January 1,			January 3,			December 28,
	2005			2004			2002
Net Sales		100.0	%		100.0	%		100.0	%
Cost of products sold		60.2	%		63.8	%		56.5	%
Gross profit		39.8	%		36.2	%		43.5	%
Selling, general and administrative expenses		37.9	%		36.2	%		34.1	%
Royalty income, net		(3.2	)%		(2.8	)		(2.3	)
Gain on sale of assets		(0.3	)%		—			—
Operating income		5.4	%		2.8	%		11.7	%
Other expense — net		—			(0.1	)%		(0.1	)%
Income before income taxes		5.4	%		2.7	%		11.6	%
Income taxes		1.9	%		1.0	%		4.3	%
Net income		3.5	%		1.7	%		7.3	%

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2004 COMPARED TO 2003

Net Sales

      Net sales in 2004 were $398.7 million, an $18.6 million (4.5%) decrease compared to 2003 net sales of $417.3 million. A summary of the Company’s net sales for the years ended January 1, 2005 and January 3, 2004 follows:

	Net Sales
	(In millions)
	Domestic
	Wholesale			Retail			Other			Total
2004	$	137.8		$	258.2		$	2.7		$	398.7
2003	$	165.7			248.7			2.9			417.3
Increase (decrease)	$	(27.9	)	$	9.5		$	(0.2	)	$	(18.6	)
Percent increase (decrease)		(16.8	)%		3.8	%		(6.9	)%		(4.5	)%

      Wholesale net sales for 2004 of $137.8 million were approximately 16.8% less than 2003 net wholesale sales of $165.7 million. The Company’s 2004 domestic wholesale unit shipments decreased approximately 19.2% as compared to 2003. The 2004 decrease in unit shipments is primarily the result of a significant customer closing 146 stores in January, 2004, lower seasonal booked orders, and a decrease in the number of close-out sales. Wholesale customers continue to take a cautious approach to their inventory positions. Net sales were impacted by a 2% increase in average unit selling price, due primarily to the reduction in close-out units sold. Net sales were also affected by customer margin support needed to effectively flow the Company’s products through retail store channels, which remained relatively consistent with prior-year levels, as a percentage of sales.

      The Company’s 2004 retail sales increase resulted from a comparable store sales increase of 2.7% compared to 2003, in addition to sales volume generated from newly opened stores. The Company’s comparable store sales calculations include sales for all stores that were open for the entire comparable fiscal periods, including remodeled and relocated stores. The comparable store sales increase resulted primarily from an increase in the average unit selling price, particularly in the fourth quarter of the year. This increase is attributable to better consumer acceptance of the Company’s product offering, especially the Holiday ’04 season, and improved inventory management that allowed the Company to better control its markdown cadence. The Company also experienced a modest increase in customer traffic during 2004. During 2004, the Company opened one outlet store and 14 Lifestyle stores. Six Lifestyle stores were opened in the fourth quarter of 2004. At January 1, 2005, the Company operated 175 domestic OshKosh B’Gosh retail stores, including 160 factory outlet stores and 15 Lifestyle stores.

Gross Profit

      The Company’s gross profit margin as a percentage of net sales increased 360 basis points to 39.8% in 2004 compared with 36.2% in 2003. The Company’s gross margin increase was primarily due to the following reasons: Growth in the Company’s retail stores combined with a reduction of wholesale business resulted in a greater proportion of retail sales, at proportionately higher gross margins, contributing an approximate 110 basis point increase in gross profit margin. In addition, a decrease in the number of wholesale units sold as “close-outs”, at substantially reduced selling prices, increased the Company’s gross margin by approximately 100 basis points.

      Further, the Company continues to evaluate and execute its sourcing strategy to reduce the overall cost of its product offering, considering production capacity in Mexico and Central America, the Far East and other regions of the world. Product cost reductions were offset by the Company’s reinvigorated design direction which added distinguishing features to its product. The Company makes its ultimate global sourcing decisions on the basis of quality, timeliness of delivery and price. During 2004, efficient execution of this strategic sourcing strategy further enhanced the Company’s gross profit margin.

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      Finally, in 2003, the Company recorded a charge of approximately $1.3 million against cost of sales to reduce excess inventory and related Spring 2004 purchase commitments resulting from the decision of a significant customer to close its children’s apparel stores in early 2004 and cancel orders.

      The Company includes certain distribution costs in its selling, general and administrative expenses. Accordingly, the Company’s gross margin may not be comparable with other companies that include certain distribution costs in costs of goods sold.

Selling, General and Administrative Expenses (SG&A)

      The Company’s SG&A expenses for 2004 of $151.2 million were comparable to 2003 SG&A expenses of $151.3 million. As a percentage of net sales, SG&A expenses were 37.9% in 2004 as compared to 36.2% in 2003. The increase in SG&A expenses as a percentage of sales relates entirely to the reduced volume of Company sales in 2004. Expansion of the Company’s retail operations included an increase of approximately $6.5 million in operating costs associated with 14 new Family Lifestyle stores. These cost increases were offset by $1.6 million reduced distribution costs due to reduced volume, a $2.3 million reduction in selling costs in our wholesale business through staff reductions, and other cost cutting measures taken to align our corporate support functions with current business activities. 2003 also included $1.0 million in severance related costs for personnel reductions.

Royalty Income

      The Company licenses a children’s apparel line under the Genuine Kids from OshKosh trademark which is available exclusively in Target stores. The Company is responsible for all product design activities associated with this product. The Company earned royalty income of $4.2 million for the full year of 2004, compared to $2.7 million in 2003, based on sales from the product launch in July 2003 through the end of the year.

      The Company also continues to license the OshKosh B’Gosh and related trademarks, domestically and internationally.

      Domestic royalty income relates to product extensions including footwear, hosiery, underwear, juvenile products, and certain outerwear. Royalty income from domestic licenses totaled $2.5 million in 2004, a $0.5 million decrease compared to $3.0 million in 2003. The reduction in domestic royalty income is primarily attributable to reduced sales of licensed products, which are generally distributed in the same channels as the OshKosh B’Gosh apparel product.

      Internationally, the Company receives royalty income for the use of its trademarks in key international markets, including Japan, Europe, Australia and Canada. Royalty income of $6.3 million is an increase over royalty income of $6.0 million in 2003. The increase is primarily attributable to growth in Europe during 2004.

Gain on Sale of Assets

      The Company recorded a gain on the sale of assets of $1.1 million in the year ended January 1, 2005. The gain relates primarily to the sale of the Company’s vacant distribution center in Oshkosh, Wisconsin during the first quarter of 2004.

Operating Income

      The combined impact of the above factors increased 2004 operating income to $21.5 million, a $9.8 million increase over 2003 operating income of $11.7 million. Following is a summary of the primary factors that impacted operating income by business:

      Wholesale Business

      Despite the reduced sales level, a reduction in number of close-out units sold at substantial discounts and reductions in operating costs, including selling expenses and distribution costs increased wholesale operating income.

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      Retail Business

      Despite a comparable sales growth and enhanced gross profit margin, store operating expenses and support costs for its Lifestyle stores reduced operating income for the Company’s retail operations.

      Procurement

      Effective execution of the Company’s global sourcing strategy by controlling freight costs and production activities enhanced the Company’s gross profit margin and operating income.

Other Income (Expense) — Net

      The Company’s 2004 net other income (expense) was $0.1 million income compared to a $0.5 million expense in 2003. This increase in income was primarily due to a decrease in interest expense during 2004, and an increase in interest income as the Company’s cash position improved during 2004.

Income Taxes

      The Company’s effective income tax rate was approximately 36% in 2004 and 2003. Substantially all income is subject to taxation in the United States, and various state and local jurisdictions.

Net Income

      Net income for the year ended January 1, 2005 of $13.8 million was up $6.6 million (91.7%) from net income for the year ended January 3, 2004 of $7.2 million. Diluted Class A earnings per share of $1.17 was almost double the 2003 diluted Class A earnings per share of $0.60.

2003 COMPARED TO 2002

Net Sales

      Net sales in 2003 were $417.3 million, a $19.7 million (4.5%) decrease compared to 2002 net sales of $437.0 million. A summary of the Company’s net sales for the years ended January 3, 2004 and December 28, 2002 follows:

	Net Sales
	(In millions)
	Domestic
	Wholesale			Retail			Other			Total
2003	$	165.7		$	248.7		$	2.9		$	417.3
2002	$	182.7			250.6			3.7			437.0
Decrease	$	(17.0	)	$	(1.9	)	$	(0.8	)	$	(19.7	)
Percent decrease		(9.3	)%		(0.8	)%		(21.6	)%		(4.5	)%

      Wholesale net sales for 2003 of $165.7 million were approximately 9.3% less than 2002 net wholesale sales of $182.7 million. The Company’s 2003 domestic wholesale unit shipments increased approximately 2.5% as compared to 2002. The 2003 increase in unit shipments is primarily the result of an increase in the number of “close-out” units sold offset, in part, by lower seasonal booked orders. Overall price reductions in the Company’s Spring and Summer ’03 product offering (which averaged approximately 10%) had a significant impact on net sales in dollars. Net sales were also affected by a highly promotional market, which resulted in increased customer margin support to assist in more effective flow of Company products through the retail channels.

      The Company’s 2003 retail sales decrease resulted from a comparable store sales decrease of 6.3% compared to 2002, offset by sales volume generated from newly opened stores and an additional week of retail sales due to our 53 week fiscal year. The comparable store sales decrease resulted from a combination of our decision to lower retail price points, a more promotional sales environment and a general decline in store traffic reflecting the challenging retail environment. During 2003, the Company opened ten factory outlet stores and

20

its first Lifestyle store. At January 3, 2004, the Company operated 165 domestic OshKosh B’Gosh retail stores, including 157 factory outlet stores, two showcase stores, five strip mall stores and a children’s only Lifestyle store.

Gross Profit

      The Company’s gross profit margin as a percentage of net sales was 36.2% in 2003 compared with 43.5% in 2002. The Company’s gross margin declined for several reasons. In both our wholesale and retail businesses, the decision made in 2002 to reduce selling prices an average of ten percent implemented with our 2002 Fall/ Back-to-School season had a continuing impact on our margins in 2003, particularly in the first half of the year. The Company also continued to support wholesale customers’ margins through negotiated support payments. In addition, a substantial increase in the number of units sold as “close-outs”, at substantially reduced selling prices, lowered our gross margin. The Company also recorded a charge of approximately $1.3 million against cost of sales to reduce excess inventory and related Spring 2004 purchase commitments resulting from the decision of a significant customer to close its children’s apparel stores in early 2004 and cancel orders.

      In the Company’s retail stores, lower customer traffic and sluggish product “sell-thru” necessitated markdowns to effectively flow seasonal inventory through our retail stores.

      The Company continued to evaluate and execute its sourcing strategy to reduce the overall cost of its product offering, considering production capacity in Mexico and Central America, the Far East and other regions of the world. However, pressures on selling prices could not be fully offset by product cost reductions. In addition, the Company’s reinvigorated design direction adds distinguishing features to its product which frequently results in incremental product costs. The Company makes its ultimate global sourcing decisions on the basis of quality, timeliness of delivery and price.

      Finally, the comparable 2002 gross margin had a $1.5 million favorable pre-tax LIFO impact, due to the substantial deflationary effects of our product sourcing in 2002. The impact of LIFO inventory was insignificant on 2003 gross margin.

Selling, General and Administrative Expenses (SG&A)

      The Company’s SG&A expenses for 2003 of $151.3 million were $2.4 million over 2002 SG&A expenses of $148.9 million. As a percentage of net sales, SG&A expenses were 36.2% in 2003 as compared to 34.1% in 2002. The increase in SG&A expenses in both dollars and as a percentage of sales relates primarily to continued expansion of the Company’s retail operations, including approximately $4.7 million in costs incurred to develop our Family Lifestyle store concept, approximately $1.0 million in severance related costs for personnel reductions and the further development of our OshKosh brand and Genuine Kids from OshKosh brand design teams. These cost increases are offset in part by the effects of cost cutting measures taken to align our corporate support functions with current business activities. SG&A expenses as a percentage of sales are also directly impacted by our sales decreases.

Royalty Income

      The Company licenses a children’s apparel line under the Genuine Kids from OshKosh trademark which is available exclusively in Target stores. The Company is responsible for all product design activities associated with this product. Genuine Kids product was introduced in Target stores in July 2003. The Company earned royalty income of $2.7 million based on sales from the product launch through the end of the year.

      The Company also continues to license the OshKosh B’Gosh and related trademarks, domestically and internationally.

      Domestically, royalty income relates to product extensions including footwear, hosiery, underwear, juvenile products, and certain outerwear. Royalty income from domestic licenses totaled $3.0 million in 2003, a $0.9 million (23.1%) decrease compared to $3.9 million in 2002. The reduction in domestic royalty income

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is primarily attributable to reduced sales of licensed products, which are generally distributed in the same channels as the OshKosh B’Gosh apparel product.

      Internationally, the Company receives royalty income for the use of its trademarks in key international markets, including Japan, Europe, Australia and Canada. Royalty income of $6.0 million is a small decrease compared to $6.3 million in 2002. The reduction is primarily attributable to a strategic change in licensee for menswear in Japan.

Operating Income

      The combined effect of reduced sales, a significantly lower gross margin percentage and a modest increase in SG&A costs contributed to a significant decline in operating income in 2003 compared to 2002.

Other Income (Expense) — Net

      The Company’s 2003 and 2002 net other income (expense) was $0.5 million expense. The Company’s interest expense decreased in 2003 as a result of prepayment of all of the Company’s long-term debt in mid 2002.

Income Taxes

      The Company’s 2003 effective income tax rate was approximately 36.0% as compared to 37.0% in 2002. A reduced level of taxable income reduced the Company’s effective federal statutory income tax rate. Substantially all income is subject to taxation in the United States, and various state and local jurisdictions.

Net Income

      Net income for the year ended January 3, 2004 of $7.2 million was down $24.8 million (77.5%) from net income for the year ended December 28, 2002 of $32.0 million. Diluted Class A earnings per share of $0.60 was 76.4% less than 2002 diluted Class A earnings per share of $2.54.

SEASONALITY OF BUSINESS

      The Company’s business continues to be seasonal, with highest sales and income in the second half of the year, which includes significant wholesale shipping periods and a major retail selling season at its retail stores. The Company’s sales and income in the first half of the year are typically lower than the second half of the year because of 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 2005 quarterly sales and income.

FINANCIAL POSITION, CAPITAL RESOURCES AND LIQUIDITY

      At January 1, 2005, the Company’s cash and cash equivalents and investments were $37.7 million, compared to $23.9 million at the end of 2003. The Company’s investments consist of highly liquid debt instruments that are used as part of the Company’s daily cash management program. Net working capital at January 1, 2005 was $77.8 million compared to $70.6 million at January 3, 2004. Accounts receivable at January 1, 2005 was $12.4 million compared to $16.7 million at January 3, 2004, due to a reduction in sales in the Company’s wholesale business. Inventories at January 1, 2005 were $61.0 million, compared to $61.4 million at the end of 2003.

      In 2004, the Company generated operating cash flow from its net income, reduced accounts receivable attributable to a further contraction of its wholesale business and the reversal of certain temporary differences including inventory, accounts receivable reserves and the effect of federal bonus depreciation that reduced cash payments for income taxes. Compared to 2003, 2004 cash flow from operations improved substantially, from $4.0 million to $28.4 million. This increase in cash flow is primarily attributable to an increase in net income of $6.6 million, a $3.6 million increase in the utilization a deferred tax assets, and a $4.2 million reduction in accounts receivable due to a contraction of the Company’s wholesale business. The Company

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maintained stable inventory levels despite an increase in the number of retail stores. This inventory management improved operating cash flow by $4.5 million, compared to 2003.

      Compared to 2002, 2003 cash flows were negatively impacted by a $24.9 million reduction in net income, a $3.8 million reduction in the benefit of stock option exercises due to limited exercises in 2003, and a $6.6 million increase in prepaid expenses primarily attributable to a deposit on insurance contract made by the Company in 2003. 2002 cash flows were also favorably impacted by a $9.0 million reduction in accounts receivable due to reduced wholesale sales volume over prior year levels, and utilization of $5.4 million in temporary tax differences, reducing cash payments for income taxes.

      Cash used in investing activities totaled $23.7 million in 2004, compared to $7.1 million of cash provided by investing activities in 2003 and $22.0 million of cash used in investing activities in 2002. The Company manages its temporarily excess cash by investing in highly liquid debt instruments, classified as investments on the Company’s consolidated balance sheets. Cash flows from investing activities are affected by year end changes in the level of investments, in addition to annual capital expenditure levels. Capital expenditures were $11.8 million in 2004, compared with $4.1 million in 2003 and $5.7 million in 2002. Capital expenditures in each year related primarily to retail store expansions and remodeling. 2004 capital expenditures included the buildout of 14 Lifestyle stores, which generally involve greater buildout costs than comparable size outlet stores.

      Cash used in financing activities totaled $4.5 million in 2004, compared to $12.2 million in 2003 and $41.8 million in 2002. The Company’s primary financing activities consisted of long-term debt prepayments in 2002, stock repurchase transactions in 2002 and 2003, and cash dividends and issuances of common shares through stock option exercises in 2002, 2003 and 2004. Cash dividends on the Company’s Class A and Class B common stock totaled $0.44 per share and $0.38 per share, respectively, in 2004, $0.36 per share and $0.31 per share, respectively, in 2003, and $0.26 per share and $0.225 per share, respectively, in 2002. The Company’s current quarterly cash dividend on its Class A and Class B Common stock is $0.11 and $0.095, respectively.

      On December 6, 1999, the Company’s Board of Directors authorized a repurchase program for up to 1.5 million shares of its Class A common stock. On December  11, 2000, the Company’s Board of Directors authorized an addition of 1.0 million shares to this repurchase program. The Company utilizes a stock repurchase program to enhance long-term shareholder value by using available excess cash to reduce the capitalization of the Company. During 2003 and 2002, the Company repurchased 400,400 and 712,000 shares, respectively, of its Class A common stock under this program for approximately $8.9 million and $21.2 million, respectively. The Company did not repurchase any common stock during 2004. As of January 1, 2005, the Company has 151,200 shares of its Class A common stock available to be repurchased under its current repurchase program. Based on current stock prices, completion of the stock repurchase plan would not materially impact the Company’s liquidity.

      The Company made cash contributions of $4.9 million and $3.5 million to its defined benefit pension plans covering hourly and salaried employees to maintain a funding status in excess of accumulated benefits obligation during 2004 and 2003, respectively. After evaluating current market conditions and future expectations, the Company lowered its discount rate again in 2004 from 6.0% to 5.75% and maintained its expected long-term rate of return of 8.0% to reflect current market expectations.

      On October 28, 2004, the Company amended its unsecured credit agreement with a number of banks that provides a $60 million revolving credit facility available for general corporate purposes, including cash borrowings and issuances of letters of credit. The amended revolving credit facility expires April 28, 2006. There were no outstanding borrowings against the revolving credit arrangement at January 1, 2005 although the Credit Agreement is used to support merchandise letters of credit with its international vendors. The Company believes that this credit facility, along with cash generated from operations, will be sufficient to finance the Company’s seasonal working capital needs, capital expenditures, and completion of its stock repurchase program, as well as other business development needs.

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CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS

      The following tables summarize our contractual and commercial obligations as of January 1, 2005:

	Payment Due by Period
	(In thousands)
			Less than		1-3		4-5		After
	Total		1 Year		Years		Years		5 Years
Contractual Obligations
Long-term debt	$	—	$	—	$	—	$	—	$	—
Capital leases		—		—		—		—		—
Operating leases		70,500		19,111		22,904		12,996		15,489
Employment contract(1)		1,230		410		820		—		—

	Amounts of Commitment Expiration per Period
	(In thousands)
			Less than		1-3		4-5		After
	Total		1 Year		Years		Years		5 Years
Other Commercial Commitments
Working capital facility	$	—	$	—	$	—	$	—	$	—
Purchase obligations(2)		44,712		44,712		—		—		—
Merchandise Letters of Credit		11,825		11,825		—		—		—
Standby Letters of Credit		400		400		—		—		—
Employee benefit plans		3,788		501		1,200		1,249		838

(1)	Includes base salary only. Employment contract also provides for other compensation, including annual incentive performance cash bonus, stock-based compensation and fringe benefits.
(2)	Represents purchase orders for inventory commitments.

NEW ACCOUNTING PRONOUNCEMENTS

      On February 7, 2005, the SEC staff provided guidance which clarified the staff’s position related to lessee accounting for operating leases under Statement of Financial Accounting Standard (SFAS) No. 13, “Accounting for Leases”. The staff’s guidance included the following items: (1) leasehold improvements should be amortized over the shorter of their economic life or the lease term (generally without renewals), (2) rent expense should be recognized on a straight line basis over the lease term, unless another systematic and rational allocation is more representative of the time pattern in which the leased property is physically employed and (3) landlord incentives should be recorded as deferred rent, and amortized as reductions to rent expense over the lease term.

      The Company has consistently amortized leasehold improvements over the shorter of their economic life or the lease term, without renewals. The Company has also consistently recorded rent expense on a straight line basis over the period in which it derives use benefit of the leased property, under the provisions of FASB Technical Bulletin 85-3 “Accounting for Operating Leases with Scheduled Rent Increases”. However, the Company had previously netted landlord construction incentives against related property, plant and equipment additions in the Company’s consolidated balance sheets and consolidated statements of cash flows. To conform to this guidance, property, plant and equipment and deferred rent have been reclassified on prior year consolidated balance sheets and statements of cash flows. The application of this guidance did not result in any change to the Company’s 2002, 2003 or 2004 consolidated statements of income.

      In December 2004, the Financial Accounting Standards Board (FASB) issued SFAS No. 123(R), “Share-Based Payment”. This statement requires expensing of stock options and other share-based payments beginning in 2005, and supersedes the FASB’s earlier rule (the original SFAS No. 123) that had allowed companies to choose between expensing stock options or showing pro forma disclosure only. The Company will be required to apply SFAS No. 123(R) as of the first interim or annual reporting period that begins after

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June 15, 2005. While the Company has not yet determined the fair market value of its stock options under the alternative methods prescribed by this statement, the Company has disclosed the pro-forma impact of expensing stock options using the Black-Scholes method in Note 1 to its financial statements. Under the modified prospective method of adoption prescribed by SFAS No. 123(R), financial statements subsequent to June  15, 2005 will include the financial impact of expensing all options that are not vested as of the transition date, but prior financial statements would not be affected.

      In March 2004, the Emerging Issues Task Force issued EITF No. 03-6, “Participating Securities and the Two — Class Method under SFAS No. 128”, which provided additional guidance in applying SFAS No. 128, “Earnings Per Share”. SFAS No. 128, as currently interpreted, requires companies that have a class of common stock with different dividend rates from those of another class of common stock to present basic and diluted earnings per share for each class of stock. Previously, the Company had presented diluted earnings per share for Class A common stock following the if-converted method in all periods of net income. The if-converted method required by SFAS No. 128 in computing diluted earnings per share required the Company to assume conversion of the Class B common shares into Class A common shares in periods of net income when computing Class A diluted earnings per share.

      The Company has expanded its earnings per share information to present diluted Class B common earnings per share for each period for which an income statement is presented. EITF No. 03-6 requires presentation of diluted Class B earnings per share for each period in which an income statement is presented regardless of whether the Class A diluted earnings per share presented assumes conversion of Class B common shares into Class A common shares for the same income statement period. Note 1 to the Company’s consolidated financial statements further describes this presentation.

CRITICAL ACCOUNTING POLICIES

      The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and revenues and expenses during the period. Significant accounting policies employed by the Company, including the use of estimates, were presented in the Notes to Consolidated Financial Statements of the Company’s 2004 Annual Report.

      Critical accounting policies are those that are most important to the presentation of the Company’s financial condition and the results of operations, require management’s most difficult, subjective and complex judgments, and involve uncertainties. The Company’s most critical accounting policies pertain to revenue recognition, net accounts receivable, inventories, accrued expenses, income taxes and stock-based compensation. Each of these accounting policies and the application of critical accounting policies and estimates was discussed in the Company’s Annual Report on Form 10-K for the year ended January 3, 2004. There were no significant changes in the application of critical accounting policies or estimates during 2004. Management must use informed judgments and best estimates to properly apply these critical accounting policies. Because of the uncertainty in these estimates, actual results could differ from estimates used in applying the critical accounting policies. The Company is not aware of any reasonably likely events or circumstances which would result in different amounts being reported that would materially affect its financial condition or results of operations.

Revenue Recognition

      Retail store revenue is recognized at the time of sale and is net of returns.

      Revenue within the Company’s wholesale business is recognized at the time merchandise is shipped from the Company’s distribution centers, as this is when title and risk of loss passes to the customer. Revenue is reduced by provision for returns when the return is authorized by the Company. Revenue reductions related to margin support, allowances and advertising support are recorded when revenue from the related shipment of product is recognized.

      Wholesale revenue is recorded net of returns, margin support, allowances and certain advertising support.

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Returns

      The Company determines the amount of potential returns of unsaleable products, and reduces sales for the full amount of the credit that is anticipated will be issued or has been issued to its wholesale customers.

Margin Support

      In the apparel industry, a supplier often faces pressure from its customers to support retail margins on the sale of the supplier’s product. The Company has historically provided allowances to its customers to assist the customer in meeting its margin expectations, and to maintain or establish long-term customer relationships. To determine the adequacy of its support, as reflected on the financial statements, the Company periodically reviews potential customer support obligations for all product shipped through the date of the financial statements. These amounts are evaluated on a customer-by-customer basis based on an evaluation of product sell-through results, retailer performance, current market conditions, the strategic importance of the customer’s ongoing business relationship and any unauthorized deductions taken by the customer. Settlements of margin support arrangements are periodically compared to the Company’s original estimates to enhance the Company’s ability to predict support levels in subsequent seasons. Margin support arrangements are recorded as a reduction of sales.

Advertising Support

      Support for customers’ advertising activities, product presentation or other promotions are considered reductions of revenue unless such support relates to advertising material the Company could obtain independently, which is recorded as advertising expense provided it does not exceed the fair value of such services. The Company records advertising commitments during the year as they are formalized, considering the Company’s prior history in dealing with customer advertising support.

Accounts Receivable, Net

      In the normal course of business, the Company extends credit to customers. Accounts receivable, as shown on the Consolidated Balance Sheets, is net of allowances for doubtful accounts and other allowances.

      An allowance for doubtful accounts is determined through analysis of the aging of accounts receivable at the date of the financial statements, assessments of collectibility based on historic trends and an evaluation of the impact of economic conditions.

      The Company regularly receives unauthorized charge backs from its customers for a variety of operational reasons, including settlement of margin support agreements. The Company periodically evaluates the adequacy of its reserve for promotional programs on a customer-by-customer basis. The Company also considers margin support requirements and likely charge backs that are anticipated to be taken in the foreseeable future to properly match these expenses with the revenue reflected in the Company’s financial statements.

      Allowances for returns of unsaleable products are also reflected as a reduction to accounts receivable as they are generally settled upon payment of customer invoices.

Inventories

      Inventories are stated at lower of cost (using the last-in, first-out method) or market. The Company continually evaluates the composition of its inventories by season to assess slow-turning, current season product as well as prior season fashion product. This analysis is significantly influenced by customer cancellations that occur after the Company has made commitments to produce its seasonal products. Due to a limited sales period for each fashion season, excess product from current and prior seasons has a diminished market value. The Company sells these units as “close-outs”, generally at substantially reduced selling prices. Factors influencing net realizable value include desirability of the product, quantity and size range of each item available, the overall supply of close-out merchandise in the off-price market, recent negotiated selling

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prices and the seasonality of the product being sold. The Company evaluates the net realizable value of remaining inventory by season and records the inventory at the lower of cost or net realizable value.

Accrued Expenses

      Accrued expenses for employee health insurance, workers’ compensation, profit sharing, contracted advertising, professional fees and other outstanding Company obligations are assessed based on statistical trends and estimates based on projections and current expectations, and are updated periodically as additional information becomes available.

Income Taxes

      The Company estimates its current tax expense (state and federal), and identifies temporary and permanent differences resulting from different treatment of items for tax and financial reporting purposes. Temporary differences result in deferred tax assets, which are included on the Company’s consolidated balance sheet. The Company’s consistent history of taxable income makes the realization of the benefit of deferred tax assets probable. The Company also periodically evaluates and has sufficiently provided for potential assessments of additional tax and interest by federal and state governmental authorities based on the ultimate settlement of current or pending audits.

Stock-Based Compensation

      The Company currently accounts for stock-based compensation on stock options and restricted stock grants under the intrinsic value method, as permitted by APB No. 25. Under this pronouncement, compensation expense is recorded based on the difference between the exercise price of stock options and the fair market value of the underlying stock on the date of the option grant. Under the Company’s non-qualified stock option program, the exercise price has consistently been set at the fair value of the underlying stock on the date of the option grant, resulting in no additional compensation expense. For restricted stock grants, the Company calculates compensation expense based on the fair value of the stock on date of the restricted stock grant, and amortizes this amount over the vesting period of the underlying restricted stock grant.

      SFAS No. 123, “Accounting for Stock-Based Compensation”, as amended by SFAS No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure” requires proforma disclosure concerning the impact on net income had fair value accounting called for under SFAS No. 123 been applied for the year ending January 1, 2005. The issuance of SFAS No. 123(R), “Share-Based Payment” in December 2004 will require the Company to expense the fair market value of its stock options for periods beginning after June 15, 2005.

      The Company currently utilizes the Black-Scholes method to determine the fair market value of non-qualified stock option grants, and discloses all relevant assumptions inherent in this valuation model and the proforma information required under SFAS No. 148 in a footnote to its financial statements. The Company updates the assumptions necessary to properly value stock options on the date of non-qualified stock option grants or restricted stock grants.

APPLICATION OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES

      The Company makes certain judgements and uses estimates and assumptions when applying significant accounting policies in the preparation of the Company’s consolidated financial statements in accordance with accounting principles generally accepted in the United States. The development and selection of critical accounting policies and the related disclosures have been reviewed with the Audit Committee of the Board of Directors. While there have not been any changes in the selection or application of significant accounting policies during the year, the Company utilizes critical estimates and assumptions relating to the application of its provision for obsolete inventory, as described below.

      In evaluating the need for a valuation allowance to reduce the carrying value of inventory to net realizable value, the Company estimates what portion of its seasonal inventory, including non-cancelable inventory

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commitments, may ultimately become obsolete. Obsolete inventory is generally sold as “close-outs”, generally at substantially reduced selling prices. In applying this accounting principle, the Company must estimate the portion of each season’s inventory that may result in excess or obsolete inventory, and further must estimate the net realizable value of this inventory. Net realizable value is affected by the timing of product availability, quantities of product available, and overall market conditions including the availability of similar product. Changes in the assumptions regarding what portion of seasonal inventory will be obsolete, or the net realizable value of obsolete inventory could have a significant impact on the Company’s results of operations and financial position. For example, if the Company were to over-estimate the net realizable value of its obsolete inventory by 10%, the impact on cost of goods sold, gross margin and operating income would be approximately $600,000. While the Company uses historic information and carefully analyzes current market conditions in making these estimates, it cannot be assured that the ultimate liquidation of this inventory or the actual amount of obsolete inventory that must be sold through off-price channels will correspond with its estimates as of January 1, 2005.

FORWARD OUTLOOK

      The Company currently projects first quarter 2005 total Company net sales to increase over first quarter 2004 levels. The Company’s booked orders in dollars for the 2005 Spring and Summer seasons were below orders booked in dollars for the comparable 2004 season. However, the Company is currently planning a comparable store sales increase in our retail business for early 2005 along with incremental sales from stores opened during 2004, including 14 Lifestyle stores. These expected retail sales increases will be offset, at least in part, by the closure of five under-performing retail stores in early January, 2005. The overall impact of these closings is expected to be immaterial to the Company’s consolidated financial statements. The Company expects to open two new outlet stores and close one additional location in 2005, in addition to opening a flagship Lifestyle store in the Mall of America.

      The Company is continuing to pursue its Lifestyle store specialty retail strategy. By the Fall 2005 season, the Company intends to merchandise its Lifestyle stores exclusively for children. This conversion is not anticipated to result in any material financial charges. Existing store locations will be converted to exclusively children’s stores, without substantial modifications to the store setting or fixturing, which have been well received by consumers. Assortments of adult merchandise will be sold through May, and remaining inventory will be liquidated through the Company’s outlet stores. The Company hopes to develop its Lifestyle stores to provide for a full range of children’s wardrobing needs, including apparel, gifts and accessories, and to create an emotional bond with our consumers who will think of the OshKosh brand first.

      The Company anticipates that total royalty income from domestic and international use of OshKosh B’Gosh and related trademarks and use of Genuine Kids from OshKosh, will be comparable or improve slightly over 2004 amounts.

      For the entire year 2005, capital expenditures are expected to total approximately $5.0 million, due primarily to retail store needs. The Company is currently budgeting depreciation and amortization for 2005 of approximately $7.0 million. The Company’s effective tax rate is expected to be approximately 36.0% for 2005.

      The foregoing forward-looking statements are qualified in their entirety by the reference to the risks and uncertainties set forth under the heading “Forward-Looking Statements” below.

FORWARD-LOOKING STATEMENTS

      Statements contained herein and in future filings by the Company with the Securities and Exchange Commission (the “SEC”), in Company press releases and in oral statements made by, or with the approval of, authorized personnel that relate to the Company’s future performance, including, without limitation, statements with respect to the Company’s anticipated financial position, results of operations and level of business for 2005 or any other future period, are forward-looking statements within the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Such statements, which are generally indicated by words or phrases such as “intends”, “plan”, “estimate”, “project”, “anticipate”, “hopes”, “believes”, “expects”, “currently anticipates”, and similar phrases are based on current expectations only and are subject

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to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, projected or estimated.

      Among the factors that could cause actual results to materially differ include the level of consumer spending for apparel, particularly in the children’s wear segment, the impact of deflation on children’s wear apparel prices; risks associated with competition in the market place, including the financial condition of and consolidations, restructurings and other ownership changes in, the apparel and related products industry and the retail industry, the introduction of new products or pricing changes by the Company’s competitors, and the Company’s ability to remain competitive with respect to product, service and value; risks associated with the Company’s dependence on sales to a limited number of large department and specialty store customers, including risks related to customer requirements for vendor margin support, as well as risks related to extending credit to large customers; risks associated with possible deterioration in the strength of the retail industry, including, but not limited to, business conditions and the economy, natural disasters, and the unanticipated loss of a major customer; risks related to the failure of Company suppliers to timely deliver needed raw materials, risks associated with importing its products into the United States under current and future customs and quota rules and regulations, which are becoming increasingly stressed, risks associated with using a global transportation matrix including a number of ports that are experiencing capacity constraints, and the Company’s ability to correctly balance the level of its commitments with actual orders; risks associated with terrorist activities as well as risks associated with foreign operations including global disease management; risks related to the Company’s ability to defend and protect its trademarks and other proprietary rights and other risks related to managing intellectual property issues. In addition, the inability to ship Company products within agreed time frames due to unanticipated manufacturing, distribution system or freight carrier 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, Africa, Mexico and Central America. If financial, political, impact of natural disasters or other difficulties were to adversely impact the Company’s contractors in these regions, it could disrupt the supply of product contracted for by the Company.

      The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

      The Company has an unsecured $60 million revolving credit facility available for general corporate purposes. Borrowings under this agreement bear interest at a variable rate, based on the London Interbank Offered Rates. The Company does not presently hedge its interest rate risk. Since the Company did not have any outstanding debt at the end of 2004, a 1% change in interest rates would not have a material impact on the Company’s interest expense for fiscal 2005.

Foreign Currency Risk

      The Company contracts for the manufacture of apparel with contractors in Asia, Central America, Mexico and other parts of the world. While these contracts are stated in terms of U.S. dollars, there can be no assurance that the cost for the production of the Company’s products will not be affected by exchange fluctuations between the United States and the local currencies of these contractors. Due to the number of currencies involved, the Company cannot quantify the potential impact of future currency fluctuations on net income in future years. The Company does not hedge its foreign currency risk.

Inflation Risk

      While the current deflationary environment, especially in the apparel industry, affects the Company’s results of operations, the Company manages its inflation/deflation risks by ongoing review of product selling prices and production costs. Management believes the Company’s ability to match product selling prices with

29

production cost reduces these risks and their affect on the Company’s business, its consolidated financial position, results of operations or cash flows.

Investment Risk

      The Company does not believe it has material exposure to market risk with respect to any of its investments. The Company does not utilize market rate sensitive instruments for trading or other purposes. For information regarding the Company’s investments, refer to the Cash and cash equivalents and Investments sections of Note 1 to the consolidated financial statements.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

	Page
Report of Independent Registered Public Accounting Firm		32
Management Report on Internal Control over Financial Reporting		33
Report of Independent Registered Public Accounting Firm		34
Consolidated Balance Sheets — January 1, 2005 and January 3, 2004		36
Consolidated Statements of Income — years ended January 1, 2005, January 3, 2004 and December 28, 2002		37
Consolidated Statements of Changes in Shareholders’ Equity — years ended January 1, 2005, January 3, 2004 and December 28, 2002		38
Consolidated Statements of Cash Flows — years ended January 1, 2005, January 3, 2004 and December 28, 2002		39
Notes to Consolidated Financial Statements		40

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

OshKosh B’Gosh, Inc.:

      We have audited the accompanying consolidated balance sheets of OshKosh B’Gosh, Inc. and subsidiaries (the “Company”) as of January 1, 2005 and January 3, 2004, and the related consolidated statements of income, shareholders’ equity and cash flows for each of the three years in the period ended January 1, 2005. Our audits also included the financial statement schedule listed in the Index at Item 15. These financial statements and the financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on the financial statements and the financial statement schedule based on our audits.

      We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

      In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Company as of January 1, 2005 and January 3, 2004, and the results of its operations and its cash flows for each of the three years in the period ended January 1, 2005 in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

      We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of the Company’s internal control over financial reporting as of January 1, 2005, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 25, 2005 expressed an unqualified opinion on management’s assessment of the effectiveness of the Company’s internal control over financial reporting and an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Milwaukee, Wisconsin

February 25, 2005

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MANAGEMENT REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

      Management of OshKosh B’Gosh, Inc. and its subsidiaries (the “Company”) is responsible for establishing and maintaining adequate internal control over financial reporting. Pursuant to the rules and regulations of the Securities and Exchange Commission, internal control over financial reporting is a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the Company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

      Management has evaluated the effectiveness of its internal control over financial reporting as of January 1, 2005 based on the control criteria established in a report entitled Internal Control — Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on such evaluation, we have concluded that the Company’s internal control over financial reporting is effective as of January 1, 2005.

      The registered independent public accounting firm of Deloitte & Touche LLP, as auditors of the Company’s consolidated financial statements, has issued an attestation report on management’s assessment of the Company’s internal control over financial reporting.

OSHKOSH B’GOSH, INC.

By: /s/ DOUGLAS W. HYDE
  Douglas W. Hyde
Chairman of the Board and
Chief Executive Officer By: /s/ MICHAEL L. HEIDER
  Michael L. Heider
Vice President Finance,
Treasurer and Chief Financial Officer

33

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

OshKosh B’Gosh, Inc.:

      We have audited management’s assessment, included in the accompanying Management Report on Internal Control over Financial Reporting, that Oshkosh B’Gosh and subsidiaries (the “Company”) maintained effective internal control over financial reporting as of January 1, 2005, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the Company’s internal control over financial reporting based on our audit.

      We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.

      A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

      Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

      In our opinion, management’s assessment that the Company maintained effective internal control over financial reporting as of January 1, 2005, is fairly stated, in all material respects, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 1, 2005, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

34

      We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedule as of and for the year ended January 1, 2005, of the Company and our report dated February 25, 2005, expressed an unqualified opinion on those financial statements and financial statement schedule.

Milwaukee, Wisconsin

February 25, 2005

35

OSHKOSH B’GOSH, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(Dollars in thousands, except per share amounts)

			January 1,			January 3,
			2005			2004
ASSETS
Current assets
	Cash and cash equivalents		$	3,608		$	3,456
	Investments			34,070			20,475
	Accounts receivable, net			12,428			16,669
	Inventories			61,044			61,358
	Prepaid expenses and other current assets			10,242			8,316
	Deferred income taxes			7,750			10,100
Total current assets				129,142			120,374
Property, plant and equipment, net				29,130			24,296
Deferred income taxes				950			2,000
Other assets				5,168			5,855
Total assets			$	164,390		$	152,525
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
	Accounts payable		$	18,169		$	16,961
	Accrued liabilities			33,197			32,827
Total current liabilities				51,366			49,788
Deferred rent				4,037			1,325
Employee benefit plan liabilities				11,253			13,647
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 — 9,579,330 shares in 2004, — 9,436,869 shares in 2003		95			94
		Class B, authorized — 4,425,000 shares; Issued and Outstanding — 2,182,926 shares in 2004, — 2,184,261 shares in 2003		22			22
	Additional paid-in capital			3,726			—
	Retained earnings			96,426			87,649
	Unearned compensation under restricted stock plan			(2,535	)		—
Total shareholders’ equity				97,734			87,765
Total liabilities and shareholders’ equity			$	164,390		$	152,525

See notes to consolidated financial statements.

36

OSHKOSH B’GOSH, INC. AND SUBSIDIARIES

Consolidated Statements of Income

(Dollars in thousands, except per share amounts)

		For the Year Ended
		January 1,			January 3,			December 28,
		2005			2004			2002
Net sales		$	398,740		$	417,272		$	436,989
Cost of products sold			240,180			266,119			246,744
Gross profit			158,560			151,153			190,245
Selling, general and administrative expenses			151,185			151,251			148,947
Royalty income, net			(12,972	)		(11,688	)		(10,188	)
(Gain) loss on sale of assets			(1,140	)		(158	)		84
Operating income			21,487			11,748			51,402
Other income (expense):
	Interest expense		(222	)		(718	)		(1,097	)
	Interest income		308			200			528
	Miscellaneous		22			4			28
Other income (expense) — net			108			(514	)		(541	)
Income before income taxes			21,595			11,234			50,861
Income taxes			7,776			4,045			18,816
Net income		$	13,819		$	7,189		$	32,045
Net income per common share
	Basic — Class A	$	1.21		$	0.62		$	2.65
	Basic — Class B	$	1.05		$	0.54		$	2.30
	Diluted — Class A	$	1.17		$	0.60		$	2.54
	Diluted — Class B	$	1.04		$	0.54		$	2.26

See notes to consolidated financial statements.

37

OSHKOSH B’GOSH, INC. AND SUBSIDIARIES

Consolidated Statements of Changes in Shareholders’ Equity

(Amounts in thousands, except per share amounts)

		Common Stock
																			Unearned
																			Compensation
		Class A						Class B					Additional						Under
													Paid-In			Retained			Restricted
		Shares			Amount			Shares			Amount		Capital			Earnings			Stock Plan
Balance — December 29, 2001			10,020		$	100			2,208		$	22	$	5,339		$	68,551		$	(312	)
Net income			—			—			—			—		—			32,045			—
Dividends
	— Class A ($.26 per share)		—			—			—			—		—			(2,635	)		—
	— Class B ($.225 per share)		—			—			—			—		—			(495	)		—
Conversions of common shares			13			—			(13	)		—		—			—			—
Stock options exercised			437			4			—			—		6,614			—			—
Income tax benefit from stock options exercised			—			—			—			—		4,108			—			—
Compensation earned under restricted stock plan			—			—			—			—		—			—			292
Repurchase and retirement of common shares			(712	)		(7	)		—			—		(16,061	)		(5,176	)		—
Balance — December 28, 2002			9,758			97			2,195			22		—			92,290			(20	)
Net income			—			—			—			—		—			7,189			—
Dividends
	— Class A ($.36 per share)		—			—			—			—		—			(3,460	)		—
	— Class B ($.31 per share)		—			—			—			—		—			(679	)		—
Conversions of common shares			11			—			(11	)		—		—			—			—
Stock options exercised, net			68			1			—			—		867			—			—
Income tax benefit from stock options exercised			—			—			—			—		321			—			—
Additional consideration under restricted stock plan			—			—			—			—		67			—			(67	)
Compensation earned under restricted stock plan			—			—			—			—		—			—			87
Repurchase and retirement of common shares			(400	)		(4	)		—			—		(1,255	)		(7,691	)		—
Balance — January 3, 2004			9,437			94			2,184			22		—			87,649			—
Net income			—			—			—			—		—			13,819			—
Dividends
	— Class A ($.44 per share)		—			—			—			—		—			(4,212	)		—
	— Class B ($.38 per share)		—			—			—			—		—			(830	)		—
Conversions of common shares			1			—			(1	)		—		—			—			—
Stock options exercised			29			—			—			—		513			—			—
Income tax benefit from stock options exercised			—			—			—			—		50			—			—
Forfeitures of restricted stock			(18	)		—			—			—		—			—			—
Award of restricted stock			130			1			—			—		3,163			—			(3,164	)
Compensation earned under restricted stock plan			—			—			—			—		—			—			629
Balance — January 1, 2005			9,579		$	95			2,183		$	22	$	3,726		$	96,426		$	(2,535	)

See notes to consolidated financial statements.

38

OSHKOSH B’GOSH, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Dollars in thousands)

					For the Year Ended
					January 1,			January 3,			December 28,
					2005			2004			2002
Cash flows from operating activities
		Net income			$	13,819		$	7,189		$	32,045
		Adjustments to reconcile net income to net cash provided by operating activities:
			Depreciation			6,580			6,860			6,937
			Amortization			531			598			1,013
			(Gain) loss on disposal of assets			(1,140	)		(158	)		349
			Deferred income taxes			3,400			(200	)		5,400
			Compensation earned under restricted stock plan			629			87			292
			Income tax benefit from stock option exercises			50			321			4,108
			Benefit plan expense, net of contributions			(2,394	)		(446	)		(3,924	)
			Changes in operating assets and liabilities:
				Accounts receivable		4,241			60			8,968
				Inventories		314			(4,244	)		(1,685	)
				Prepaid expenses and other current assets		(1,926	)		(6,631	)		(78	)
				Accounts payable		1,208			5,054			678
				Accrued liabilities and other non-current liabilities		3,082			(4,535	)		284
Net cash provided by operating activities						28,394			3,955			54,387
	Cash flows from investing activities
		Additions to property, plant and equipment				(11,847	)		(4,090	)		(5,722	)
		Proceeds from disposal of assets				2,115			510			369
		Sale (purchase) of investments				(13,595	)		11,090			(16,270	)
		Changes in other assets				(386	)		(421	)		(402	)
	Net cash (used in) provided by investing activities					(23,713	)		7,089			(22,025	)
	Cash flows from financing activities
		Payments on long-term debt				—			—			(24,000	)
		Dividends paid				(5,042	)		(4,139	)		(3,130	)
		Net proceeds from issuance of common shares				513			868			6,618
		Repurchase of common shares				—			(8,950	)		(21,244	)
Net cash used in financing activities						(4,529	)		(12,221	)		(41,756	)
Net increase (decrease) in cash and cash equivalents						152			(1,177	)		(9,394	)
Cash and cash equivalents at beginning of year						3,456			4,633			14,027
Cash and cash equivalents at end of year					$	3,608		$	3,456		$	4,633
Supplementary disclosures
		Cash paid for interest			$	144		$	287		$	652
		Cash paid for income taxes			$	2,706		$	6,625		$	5,434

See notes to consolidated financial statements.

39

OSHKOSH B’GOSH, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollars in thousands, except 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 children’s 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.

Use of estimates

      The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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.

Cash and cash equivalents

      Cash equivalents consist primarily of highly liquid investments, such as money market accounts, with original maturities of three months or less. Cash equivalents are stated at cost, which approximates market value.

Investments

      The Company’s investments consist of highly liquid debt instruments with short duration put features or auction rate debt securities. These investments are classified as available for sale securities and are stated at cost, which approximates market value. The Company’s policy is to invest temporarily excess cash in high grade liquid debt instruments with short term interest characteristics. The Company historically classified these instruments as cash equivalents. After a detailed review of the characteristics of each instrument, the Company has determined that these instruments are more properly classified as investments in the Company’s consolidated balance sheets, and that the purchase or sale of these instruments are properly reflected as an investing activity in the Company’s consolidated statements of cash flows, and has reclassified prior year amounts to conform to this presentation. Sale (purchase) of investments includes frequent transactions as part of the Company’s cash management process. Total sales (purchases) amounted to $83,155 and $(96,750) in 2004, $107,960 and $(96,870) in 2003, and $141,015 and $(157,285) in 2002, respectively.

Financial instruments

      The fair value of financial instruments, primarily cash equivalents, investments, accounts receivable, accounts payable and accrued liabilities do not materially differ from their carrying value due to their short-term nature.

40

OSHKOSH B’GOSH, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

Accounts receivable

      Accounts receivable are recorded net of allowances, which totaled $4,398 in 2004 and $5,602 in 2003.

Inventories

      Inventories are stated at the lower of cost or market on the last-in, first-out (LIFO) basis.

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. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” less accumulated depreciation. Expenditures for improvements that increase asset values or extend usefulness are capitalized. Expenditures for maintenance and repairs are expensed as incurred. Depreciation and amortization for financial reporting purposes are 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, fixtures and equipment		3 to 10

      Leasehold improvements are depreciated over the shorter of the lease term (not including renewals) or the estimated useful life.

Construction Allowances

      Construction allowances received from landlords are recorded as deferred rent and amortized as reductions to rent expense over the lease term.

Revenue recognition

      Revenue within wholesale operations is recognized at the time merchandise is shipped and title and risk of loss is transferred to customers. Wholesale revenue is recorded net of returns, margin support, allowances, and certain co-op advertising support. Returns are recorded when the company authorizes the return of product. Margin support arrangements are based on management’s estimate of seasonal support levels that correspond with current period product shipments. Allowances for the settlement of promotional programs are estimated based on product sell-through results, current market conditions and existing open chargeback levels. Advertising support arrangements not specifically relating to the reimbursement for actual advertising expenses by the Company’s customers are recorded in the period corresponding with the shipment of seasonal products, as a reduction of revenues.

      Retail store revenues are recognized at the time of sale, net of all promotional discounts and estimated returns.

      Royalty income is recognized based on actual sales of licensed products.

Cost of products sold

      Cost of products sold includes inventory production or procurement costs, including inbound freight, duty, planning, purchasing, sourcing, inbound quality, and inspection costs.

41

OSHKOSH B’GOSH, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

Shipping and handling fees and costs

      Shipping and handling fees charged to customers are included in net sales. Shipping and handling costs, including inbound freight, purchasing and inspection costs, are included in cost of products sold.

Selling, general and administrative costs

      Selling, general and administrative costs include selling, advertising, distribution, general and administrative costs. Distribution costs, including receiving, warehousing and internal transfer costs, totaled $22,426, $24,011 and $24,191 in 2004, 2003 and 2002, respectively.

Advertising

      Advertising costs are expensed as incurred and totaled $8,129, $7,867 and $11,550 in 2004, 2003 and 2002, respectively.

Earnings per share

      The Company maintains two classes of common stock — Class A and Class B common stock. Shares of Class B common stock may be converted to an equal number of Class A common shares, without restriction. The Company’s common stock authorization provides that dividends must be paid on both the Class A and Class B common stock at any time that dividends are paid. Each share of Class A common stock is entitled to receive 115% of the cash dividend paid on each share of Class B common stock.

      In March 2004, the Emerging Issues Task Force reached a consensus on Issue 03-6, “Participating Securities and the Two — Class Method under SFAS No. 128” (EITF 03-6). EITF 03-6 provides guidance in determining when the two-class method, as defined in SFAS No. 128, “Earnings per Share,” must be utilized in calculating earnings per share. This EITF was adopted by the Company during 2004 and the Company now presents basic and diluted earnings per share for both Class A common stock and Class B common stock. Prior periods earnings per share presentations have been recast to conform with the current year presentation.

      Basic earnings per share for the Company’s Class A and Class B common stock is calculated by dividing net income allocated to Class A and Class B common stock by the weighted average number of shares of Class A and Class B common stock outstanding. Net income available to the Company’s Class A and Class B common stockholders for the basic earnings per share calculation is allocated among each class based upon a 15% dividend preference on Class A common stock.

      The following table shows how net income is allocated using this method:

		2004		2003		2002
Allocation of Net Income — Basic
	Common A	$	11,535	$	6,007	$	26,967
	Common B		2,284		1,182		5,078
	Total	$	13,819	$	7,189	$	32,045

      In periods in which the Company has income available to common shareholders, diluted earnings per share for the Company’s Class A common stock is calculated by dividing total net income by total weighted average shares outstanding, which includes the dilutive effect of employee stock options and the conversion feature of the Company’s Class B common stock. The conversion feature of the Company’s Class B common stock is included in the calculation of Class A diluted earnings per share in periods of income as the effect of the conversion is dilutive.

42

OSHKOSH B’GOSH, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

      The Company’s Class B diluted earning per share is also presented for each period regardless of whether the Class B common shares are assumed converted into Class A common shares in the computation of diluted Class A earnings per share. Diluted earnings per share for the Company’s Class B common stock is calculated similarly to Class B basic earnings per share whereby net income available to the Company’s Class A and Class B common stockholders for the diluted earnings per share calculation is allocated among each class based upon a 15% dividend preference on Class A common stock, including the dilutive effect of stock options on Class A common stock.

      The following table shows how net income is allocated using this method:

		2004		2003		2002
Allocation of Net Income — Diluted
	Common A	$	11,542	$	6,012	$	27,064
	Common B		2,277		1,177		4,981
	Total	$	13,819	$	7,189	$	32,045

      The following table illustrates the weighted average number of common shares outstanding during the year that were used in the calculation of basic and diluted earnings per share:

	Shares in thousands
	2004		2003		2002
Weighted average shares — Basic — Class A		9,559		9,641		10,177
Employee stock options (treasury stock method)		55		111		260
Weighted average shares — Class B (if-converted to Class A)		2,184		2,192		2,204
Total Weighted average shares for Class A diluted earnings per share		11,798		11,944		12,641

      The Company had 520,525, 339,225 and 317,500 employee stock options for Class A common stock that were anti-dilutive in 2004, 2003 and 2002, respectively, and, accordingly, are not included in the diluted earnings per share calculations.

Stock-based compensation — options

      The Company has elected to follow Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued to Employees”, in accounting for its employee stock options. Under APB No. 25, no compensation expense is recognized because the exercise price of the Company’s employee stock options equals the market price of the underlying stock on the date of grant and the number of shares granted is fixed.

      The OshKosh B’Gosh, Inc. 2004 Incentive Stock Plan (Plan) as adopted by the Board of Directors on February 17, 2004, was approved by the Company’s shareholders at its annual shareholders’ meeting on May 4, 2004. The Plan, which became effective August 1, 2004, permits stock option and restricted stock grants covering a maximum of 1,350,000 shares of Class A Common Stock, all of which were available for grant at January 1, 2005. The Company’s prior Incentive Stock Plans expired in August 2004 with approximately 250,000 shares available for grant. Stock options granted under these plans generally have ten-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. 148, “Accounting for Stock Based Compensation-Transition and Disclosure,” has been determined as if the Company had accounted for its employee stock options under the fair value method. 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 2004, 2003 and 2002, respectively: risk-free interest rates of

43

OSHKOSH B’GOSH, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

4.13%, 3.90% and 4.91%; annual dividend yield of 2.04%, 1.19% and 0.68%; volatility factors of the expected market price of the Company’s common stock of .429, .364 and .514; and a weighted-average expected life of the option of approximately eight years. Changes in these subjective assumptions can significantly affect the fair value calculations.

      The estimated fair values of the options are amortized to expense over the options’ vesting periods:

		2004			2003			2002
Net income as reported		$	13,819		$	7,189		$	32,045
Add: Stock based compensation included in net income as reported, net of related tax effects			402			55			184
Deduct: Stock based compensation determined under fair value based methods for all awards, net of related tax effects			(1,659	)		(1,706	)		(2,256	)
Pro forma net income		$	12,562		$	5,538		$	29,973
Net income per common share as reported
	Basic — Class A		1.21			0.62			2.65
	Basic — Class B		1.05			0.54			2.30
	Diluted — Class A		1.17			0.60			2.54
	Diluted — Class B		1.04			0.54			2.26
Pro forma net income per common share
	Basic — Class A		1.10			0.48			2.48
	Basic — Class B		0.95			0.42			2.16
	Diluted — Class A		1.06			0.47			2.39
	Diluted — Class B		0.95			0.42			2.13

      In December 2004, the Financial Accounting Standards Board issued SFAS No. 123(R), “Share-Based Payment.” SFAS No. 123(R) requires all entities to recognize compensation expense in an amount equal to the fair value of share-based payments granted to employees. SFAS No. 123(R) is effective in the first reporting period beginning after June 15, 2005. The Company is currently evaluating the impact of this statement.

44

OSHKOSH B’GOSH, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

      A summary of the Company’s stock option activity and related information follows:

		2004					2003					2002
					Weighted-					Weighted-					Weighted-
		Options			Average		Options			Average		Options			Average
		(000’s)			Exercise Price		(000’s)			Exercise Price		(000’s)			Exercise Price
Outstanding-beginning of year			1,055		$	26		1,029		$	26		1,199		$	17
	Granted		221			22		240			24		345			41
	Exercised		(29	)		18		(115	)		18		(441	)		15
	Forfeited		(60	)		28		(99	)		31		(74	)		23
Outstanding — end of Year			1,187		$	25		1,055		$	26		1,029		$	26
Exercisable at end of year			732		$	24		540		$	23		419		$	22
Weighted-average fair value of options granted during year					$	6.52				$	7.15				$	15.94

	Options Outstanding						Options Exercisable
			Weighted-
			Average
	Number		Remaining		Weighted-		Number		Weighted-
	Outstanding		Contract		Average		Outstanding		Average
Range of Exercise Prices	(000’s)		Life		Exercise Price		(000’s)		Exercise Price
$ 7 to $ 9		2		2.1	$	8		2	$	8
$15 to $17		140		5.1	$	16		140	$	16
$18 to $23		556		6.5	$	20		336	$	19
$24 to $34		239		7.9	$	25		110	$	27
$36 to $42		250		7.1	$	41		144	$	41
		1,187						732

Stock-based compensation — restricted stock

      On February 10, 2004, the Company issued 129,700 shares of restricted stock to certain key employees. The restrictions lapse over four years based on attainment of certain financial performance targets and continued employment. Under APB No. 25, compensation expense is reflected over the period in which services are performed and when the financial performance targets are met.

Fiscal year

      The Company’s fiscal year is a 52/53-week year ending on the Saturday closest to December 31. Fiscal 2004 was a 52-week year that ended on January 1, 2005. Fiscal 2003 was a 53-week year that ended on January 3, 2004 and fiscal 2002 was a 52-week year that ended on December 28, 2002. All references to years in this report refer to the fiscal years described above.

45

OSHKOSH B’GOSH, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

Comprehensive income

      Comprehensive income equaled net income for all years presented.

Reclassifications

      Certain prior year amounts have been reclassified to conform with the current year presentation.

NOTE 2. INVENTORIES

      A summary of inventories follows:

	January 1,		January 3,
	2005		2004
Finished goods	$	48,285	$	51,750
Work in process		11,703		8,817
Raw materials		1,056		791
Total	$	61,044	$	61,358

      The replacement cost of inventory exceeds the above LIFO costs by $10,972 and $10,515 at January 1, 2005 and January 3, 2004, respectively.

NOTE 3. PREPAID EXPENSES AND OTHER CURRENT ASSETS

      A summary of prepaid expenses and other current assets follows:

	January 1,		January 3,
	2005		2004
Deposit under insurance contract	$	4,500	$	4,500
Prepaid rent		2,092		1,857
Other current assets		3,650		1,959
	$	10,242	$	8,316

NOTE 4. PROPERTY, PLANT AND EQUIPMENT

      A summary of property, plant and equipment follows:

	January 1,		January 3,
	2005		2004
Land and improvements	$	2,579	$	2,654
Buildings		13,509		13,831
Leasehold improvements		29,024		22,095
Machinery, fixtures and equipment		36,759		34,517
Construction in progress		9		36
Total		81,880		73,133
Less: accumulated depreciation and amortization		52,750		48,837
Property, plant and equipment, net	$	29,130	$	24,296

46

OSHKOSH B’GOSH, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

NOTE 5. CREDIT AGREEMENTS

      The Company has an unsecured credit agreement with a number of banks which provides a $60,000 revolving credit facility available for general corporate purposes, including cash borrowings and issuances of letters of credit. The revolving credit facility expires April 28, 2006. Merchandise letters of credit of approximately $11,825 and standby letters of credit of $400 were outstanding at January 1, 2005, with $47,775 of the unused revolving credit facility available for borrowing.

      Under the terms of the agreement, interest rates are determined at the time of borrowing and are based on London Interbank Offered Rates plus additional basis points (effectively 3.32% at January 1, 2005). Commitment fees of 0.15% are required on the revolving credit facility. The Company is required to maintain certain financial ratios in connection with this agreement. As of January 1, 2005, the Company is in compliance with all of its financial covenants. There were no outstanding borrowings against the revolving credit arrangement at January 1, 2005 and January 3, 2004.

NOTE 6. ACCRUED LIABILITIES

      A summary of accrued liabilities follows:

	January 1,		January 3,
	2005		2004
Compensation	$	7,462	$	5,125
Workers’ compensation		7,050		7,800
Income taxes		7,682		6,098
Other		11,003		13,804
Total	$	33,197	$	32,827

NOTE 7. LEASES

      The Company leases certain property and equipment including a design studio, retail stores, manufacturing facilities and a regional sales office under operating leases. Certain leases provide the Company with renewal options. Rent expense for leases with scheduled rent increases is recognized on a straight line basis over the time period in which use benefit is derived. 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:

Fiscal Year
2005	$	19,111
2006		13,238
2007		9,666
2008		7,472
2009		5,524
Thereafter		15,489
Total minimum lease payments	$	70,500

47

OSHKOSH B’GOSH, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

      Total rent expense charged to operations for all operating leases is as follows:

	2004		2003		2002
Minimum rentals	$	23,343	$	21,476	$	20,346
Contingent rentals		755		710		1,112
Total rent expense	$	24,098	$	22,186	$	21,458

NOTE 8. INCOME TAXES

      Income tax expense is comprised of the following:

		2004		2003			2002
Current:
	Federal	$	3,739	$	3,659		$	12,102
	State and local		637		586			1,314
Deferred			3,400		(200	)		5,400
Total		$	7,776	$	4,045		$	18,816

      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:

		January 1,			January 3,
		2005			2004
		Assets (Liabilities)
Current deferred taxes
	Accounts receivable allowances	$	1,525		$	2,012
	Inventory valuation		1,964			2,452
	Accrued liabilities		4,084			5,102
	Other		177			534
Total net current deferred tax assets		$	7,750		$	10,100
Non-current deferred taxes
	Depreciation	$	(1,993	)	$	(1,427	)
	Deferred employee benefits		2,466			3,185
	Trademark		512			478
	Other		(35	)		(236	)
Total net non-current deferred tax assets		$	950		$	2,000

      Substantially all income is subject to United States taxation. A reconciliation of the federal statutory income tax rate to the effective tax rates reflected in the consolidated statements of income follows:

		2004			2003			2002
Federal statutory tax rate			35.0	%		34.0	%		35.0	%
Differences resulting from:
	State and local income taxes, net of federal income tax benefit		2.0			3.4			2.2
	Other, including federal employment credits		(1.0	)		(1.4	)		(.2	)
Total			36.0	%		36.0	%		37.0	%

48

OSHKOSH B’GOSH, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

NOTE 9. RETIREMENT PLANS

      The Company has defined contribution and defined benefit pension plans covering substantially all full-time U.S. employees. Charges to operations by the Company for these plans totaled $4,430, $4,173 and $3,658 for 2004, 2003 and 2002, respectively.

Defined benefit plans

      The Company sponsors several defined benefit pension plans covering certain U.S. hourly and salaried employees. These pension plan assets are invested in group annuity contracts and equity securities based on the Company’s overall strategic investment direction as follows:

	Target Allocation			Expected Long-Term
	Percentage			Rate of Return
Equity investments		50	%		9-10	%
Intermediate term debt investments		40	%		5-7	%
Real estate investments		10	%		6-8	%
Total		100	%		8	%

      The long-term rate of return assumption considers historic returns adjusted for changes in overall economic conditions that may affect future returns and a weighting of each investment class.

      The defined benefit pension plan assets were invested as follows as of the end of each year:

	2004			2003
Equity investments		50	%		50	%
Intermediate term debt investments		39	%		39	%
Real estate investments		11	%		11	%
Total		100	%		100	%

      The actuarial computations utilized the following assumptions, using year-end measurement dates:

Benefit Obligation	2004			2003
Discount rate		5.75	%		6.0	%
Rates of increase in compensation level		0- 4.5	%		0- 4.5	%

Net Periodic Pension Cost	2004			2003			2002
Discount rate		6.0	%		6.5	%		7.0	%
Expected long-term rate of return on assets		8.0	%		8.0	%		8.0	%
Rates of increase in compensation levels		0- 4.5	%		0- 4.5	%		0- 4.5	%

49

OSHKOSH B’GOSH, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

      Net periodic pension cost was comprised of:

	2004			2003			2002
Service cost	$	2,456		$	2,184		$	2,053
Interest cost		3,084			2,806			2,667
Expected return on plan assets		(3,559	)		(2,926	)		(2,892	)
Amortization of prior service cost		324			323			313
Amortization of transition obligation		—			(151	)		(159	)
Recognized actuarial loss (gain)		246			98			(273	)
Net periodic pension cost	$	2,551		$	2,334		$	1,709

      A reconciliation of changes in the projected pension benefit obligation and plan assets follows:

		2004			2003
Change in projected benefit obligation
	Projected benefit obligation at beginning of year	$	51,189		$	44,727
	Service cost		2,456			2,184
	Interest cost		3,084			2,806
	Amendments		100			82
	Actuarial loss		2,565			3,333
	Benefits paid		(1,694	)		(1,943	)
Projected benefit obligation at end of year			57,700			51,189
Change in plan assets
	Fair value of plan assets at beginning of year		44,479			36,569
	Actual return on plan assets		3,748			6,326
	Company contributions		4,904			3,527
	Benefits paid		(1,694	)		(1,943	)
Fair value of plan assets at end of year			51,437			44,479
Funded status
	Funded status of plan		(6,263	)		(6,710	)
	Unrecognized net actuarial loss		5,840			3,711
	Unrecognized prior service cost		792			1,016
Accrued benefit cost		$	369		$	(1,983	)

      Amounts recognized in the Consolidated Balance Sheets:

	2004			2003
Prepaid benefit cost	$	3,917		$	4,009
Accrued benefit liability		(3,548	)		(5,992	)
	$	369		$	(1,983	)

50

OSHKOSH B’GOSH, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

      Amounts applicable to the Company’s pension plans with accumulated benefit obligations in excess of plan assets are as follows:

	ABO> Assets		ABO> Assets
	January 1,		January 3,
	2005		2004
Projected benefit obligations	$	3,460	$	2,672
Accumulated benefit obligations		2,952		2,261
Fair value of plan assets		—		—

      Total accumulated benefit obligations for all defined benefit plans totaled $47,491 and $39,466 at January 1, 2005 and January 3, 2004, respectively.

      The Company currently expects benefit payments for its defined benefit pension plans as follows for the next ten fiscal years.

Fiscal Year
2005	$	1,400
2006		1,300
2007		1,900
2008		1,700
2009		2,400
2010-2014		16,400
	$	25,100

      While limited to funding requirements of federal laws and regulations, the Company intends to annually fund the qualified plans in an amount sufficient to have plan assets in excess of the accumulated benefit obligation at year end. The amount to be funded in 2005 is currently estimated to be approximately $2,000.

      The Company also sponsors an unfunded defined benefit post-retirement life and health insurance plan that covers qualifying salaried employees.

Defined contribution plans

      The Company maintains retirement plans 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. Matching contributions by the Company on participant contributions amounted to approximately $357, $432 and $439 for 2004, 2003 and 2002, respectively. The retirement plans also allow for discretionary contributions as determined by the Company’s Retirement Plan Committee. Charges to operations by the Company for annual discretionary contributions under this plan totaled $1,328, $1,292 and $1,222 for 2004, 2003 and 2002, respectively.

      The Company also has supplemental retirement programs for designated employees. Annual provisions to this unfunded plan are discretionary and are determined by the Company’s Retirement Plan Committee. Charges to operations by the Company for additions to this plan totaled $194, $115 and $288 for 2004, 2003 and 2002, respectively.

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.

51

OSHKOSH B’GOSH, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

      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 $1.875 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 $1.875 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.

      On December 6, 1999, the Company’s Board of Directors authorized a repurchase program for up to 1.5 million shares of its Class A common stock. On December 11, 2000, the Company’s Board of Directors authorized an addition of 1.0 million shares to this repurchase program. During 2003 and 2002, the Company repurchased 400,400 and 712,000 shares, respectively, of its Class A common stock under this program for approximately $8,950 and $21,244, respectively. The Company did not repurchase any common stock during 2004. As of January 1, 2005, the Company had 151,200 shares of its Class A common stock available to be repurchased under its current repurchase program.

NOTE 11. BUSINESS AND CREDIT CONCENTRATIONS

      Operations of the Company occur primarily within the United States and its customers are not concentrated in any geographic region. The Company provides credit, in the normal course of business, to department and specialty stores. The Company performs ongoing credit evaluations of its customers and maintains allowances for potential credit losses.

      In 2004, 2003 and 2002 no individual customer had sales in excess of 10% of the Company’s net sales.

NOTE 12. LITIGATION

      The Company is subject to various legal actions and proceedings in the normal course of business. Although litigation is subject to many uncertainties and the ultimate exposure with respect to these matters cannot be ascertained, management does not believe the final outcome will have a significant affect on the consolidated financial statements.

NOTE 13. SEGMENT REPORTING

      The Company designs, sources and markets apparel products using primarily the OshKosh B’Gosh brand. The apparel products are primarily marketed in two distinct distribution channels: domestic wholesale and through Company-owned retail stores. The Company designs and sources product to meet the needs of these distribution channels through a single procurement business unit.

      Certain operations have been segregated into segments as defined by SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information”. The Company manages its business operations by periodic analysis of business unit results. For this purpose, domestic wholesale, retail, and procurement are separately identified for management reporting and are considered segments as defined by SFAS No. 131.

52

OSHKOSH B’GOSH, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

      Management evaluates the operating performance of each of its business units based on income before taxes as well as return on net assets. For this purpose, product is transferred from procurement to the domestic wholesale and retail business units at cost. However, procurement receives a markup on product sold by the Company’s wholesale and retail business units. Accounting policies used for segment reporting are consistent with the Company’s overall accounting policies, except that inventories are valued on a FIFO basis. In addition, interest income, interest expense, certain corporate office expenses and the effects of the LIFO inventory valuation method are not allocated to individual business units, and are included in the All Other/Corporate column below.

      Segment assets include all assets used in the operation of each business unit, including accounts receivable, inventories and property, plant and equipment. Certain other corporate assets that cannot be specifically identified with the operation of a business unit are not allocated. Financial information for the Company’s reportable segments follows:

	Domestic							All Other/
	Wholesale		Retail		Procurement			Corporate		Total
January 1, 2005
Net sales	$	137,776	$	258,234	$	92		$	2,638	$	398,740
Income before income taxes		7,222		594		5,126			8,653		21,595
Assets		24,616		75,955		18,323			45,496		164,390
Depreciation expense		1,014		4,639		398			529		6,580
Property, plant and equipment additions		347		11,397		75			28		11,847
January 3, 2004
Net sales	$	165,700	$	248,694	$	141		$	2,737	$	417,272
Income (loss) before income taxes		2,108		9,618		(1,562	)		1,070		11,234
Assets		34,844		64,309		15,265			38,107		152,525
Depreciation expense		1,283		4,461		487			629		6,860
Property, plant and equipment additions		494		3,358		165			73		4,090
December 28, 2002
Net sales	$	182,744	$	250,539	$	180		$	3,526	$	436,989
Income before income taxes		16,541		22,354		11,048			918		50,861
Assets		44,026		49,274		15,638			47,107		156,045
Depreciation expense		1,651		4,044		555			687		6,937
Property, plant and equipment additions		425		5,155		108			34		5,722

53

OSHKOSH B’GOSH, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

NOTE 14. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

		2004 Quarter Ended
		April 3,			July 3,			October 2,		January 1,
		2004			2004			2004		2005
Net sales		$	79,507		$	83,081		$	115,187	$	120,965
Gross profit			30,798			31,772			45,819		50,171
Net income (loss)			(1,196	)		(1,613	)		8,003		8,625
Net income (loss) per common share:
	Basic — Class A		(0.10	)		(0.14	)		0.70		0.75
	Basic — Class B		(0.10	)		(0.14	)		0.61		0.65
	Diluted — Class A		(0.10	)		(0.14	)		0.68		0.73
	Diluted — Class B		(0.10	)		(0.14	)		0.60		0.65

		2003 Quarter Ended
		April 5,		July 5			October 4,		January 3,
		2003		2003			2003		2004
Net sales		$	99,287	$	84,546		$	124,097	$	109,342
Gross profit			40,704		30,700			44,656		35,093
Net income (loss)			1,281		(1,874	)		6,783		999
Net income (loss) per common share:
	Basic — Class A		0.11		(0.16	)		0.59		0.09
	Basic — Class B		0.10		(0.16	)		0.51		0.08
	Diluted — Class A		0.11		(0.16	)		0.57		0.08
	Diluted — Class B		0.10		(0.16	)		0.51		0.08

54

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

      None

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

      The Company maintains disclosure controls and procedures designed to ensure that the information the Company must disclose in its filings with the Securities and Exchange Commission is recorded, processed, summarized and reported on a timely basis. The Company’s principal executive officer and principal financial officer have reviewed and evaluated the Company’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the end of the period covered by this report on Form 10-K (the “Evaluation Date”). Based on such evaluation, such officers have concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures are effective in bringing to their attention on a timely basis material information relating to the Company required to be included in the Company’s periodic filings under the Exchange Act.

Internal Control over Financial Reporting

      Management’s annual report on internal control over financial reporting and the attestation report of the Company’s independent registered public accounting firm are included in Item 8 under the headings “Management Report on Internal Control over Financial Reporting” and “Report of Independent Registered Public Accounting Firm,” respectively, and incorporated herein by reference.

Changes in Internal Control over Financial Reporting

      There have not been any significant changes in the Company’s internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the Company’s most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

      None

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

      The information required by this item is incorporated by reference to the definitive Proxy Statement of OshKosh B’Gosh, Inc. for its annual meeting to be held on May 3, 2005, under the captions “Directors and Executive Officers” and “Section 16(a) Beneficial Ownership Reporting Compliance”.

ITEM 11. EXECUTIVE COMPENSATION

      The information required by this item is incorporated by reference to the definitive Proxy Statement of OshKosh B’Gosh, Inc. for its annual meeting to be held on May 3, 2005, under the captions “Management Compensation” and “Directors’ Compensation”.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

      The information required by this item is incorporated by reference to the definitive Proxy Statement of OshKosh B’Gosh, Inc. for its annual meeting to be held on May 3, 2005, under the captions “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plans”.

55

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      The information required by this item is incorporated by reference to the definitive Proxy Statement of OshKosh B’Gosh, Inc. for its annual meeting to be held on May 3, 2005, under the caption “Directors and Executive Officers”.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

      The information required by this item is incorporated by reference to the definitive Proxy Statement of OshKosh B’Gosh, Inc. for its annual meeting to be held on May 3, 2005, under the caption, “Report of the Audit Committee”.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

      (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 the schedules are not applicable, the amounts are immaterial or the required information is included in the consolidated financial statements or notes thereto.

      (3) Index to Exhibits

      (b) Exhibits

See Exhibit Index, attached hereto.

56

SIGNATURES

Date: March 14, 2005

      Pursuant to the requirements of Section 13 of 15(d) of the Securities Exchange Act of 1934, the Company 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

Douglas W. Hyde

Chairman of the Board and Chief Executive Officer (Principal Executive Officer)

By:  /s/ MICHAEL L. HEIDER

Michael L. Heider

Vice President Finance, Treasurer and Chief Financial Officer (Principal Financial Officer and Principal Accounting 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 Company and in the capacities and on the dates indicated.

Signature		Title
By:	/s/ DOUGLAS W. HYDE	Chairman of the Board, Chief Executive Officer and Director
By:	/s/ MICHAEL L. HEIDER	Vice President Finance, Treasurer and Chief Financial Officer
By:	/s/ STEVEN R. DUBACK	Director
By:	/s/ WILLIAM F. WYMAN	Director
By:	/s/ PHOEBE A. WOOD	Director
By:	/s/ SHIRLEY A. DAWE	Director
By:	/s/ TAMARA L. HEIM	Director
By:	/s/ ROBERT C. SIEGEL	Director

57

Exhibit Index

3	.1	Restated Certificate of Incorporation of OshKosh B’Gosh, Inc., dated May 9, 2002 (incorporated herein by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 28, 2002).
3	.2	By-laws of OshKosh B’Gosh, Inc., as amended (incorporated herein by reference to Exhibit 3.2 to the Company’s Form 8-K dated February 15, 2005, filed on February 17, 2005).
*10	.1	OshKosh B’Gosh, Inc. 401(K) Plan, as amended, effective January 1, 2004.
*10	.2	OshKosh B’Gosh, Inc. Pension Plan, as amended, effective January 1, 2005.
*10	.3	OshKosh B’Gosh, Inc. Executive Non-Qualified Profit Sharing Plan, as amended. (incorporated herein by reference to Exhibit 10.3 to the Company’s Annual Report on Form 10-K for the fiscal year ended January 1, 2004).
*10	.4	OshKosh B’Gosh, Inc. Excess Benefit Plan (incorporated herein by reference to Exhibit 10.4 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 28, 2002).
*10	.5	OshKosh B’Gosh, Inc. Executive Deferred Compensation Plan (incorporated herein by reference to Exhibit 10.5 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 28, 2002).
*10	.6	OshKosh B’Gosh, Inc. 2004 Supplemental Profit Sharing Plan (incorporated herein by reference to Exhibit 10.11 to the Company’s Form 8-K dated December 30, 2004, filed on January 4, 2005).
*10	.7	OshKosh B’Gosh, Inc. Officers Medical and Dental Reimbursement Plan, as amended.
*10	.8	OshKosh B’Gosh, Inc. 1994 Incentive Stock Plan, as amended (incorporated herein by reference to Exhibit 10.5 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 29, 2001).
10	.9	OshKosh B’Gosh, Inc. 1995 Outside Director’s Stock Option Plan (incorporated herein by reference to Exhibit 10.8 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 28, 2002).
*10	.10	OshKosh B’Gosh, Inc. 2004 Incentive Stock Plan (incorporated herein by reference to Exhibit 99.1 to the Company’s Registration Statement on Form S-8, Registration Number 333-122617, filed on February 7, 2005).
10	.11	Credit agreement between OshKosh B’Gosh, Inc. and U.S. Bank N.A. and participating banks as amended, dated as of October 28, 2004 (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed on November 1, 2004).
*10	.12	Employment Agreement between OshKosh B’Gosh, Inc. and David L. Omachinski (incorporated herein by reference to Exhibit 10.10 to the Company’s Form 8-K dated December 7, 2004, filed on December 10, 2004).
21		List of subsidiaries
23		Consent of Deloitte & Touche LLP
31	.1	Certification by the Chief Executive Officer
31	.2	Certification by the Vice President Finance, Treasurer and Chief Financial Officer
32	.1	Section 906 of the Sarbanes-Oxley Act Certification by the Chief Executive Officer
32	.2	Section 906 of the Sarbanes-Oxley Act Certification by the Vice President Finance, Treasurer and Chief Financial Officer

*  Represents a plan that covers compensation, benefits and/or related arrangements for executive management.

58

OSHKOSH B’GOSH, INC. AND SUBSIDIARIES

Schedule II

Valuation and Qualifying Accounts

(Dollars in thousands)

		Balance at		Charged to			Deductions		Balance at
		Beginning		Costs and			Net of		End of
		of Period		Expenses			Recoveries		Period
Allowance for Doubtful Accounts
	January 1, 2005	$	200	$	(79	)	$	21	$	100
	January 3, 2004		300		(6	)		94		200
	December 28, 2002		500		(96	)		104		300
Allowance for Promotional Programs
	January 1, 2005	$	5,402	$	28,937		$	30,041	$	4,298
	January 3, 2004		4,937		48,211			47,746		5,402
	December 28, 2002		6,575		35,629			37,267		4,937

59 EX-10.1 2 c92767exv10w1.htm 401(K) PLAN, AS AMENDED, EFFECTIVE JANUARY 1, 2004

EXHIBIT 10.1

Your plan is an important legal document. This sample plan has been prepared based on our understanding of the desired provisions. It may not fit your situation. You should consult with your lawyer on the plan’s legal and tax implications. Neither Principal Life Insurance Company nor its agents can be responsible for the legal or tax aspects of the plan nor its appropriateness for your situation. If you wish to change the provisions of this sample plan, you may ask us to prepare new sample wording for you and your lawyer to review.

OSHKOSH B’GOSH, INC.
401(k) PLAN

Defined Contribution Plan 8.0

Restated January 1, 2003

TABLE OF CONTENTS

INTRODUCTION
ARTICLE I		FORMAT AND DEFINITIONS
Section 1.01	—	Format
Section 1.02	—	Definitions
ARTICLE II		PARTICIPATION
Section 2.01	—	Active Participant
Section 2.02	—	Inactive Participant
Section 2.03	—	Cessation of Participation
Section 2.04	—	Adopting Employers - Single Plan
ARTICLE III		CONTRIBUTIONS
Section 3.01	—	Employer Contributions
Section 3.01A	—	Rollover Contributions
Section 3.02	—	Forfeitures
Section 3.03	—	Allocation
Section 3.04	—	Contribution Limitation
Section 3.05	—	Excess Amounts
ARTICLE IV		INVESTMENT OF CONTRIBUTIONS
Section 4.01	—	Investment and Timing of Contributions

ARTICLE V		BENEFITS
Section 5.01	—	Retirement Benefits
Section 5.02	—	Death Benefits
Section 5.03	—	Vested Benefits
Section 5.04	—	When Benefits Start
Section 5.05	—	Withdrawal Benefits
Section 5.06	—	Loans to Participants
Section 5.07	—	Distributions Under Qualified Domestic Relations Orders
ARTICLE VI		DISTRIBUTION OF BENEFITS
Section 6.01	—	Form of Distribution
Section 6.02	—	Election Procedures
Section 6.03	—	Notice Requirements
ARTICLE VII		DISTRIBUTION REQUIREMENTS
Section 7.01	—	Application
Section 7.02	—	Definitions
Section 7.03	—	Distribution Requirements
ARTICLE VIII		TERMINATION OF THE PLAN
ARTICLE IX		ADMINISTRATION OF THE PLAN
Section 9.01	—	Administration
Section 9.02	—	Expenses
Section 9.03	—	Records
Section 9.04	—	Information Available
Section 9.05	—	Claim and Appeal Procedures
Section 9.06	—	Delegation of Authority
Section 9.07	—	Exercise of Discretionary Authority
ARTICLE X		GENERAL PROVISIONS
Section 10.01	—	Amendments
Section 10.02	—	Direct Rollovers
Section 10.03	—	Mergers and Direct Transfers
Section 10.04	—	Provisions Relating to the Insurer and Other Parties
Section 10.05	—	Employment Status
Section 10.06	—	Rights to Plan Assets
Section 10.07	—	Beneficiary
Section 10.08	—	Nonalienation of Benefits
Section 10.09	—	Construction
Section 10.10	—	Legal Actions

Section 10.11	—	Small Amounts
Section 10.12	—	Word Usage
Section 10.13	—	Change in Service Method
Section 10.14	—	Military Service
ARTICLE XI		TOP-HEAVY PLAN REQUIREMENTS
Section 11.01	—	Application
Section 11.02	—	Definitions
Section 11.03	—	Modification of Vesting Requirements
Section 11.04	—	Modification of Contributions

PLAN EXECUTION

INTRODUCTION

     The Primary Employer previously established a 401(k) savings plan on October 1, 1996.

     The Primary Employer is of the opinion that the plan should be changed. It believes that the best means to accomplish these changes is to completely restate the plan’s terms, provisions and conditions. The restatement, effective January 1, 2003, is set forth in this document and is substituted in lieu of the prior document.

     The Primary Employer previously established a profit sharing plan on January 1, 1952, and restated November 6, 2001.

     The Primary Employer is of the opinion that these two plans should be merged under the Oshkosh B’Gosh, Inc. 401(k) Plan. Effective January 1, 2003, the plans are merged and this document is in lieu of the OshKosh B’Gosh, Inc. Profit Sharing Plan.

     The restated plan continues to be for the exclusive benefit of employees of the Employer. All persons covered under the plan on December 31, 2002, shall continue to be covered under the restated plan with no loss of benefits.

     It is intended that the plan, as restated, shall qualify as a profit sharing plan under the Internal Revenue Code of 1986, including any later amendments to the Code.

ARTICLE I

FORMAT AND DEFINITIONS

SECTION 1.01—FORMAT.

     Words and phrases defined in the DEFINITIONS SECTION of Article I shall have that defined meaning when used in this Plan, unless the context clearly indicates otherwise.

     These words and phrases have an initial capital letter to aid in identifying them as defined terms.

SECTION 1.02—DEFINITIONS.

Account means, for a Participant, his share of the Plan Fund. Separate accounting records are kept for those parts of his Account that result from:

(a)	Elective Deferral Contributions
(b)	Matching Contributions
(c)	Discretionary Contributions
(d)	Rollover Contributions

     A Participant’s Account shall be reduced by any distribution of his Vested Account and by any Forfeitures. A Participant’s Account shall participate in the earnings credited, expenses charged, and any appreciation or depreciation of the Investment Fund. His Account is subject to any minimum guarantees applicable under the Annuity Contract or other investment arrangement and to any expenses associated therewith.

     Accrual Computation Period means a consecutive 12-month period ending on the last day of each Plan Year, including corresponding consecutive 12-month periods before October 1, 1996.

     ACP Test means the nondiscrimination test described in Code Section 401(m)(2) as provided for in subparagraph (d) of the EXCESS AMOUNTS SECTION of Article III.

     Active Participant means an Eligible Employee who is actively participating in the Plan according to the provisions in the ACTIVE PARTICIPANT SECTION of Article II.

     Adopting Employer means an employer which is a Controlled Group member and which is listed in the ADOPTING EMPLOYERS - SINGLE PLAN SECTION of Article II.

     ADP Test means the nondiscrimination test described in Code Section 401(k)(3) as provided for in subparagraph (c) of the EXCESS AMOUNTS SECTION of Article III.

     Affiliated Service Group means any group of corporations, partnerships or other organizations of which the Employer is a part and which is affiliated within the meaning of Code Section 414(m) and regulations thereunder. Such a group includes at least two organizations one of which is either a service organization (that is, an organization the principal business of which is performing services), or an organization the principal business of which is performing management functions on a regular and continuing basis. Such service is of a type historically performed by employees. In the case of a

management organization, the Affiliated Service Group shall include organizations related, within the meaning of Code Section 144(a)(3), to either the management organization or the organization for which it performs management functions. The term Controlled Group, as it is used in this Plan, shall include the term Affiliated Service Group.

     Alternate Payee means any spouse, former spouse, child, or other dependent of a Participant who is recognized by a qualified domestic relations order as having a right to receive all, or a portion of, the benefits payable under the Plan with respect to such Participant.

     Annual Compensation means, for a Plan Year, the Employee’s Compensation for the Compensation Year ending with or within the consecutive 12-month period ending on the last day of the Plan Year.

     Annual Compensation shall include Compensation received while an Active Participant.

     Annuity Contract means the annuity contract or contracts into which the Employer enters with the Insurer for guaranteed benefits, for the investment of Contributions in separate accounts, and for the payment of benefits under this Plan. The term Annuity Contract as it is used in this Plan shall include the plural unless the context clearly indicates the singular is meant.

     Annuity Starting Date means, for a Participant, the first day of the first period for which an amount is payable as an annuity or any other form.

     Beneficiary means the person or persons named by a Participant to receive any benefits under the Plan when the Participant dies. See the BENEFICIARY SECTION of Article X.

     Claimant means any person who makes a claim for benefits under this Plan. See the CLAIM AND APPEAL PROCEDURES SECTION of Article IX.

     Code means the Internal Revenue Code of 1986, as amended.

     Compensation means, except for purposes of the CONTRIBUTION LIMITATION SECTION of Article III and Article XI, the total earnings, except as modified in this definition, paid or made available to an Employee by the Employer during any specified period.

     “Earnings” in this definition means wages within the meaning of Code Section 3401(a) and all other payments of compensation to an Employee by the Employer (in the course of the Employer’s trade or business) for which the Employer is required to furnish the Employee a written statement under Code Sections 6041(d), 6051(a)(3), and 6052. Earnings must be determined without regard to any rules under Code Section 3401(a) that limit the remuneration included in wages based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in Code Section 3401(a)(2)). The amount reported in the “Wages, Tips and Other Compensation” box on Form W-2 satisfies this definition.

For any Self-employed Individual, Compensation means Earned Income.

Compensation shall exclude reimbursements or other expense allowances, fringe benefits (cash and noncash), moving expenses, deferred compensation (other than elective contributions), and welfare benefits.

Compensation shall also include elective contributions. For this purpose, elective contributions are amounts contributed by the Employer pursuant to a salary reduction agreement and which are not includible in the gross income of the Employee under Code Section 125, 402(e)(3), 402(h)(1)(B), or 403(b). Elective contributions also include compensation deferred under a Code Section 457 plan maintained by the Employer and employee contributions “picked up” by a governmental entity and, pursuant to Code Section 414(h)(2), treated as Employer contributions. For years beginning after December 31, 1997, elective contributions shall also include amounts contributed by the Employer pursuant to a salary reduction agreement and which are not includible in the gross income of the Employee under Code Section 132(f)(4).

     For purposes of the EXCESS AMOUNTS SECTION of Article III, the Employer may elect to use an alternative nondiscriminatory definition of Compensation in accordance with the regulations under Code Section 414(s).

     For Plan Years beginning on or after January 1, 1994, the annual Compensation of each Participant taken into account for determining all benefits provided under the Plan for any determination period shall not exceed $150,000, as adjusted for increases in the cost-of-living in accordance with Code Section 401(a)(17)(B). The cost-of-living adjustment in effect for a calendar year applies to any determination period beginning in such calendar year.

     If a determination period consists of fewer than 12 months, the annual limit is an amount equal to the otherwise applicable annual limit multiplied by a fraction. The numerator of the fraction is the number of months in the short determination period, and the denominator of the fraction is 12.

     If Compensation for any prior determination period is taken into account in determining a Participant’s contributions or benefits for the current Plan Year, the Compensation for such prior determination period is subject to the applicable annual compensation limit in effect for that determination period. For this purpose, in determining contributions or benefits in Plan Years beginning on or after January 1, 1994, the annual compensation limit in effect for determination periods beginning before that date is $150,000.

     Compensation means, for a Leased Employee, Compensation for the services the Leased Employee performs for the Employer, determined in the same manner as the Compensation of Employees who are not Leased Employees, regardless of whether such Compensation is received directly from the Employer or from the leasing organization.

     Compensation Year means the consecutive 12-month period ending on the last day of each Plan Year, including corresponding periods before October 1, 1996.

     Contributions means

Elective Deferral Contributions
Matching Contributions
Discretionary Contributions
     Rollover Contributions

     as set out in Article III, unless the context clearly indicates only specific contributions are meant.

     Controlled Group means any group of corporations, trades, or businesses of which the Employer is a part that are under common control. A Controlled Group includes any group of corporations, trades, or businesses, whether or not incorporated, which is either a parent-subsidiary group, a brother-sister group, or a combined group within the meaning of Code Section 414(b), Code Section 414(c) and regulations thereunder and, for purposes of determining contribution limitations under the CONTRIBUTION LIMITATION SECTION of Article III, as modified by Code Section 415(h) and, for the purpose of identifying Leased Employees, as modified by Code Section 144(a)(3). The term Controlled Group, as it is used in this Plan, shall include the term Affiliated Service Group and any other employer required to be aggregated with the Employer under Code Section 414(o) and the regulations thereunder.

     Direct Rollover means a payment by the Plan to the Eligible Retirement Plan specified by the Distributee.

     Discretionary Contributions means discretionary contributions made by the Employer to fund this Plan. See the EMPLOYER CONTRIBUTIONS SECTION of Article III.

     Distributee means 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 Code Section 414(p), are Distributees with regard to the interest of the spouse or former spouse.

     Earned Income means, for a Self-employed Individual, net earnings from self-employment in the trade or business for which this Plan is established if such Self-employed Individual’s personal services are a material income producing factor for that trade or business. Net earnings shall be determined without regard to items not included in gross income and the deductions properly allocable to or chargeable against such items. Net earnings shall be reduced for the employer contributions to the Employer’s qualified retirement plan(s) to the extent deductible under Code Section 404.

     Net earnings shall be determined with regard to the deduction allowed to the Employer by Code Section 164(f) for taxable years beginning after December 31, 1989.

     Elective Deferral Contributions means contributions made by the Employer to fund this Plan in accordance with elective deferral agreements between Eligible Employees and the Employer.

     Elective deferral agreements shall be made, changed, or terminated according to the provisions of the EMPLOYER CONTRIBUTIONS SECTION of Article III.

     Elective Deferral Contributions shall be 100% vested and subject to the distribution restrictions of Code Section 401(k) when made. See the WHEN BENEFITS START SECTION of Article V.

     Eligibility Break in Service means an Eligibility Computation Period in which an Employee is credited with 500 or fewer Hours-of-Service. An Employee incurs an Eligibility Break in Service on the last day of an Eligibility Computation Period in which he has an Eligibility Break in Service.

     Eligibility Computation Period means a consecutive 12-month period. The first Eligibility Computation Period begins on an Employee’s Employment Commencement Date. Later Eligibility Computation Periods shall be consecutive 12-month periods ending on the last day of each Plan Year that begins after his Employment Commencement Date.

     To determine an Eligibility Computation Period after an Eligibility Break in Service, the Plan shall use the consecutive 12-month period beginning on an Employee’s Reemployment Commencement Date as if his Reemployment Commencement Date were his Employment Commencement Date.

     Eligibility Service means one year of service for each Eligibility Computation Period that has ended and in which an Employee is credited with at least 1,000 Hours-of-Service.

     However, Eligibility Service is modified as follows:

     Period of Military Duty included:

A Period of Military Duty shall be included as service with the Employer to the extent it has not already been credited. For purposes of crediting Hours-of-Service during the Period of Military Duty, an Hour-of-Service shall be credited (without regard to the 501 Hour-of-Service limitation) for each hour an Employee would normally have been scheduled to work for the Employer during such period.

Controlled Group service included:

An Employee’s service with a member firm of a Controlled Group while both that firm and the Employer were members of the Controlled Group shall be included as service with the Employer.

     Eligible Employee means any Employee of the Employer, for purposes of Contributions other than Discretionary Contributions, who meets the following requirement. His employment classification with the Employer is one of the following:

Nonbargaining class. Not represented for collective bargaining purposes by any collective bargaining agreement between the Employer and employee representatives, if retirement benefits were the subject of good faith bargaining and if two percent or less of the Employees who are covered pursuant to that agreement are professionals as defined in section 1.410(b)-9 of the regulations. For this purpose, the term “employee representatives” does not include any organization more than half of whose members are Employees who are owners, officers, or executives of the Employer.

Not a nonresident alien, within the meaning of Code Section 7701(b)(1)(B), who receives no earned income, within the meaning of Code Section 911(d)(2), from the Employer which constitutes income from sources within the United States, within the meaning of Code Section 861(a)(3), or who receives such earned income but it is all exempt from income tax in the United States under the terms of an income tax convention.

Not a Leased Employee.

Not an Employee considered by the Employer to be an independent contractor, or the employee of an independent contractor, who is later determined by the Internal Revenue Service to be an Employee.

     Eligible Employee means any Employee of the Employer, for purposes of Discretionary Contributions, means any Employee of the Employer, who meets the following requirement. His employment classification with the Employer is all of the following:

Salaried class (pays social security and employed in classification codes, 220, 750, 840 and 850.)

Nonbargaining class. Not represented for collective bargaining purposes by any collective bargaining agreement between the Employer and employee representatives, if retirement benefits were the subject of good faith bargaining and if two percent or less of the Employees who are covered pursuant to that agreement are professionals as defined in section 1.410(b)-9 of the regulations. For this purpose, the term “employee representatives” does not include any organization more than half of whose members are Employees who are owners, officers, or executives of the Employer.

Not a nonresident alien, within the meaning of Code Section 7701(b)(1)(B), who receives no earned income, within the meaning of Code Section 911(d)(2), from the Employer which constitutes income from sources within the United States, within the meaning of Code Section 861(a)(3), or who receives such earned income but it is all exempt from income tax in the United States under the terms of an income tax convention.

Not a Leased Employee.

Not an Employee considered by the Employer to be an independent contractor, or the employee of an independent contractor, who is later determined by the Internal Revenue Service to be an Employee.

     Eligible Retirement Plan means an individual retirement account described in Code Section 408(a), an individual retirement annuity described in Code Section 408(b), an annuity plan described in Code Section 403(a) or a qualified trust described in Code Section 401(a), 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.

     Eligible Rollover Distribution means 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: (i) 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; (ii) any distribution to the extent such distribution is required under Code Section 401(a)(9); (iii) any hardship distribution described in Code Section 401(k)(2)(B)(i)(IV) received after December 31, 1998; (iv) the portion of any other distribution(s) that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities); and (v) any other

distribution(s) that is reasonably expected to total less than $200 during a year.

     Employee means an individual who is employed by the Employer or any other employer required to be aggregated with the Employer under Code Sections 414(b), (c), (m), or (o). A Controlled Group member is required to be aggregated with the Employer.

     The term Employee shall include any Self-employed Individual treated as an employee of any employer described in the preceding paragraph as provided in Code Section 401(c)(1). The term Employee shall also include any Leased Employee deemed to be an employee of any employer described in the preceding paragraph as provided in Code Section 414(n) or (o).

     The term Employee shall exclude any person who is classified by the Employer or any such other employer as other than an employee, for the entire period of such classification, without regard to any subsequent reclassification which may occur by operation of law or otherwise.

     Employer means, except for purposes of the CONTRIBUTION LIMITATION SECTION of Article III, the Primary Employer. This will also include any successor corporation or firm of the Employer which shall, by written agreement, assume the obligations of this Plan or any Predecessor Employer which maintained this Plan. For purposes of determining an Eligible Employee, Employer means the Primary Employer and all Adopting Employers in the ADOPTING EMPLOYERS - SINGLE PLAN SECTION of Article II.

     Employer Contributions means

Elective Deferral Contributions
Matching Contributions
Discretionary Contributions

     as set out in Article III and contributions made by the Employer to fund this Plan in accordance with the provisions of the MODIFICATION OF CONTRIBUTIONS SECTION of Article XI, unless the context clearly indicates only specific contributions are meant.

     Employment Commencement Date means the date an Employee first performs an Hour-of-Service.

     Entry Date means the date an Employee first enters the Plan as an Active Participant. See the ACTIVE PARTICIPANT SECTION of Article II.

     ERISA means the Employee Retirement Income Security Act of 1974, as amended.

     Fiscal Year means the 12 consecutive month period beginning on the Saturday closest to December 31 and ending on the Friday closest to December 31.

     Forfeiture means the part, if any, of a Participant’s Account that is forfeited. See the FORFEITURES SECTION of Article III.

     Forfeiture Date means, as to a Participant, the date the Participant incurs five consecutive Vesting Breaks in Service.

     Highly Compensated Employee means any Employee who:

(a)	was a 5-percent owner at any time during the year or the preceding year, or
(b)	for the preceding year had compensation from the Employer in excess of $80,000 and, if the Employer so elects, was in the top-paid group for the preceding year. The $80,000 amount is adjusted at the same time and in the same manner as under Code Section 415(d), except that the base period is the calendar quarter ending September 30, 1996.

     For this purpose the applicable year of the plan for which a determination is being made is called a determination year and the preceding 12-month period is called a look-back year. If the Employer makes a calendar year data election, the look-back year shall be the calendar year beginning with or within the look-back year. The Plan may not use such election to determine whether Employees are Highly Compensated Employees on account of being a 5-percent owner.

     In determining who is a Highly Compensated Employee, the Employer does not make a top-paid group election. In determining who is a Highly Compensated Employee, the Employer does not make a calendar year data election.

     Calendar year data elections and top-paid group elections, once made, apply for all subsequent years unless changed by the Employer. If the Employer makes one election, the Employer is not required to make the other. If both elections are made, the look-back year in determining the top-paid group must be the calendar year beginning with or within the look-back year. These elections must apply consistently to the determination years of all plans maintained by the Employer which reference the highly compensated employee definition in Code Section 414(q), except as provided in Internal Revenue Service Notice 97-45 (or superseding guidance). The consistency requirement will not apply to determination years beginning with or within the 1997 calendar year, and for determination years beginning on or after January 1, 1998 and before January 1, 2000, satisfaction of the consistency requirement is determined without regard to any nonretirement plans of the Employer.

     The determination of who is a highly compensated former Employee is based on the rules applicable to determining Highly Compensated Employee status as in effect for that determination year, in accordance with section 1.414(q)-1T, A-4 of the temporary Income Tax Regulations and Internal Revenue Service Notice 97-45.

     In determining whether an Employee is a Highly Compensated Employee for years beginning in 1997, the amendments to Code Section 414(q) stated above are treated as having been in effect for years beginning in 1996.

     The determination of who is a Highly Compensated Employee, including the determinations of the number and identity of Employees in the top-paid group, the compensation that is considered, and the identity of the 5-percent owners, shall be made in accordance with Code Section 414(q) and the regulations thereunder.

     Hour-of-Service means the following:

(a)

Each hour for which an Employee is paid, or entitled to payment, for performing duties for the Employer during the applicable computation period.

(b)

Each hour for which an Employee is paid, or entitled to payment, by the Employer because of a period of time in 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. Notwithstanding the preceding provisions of this subparagraph (b), no credit will be given to the Employee:

(1) for more than 501 Hours-of-Service under this subparagraph (b) because of any single continuous period in which the Employee performs no duties (whether or not such period occurs in a single computation period); or

(2) for an Hour-of-Service for which the Employee is directly or indirectly paid, or entitled to payment, because of a period in which no duties are performed if such payment is made or due under a plan maintained solely for the purpose of complying with applicable worker’s or workmen’s compensation, or unemployment compensation, or disability insurance laws; or

(3) for an Hour-of-Service for a payment which solely reimburses the Employee for medical or medically related expenses incurred by him.

For purposes of this subparagraph (b), a payment shall be deemed to be made by, or due from the Employer, regardless of whether such payment is made by, or due from the Employer, directly or indirectly through, among others, a trust fund or insurer, to which the Employer contributes or pays premiums and regardless of whether contributions made or due to the trust fund, insurer or other entity are for the benefit of particular employees or are on behalf of a group of employees in the aggregate.

(c)   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 shall not be credited both under subparagraph (a) or subparagraph (b) above (as the case may be) and under this subparagraph (c). Crediting of Hours-of-Service for back pay awarded or agreed to with respect to periods described in subparagraph (b) above will be subject to the limitations set forth in that subparagraph.

     Hours-of-Service shall be determined on the basis of months worked for salaried exempt employees. An Employee shall be credited with 190 Hours-of-Service for each month in which the Employee would otherwise be credited with at least one Hour-of-Service.

     The crediting of Hours-of-Service above shall be applied under the rules of paragraphs (b) and (c) of the Department of Labor Regulation 2530.200b-2 (including any interpretations or opinions implementing such rules); which rules, by this reference, are specifically incorporated in full within this Plan. The reference to paragraph (b) applies to the special rule for determining hours of service for reasons other than the performance of duties such as payments calculated (or not calculated) on the basis of units of time and the rule against double credit. The reference to paragraph (c) applies to the crediting of hours of service to computation periods.

     Hours-of-Service shall be credited for employment with any other employer required to be aggregated with the Employer under Code Sections 414(b), (c), (m), or (o) and the regulations thereunder for purposes of eligibility and vesting. Hours-of-Service shall also be credited for any individual who is considered an employee for purposes of this Plan pursuant to Code Section 414(n) or (o) and the regulations thereunder.

     Solely for purposes of determining whether a one-year break in service has occurred for eligibility or vesting purposes, during a Parental Absence an Employee shall be credited with the Hours-of-Service which otherwise would normally have been credited to the Employee but for such absence, or in any case in which such hours cannot be determined, eight Hours-of-Service per day of such absence. The Hours-of-Service credited under this paragraph shall be credited in the computation period in which the absence begins if the crediting is necessary to prevent a break in service in that period; or in all other cases, in the following computation period.

     Inactive Participant means a former Active Participant who has an Account. See the INACTIVE PARTICIPANT SECTION of Article II.

     Insurer means Principal Life Insurance Company and any other insurance company or companies named by the Trustee or Primary Employer.

     Investment Fund means the total of Plan assets, excluding the guaranteed benefit policy portion of any Annuity Contract. All or a portion of these assets may be held under the Trust Agreement.

     The Investment Fund shall be valued at current fair market value as of the Valuation Date. The valuation shall take into consideration investment earnings credited, expenses charged, payments made, and changes in the values of the assets held in the Investment Fund.

     The Investment Fund shall be allocated at all times to Participants, except as otherwise expressly provided in the Plan. The Account of a Participant shall be credited with its share of the gains and losses of the Investment Fund. That part of a Participant’s Account invested in a funding arrangement which establishes one or more accounts or investment vehicles for such Participant thereunder shall be credited with the gain or loss from such accounts or investment vehicles. The part of a Participant’s Account which is invested in other funding arrangements shall be credited with a proportionate share of the gain or loss of such investments. The share shall be determined by multiplying the gain or loss of the investment by the ratio of the part of the Participant’s Account invested in such funding arrangement to the total of the Investment Fund invested in such funding arrangement.

     Investment Manager means any fiduciary (other than a trustee or Named Fiduciary)

(a)

who has the power to manage, acquire, or dispose of any assets of the Plan;

(b)

who (i) is registered as an investment adviser under the Investment Advisers Act of 1940; (ii) is not registered as an investment adviser under such Act by reason of paragraph (1) of section 203A(a) of such Act, is registered as an investment adviser under the laws of the state (referred to in such paragraph (1)) in which it maintains its principal office and place of business, and, at the time it last filed the registration form most recently filed by it with such state in order to maintain its registration under the laws of such state, also filed a copy of such form with the Secretary of Labor, (iii) is a bank, as defined in that Act; or (iv) is an insurance

	company qualified to perform services described in subparagraph (a) above under the laws of more than one state; and
(c)	who has acknowledged in writing being a fiduciary with respect to the Plan.

     Late Retirement Date means the first day of any month which is after a Participant’s Normal Retirement Date and on which retirement benefits begin. If a Participant continues to work for the Employer after his Normal Retirement Date, his Late Retirement Date shall be the earliest first day of the month on or after the date he ceases to be an Employee. An earlier or a later Retirement Date may apply if the Participant so elects. An earlier Retirement Date may apply if the Participant is age 70 1/2. See the WHEN BENEFITS START SECTION of Article V.

     Leased Employee means any person (other than an employee of the recipient) who, pursuant to an agreement between the recipient and any other person (“leasing organization”), has performed services for the recipient (or for the recipient and related persons determined in accordance with Code Section 414(n)(6)) on a substantially full time basis for a period of at least one year, and such services are performed under primary direction or control by the recipient. Contributions or benefits provided by the leasing organization to a Leased Employee, which are attributable to service performed for the recipient employer, shall be treated as provided by the recipient employer.

     A Leased Employee shall not be considered an employee of the recipient if:

(a)

such employee is covered by a money purchase pension plan providing (i) a nonintegrated employer contribution rate of at least 10 percent of compensation, as defined in Code Section 415(c)(3), but for years beginning before January 1, 1998, including amounts contributed pursuant to a salary reduction agreement which are excludible from the employee’s gross income under Code Sections 125, 402(e)(3), 402(h)(1)(B), or 403(b), (ii) immediate participation, and (iii) full and immediate vesting, and

(b)

Leased Employees do not constitute more than 20 percent of the recipient’s nonhighly compensated work force.

     Loan Administrator means the person(s) or position(s) authorized to administer the Participant loan program.

     The Loan Administrator is the Benefits Manager, or his or her designee.

     Matching Contributions means contributions made by the Employer to fund this Plan which are contingent on a Participant’s Elective Deferral Contributions. See the EMPLOYER CONTRIBUTIONS SECTION of Article III.

     Monthly Date means each Yearly Date and the same day of each following month during the Plan Year beginning on such Yearly Date.

     Named Fiduciary means the person or persons who have authority to control and manage the operation and administration of the Plan.

     The Named Fiduciary is the Employer.

     Nonhighly Compensated Employee means an Employee of the Employer who is not a Highly Compensated Employee.

     Nonvested Account means the excess, if any, of a Participant’s Account over his Vested Account.

          Normal Retirement Age means the age at which the Participant’s normal retirement benefit becomes nonforfeitable if he is an Employee. A Participant’s Normal Retirement Age is 65.

     Normal Retirement Date means the earliest first day of the month on or after the date the Participant reaches his Normal Retirement Age. Unless otherwise provided in this Plan, a Participant’s retirement benefits shall begin on a Participant’s Normal Retirement Date if he has ceased to be an Employee on such date and has a Vested Account. Even if the Participant is an Employee on his Normal Retirement Date, he may choose to have his retirement benefit begin on such date. See the WHEN BENEFITS START SECTION of Article V.

     Owner-employee means a Self-employed Individual who, in the case of a sole proprietorship, owns the entire interest in the unincorporated trade or business for which this Plan is established. If this Plan is established for a partnership, an Owner-employee means a Self-employed Individual who owns more than 10 percent of either the capital interest or profits interest in such partnership.

     Parental Absence means an Employee’s absence from work:

(a)	by reason of pregnancy of the Employee,
(b)	by reason of birth of a child of the Employee,
(c)	by reason of the placement of a child with the Employee in connection with adoption of such child by such Employee, or
(d)	for purposes of caring for such child for a period beginning immediately following such birth or placement.

     Participant means either an Active Participant or an Inactive Participant.

     Period of Military Duty means, for an Employee

(a)	who served as a member of the armed forces of the United States, and
(b)	who was reemployed by the Employer at a time when the Employee had a right to reemployment in accordance with seniority rights as protected under Chapter 43 of Title 38 of the U. S. Code, the period of time from the date the Employee was first absent from active work for the Employer because of such military duty to the date the Employee was reemployed.

     Plan means the 401(k) savings plan of the Employer set forth in this document, including any later amendments to it.

     Plan Administrator means the person or persons who administer the Plan.

     The Plan Administrator is the Employer.

     Plan Fund means the total of the Investment Fund and the guaranteed benefit policy portion of any Annuity Contract. The Investment Fund shall be valued as stated in its definition. The guaranteed benefit policy portion of any Annuity Contract shall be determined in accordance with the terms of the Annuity Contract and, to the extent that such Annuity Contract allocates contract values to Participants, allocated to Participants in accordance with its terms. The total value of all amounts held under the Plan Fund shall equal the value of the aggregate Participants’ Accounts under the Plan.

     Plan Year means a period beginning on a Yearly Date and ending on the day before the next Yearly Date.

     Predecessor Employer means a firm of which the Employer was once a part (e.g., due to a spinoff or change of corporate status) or a firm absorbed by the Employer because of a merger or acquisition (stock or asset, including a division or an operation of such company).

     Primary Employer means OshKosh B’Gosh, Inc.

          Reemployment Commencement Date means the date an Employee first performs an Hour-of-Service following an Eligibility Break in Service.

     Reentry Date means the date a former Active Participant reenters the Plan. See the ACTIVE PARTICIPANT SECTION of Article II.

     Retirement Date means the date a retirement benefit will begin and is a Participant’s Normal or Late Retirement Date, as the case may be.

     Rollover Contributions means the Rollover Contributions which are made by an Eligible Employee or an Inactive Participant according to the provisions of the ROLLOVER CONTRIBUTIONS SECTION of Article III.

     Self-employed Individual means, with respect to any Fiscal Year, an individual who has Earned Income for the Fiscal Year (or who would have Earned Income but for the fact the trade or business for which this Plan is established did not have net profits for such Fiscal Year).

     Totally and Permanently Disabled means that a Participant is disabled as determined by a physician who is selected by the Plan Administrator. Such mental or physical disability must be expected to be of long continuous duration or which may be expected to result in death and which prevents him from satisfactorily performing his duties with the Employer or affiliated employers.

     Trust Agreement means an agreement of trust between the Primary Employer and Trustee established for the purpose of holding and distributing the Trust Fund under the provisions of the Plan. The

Trust Agreement may provide for the investment of all or any portion of the Trust Fund in the Annuity Contract.

     Trust Fund means the total funds held under the Trust Agreement.

     Trustee means the party or parties named in the Trust Agreement. The term Trustee as it is used in this Plan is deemed to include the plural unless the context clearly indicates the singular is meant.

     Valuation Date means the date on which the value of the assets of the Investment Fund is determined. The value of each Account which is maintained under this Plan shall be determined on the Valuation Date. In each Plan Year, the Valuation Date shall be the last day of the Plan Year. At the discretion of the Plan Administrator, Trustee, or Insurer (whichever applies), assets of the Investment Fund may be valued more frequently. These dates shall also be Valuation Dates.

     Vested Account means the vested part of a Participant’s Account. The Participant’s Vested Account is equal to that part of his Account which results from Contributions which were 100% vested when made before his Vesting Percentage is 100% and is equal to his Account when his Vesting Percentage is 100%.

     If the Participant’s Vesting Percentage is less than 100%, his Vested Account equals the sum of (a) and (b) below:

(a)	The part of the Participant’s Account that results from Employer Contributions made before a prior Forfeiture Date and all other Contributions which were 100% vested when made.
(b)	The balance of the Participant’s Account in excess of the amount in (a) above multiplied by his Vesting Percentage.

     The Participant’s Vested Account is nonforfeitable.

     Vesting Break in Service means a Vesting Computation Period in which an Employee is credited with 500 or fewer Hours-of-Service. An Employee incurs a Vesting Break in Service on the last day of a Vesting Computation Period in which he has a Vesting Break in Service.

     Vesting Computation Period means a consecutive 12-month period ending on the last day of each Plan Year, including corresponding consecutive 12-month periods before October 1, 1996.

     Vesting Percentage means the percentage used to determine the nonforfeitable portion of a Participant’s Account attributable to Employer Contributions which were not 100% vested when made.

     A Participant’s Vesting Percentage is shown in the following schedule opposite the number of whole years of his Vesting Service.

VESTING SERVICE	VESTING
(whole years)	PERCENTAGE
Less than 3		0
3 or more		100

     The Vesting Percentage for a Participant who is an Employee on or after the date he reaches Normal Retirement Age shall be 100%. The Vesting Percentage for a Participant who is an Employee on the date he becomes Totally and Permanently Disabled or dies shall be 100%. With respect to Matching Contributions only, the Vesting Percentage for a Participant who is permanently laid-off from Manufacturing Distribution or Finishing Facility shall be 100%.

     If the schedule used to determine a Participant’s Vesting Percentage is changed, the new schedule shall not apply to a Participant unless he is credited with an Hour-of-Service on or after the date of the change and the Participant’s nonforfeitable percentage on the day before the date of the change is not reduced under this Plan. The amendment provisions of the AMENDMENTS SECTION of Article X regarding changes in the computation of the Vesting Percentage shall apply.

     Vesting Service means one year of service for each Vesting Computation Period in which an Employee is credited with at least 1,000 Hours-of-Service.

     However, Vesting Service is modified as follows:

     Period of Military Duty included:

A Period of Military Duty shall be included as service with the Employer to the extent it has not already been credited. For purposes of crediting Hours-of-Service during the Period of Military Duty, an Hour-of-Service shall be credited (without regard to the 501 Hour-of-Service limitation) for each hour an Employee would normally have been scheduled to work for the Employer during such period.

     Controlled Group service included:

An Employee’s service with a member firm of a Controlled Group while both that firm and the Employer were members of the Controlled Group shall be included as service with the Employer.

     Yearly Date means October 1, 1996, and each following January 1.

     Years of Service means an Employee’s Vesting Service disregarding any modifications which exclude service.

ARTICLE II

PARTICIPATION

SECTION 2.01—ACTIVE PARTICIPANT.

(a)   For purposes of Contributions other than Discretionary Contributions, an Employee shall first become an Active Participant (begin active participation in the Plan) on the earliest Monthly Date on which he is an Eligible Employee and has met both of the eligibility requirements set

forth below. This date is his Entry Date.

(1)   Eligibility Service

	He has completed one year of Eligibility Service with 1,000 Hours-of-Service before his Entry Date for all purposes except eligibility for Discretionary Contributions.
	or
(b)	He has completed three consecutive months of Eligibility Service with 250 Hours-of-Service (earned within that 3 month period) before his Entry Date.

(2)   He is age 21 or older.

For purposes of Discretionary Contributions, an Employee shall first become an Active Participant (begin active participation in the Plan) on the earliest Monthly Date on which he is an Eligible Employee and has met both of the eligibility requirements set forth below. This date is his Entry Date for purposes of Discretionary Contributions only.

(1)	He has completed one year of Eligibility Service with 1,000 Hours-of-Service before his Entry Date.
(2)	He is age 21 or older.

	Each Employee who was an Active Participant under the Plan on December 31, 2002, shall continue to be an Active Participant if he is still an Eligible Employee on January 1, 2003, and his Entry Date shall not change.
	If a person has been an Eligible Employee who has met all of the eligibility requirements above, but is not an Eligible Employee on the date which would have been his Entry Date, he shall become an Active Participant on the date he again becomes an Eligible Employee. This date is his Entry Date.
	In the event an Employee who is not an Eligible Employee becomes an Eligible Employee, such Eligible Employee shall become an Active Participant immediately if such Eligible Employee has satisfied the eligibility requirements above and would have otherwise previously become an Active Participant had he met the definition of Eligible Employee. This date is his Entry Date.
	For purposes of the foregoing paragraphs, eligibility and Entry Dates shall be determined separately for Discretionary Contributions and all Contributions other than Discretionary Contributions.
(b)	An Inactive Participant shall again become an Active Participant (resume active participation in the Plan) on the date he again performs an Hour-of-Service as an Eligible Employee. This date is his Reentry Date.
	Upon again becoming an Active Participant, he shall cease to be an Inactive Participant.

(c)   A former Participant shall again become an Active Participant (resume active participation in the Plan) on the date he again performs an Hour-of-Service as an Eligible Employee. This date is his Reentry Date.

     There shall be no duplication of benefits for a Participant under this Plan because of more than one period as an Active Participant.

SECTION 2.02—INACTIVE PARTICIPANT.

     An Active Participant shall become an Inactive Participant (stop accruing benefits under the Plan) on the earlier of the following:

(a)	the date the Participant ceases to be an Eligible Employee, or
(b)	the effective date of complete termination of the Plan under Article VIII.

     An Employee or former Employee who was an Inactive Participant under the Plan on December 31, 2002, shall continue to be an Inactive Participant on January 1, 2003. Eligibility for any benefits payable to the Participant or on his behalf and the amount of the benefits shall be determined according to the provisions of the prior document, unless otherwise stated in this document.

SECTION 2.03—CESSATION OF PARTICIPATION.

     A Participant shall cease to be a Participant on the date he is no longer an Eligible Employee and his Account is zero.

SECTION 2.04—ADOPTING EMPLOYERS - SINGLE PLAN.

     Each of the Controlled Group members listed below is an Adopting Employer. Each Adopting Employer listed below participates with the Employer in this Plan. An Adopting Employer’s agreement to participate in this Plan shall be in writing.

     The Employer has the right to amend the Plan. An Adopting Employer does not have the right to amend the Plan.

     If the Adopting Employer did not maintain its plan before its date of adoption specified below, its date of adoption shall be the Entry Date for any of its Employees who have met the requirements in the ACTIVE PARTICIPANT SECTION of Article II as of that date. Service with and Compensation from an Adopting Employer shall be included as service with and Compensation from the Employer. Transfer of employment, without interruption, between an Adopting Employer and another Adopting Employer or the Employer shall not be considered an interruption of service. The Employer’s Fiscal Year defined in the DEFINITIONS SECTION of Article I shall be the Fiscal Year used in interpreting this Plan for Adopting Employers.

     Contributions made by an Adopting Employer shall be treated as Contributions made by the Employer. Forfeitures arising from those Contributions shall be used for the benefit of all Participants.

     An employer shall not be an Adopting Employer if it ceases to be a Controlled Group member. Such an employer may continue a retirement plan for its Employees in the form of a separate document. This Plan shall be amended to delete a former Adopting Employer from the list below.

     If (i) an employer ceases to be an Adopting Employer or the Plan is amended to delete an Adopting Employer and (ii) the Adopting Employer does not continue a retirement plan for the benefit of its Employees, partial termination may result and the provisions of Article VIII shall apply.

ADOPTING EMPLOYERS
NAME	DATE OF ADOPTION
OshKosh B’Gosh, Inc.	January 1, 2000
OshKosh B’Gosh Retail, Inc.	January 1, 2000
OBG Product Development and Sales, Inc.	September 1, 2000
OBG Distribution Company, LLC	September 1, 2000
OBG Manufacturing Company	September 1, 2000

ARTICLE III

CONTRIBUTIONS

SECTION 3.01—EMPLOYER CONTRIBUTIONS.

     Employer Contributions shall be made without regard to current or accumulated net income, earnings or profits of the Employer. Notwithstanding the foregoing, the Plan shall continue to be designed to qualify as a profit sharing plan for purposes of Code Sections 401(a), 402, 412, and 417. Such Contributions shall be equal to the Employer Contributions as described below:

(a)	The amount of each Elective Deferral Contribution for a Participant shall be equal to a portion of Compensation as specified in the elective deferral agreement. An Employee who is eligible to participate in the Plan may file an elective deferral agreement with the Employer. The Participant shall modify or terminate the elective deferral agreement by filing a new elective deferral agreement. The elective deferral agreement may not be made retroactively and shall remain in effect until modified or terminated.
	The elective deferral agreement to start or modify Elective Deferral Contributions shall be effective on the first day of the first pay period following the pay period in which the Participant’s Entry Date (Reentry Date, if applicable) or any following Monthly Date occurs. In order for the elective deferral agreement to become effective on this date, it must be entered into prior to a date specified by the Plan Administrator.
	The elective deferral agreement to stop Elective Deferral Contributions may be entered into on any date. Such elective deferral agreement shall be effective on the first day of the pay period following the pay period in which the elective deferral agreement is entered into.

	Elective Deferral Contributions are fully (100%) vested and nonforfeitable.
(b)	The Employer may make discretionary Matching Contributions. The percentage of Elective Deferral Contributions matched, if any, shall be a percentage as determined by the Employer. Elective Deferral Contributions which are over a percentage of Compensation won’t be matched. The percentage shall be determined by the Employer.
	Matching Contributions are calculated based on Elective Deferral Contributions and Compensation for the month. Matching Contributions shall be made for all persons who were Active Participants at any time during that month.
	Any percentage determined by the Employer shall apply to all eligible persons for the entire Plan Year.
	Matching Contributions are subject to the Vesting Percentage.
(c)	Discretionary Contributions may be made for each Plan Year in an amount determined by the Employer.
	Discretionary Contributions are subject to the Vesting Percentage.

     No Participant shall be permitted to have Elective Deferral Contributions, as defined in the EXCESS AMOUNTS SECTION of this article, made under this Plan, or any other qualified plan maintained by the Employer, during any taxable year, in excess of the dollar limitation contained in Code Section 402(g) in effect at the beginning of such taxable year.

     An elective deferral agreement (or change thereto) must be made in such manner and in accordance with such rules as the Employer may prescribe (including by means of voice response or other electronic system under circumstances the Employer permits) and may not be made retroactively.

     Employer Contributions are allocated according to the provisions of the ALLOCATION SECTION of this article.

     A portion of the Plan assets resulting from Employer Contributions (but not more than the original amount of those Contributions) may be returned if the Employer Contributions are made because of a mistake of fact or are more than the amount deductible under Code Section 404 (excluding any amount which is not deductible because the Plan is disqualified). The amount involved must be returned to the Employer within one year after the date the Employer Contributions are made by mistake of fact or the date the deduction is disallowed, whichever applies. Except as provided under this paragraph and Article VIII, the assets of the Plan shall never be used for the benefit of the Employer and are held for the exclusive purpose of providing benefits to Participants and their Beneficiaries and for defraying reasonable expenses of administering the Plan.

SECTION 3.01A—ROLLOVER CONTRIBUTIONS.

     A Rollover Contribution may be made by an Eligible Employee or an Inactive Participant if the

following conditions are met:

(a)	The Contribution is of amounts distributed from a plan that satisfies the requirements of Code Section 401(a) or from a “conduit” individual retirement account described in Code Section 408(d)(3)(A). In the case of an Inactive Participant, the Contribution must be of an amount distributed from another plan of the Employer, or a plan of a Controlled Group member, that satisfies the requirements of Code Section 401(a).
(b)	The Contribution is of amounts that the Code permits to be transferred to a plan that meets the requirements of Code Section 401(a).
(c)	The Contribution is made in the form of a direct rollover under Code Section 401(a)(31) or is a rollover made under Code Section 402(c) or 408(d)(3)(A) within 60 days after the Eligible Employee or Inactive Participant receives the distribution.
(d)	The Eligible Employee or Inactive Participant furnishes evidence satisfactory to the Plan Administrator that the proposed rollover meets conditions (a), (b), and (c) above.

     A Rollover Contribution shall be allowed in cash only and must be made according to procedures set up by the Plan Administrator.

     If the Eligible Employee is not an Active Participant when the Rollover Contribution is made, he shall be deemed to be an Active Participant only for the purpose of investment and distribution of the Rollover Contribution. Employer Contributions shall not be made for or allocated to the Eligible Employee until the time he meets all of the requirements to become an Active Participant.

     Rollover Contributions made by an Eligible Employee or an Inactive Participant shall be credited to his Account. The part of the Participant’s Account resulting from Rollover Contributions is fully (100%) vested and nonforfeitable at all times. A separate accounting record shall be maintained for that part of his Rollover Contributions consisting of voluntary contributions which were deducted from the Participant’s gross income for Federal income tax purposes.

SECTION 3.02—FORFEITURES.

     The Nonvested Account of a Participant shall be forfeited as of the earlier of the following:

(a)	the date the Participant dies (if prior to such date he had ceased to be an Employee), or
(b)	the Participant’s Forfeiture Date.

All or a portion of a Participant’s Nonvested Account shall be forfeited before such earlier date if, after he ceases to be an Employee, he receives, or is deemed to receive, a distribution of his entire Vested Account or a distribution of his Vested Account derived from Employer Contributions which were not 100% vested when made, under the RETIREMENT BENEFITS SECTION of Article V, the VESTED BENEFITS SECTION of Article V, or the SMALL AMOUNTS SECTION of Article X. The forfeiture shall occur as of the date the Participant receives, or is deemed to receive, the distribution. If a Participant receives, or is deemed to receive, his entire Vested Account, his entire Nonvested Account shall be forfeited. If a

Participant receives a distribution of his Vested Account from Employer Contributions which were not 100% vested when made, but less than his entire Vested Account from such Contributions, the amount to be forfeited shall be determined by multiplying his Nonvested Account from such Contributions by a fraction. The numerator of the fraction is the amount of the distribution derived from Employer Contributions which were not 100% vested when made and the denominator of the fraction is his entire Vested Account derived from such Contributions on the date of distribution.

     A Forfeiture shall also occur as provided in the EXCESS AMOUNTS SECTION of this article.

     Forfeitures shall be determined at least once during each Plan Year. Forfeitures may first be used to pay administrative expenses. Forfeitures of Matching Contributions which relate to excess amounts as provided in the EXCESS AMOUNTS SECTION of this article, which have not been used to pay administrative expenses, shall be applied to reduce the earliest Employer Contributions made after the Forfeitures are determined. Any other Forfeitures which have not been used to pay administrative expenses shall be applied to reduce the earliest Employer Contributions made after the Forfeitures are determined. Upon their application to reduce Employer Contributions, Forfeitures shall be deemed to be Employer Contributions.

     If a Participant again becomes an Eligible Employee after receiving a distribution which caused all or a portion of his Nonvested Account to be forfeited, he shall have the right to repay to the Plan the entire amount of the distribution he received (excluding any amount of such distribution resulting from Contributions which were 100% vested when made). The repayment must be made in a single sum (repayment in installments is not permitted) before the earlier of the date five years after the date he again becomes an Eligible Employee or the end of the first period of five consecutive Vesting Breaks in Service which begin after the date of the distribution.

     If the Participant makes the repayment above, the Plan Administrator shall restore to his Account an amount equal to his Nonvested Account which was forfeited on the date of distribution, unadjusted for any investment gains or losses. If no amount is to be repaid because the Participant was deemed to have received a distribution, or only received a distribution of Contributions which were 100% vested when made, and he again performs an Hour-of-Service as an Eligible Employee within the repayment period, the Plan Administrator shall restore the Participant’s Account as if he had made a required repayment on the date he performed such Hour-of-Service. Restoration of the Participant’s Account shall include restoration of all Code Section 411(d)(6) protected benefits with respect to that restored Account, according to applicable Treasury regulations. Provided, however, the Plan Administrator shall not restore the Nonvested Account if (i) a Forfeiture Date has occurred after the date of the distribution and on or before the date of repayment and (ii) that Forfeiture Date would result in a complete forfeiture of the amount the Plan Administrator would otherwise restore.

     The Plan Administrator shall restore the Participant’s Account by the close of the Plan Year following the Plan Year in which repayment is made. Permissible sources for the restoration of the Participant’s Account are Forfeitures or special Employer Contributions. Such special Employer Contributions shall be made without regard to profits. The repaid and restored amounts are not included in the Participant’s Annual Additions, as defined in the CONTRIBUTION LIMITATION SECTION of this article.

SECTION 3.03—ALLOCATION.

     A person meets the allocation requirements of this section if he is an Active Participant on the last day of the Plan Year. A person shall also meet the requirements of this section if he was an Active Participant at any time during the Plan Year and terminates employment during the year after Normal Retirement Age (or age 60 with 10 years of Vesting Service), death, or becoming Totally and Permanently Disabled.

     Elective Deferral Contributions shall be allocated to Participants for whom such Contributions are made under the EMPLOYER CONTRIBUTIONS SECTION of this article. Such Contributions shall be allocated when made and credited to the Participant’s Account.

     Matching Contributions shall be allocated to the persons for whom such Contributions are made under the EMPLOYER CONTRIBUTIONS SECTION of this article. Such Contributions shall be allocated when made and credited to the person’s Account.

     Discretionary Contributions shall be allocated as of the last day of the Plan Year using Annual Compensation for the Plan Year. The amount allocated shall be determined as follows:

     STEP ONE: The step one shall only apply in years in which the Plan is a Top-heavy Plan, as defined in the DEFINITIONS SECTION of Article XI, and the minimum contribution under the MODIFICATION OF CONTRIBUTIONS SECTION of Article XI is not being provided by other contributions to this Plan or another plan of the Employer.

The allocation in this step one shall be made to each person meeting the allocation requirements of this section and each person who is entitled to a minimum contribution under the MODIFICATION OF CONTRIBUTIONS SECTION of Article XI. Each such person’s allocation shall be an amount equal to the Discretionary Contributions multiplied by the ratio of such person’s Annual Compensation to the total Aannual Compensation of all such persons. Such amount shall not exceed 3% of such person’s Annual Compensation. The allocation for any person who does not meet the allocation requirements of this section shall be limited to the amount necessary to fund the minimum contribution.

STEP TWO: The allocation in this step two shall be made to each person meeting the allocation requirements of this section. Each such person’s allocation shall be equal to any amount remaining after the allocation in step one multiplied by the ratio of such person’s Annual Compensation to the total Annual Compensation of all such persons.

The amount shall be credited to the person’s Account.

     If Leased Employees are Eligible Employees, in determining the amount of Employer Contributions allocated to a person who is a Leased Employee, contributions provided by the leasing organization which are attributable to services such Leased Employee performs for the Employer shall be treated as provided by the Employer. Those contributions shall not be duplicated under this Plan.

SECTION 3.04—CONTRIBUTION LIMITATION.

(a)	Definitions. For the purpose of determining the contribution limitation set forth in this section, the following terms are defined.
	Annual Additions means the sum of the following amounts credited to a Participant’s account

for the Limitation Year:

(1)	employer contributions;
(2)	employee contributions; and
(3)	forfeitures.

Annual Additions to a defined contribution plan shall also include the following:

(4) amounts allocated, after March 31, 1984, to an individual medical account, as defined in Code Section 415(l)(2), which are part of a pension or annuity plan maintained by the Employer,

(5) amounts derived from contributions paid or accrued after December 31, 1985, in taxable years ending after such date, which are attributable to post-retirement medical benefits, allocated to the separate account of a key employee, as defined in Code Section 419A(d)(3), under a welfare benefit fund, as defined in Code Section 419(e), maintained by the Employer; and

(6)   allocations under a simplified employee pension.

For this purpose, any Excess Amount applied under (e) and (k) below in the Limitation Year to reduce Employer Contributions shall be considered Annual Additions for such Limitation Year.

Compensation means wages within the meaning of Code Section 3401(a) and all other payments of compensation to an Employee by the Employer (in the course of the Employer’s trade or business) for which the Employer is required to furnish the Employee a written statement under Code Sections 6041(d), 6051(a)(3), and 6052. Compensation must be determined without regard to any rules under Code Section 3401(a) that limit the remuneration included in wages based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in Code Section 3401(a)(2)). The amount reported in the “Wages, Tips and Other Compensation” box on Form W-2 satisfies this definition.

For any Self-employed Individual, Compensation shall mean Earned Income.

For purposes of applying the limitations of this section, Compensation for a Limitation Year is the Compensation actually paid or made available in gross income during such Limitation Year.

For Limitation Years beginning after December 31, 1997, for purposes of applying the limitations of this section, Compensation paid or made available during such Limitation Year shall include any elective deferral (as defined in Code Section 402(g)(3)), and any amount which is contributed or deferred by the Employer at the election of the Employee and which is not includible in the gross income of the Employee by reason of Code Section 125, 132(f)(4), or 457.

     Defined Contribution Dollar Limitation means, for Limitation Years beginning after

     December 31, 1994, $30,000, as adjusted under Code Section 415(d).

     Employer means the employer that adopts this Plan, and all members of a controlled group of corporations (as defined in Code Section 414(b) as modified by Code Section 415(h)), all commonly controlled trades or businesses (as defined in Code Section 415(c) as modified by Code Section 415(h)) or affiliated service groups (as defined in Code Section 414(m)) of which the adopting employer is a part, and any other entity required to be aggregated with the employer pursuant to regulations under Code Section 414(o).

Excess Amount means the excess of the Participant’s Annual Additions for the Limitation Year over the Maximum Permissible Amount.

     Limitation Year means the consecutive 12-month period ending on each December 31. If the Limitation Year is other than the calendar year, execution of this Plan (or any amendment to this Plan changing the Limitation Year) constitutes the Employer’s adoption of a written resolution electing the Limitation Year. If the Limitation Year is amended to a different consecutive 12-month period, the new Limitation Year must begin on a date within the Limitation Year in which the amendment is made.

Maximum Permissible Amount means the maximum Annual Addition that may be contributed or allocated to a Participant’s Account under the Plan for any Limitation Year. This amount shall not exceed the lesser of:

(1)	The Defined Contribution Dollar Limitation, or
(2)	25 percent of the Participant’s Compensation for the Limitation Year.

The compensation limitation referred to in (2) shall not apply to any contribution for medical benefits (within the meaning of Code Section 401(h) or 419A(f)(2)) which is otherwise treated as an Annual Addition under Code Section 415(l)(1) or 419A(d)(2).

If a short Limitation Year is created because of an amendment changing the Limitation Year to a different consecutive 12-month period, the Maximum Permissible Amount will not exceed the Defined Contribution Dollar Limitation multiplied by the following fraction:

Number of months in the short Limitation Year
12

(b)   If the Participant does not participate in, and has never participated in, another qualified plan maintained by the Employer or a welfare benefit fund, as defined in Code Section 419(e), maintained by the Employer, or an individual medical account, as defined in Code Section 415(l)(2), maintained by the Employer, or a simplified employee pension, as defined in Code Section 408(k), maintained by the Employer, which provides an Annual Addition, the amount of Annual Additions which may be credited to the Participant’s Account for any Limitation Year shall not exceed the lesser of the Maximum Permissible Amount or any other limitation contained in this Plan. If the Employer Contribution that would otherwise be contributed or allocated to the Participant’s Account would cause the Annual Additions for the

	Limitation Year to exceed the Maximum Permissible Amount, the amount contributed or allocated shall be reduced so that the Annual Additions for the Limitation Year will equal the Maximum Permissible Amount.
(c)	Prior to determining the Participant’s actual Compensation for the Limitation Year, the Employer may determine the Maximum Permissible Amount for a Participant on the basis of a reasonable estimation of the Participant’s Compensation for the Limitation Year, uniformly determined for all Participants similarly situated.
(d)	As soon as is administratively feasible after the end of the Limitation Year, the Maximum Permissible Amount for the Limitation Year will be determined on the basis of the Participant’s actual Compensation for the Limitation Year.
(e)	If a reasonable error in estimating a Participant’s Compensation for the Limitation Year, a reasonable error in determining the amount of elective deferrals (within the meaning of Code Section 402(g)(3)) that may be made with respect to any individual under the limits of Code Section 415, or under other facts and circumstances allowed by the Internal Revenue Service, there is an Excess Amount, the excess will be disposed of as follows:
	(1) Any Elective Deferral Contributions that are not the basis for Matching Contributions (plus attributable earnings), to the extent they would reduce the Excess Amount, will be distributed to the Participant.
	(2) If after the application of (1) above an Excess Amount still exists, any Elective Deferral Contributions that are the basis for Matching Contributions (plus attributable earnings), to the extent they would reduce the Excess Amount, will be distributed to the Participant. Concurrently with the distribution of such Elective Deferral Contributions, any Matching Contributions which relate to any Elective Deferral Contributions distributed in the preceding sentence, to the extent such application would reduce the Excess Amount, will be applied as provided in (3) or (4) below:
	(3) If after the application of (2) above an Excess Amount still exists, and the Participant is covered by the Plan at the end of the Limitation Year, the Excess Amount in the Participant’s Account will be used to reduce Employer Contributions for such Participant in the next Limitation Year, and each succeeding Limitation Year if necessary.
	(4) If after the application of (2) above an Excess Amount still exists, and the Participant is not covered by the Plan at the end of the Limitation Year, the Excess Amount will be held unallocated in a suspense account. The suspense account will be applied to reduce future Employer Contributions for all remaining Participants in the next Limitation Year, and each succeeding Limitation Year if necessary.
	(5) If a suspense account is in existence at any time during a Limitation Year pursuant to this (e), it will participate in the allocation of investment gains or losses. If a suspense account is in existence at any time during a particular Limitation Year, all amounts in the suspense account must be allocated and reallocated to Participant’s Accounts before any Employer Contributions may be made to the Plan for that Limitation Year. Excess Amounts held in a suspense account

	may not be distributed to Participants or former Participants.
(f)	This (f) applies if, in addition to this Plan, the Participant is covered under another qualified defined contribution plan maintained by the Employer, a welfare benefit fund maintained by the Employer, an individual medical account maintained by the Employer, or a simplified employee pension maintained by the Employer which provides an Annual Addition during any Limitation Year. The Annual Additions which may be credited to a Participant’s Account under this Plan for any such Limitation Year will not exceed the Maximum Permissible Amount, reduced by the Annual Additions credited to a Participant’s account under the other qualified defined contribution plans, welfare benefit funds, individual medical accounts, and simplified employee pensions for the same Limitation Year. If the Annual Additions with respect to the Participant under other qualified defined contribution plans, welfare benefit funds, individual medical accounts, and simplified employee pensions maintained by the Employer are less than the Maximum Permissible Amount, and the Employer Contribution that would otherwise be contributed or allocated to the Participant’s Account under this Plan would cause the Annual Additions for the Limitation Year to exceed this limitation, the amount contributed or allocated will be reduced so that the Annual Additions under all such plans and funds for the Limitation Year will equal the Maximum Permissible Amount. If the Annual Additions with respect to the Participant under such other qualified defined contribution plans, welfare benefit funds, individual medical accounts, and simplified employee pensions in the aggregate are equal to or greater than the Maximum Permissible Amount, no amount will be contributed or allocated to the Participant’s Account under this Plan for the Limitation Year.
(g)	Prior to determining the Participant’s actual Compensation for the Limitation Year, the Employer may determine the Maximum Permissible Amount for a Participant in the manner described in (c) above.
(h)	As soon as administratively feasible after the end of the Limitation Year, the Maximum Permissible Amount for the Limitation Year will be determined on the basis of the Participant’s actual Compensation for the Limitation Year.
(i)	If pursuant to (h) above or as a result of the allocation of forfeitures or as a result of a reasonable error in determining the amount of elective deferrals (within the meaning of Code Section 402(g)(3) that may be made with respect to any individual under the limits of Code Section 415, a Participant’s Annual Additions under this Plan and such other plans would result in an Excess Amount for a Limitation Year, the Excess Amount will be deemed to consist of the Annual Additions last allocated, except that Annual Additions attributable to a simplified employee pension will be deemed to have been allocated first, followed by Annual Additions to a welfare benefit fund or individual medical account, regardless of the actual allocation date.
(j)	If an Excess Amount was allocated to a Participant on an allocation date of this Plan which coincides with an allocation date of another plan, the Excess Amount attributed to this Plan will be the product of:

(1)	the total Excess Amount allocated as of such date, times
(2)	the ratio of (i) the Annual Addition allocated to the Participant for the Limitation Year as

of such date under this Plan to (ii) the total Annual Additions allocated to the Participant for the Limitation Year as of such date under this and all other qualified defined contribution plans.

(k)   Any Excess Amount attributed to this Plan will be disposed of in the manner described in (e) above.

     SECTION 3.05—EXCESS AMOUNTS.

(a)   Definitions. For the purposes of this section, the following terms are defined:

ACP means the average (expressed as a percentage) of the Contribution Percentages of the Eligible Participants in a group.

ADP means the average (expressed as a percentage) of the Deferral Percentages of the Eligible Participants in a group.

Aggregate Limit means the greater of:

(1)   The sum of:

(i)	125 percent of the greater of the ADP of the Nonhighly Compensated Employees for the prior Plan Year or the ACP of the Nonhighly Compensated Employees under the plan subject to Code Section 401(m) for the Plan Year beginning with or within the prior Plan Year of the cash or deferred arrangement, and
(ii)	the lesser of 200 percent or 2 percent plus the lesser of such ADP or ACP.

(2)   The sum of:

(i)	125 percent of the lesser of the ADP of the Nonhighly Compensated Employees for the prior Plan Year or the ACP of the Nonhighly Compensated Employees under the plan subject to Code Section 401(m) for the Plan Year beginning with or within the prior Plan Year of the cash or deferred arrangement, and
(ii)	the lesser of 200 percent or 2 percent plus the greater of such ADP or ACP.

If the Employer has elected to use the current testing method, then, in calculating the Aggregate Limit for a particular Plan Year, the Nonhighly Compensated Employees’ ADP and ACP for that Plan Year, instead of the prior Plan Year, is used.

Contribution Percentage means the ratio (expressed as a percentage) of the Eligible Participant’s Contribution Percentage Amounts to the Eligible Participant’s Compensation for the Plan Year (whether or not the Eligible Participant was an Eligible Participant for the entire Plan Year). For an Eligible Participant for whom such Contribution Percentage Amounts for the Plan Year are zero, the percentage is zero.

Contribution Percentage Amounts means the sum of the Participant Contributions and

Matching Contributions (that are not Qualified Matching Contributions taken into account for purposes of the ADP Test) made under the Plan on behalf of the Eligible Participant for the Plan Year. Such Contribution Percentage Amounts shall not include Matching Contributions that are forfeited either to correct Excess Aggregate Contributions or because the Contributions to which they relate are Excess Elective Deferrals, Excess Contributions, or Excess Aggregate Contributions. Under such rules as the Secretary of the Treasury shall prescribe, in determining the Contribution Percentage the Employer may elect to include Qualified Nonelective Contributions under this Plan which were not used in computing the Deferral Percentage. The Employer may also elect to use Elective Deferral Contributions in computing the Contribution Percentage so long as the ADP Test is met before the Elective Deferral Contributions are used in the ACP Test and continues to be met following the exclusion of those Elective Deferral Contributions that are used to meet the ACP Test.

Deferral Percentage means the ratio (expressed as a percentage) of Elective Deferral Contributions under this Plan on behalf of the Eligible Participant for the Plan Year to the Eligible Participant’s Compensation for the Plan Year (whether or not the Eligible Participant was an Eligible Participant for the entire Plan Year). The Elective Deferral Contributions used to determine the Deferral Percentage shall include Excess Elective Deferrals (other than Excess Elective Deferrals of Nonhighly Compensated Employees that arise solely from Elective Deferral Contributions made under this Plan or any other plans of the Employer or a Controlled Group member), but shall exclude Elective Deferral Contributions that are used in computing the Contribution Percentage (provided the ADP Test is satisfied both with and without exclusion of these Elective Deferral Contributions). Under such rules as the Secretary of the Treasury shall prescribe, the Employer may elect to include Qualified Nonelective Contributions and Qualified Matching Contributions under this Plan in computing the Deferral Percentage. For an Eligible Participant for whom such contributions on his behalf for the Plan Year are zero, the percentage is zero.

Elective Deferral Contributions means any employer contributions made to a plan at the election of a participant, in lieu of cash compensation, and shall include contributions made pursuant to a salary reduction agreement or other deferral mechanism. With respect to any taxable year, a participant’s Elective Deferral Contributions are the sum of all employer contributions made on behalf of such participant pursuant to an election to defer under any qualified cash or deferred arrangement described in Code Section 401(k), any salary reduction simplified employee pension plan described in Code Section 408(k)(6), any SIMPLE IRA plan described in Code Section 408(p), any eligible deferred compensation plan under Code Section 457, any plan described under Code Section 501(c)(18), and any employer contributions made on behalf of a participant for the purchase of an annuity contract under Code Section 403(b) pursuant to a salary reduction agreement. Elective Deferral Contributions shall not include any deferrals properly distributed as excess annual additions.

Eligible Participant means, for purposes of determining the Deferral Percentage, any Employee who is otherwise entitled to make Elective Deferral Contributions under the terms of the Plan for the Plan Year. Eligible Participant means, for purposes of determining the Contribution Percentage, any Employee who is eligible (i) to make a Participant Contribution or an Elective Deferral Contribution (if the Employer takes such contributions into account in the calculation of the Contribution Percentage), or (ii) to receive a Matching Contribution

(including forfeitures) or a Qualified Matching Contribution. If a Participant Contribution is required as a condition of participation in the Plan, any Employee who would be a Participant in the Plan if such Employee made such a contribution shall be treated as an Eligible Participant on behalf of whom no Participant Contributions are made.

Excess Aggregate Contributions means, with respect to any Plan Year, the excess of:

(1) The aggregate Contribution Percentage Amounts taken into account in computing the numerator of the Contribution Percentage actually made on behalf of Highly Compensated Employees for such Plan Year, over

(2) The maximum Contribution Percentage Amounts permitted by the ACP Test (determined by hypothetically reducing contributions made on behalf of Highly Compensated Employees in order of their Contribution Percentages beginning with the highest of such percentages).

Such determination shall be made after first determining Excess Elective Deferrals and then determining Excess Contributions.

Excess Contributions means, with respect to any Plan Year, the excess of:

(1) The aggregate amount of employer contributions actually taken into account in computing the Deferral Percentage of Highly Compensated Employees for such Plan Year, over

(2) The maximum amount of such contributions permitted by the ADP Test (determined by hypothetically reducing contributions made on behalf of Highly Compensated Employees in the order of the Deferral Percentages, beginning with the highest of such percentages).

Such determination shall be made after first determining Excess Elective Deferrals.

Excess Elective Deferrals means those Elective Deferral Contributions that are includible in a Participant’s gross income under Code Section 402(g) to the extent such Participant’s Elective Deferral Contributions for a taxable year exceed the dollar limitation under such Code section. Excess Elective Deferrals shall be treated as Annual Additions, as defined in the CONTRIBUTION LIMITATION SECTION of this article, under the Plan, unless such amounts are distributed no later than the first April 15 following the close of the Participant’s taxable year.

Matching Contributions means employer contributions made to this or any other defined contribution plan, or to a contract described in Code Section 403(b), on behalf of a participant on account of a Participant Contribution made by such participant, or on account of a participant’s Elective Deferral Contributions, under a plan maintained by the Employer or a Controlled Group member.

Participant Contributions means contributions made to the plan by or on behalf of a participant that are included in the participant’s gross income in the year in which made and that are maintained under a separate account to which the earnings and losses are allocated.

Qualified Matching Contributions means Matching Contributions which are subject to the distribution and nonforfeitability requirements under Code Section 401(k) when made.

Qualified Nonelective Contributions means any employer contributions (other than Matching Contributions) which an employee may not elect to have paid to him in cash instead of being contributed to the plan and which are subject to the distribution and nonforfeitability requirements under Code Section 401(k) when made.

(b)	Excess Elective Deferrals. A Participant may assign to this Plan any Excess Elective Deferrals made during a taxable year of the Participant by notifying the Plan Administrator in writing on or before the first following March 1 of the amount of the Excess Elective Deferrals to be assigned to the Plan. A Participant is deemed to notify the Plan Administrator of any Excess Elective Deferrals that arise by taking into account only those Elective Deferral Contributions made to this Plan and any other plan of the Employer or a Controlled Group member. The Participant’s claim for Excess Elective Deferrals shall be accompanied by the Participant’s written statement that if such amounts are not distributed, such Excess Elective Deferrals will exceed the limit imposed on the Participant by Code Section 402(g) for the year in which the deferral occurred. The Excess Elective Deferrals assigned to this Plan cannot exceed the Elective Deferral Contributions allocated under this Plan for such taxable year.
	Notwithstanding any other provisions of the Plan, Elective Deferral Contributions in an amount equal to the Excess Elective Deferrals assigned to this Plan, plus any income and minus any loss allocable thereto, shall be distributed no later than April 15 to any Participant to whose Account Excess Elective Deferrals were assigned for the preceding year and who claims Excess Elective Deferrals for such taxable year.
	The Excess Elective Deferrals shall be adjusted for income or loss. The income or loss allocable to such Excess Elective Deferrals shall be equal to the income or loss allocable to the Participant’s Elective Deferral Contributions for the taxable year in which the excess occurred multiplied by a fraction. The numerator of the fraction is the Excess Elective Deferrals. The denominator of the fraction is the closing balance without regard to any income or loss occurring during such taxable year (as of the end of such taxable year) of the Participant’s Account resulting from Elective Deferral Contributions.
	Any Matching Contributions which were based on the Elective Deferral Contributions which are distributed as Excess Elective Deferrals, plus any income and minus any loss allocable thereto, shall be forfeited.
(c)	ADP Test. As of the end of each Plan Year after Excess Elective Deferrals have been determined, the Plan must satisfy the ADP Test. The ADP Test shall be satisfied using the prior year testing method, unless the Employer has elected to use the current year testing method.

(1) Prior Year Testing Method. The ADP for a Plan Year for Eligible Participants who are Highly Compensated Employees for each Plan Year and the prior year’s ADP for Eligible Participants who were Nonhighly Compensated Employees for the prior Plan Year must satisfy one of the following tests:

(i)	The ADP for a Plan Year for Eligible Participants who are Highly Compensated Employees for the Plan Year shall not exceed the prior year’s ADP for Eligible Participants who were Nonhighly Compensated Employees for the prior Plan Year multiplied by 1.25; or
(ii)	The ADP for a Plan Year for Eligible Participants who are Highly Compensated Employees for the Plan Year:

A. shall not exceed the prior year’s ADP for Eligible Participants who were Nonhighly Compensated Employees for the prior Plan Year multiplied by 2, and

B. the difference between such ADPs is not more than 2.

     If this is not a successor plan, for the first Plan Year the Plan permits any Participant to make Elective Deferral Contributions, for purposes of the foregoing tests, the prior year’s Nonhighly Compensated Employees’ ADP shall be 3 percent, unless the Employer has elected to use the Plan Year’s ADP for these Eligible Participants.

(2) Current Year Testing Method. The ADP for a Plan Year for Eligible Participants who are Highly Compensated Employees for each Plan Year and the ADP for Eligible Participants who are Nonhighly Compensated Employees for the Plan Year must satisfy one of the following tests:

(i)	The ADP for a Plan Year for Eligible Participants who are Highly Compensated Employees for the Plan Year shall not exceed the ADP for Eligible Participants who are Nonhighly Compensated Employees for the Plan Year multiplied by 1.25; or
(ii)	The ADP for a Plan Year for Eligible Participants who are Highly Compensated Employees for the Plan Year:

A. shall not exceed the ADP for Eligible Participants who are Nonhighly Compensated Employees for the Plan Year multiplied by 2, and

B. the difference between such ADP’s is not more than 2.

     If the Employer has elected to use the current year testing method, that election cannot be changed unless (i) the Plan has been using the current year testing method for the preceding five Plan Years, or if less, the number of Plan Years the Plan has been in existence; or (ii) the Plan otherwise meets one of the conditions specified in Internal Revenue Service Notice 98-1 (or superseding guidance) for changing from the current year testing method.

A Participant is a Highly Compensated Employee for a particular Plan Year if he meets the definition of a Highly Compensated Employee in effect for that Plan Year. Similarly, a Participant is a Nonhighly Compensated Employee for a particular Plan Year if he does not meet the definition of a Highly Compensated Employee in effect for that Plan Year.

The Deferral Percentage for any Eligible Participant who is a Highly Compensated Employee for the Plan Year and who is eligible to have Elective Deferral Contributions (and Qualified Nonelective Contributions or Qualified Matching Contributions, or both, if treated as Elective Deferral Contributions for purposes of the ADP Test) allocated to his account under two or more arrangements described in Code Section 401(k) that are maintained by the Employer or a Controlled Group member shall be determined as if such Elective Deferral Contributions (and, if applicable, such Qualified Nonelective Contributions or Qualified Matching Contributions, or both) were made under a single arrangement. If a Highly Compensated Employee participates in two or more cash or deferred arrangements that have different plan years, all cash or deferred arrangements ending with or within the same calendar year shall be treated as a single arrangement. The foregoing notwithstanding, certain plans shall be treated as separate if mandatorily disaggregated under the regulations of Code Section 401(k).

In the event this Plan satisfies the requirements of Code Section 401(k), 401(a)(4), or 410(b) only if aggregated with one or more other plans, or if one or more other plans satisfy the requirements of such Code sections only if aggregated with this Plan, then this section shall be applied by determining the Deferral Percentage of Employees as if all such plans were a single plan. Any adjustments to the Nonhighly Compensated Employee ADP for the prior year shall be made in accordance with Internal Revenue Service Notice 98-1 (or superseding guidance), unless the Employer has elected to use the current year testing method. Plans may be aggregated in order to satisfy Code Section 401(k) only if they have the same plan year and use the same testing method for the ADP Test.

For purposes of the ADP Test, Elective Deferral Contributions, Qualified Nonelective Contributions, and Qualified Matching Contributions must be made before the end of the 12-month period immediately following the Plan Year to which the contributions relate.

The Employer shall maintain records sufficient to demonstrate satisfaction of the ADP Test and the amount of Qualified Nonelective Contributions or Qualified Matching Contributions, or both, used in such test.

If the Plan Administrator should determine during the Plan Year that the ADP Test is not being met, the Plan Administrator may limit the amount of future Elective Deferral Contributions of the Highly Compensated Employees.

Notwithstanding any other provisions of this Plan, Excess Contributions, plus any income and minus any loss allocable thereto, shall be distributed no later than the last day of each Plan Year to Participants to whose Accounts such Excess Contributions were allocated for the preceding Plan Year. Excess Contributions are allocated to the Highly Compensated Employees with the largest amounts of employer contributions taken into account in calculating the ADP Test for the year in which the excess arose, beginning with the Highly Compensated Employee with the largest amount of such employer contributions and continuing in descending order until all of the Excess Contributions have been allocated. For purposes of the preceding sentence, the “largest amount” is determined after distribution of any Excess Contributions. If such excess amounts are distributed more than 2 1/2 months after the last day of the Plan Year in which such excess amounts arose, a 10 percent excise tax shall be imposed on the employer maintaining the plan with respect to such amounts.

Excess Contributions shall be treated as Annual Additions, as defined in the CONTRIBUTION LIMITATION SECTION of this article.

The Excess Contributions shall be adjusted for income or loss. The income or loss allocable to such Excess Contributions allocated to each Participant shall be equal to the income or loss allocable to the Participant’s Elective Deferral Contributions (and, if applicable, Qualified Nonelective Contributions or Qualified Matching Contributions, or both) for the Plan Year in which the excess occurred multiplied by a fraction. The numerator of the fraction is the Excess Contributions. The denominator of the fraction is the closing balance without regard to any income or loss occurring during such Plan Year (as of the end of such Plan Year) of the Participant’s Account resulting from Elective Deferral Contributions (and Qualified Nonelective Contributions or Qualified Matching Contributions, or both, if such contributions are included in the ADP Test).

Excess Contributions allocated to a Participant shall be distributed from the Participant’s Account resulting from Elective Deferral Contributions. If such Excess Contributions exceed the balance in the Participant’s Account resulting from Elective Deferral Contributions, the balance shall be distributed from the Participant’s Account resulting from Qualified Matching Contributions (if applicable) and Qualified Nonelective Contributions, respectively. Any Matching Contributions which were based on the Elective Deferral Contributions which are distributed as Excess Contributions, plus any income and minus any loss allocable thereto, shall be forfeited.

(d)   ACP Test. As of the end of each Plan Year, the Plan must satisfy the ACP Test. The ACP Test shall be satisfied using the prior year testing method, unless the Employer has elected to use the current year testing method.

(1) Prior Year Testing Method. The ACP for a Plan Year for Eligible Participants who are Highly Compensated Employees for each Plan Year and the prior year’s ACP for Eligible Participants who were Nonhighly Compensated Employees for the prior Plan Year must satisfy one of the following tests:

(i)	The ACP for the Plan Year for Eligible Participants who are Highly Compensated Employees for the Plan Year shall not exceed the prior year’s ACP for Eligible Participants who were Nonhighly Compensated Employees for the prior Plan Year multiplied by 1.25; or
(ii)	The ACP for a Plan Year for Eligible Participants who are Highly Compensated Employees for the Plan Year:

A. shall not exceed the prior year’s ACP for Eligible Participants who were Nonhighly Compensated Employees for the prior Plan Year multiplied by 2, and

B. the difference between such ACPs is not more than 2.

     If this is not a successor plan, for the first Plan Year the Plan permits any Participant to make Participant Contributions, provides for Matching Contributions, or both, for purposes of

the foregoing tests, the prior year’s Nonhighly Compensated Employees’ ACP shall be 3 percent, unless the Employer has elected to use the Plan Year’s ACP for these Eligible Participants.

(2) Current Year Testing Method. The ACP for a Plan Year for Eligible Participants who are Highly Compensated Employees for each Plan Year and the ACP for Eligible Participants who are Nonhighly Compensated Employees for the Plan Year must satisfy one of the following tests:

(i)	The ACP for a Plan Year for Eligible Participants who are Highly Compensated Employees for the Plan Year shall not exceed the ACP for Eligible Participants who are Nonhighly Compensated Employees for the Plan Year multiplied by 1.25; or
(ii)	The ACP for a Plan Year for Eligible Participants who are Highly Compensated Employees for the Plan Year:

A. shall not exceed the ACP for Eligible Participants who are Nonhighly Compensated Employees for the Plan Year multiplied by 2, and

B. the difference between such ACPs is not more than 2.

     If the Employer has elected to use the current year testing method, that election cannot be changed unless (i) the Plan has been using the current year testing method for the preceding five Plan Years, or if less, the number of Plan Years the Plan has been in existence; or (ii) the Plan otherwise meets one of the conditions specified in Internal Revenue Service Notice 98-1 (or superseding guidance) for changing from the current year testing method.

A Participant is a Highly Compensated Employee for a particular Plan Year if he meets the definition of a Highly Compensated Employee in effect for that Plan Year. Similarly, a Participant is a Nonhighly Compensated Employee for a particular Plan Year if he does not meet the definition of a Highly Compensated Employee in effect for that Plan Year.

Multiple Use. If one or more Highly Compensated Employees participate in both a cash or deferred arrangement and a plan subject to the ACP Test maintained by the Employer or a Controlled Group member, and the sum of the ADP and ACP of those Highly Compensated Employees subject to either or both tests exceeds the Aggregate Limit, then the Contribution Percentage of those Highly Compensated Employees who also participate in a cash or deferred arrangement will be reduced in the manner described below for allocating Excess Aggregate Contributions so that the limit is not exceeded. The amount by which each Highly Compensated Employee’s Contribution Percentage is reduced shall be treated as an Excess Aggregate Contribution. The ADP and ACP of the Highly Compensated Employees are determined after any corrections required to meet the ADP Test and ACP Test and are deemed to be the maximum permitted under such tests for the Plan Year. Multiple use does not occur if either the ADP or ACP of the Highly Compensated Employees does not exceed 1.25 multiplied by the ADP and ACP, respectively, of the Nonhighly Compensated Employees.

The Contribution Percentage for any Eligible Participant who is a Highly Compensated Employee for the Plan Year and who is eligible to have Contribution Percentage Amounts

allocated to his account under two or more plans described in Code Section 401(a) or arrangements described in Code Section 401(k) that are maintained by the Employer or a Controlled Group member shall be determined as if the total of such Contribution Percentage Amounts was made under each plan. If a Highly Compensated Employee participates in two or more cash or deferred arrangements that have different plan years, all cash or deferred arrangements ending with or within the same calendar year shall be treated as a single arrangement. The foregoing notwithstanding, certain plans shall be treated as separate if mandatorily disaggregated under the regulations of Code Section 401(m).

In the event this Plan satisfies the requirements of Code Section 401(m), 401(a)(4), or 410(b) only if aggregated with one or more other plans, or if one or more other plans satisfy the requirements of such Code sections only if aggregated with this Plan, then this section shall be applied by determining the Contribution Percentage of Employees as if all such plans were a single plan. Any adjustments to the Nonhighly Compensated Employee ACP for the prior year shall be made in accordance with Internal Revenue Service Notice 98-1 (or superseding guidance), unless the Employer has elected to use the current year testing method. Plans may be aggregated in order to satisfy Code Section 401(m) only if they have the same plan year and use the same testing method for the ACP Test.

For purposes of the ACP Test, Participant Contributions are considered to have been made in the Plan Year in which contributed to the Plan. Matching Contributions and Qualified Nonelective Contributions will be considered to have been made for a Plan Year if made no later than the end of the 12-month period beginning on the day after the close of the Plan Year.

The Employer shall maintain records sufficient to demonstrate satisfaction of the ACP Test and the amount of Qualified Nonelective Contributions or Qualified Matching Contributions, or both, used in such test.

Notwithstanding any other provisions of this Plan, Excess Aggregate Contributions, plus any income and minus any loss allocable thereto, shall be forfeited, if not vested, or distributed, if vested, no later than the last day of each Plan Year to Participants to whose Accounts such Excess Aggregate Contributions were allocated for the preceding Plan Year. Excess Aggregate Contributions are allocated to the Highly Compensated Employees with the largest Contribution Percentage Amounts taken into account in calculating the ACP Test for the year in which the excess arose, beginning with the Highly Compensated Employee with the largest amount of such Contribution Percentage Amounts and continuing in descending order until all of the Excess Aggregate Contributions have been allocated. For purposes of the preceding sentence, the “largest amount” is determined after distribution of any Excess Aggregate Contributions. If such Excess Aggregate Contributions are distributed more than 2 1/2 months after the last day of the Plan Year in which such excess amounts arose, a 10 percent excise tax shall be imposed on the employer maintaining the plan with respect to such amounts.

Excess Aggregate Contributions shall be treated as Annual Additions, as defined in the CONTRIBUTION LIMITATION SECTION of this article.

The Excess Aggregate Contributions shall be adjusted for income or loss. The income or loss allocable to such Excess Aggregate Contributions allocated to each Participant shall be equal to

	the income or loss allocable to the Participant’s Contribution Percentage Amounts for the Plan Year in which the excess occurred multiplied by a fraction. The numerator of the fraction is the Excess Aggregate Contributions. The denominator of the fraction is the closing balance without regard to any income or loss occurring during such Plan Year (as of the end of such Plan Year) of the Participant’s Account resulting from Contribution Percentage Amounts.
	Excess Aggregate Contributions allocated to a Participant shall be distributed from the Participant’s Account resulting from Participant Contributions that are not required as a condition of employment or participation or for obtaining additional benefits from Employer Contributions. If such Excess Aggregate Contributions exceed the balance in the Participant’s Account resulting from such Participant’s Contributions, the balance shall be forfeited, if not vested, or distributed, if vested, on a pro-rata basis from the Participant’s Account resulting from Contribution Percentage Amounts.
(e)	Employer Elections. The Employer has not made an election to use the current year testing method.

ARTICLE IV

INVESTMENT OF CONTRIBUTIONS

SECTION 4.01—INVESTMENT AND TIMING OF CONTRIBUTIONS.

     The handling of Contributions is governed by the provisions of the Trust Agreement, the Annuity Contract, and any other funding arrangement in which the Plan Fund is or may be held or invested. To the extent permitted by the Trust Agreement, Annuity Contract, or other funding arrangement, the parties named below shall direct the Contributions to the guaranteed benefit policy portion of the Annuity Contract, any of the investment options available under the Annuity Contract, or any of the investment vehicles available under the Trust Agreement and may request the transfer of amounts resulting from those Contributions between such investment options and investment vehicles or the transfer of amounts between the guaranteed benefit policy portion of the Annuity Contract and such investment options and investment vehicles. A Participant may not direct the Trustee or Insurer to invest the Participant’s Account in collectibles. Collectibles mean any work of art, rug or antique, metal or gem, stamp or coin, alcoholic beverage, or other tangible personal property specified by the Secretary of the Treasury. However, for tax years beginning after December 31, 1997, certain coins and bullion as provided in Code Section 408(m)(3) shall not be considered collectibles. To the extent that a Participant who has investment direction fails to give timely direction, the Primary Employer shall direct the investment of his Account. If the Primary Employer has investment direction, such Account shall be invested ratably in the guaranteed benefit policy portion of the Annuity Contract, the investment options available under the Annuity Contract, or the investment vehicles available under the Trust Agreement in the same manner as the Accounts of all other Participants who do not direct their investments. The Primary Employer shall have investment direction for amounts which have not been allocated to Participants. To the extent an investment is no longer available, the Primary Employer may require that amounts currently held in such investment be reinvested in other investments.

     At least annually, the Named Fiduciary shall review all pertinent Employee information and Plan data in order to establish the funding policy of the Plan and to determine appropriate methods of carrying out the Plan’s objectives. The Named Fiduciary shall inform the Trustee and any Investment Manager of the Plan’s

short-term and long-term financial needs so the investment policy can be coordinated with the Plan’s financial requirements.

(a)	Employer Contributions other than Elective Deferral Contributions: The Participant shall direct the investment of such Employer Contributions and transfer of amounts resulting from those Contributions.
(b)	Elective Deferral Contributions: The Participant shall direct the investment of Elective Deferral Contributions and transfer of amounts resulting from those Contributions.
(c)	Rollover Contributions: The Participant shall direct the investment of Rollover Contributions and transfer of amounts resulting from those Contributions.

     However, the Named Fiduciary may delegate to the Investment Manager investment discretion for Contributions and amounts which are not subject to Participant direction.

     The Employer shall pay to the Insurer or Trustee, as applicable, the Elective Deferral Contributions for each Plan Year not later than the end of the 12-month period immediately following the Plan Year for which they are deemed to be paid.

     All Contributions are forwarded by the Employer to the Trustee to be deposited in the Trust Fund or to the Insurer to be deposited under the Annuity Contract, as applicable. Contributions that are accumulated through payroll deduction shall be paid to the Trustee or Insurer, as applicable, by the earlier of (i) the date the Contributions can reasonably be segregated from the Employer’s assets, or (ii) the 15th business day of the month following the month in which the Contributions would otherwise have been paid in cash to the Participant.

ARTICLE V

BENEFITS

SECTION 5.01—RETIREMENT BENEFITS.

     On a Participant’s Retirement Date, his Vested Account shall be distributed to him according to the distribution of benefits provisions of Article VI and the provisions of the SMALL AMOUNTS SECTION of Article X.

SECTION 5.02—DEATH BENEFITS.

     If a Participant dies before his Annuity Starting Date, his Vested Account shall be distributed according to the distribution of benefits provisions of Article VI and the provisions of the SMALL AMOUNTS SECTION of Article X.

SECTION 5.03—VESTED BENEFITS.

     If an Inactive Participant’s Vested Account is not payable under the SMALL AMOUNTS SECTION of Article X, he may elect, but is not required, to receive a distribution of his Vested Account after he ceases

to be an Employee. The Participant’s election shall be subject to his spouse’s consent as provided in the ELECTION PROCEDURES SECTION of Article VI. A distribution under this paragraph shall be a retirement benefit and shall be distributed to the Participant according to the distribution of benefits provisions of Article VI.

     A Participant may not elect to receive a distribution under the provisions of this section after he again becomes an Employee until he subsequently ceases to be an Employee and meets the requirements of this section.

     If an Inactive Participant does not receive an earlier distribution, upon his Retirement Date or death, his Vested Account shall be distributed according to the provisions of the RETIREMENT BENEFITS SECTION or the DEATH BENEFITS SECTION of Article V.

     The Nonvested Account of an Inactive Participant who has ceased to be an Employee shall remain a part of his Account until it becomes a Forfeiture. However, if he again becomes an Employee so that his Vesting Percentage can increase, the Nonvested Account may become a part of his Vested Account.

SECTION 5.04—WHEN BENEFITS START.

(a)   Unless otherwise elected, benefits shall begin before the 60th day following the close of the Plan Year in which the latest date below occurs:

(1)	The date the Participant attains age 65 (or Normal Retirement Age, if earlier).
(2)	The 10th anniversary of the Participant’s Entry Date.
(3)	The date the Participant ceases to be an Employee.

	Notwithstanding the foregoing, the failure of a Participant to consent to a distribution while a benefit is immediately distributable, within the meaning of the ELECTION PROCEDURES SECTION of Article VI, shall be deemed to be an election to defer the start of benefits sufficient to satisfy this section.
	The Participant may elect to have his benefits begin after the latest date for beginning benefits described above, subject to the following provisions of this section. The Participant shall make the election in writing. Such election must be made before his Normal Retirement Date or the date he ceases to be an Employee, if later. The election must describe the form of distribution and the date benefits will begin. The Participant shall not elect a date for beginning benefits or a form of distribution that would result in a benefit payable when he dies which would be more than incidental within the meaning of governmental regulations.
	Benefits shall begin on an earlier date if otherwise provided in the Plan. For example, the Participant’s Retirement Date or Required Beginning Date, as defined in the DEFINITIONS SECTION of Article VII.
(b)	The Participant’s Vested Account which results from Elective Deferral Contributions may not be distributed to a Participant or to his Beneficiary (or Beneficiaries) in accordance with the

Participant’s or Beneficiary’s (or Beneficiaries’) election, earlier than separation from service, death, or disability. Such amount may also be distributed upon:

(1) Termination of the Plan, as permitted in Article VIII.

(2) The disposition by the Employer, if the Employer is a corporation, to an unrelated corporation of substantially all of the assets, within the meaning of Code Section 409(d)(2), used in a trade or business of the Employer if the Employer continues to maintain the Plan after the disposition, but only with respect to Employees who continue employment with the corporation acquiring such assets.

(3) The disposition by the Employer, if the Employer is a corporation, to an unrelated entity of the Employer’s interest in a subsidiary, within the meaning of Code Section 409(d)(3), if the Employer continues to maintain the Plan, but only with respect to Employees who continue employment with such subsidiary.

(4) The hardship of the Participant as permitted in the WITHDRAWAL BENEFITS SECTION of this article.

All distributions that may be made pursuant to one or more of the foregoing distributable events will be a retirement benefit and shall be distributed to the Participant according to the distribution of benefit provisions of Article VI. In addition, distributions that are triggered by (1), (2) and (3) above must be made in a lump sum. A lump sum shall include a distribution of an annuity contract.

SECTION 5.05—WITHDRAWAL BENEFITS.

     A Participant may withdraw any part of his Vested Account which results from the following Contributions:

     Elective Deferral Contributions

in the event of hardship due to an immediate and heavy financial need. Withdrawals from the Participant’s Account resulting from Elective Deferral Contributions shall be limited to the amount of the Participant’s Elective Deferral Contributions. Immediate and heavy financial need shall be limited to: (i) expenses incurred or necessary for medical care, described in Code Section 213(d), of the Participant, the Participant’s spouse, or any dependents of the Participant (as defined in Code Section 152); (ii) purchase (excluding mortgage payments) of a principal residence for the Participant; (iii) payment of tuition, related educational fees, and room and board expenses, for the next 12 months of post-secondary education for the Participant, his spouse, children, or dependents; (iv) the need to prevent the eviction of the Participant from his principal residence or foreclosure on the mortgage of the Participant’s principal residence; or (v) any other distribution which is deemed by the Commissioner of Internal Revenue to be made on account of immediate and heavy financial need as provided in Treasury regulations.

     No withdrawal shall be allowed which is not necessary to satisfy such immediate and heavy financial need. Such withdrawal shall be deemed necessary only if all of the following requirements are met: (i) the distribution is not in excess of the amount of the immediate and heavy financial need (including amounts

necessary to pay any Federal, state, or local income taxes or penalties reasonably anticipated to result from the distribution); (ii) the Participant has obtained all distributions, other than hardship distributions, and all nontaxable loans currently available under all plans maintained by the Employer; (iii) the Plan, and all other plans maintained by the Employer, provide that the Participant’s elective contributions and participant contributions will be suspended for at least 6 months after receipt of the hardship distribution; and (iv) the Plan, and all other plans maintained by the Employer, provide that the Participant may not make elective contributions for the Participant’s taxable year immediately following the taxable year of the hardship distribution in excess of the applicable limit under Code Section 402(g) for such next taxable year less the amount of such Participant’s elective contributions for the taxable year of the hardship distribution. The Plan will suspend elective contributions and participant contributions for 6 months and limit elective deferrals as provided in the preceding sentence. A Participant shall not cease to be an Eligible Participant, as defined in the EXCESS AMOUNTS SECTION of Article III, merely because his elective contributions or participant contributions are suspended.

     A request for withdrawal shall be made in such manner and in accordance with such rules as the Employer will prescribe for this purpose (including by means of voice response or other electronic means under circumstances the Employer permits). Withdrawals shall be a retirement benefit and shall be distributed to the Participant according to the distribution of benefits provisions of Article VI. A forfeiture shall not occur solely as a result of a withdrawal.

SECTION 5.06—LOANS TO PARTICIPANTS.

     Loans shall be made available to all Participants on a reasonably equivalent basis. Loans shall only be made from a Participant’s Vested Account resulting from Elective Deferral Contributions, Rollover Contributions, and Matching Contributions. Loans shall be made available only in the event of hardship due to an immediate and heavy financial need. Immediate and heavy financial need shall be limited to (i) medical expenses described in Code Section 213(d) incurred by the Participant, the Participant’s spouse, or any dependents of the Participant (as defined in Code Section 152); (ii) purchase (excluding mortgage payments) of a principal residence for the Participant; (iii) payment of tuition for the next semester or quarter of post-secondary education for the Participant, his spouse, children or dependents; (iv) the need to prevent the eviction of the Participant from his principal residence or foreclosure on the mortgage of the Participant’s principal residence; or (v) any other distribution which is deemed by the Commissioner of Internal Revenue to be made on account of immediate and heavy financial need as provided in Treasury regulations. The Participant’s request for a loan shall include his written statement that an immediate and heavy financial need exists and explain its nature.

     For purposes of this section, and unless otherwise specified, Participant means any Participant or Beneficiary who is a party-in-interest as defined in ERISA. Loans shall not be made to Highly Compensated Employees in an amount greater than the amount made available to other Participants.

     No loans will be made to any shareholder-employee or Owner-employee. For purposes of this requirement, a shareholder-employee means an employee or officer of an electing small business (Subchapter S) corporation who owns (or is considered as owning within the meaning of Code Section 318(a)(1)), on any day during the taxable year of such corporation, more than 5 percent of the outstanding stock of the corporation.

     A loan to a Participant shall be a Participant-directed investment of his Account. The loan is a Trust

Fund investment but no Account other than the borrowing Participant’s Account shall share in the interest paid on the loan or bear any expense or loss incurred because of the loan.

     The number of outstanding loans shall not be limited. The minimum amount of any loan shall be $1,000.

     Loans must be adequately secured and bear a reasonable rate of interest.

     The amount of the loan shall not exceed the maximum amount that may be treated as a loan under Code Section 72(p) (rather than a distribution) to the Participant and shall be equal to the lesser of (a) or (b) below:

(a)	$50,000, reduced by the highest outstanding loan balance of loans during the one-year period ending on the day before the new loan is made.
(b)	The greater of (1) or (2), reduced by (3) below:

(1)	One-half of the Participant’s Vested Account attributable to Elective Deferral Contributions, Rollover Contributions, and Matching Contributions.
(2)	$10,000.
(3)	Any outstanding loan balance on the date the new loan is made.

For purposes of this maximum, a Participant’s Vested Account does not include any accumulated deductible employee contributions, as defined in Code Section 72(o)(5)(B), and all qualified employer plans, as defined in Code Section 72(p)(4), of the Employer and any Controlled Group member shall be treated as one plan.

     The foregoing notwithstanding, the amount of such loan shall not exceed 50 percent of the amount of the Participant’s Vested Account, reduced by any outstanding loan balance on the date the new loan is made. For purposes of this maximum, a Participant’s Vested Account does not include any accumulated deductible employee contributions, as defined in Code Section 72(o)(5)(B). No collateral other than a portion of the Participant’s Vested Account (as limited above) shall be accepted. The Loan Administrator shall determine if the collateral is adequate for the amount of the loan requested.

     Each loan shall bear a reasonable fixed rate of interest to be determined by the Loan Administrator. In determining the interest rate, the Loan Administrator shall take into consideration fixed interest rates currently being charged by commercial lenders for loans of comparable risk on similar terms and for similar durations, so that the interest will provide for a return commensurate with rates currently charged by commercial lenders for loans made under similar circumstances. The Loan Administrator shall not discriminate among Participants in the matter of interest rates; but loans granted at different times may bear different interest rates in accordance with the current appropriate standards.

     The loan shall by its terms require that repayment (principal and interest) be amortized in level payments, not less frequently than quarterly, over a period not extending beyond five years from the date of the loan. If the loan is used to acquire a dwelling unit, which within a reasonable time (determined at the time the loan is made) will be used as the principal residence of the Participant, the repayment period may

extend beyond five years from the date of the loan. The period of repayment for any loan shall be arrived at by mutual agreement between the Loan Administrator and the Participant and if the loan is for a principal residence, shall not be made for a period longer than the repayment period consistent with commercial practices.

     The Participant shall make an application for a loan in such manner and in accordance with such rules as the Employer shall prescribe for this purpose (including by means of voice response or other electronic means under circumstances the Employer permits). The application must specify the amount and duration requested.

     Information contained in the application for the loan concerning the income, liabilities, and assets of the Participant will be evaluated to determine whether there is a reasonable expectation that the Participant will be able to satisfy payments on the loan as due. Additionally, the Loan Administrator will pursue any appropriate further investigations concerning the creditworthiness and credit history of the Participant to determine whether a loan should be approved.

     Each loan shall be fully documented in the form of a promissory note signed by the Participant for the face amount of the loan, together with interest determined as specified above.

     There will be an assignment of collateral to the Plan executed at the time the loan is made.

     In those cases where repayment through payroll deduction is available, installments are so payable, and a payroll deduction agreement shall be executed by the Participant at the time the loan is made. Loan repayments that are accumulated through payroll deduction shall be paid to the Trustee by the earlier of (i) the date the loan repayments can reasonably be segregated from the Employer’s assets, or (ii) the 15th business day of the month following the month in which such amounts would otherwise have been paid in cash to the Participant.

     Where payroll deduction is not available, payments in cash are to be timely made. Any payment that is not by payroll deduction shall be made payable to the Employer or the Trustee, as specified in the promissory note, and delivered to the Loan Administrator, including prepayments, service fees and penalties, if any, and other amounts due under the note. The Loan Administrator shall deposit such amounts into the Plan as soon as administratively practicable after they are received, but in no event later than the 15th business day of the month after they are received.

     The promissory note may provide for reasonable late payment penalties and service fees. Any penalties or service fees shall be applied to all Participants in a nondiscriminatory manner. If the promissory note so provides, such amounts may be assessed and collected from the Account of the Participant as part of the loan balance.

     Each loan may be paid prior to maturity, in part or in full, without penalty or service fee, except as may be set out in the promissory note.

     The Plan shall suspend loan payments for a period not exceeding one year during which an approved unpaid leave of absence occurs other than a military leave of absence. The Loan Administrator shall provide the Participant a written explanation of the effect of the suspension of payments upon his loan.

     If a Participant separates from service (or takes a leave of absence) from the Employer because of service in the military and does not receive a distribution of his Vested Account, the Plan shall suspend loan payments until the Participant’s completion of military service or until the Participant’s fifth anniversary of commencement of military service, if earlier, as permitted under Code Section 414(u). The Loan Administrator shall provide the Participant a written explanation of the effect of his military service upon his loan.

     If any payment of principal and interest, or any portion thereof, remains unpaid for more than 90 days after due, the loan shall be in default. For purposes of Code Section 72(p), the Participant shall then be treated as having received a deemed distribution regardless of whether or not a distributable event has occurred.

     Upon default, the Plan has the right to pursue any remedy available by law to satisfy the amount due, along with accrued interest, including the right to enforce its claim against the security pledged and execute upon the collateral as allowed by law. The entire principal balance whether or not otherwise then due, along with accrued interest, shall become immediately due and payable without demand or notice, and subject to collection or satisfaction by any lawful means, including specifically, but not limited to, the right to enforce the claim against the security pledged and to execute upon the collateral as allowed by law.

     In the event of default, foreclosure on the note and attachment of security or use of amounts pledged to satisfy the amount then due shall not occur until a distributable event occurs in accordance with the Plan, and shall not occur to an extent greater than the amount then available upon any distributable event which has occurred under the Plan.

     All reasonable costs and expenses, including but not limited to attorney’s fees, incurred by the Plan in connection with any default or in any proceeding to enforce any provision of a promissory note or instrument by which a promissory note for a Participant loan is secured, shall be assessed and collected from the Account of the Participant as part of the loan balance.

     If payroll deduction is being utilized, in the event that a Participant’s available payroll deduction amounts in any given month are insufficient to satisfy the total amount due, there will be an increase in the amount taken subsequently, sufficient to make up the amount that is then due. If any amount remains past due more than 90 days, the entire principal amount, whether or not otherwise then due, along with interest then accrued, shall become due and payable, as above.

     If no distributable event has occurred under the Plan at the time that the Participant’s Vested Account would otherwise be used under this provision to pay any amount due under the outstanding loan, this will not occur until the time, or in excess of the extent to which, a distributable event occurs under the Plan. An outstanding loan will become due and payable in full 60 days after a Participant ceases to be an Employee and a party-in-interest as defined in ERISA or after complete termination of the Plan.

SECTION 5.07—DISTRIBUTIONS UNDER QUALIFIED DOMESTIC RELATIONS ORDERS.

     The Plan specifically permits distributions to an Alternate Payee under a qualified domestic relations order as defined in Code Section 414(p), at any time, irrespective of whether the Participant has attained his earliest retirement age, as defined in Code Section 414(p), under the Plan. A distribution to an Alternate Payee before the Participant has attained his earliest retirement age is available only if the order specifies that

distribution shall be made prior to the earliest retirement age or allows the Alternate Payee to elect a distribution prior to the earliest retirement age.

     Nothing in this section shall permit a Participant to receive a distribution at a time otherwise not permitted under the Plan nor shall it permit the Alternate Payee to receive a form of payment not permitted under the Plan.

     The benefit payable to an Alternate Payee shall be subject to the provisions of the SMALL AMOUNTS SECTION of Article X if the value of the benefit does not exceed $5,000 ($3,500 for Plan Years beginning before August 6, 1997).

     The Plan Administrator shall establish reasonable procedures to determine the qualified status of a domestic relations order. Upon receiving a domestic relations order, the Plan Administrator shall promptly notify the Participant and the Alternate Payee named in the order, in writing, of the receipt of the order and the Plan’s procedures for determining the qualified status of the order. Within a reasonable period of time after receiving the domestic relations order, the Plan Administrator shall determine the qualified status of the order and shall notify the Participant and each Alternate Payee, in writing, of its determination. The Plan Administrator shall provide notice under this paragraph by mailing to the individual’s address specified in the domestic relations order, or in a manner consistent with Department of Labor regulations. The Plan Administrator may treat as qualified any domestic relations order entered into before January 1, 1985, irrespective of whether it satisfies all the requirements described in Code Section 414(p).

     If any portion of the Participant’s Vested Account is payable during the period the Plan Administrator is making its determination of the qualified status of the domestic relations order, a separate accounting shall be made of the amount payable. If the Plan Administrator determines the order is a qualified domestic relations order within 18 months of the date amounts are first payable following receipt of the order, the payable amounts shall be distributed in accordance with the order. If the Plan Administrator does not make its determination of the qualified status of the order within the 18-month determination period, the payable amounts shall be distributed in the manner the Plan would distribute if the order did not exist and the order shall apply prospectively if the Plan Administrator later determines the order is a qualified domestic relations order.

     The Plan shall make payments or distributions required under this section by separate benefit checks or other separate distribution to the Alternate Payee(s).

ARTICLE VI

DISTRIBUTION OF BENEFITS

SECTION 6.01—FORM OF DISTRIBUTION.

     Unless an optional form of benefit is selected pursuant to a qualified election within the election period (see the ELECTION PROCEDURES SECTION of this article), the automatic form of benefit payable to or on behalf of a Participant is determined as follows:

(a)   Retirement Benefits. Prior to February 1, 2004, single sum and installments are allowed. Effective as of February 1, 2004, the Plan is being amended to eliminate installments as an optional form of

distribution and the Plan provides a single sum distribution form that is otherwise identical to the optional form of distribution eliminated or restricted. The amendment shall not apply to any distribution with an Annuity Starting Date earlier than the earlier of (i) the 90th day after the date the Participant receiving the distribution has been furnished a summary that reflects the amendment and that satisfies the ERISA requirements at 29 CFR 2520.104b-3 relating to a summary of material modifications, or (ii) the first day of the second Plan Year following the Plan Year in which the amendment is adopted.

(b)

Death Benefits. The only form of death benefit is a single sum payment.

SECTION 6.02— ELECTION PROCEDURES.

     The Participant shall make any election under this section in writing. The Plan Administrator may require such individual to complete and sign any necessary documents as to the provisions to be made. Any election permitted under (a) below shall be subject to the qualified election provisions of (b) below.

(a)	Death Benefits. A Participant may elect his Beneficiary.
(b)	Qualified Election. The Participant may make an election at any time during the election period. The Participant may revoke the election made (or make a new election) at any time and any number of times during the election period. An election is effective only if it meets the consent requirements below.

Election Period for Death Benefits. A Participant may make an election as to death benefits at
     any time before he dies.

Consent to Election. If the Participant’s Vested Account exceeds $5,000, any benefit which is
     immediately distributable requires the consent of the Participant.

The consent of the Participant to a benefit which is immediately distributable must not be made before the date the Participant is provided with the notice of the ability to defer the distribution. Such consent shall be made in writing.

     The consent shall not be made more than 90 days before the Annuity Starting Date. The consent of the Participant shall not be required to the extent that a distribution is required to satisfy Code Section 401(a)(9) or Code Section 415.

     In addition, upon termination of this Plan, if the Plan does not offer an annuity option (purchased from a commercial provider), and if the Employer (or any entity within the same Controlled Group) does not maintain another defined contribution plan (other than an employee stock ownership plan as defined in Code Section 4975(e)(7)), the Participant’s Account balance will, without the Participant’s consent, be distributed to the Participant. However, if any entity within the same Controlled Group maintains another defined contribution plan (other than an employee stock ownership plan as defined in Code Section 4975(e)(7)) then the Participant’s Account will be transferred, without the Participant’s consent, to the other plan if the Participant does not consent to an immediate distribution.

     A benefit is immediately distributable if any part of the benefit could be distributed to the Participant before the Participant attains the older of Normal Retirement Age or age 62.

(c)   Designation of Beneficiary. Spousal consent is needed to name a Beneficiary other than the Participant’s spouse. If a Participant names a Beneficiary other than his spouse, the spouse has the right to limit consent only to a specific Beneficiary. The spouse can relinquish such right. Such consent shall be in writing. The spouse’s consent shall be witnessed by a plan representative or notary public. The spouse’s consent must acknowledge the effect of the election, including that the spouse had the right to limit consent only to a specific Beneficiary and that the relinquishment of such right was voluntary. Unless the consent of the spouse expressly permits designations by the Participant without a requirement of further consent by the spouse, the spouse’s consent must be limited to the Beneficiary, class of Beneficiaries, or contingent Beneficiary named in the election.

     Spousal consent is not required, however, if the Participant establishes to the satisfaction of the plan representative that the consent of the spouse cannot be obtained because there is no spouse or the spouse cannot be located. A spouse’s consent under this paragraph shall not be valid with respect to any other spouse. A Participant may revoke a prior election without the consent of the spouse. Any new election will require a new spousal consent, unless the consent of the spouse expressly permits such election by the Participant without further consent by the spouse. A spouse’s consent may be revoked at any time within the Participant’s election period.

SECTION 6.03—NOTICE REQUIREMENTS.

     Right to Defer. The Plan Administrator shall furnish to the Participant a written explanation of the right of the Participant to defer distribution until the benefit is no longer immediately distributable.

     The Plan Administrator shall furnish the written explanation by a method reasonably calculated to reach the attention of the Participant no less than 30 days, and no more than 90 days, before the Annuity Starting Date.

     However, distribution may begin less than 30 days after the notice described in this subparagraph is given, provided the Plan Administrator clearly informs the Participant that he has a right to a period of at least 30 days after receiving the notice to consider the decision of whether or not to elect a distribution, and the Participant, after receiving the notice, affirmatively elects a distribution.

ARTICLE VII

DISTRIBUTION REQUIREMENTS

SECTION 7.01—APPLICATION.

The timing of any distribution must meet the requirements of this article.

SECTION 7.02—DEFINITIONS.

For purposes of this article, the following terms are defined:

     5-percent Owner means a 5-percent owner as defined in Code Section 416. A Participant is treated as a 5-percent Owner for purposes of this article if such Participant is a 5-percent Owner at any time during the Plan Year ending with or within the calendar year in which such owner attains age 70 1/2.

     In addition, a Participant is treated as a 5-percent Owner for purposes of this article if such Participant becomes a 5-percent Owner in a later Plan Year. Such Participant’s Required Beginning Date shall not be later than the April 1 of the calendar year following the calendar year in which such later Plan Year ends.

     Once distributions have begun to a 5-percent Owner under this article, they must continue to be distributed, even if the Participant ceases to be a 5-percent Owner in a subsequent year.

     Required Beginning Date means, for a Participant who is a 5-percent Owner, the April 1 of the calendar year following the calendar year in which he attains age 70 1/2.

     Required Beginning Date means, for any Participant who is not a 5-percent Owner, the April 1 of the calendar year following the later of the calendar year in which he attains age 70 1/2 or the calendar year in which he retires.

     The preretirement age 70 1/2 distribution option is only eliminated with respect to Participants who reach age 70 1/2 in or after a calendar year that begins after the later of December 31, 1998, or the adoption date of the amendment which eliminated such option. The preretirement age 70 1/2 distribution is an optional form of benefit under which benefits payable in a particular distribution form (including any modifications that may be elected after benefits begin) begin at a time during the period that begins on or after January 1 of the calendar year in which the Participant attains age 70 1/2 and ends April 1 of the immediately following calendar year.

     The options available for Participants who are not 5-percent Owners and attained age 70 1/2 in calendar years before the calendar year that begins after the later of December 31, 1998, or the adoption date of the amendment which eliminated the preretirement age 70 1/2 distribution shall be the following. Any such Participant attaining age 70 1/2 in years after 1995 may elect by April 1 of the calendar year following the calendar year in which he attained age 70 1/2 (or by December 31, 1997 in the case of a Participant attaining age 70 1/2 in 1996) to defer distributions until the calendar year following the calendar year in which he retires.

SECTION 7.03—DISTRIBUTION REQUIREMENTS.

(a)   General Rules.

(1) The requirements of this article shall apply to any distribution of a Participant’s interest and shall take precedence over any inconsistent provisions of this Plan. Unless otherwise specified, the provisions of this article apply to calendar years beginning after December 31, 1984.

(2) All distributions required under this article shall be determined and made in accordance with the proposed regulations under Code Section 401(a)(9).

(3) With respect to distributions under the Plan made on or after June 14, 2001, for calendar years beginning on or after January 1, 2001, the Plan will apply the minimum distribution requirements of Code Section 401(a)(9) in accordance with the regulations under Code Section 401(a)(9) that were proposed on January 17, 2001 (the 2001 Proposed Regulations), notwithstanding any provision of the Plan to the contrary. If the total amount of required minimum distributions made to a Participant for 2001 prior to June 14, 2001, are equal to or greater than the amount of required minimum distributions determined under the 2001 Proposed Regulations, then no additional distributions are required for such Participant for 2001 on or after such date. If the total amount of required minimum distributions made to a Participant for 2001 prior to June 14, 2001, are less than the amount determined under the 2001 Proposed Regulations, then the amount of required minimum distributions for 2001 on or after such date will be determined so that the total amount of required minimum distributions for 2001 is the amount determined under the 2001 Proposed Regulations. These provisions shall continue in effect until the last calendar year beginning before the effective date of final regulations under Code Section 401(a)(9) or such other date as may be published by the Internal Revenue Service.

(b)	Required Beginning Date. The entire interest of a Participant must be distributed or begin to be distributed no later than the Participant’s Required Beginning Date.
(c)	Death Distribution Provisions. If the Participant dies before distribution of his interest begins, distribution of the Participant’s entire interest shall be completed by December 31 of the calendar year containing the fifth anniversary of the Participant’s death.

ARTICLE VIII

TERMINATION OF THE PLAN

     The Employer expects to continue the Plan indefinitely but reserves the right to terminate the Plan in whole or in part at any time upon giving written notice to all parties concerned. Complete discontinuance of Contributions constitutes complete termination of the Plan.

     The Account of each Participant shall be fully (100%) vested and nonforfeitable as of the effective date of complete termination of the Plan. The Account of each Participant who is included in the group of Participants deemed to be affected by the partial termination of the Plan shall be fully (100%) vested and nonforfeitable as of the effective date of the partial termination of the Plan. The Participant’s Account shall continue to participate in the earnings credited, expenses charged, and any appreciation or depreciation of the Investment Fund until his Vested Account is distributed.

     A Participant’s Account which does not result from the Contributions listed below may be distributed to the Participant after the effective date of the complete termination of the Plan:

     Elective Deferral Contributions

     A Participant’s Account resulting from such Contributions may be distributed upon complete

termination of the Plan, but only if neither the Employer nor any Controlled Group member maintain or establish a successor defined contribution plan (other than an employer stock ownership plan as defined in Code Section 4975(e)(7), a simplified employee pension plan as defined in Code Section 408(k) or a SIMPLE IRA plan as defined in Code Section 408(p)) and such distribution is made in a lump sum. A distribution under this article shall be a retirement benefit and shall be distributed to the Participant according to the provisions of Article VI.

     The Participant’s entire Vested Account shall be paid in a single sum to the Participant as of the effective date of complete termination of the Plan if (i) the requirements for distribution of Elective Deferral Contributions in the above paragraph are met and (ii) consent of the Participant is not required in the ELECTION PROCEDURES SECTION of Article VI to distribute a benefit which is immediately distributable. This is a small amounts payment. The small amounts payment is in full settlement of all benefits otherwise payable.

     Upon complete termination of the Plan, no more Employees shall become Participants and no more Contributions shall be made.

     The assets of this Plan shall not be paid to the Employer at any time, except that, after the satisfaction of all liabilities under the Plan, any assets remaining may be paid to the Employer. The payment may not be made if it would contravene any provision of law.

ARTICLE IX

ADMINISTRATION OF THE PLAN

SECTION 9.01—ADMINISTRATION.

     Subject to the provisions of this article, the Plan Administrator has complete control of the administration of the Plan. The Plan Administrator has all the powers necessary for it to properly carry out its administrative duties. Not in limitation, but in amplification of the foregoing, the Plan Administrator has complete discretion to construe or interpret the provisions of the Plan, including ambiguous provisions, if any, and to determine all questions that may arise under the Plan, including all questions relating to the eligibility of Employees to participate in the Plan and the amount of benefit to which any Participant or Beneficiary may become entitled. The Plan Administrator’s decisions upon all matters within the scope of its authority shall be final.

     Unless otherwise set out in the Plan or Annuity Contract, the Plan Administrator may delegate recordkeeping and other duties which are necessary for the administration of the Plan to any person or firm which agrees to accept such duties. The Plan Administrator shall be entitled to rely upon all tables, valuations, certificates and reports furnished by the consultant or actuary appointed by the Plan Administrator and upon all opinions given by any counsel selected or approved by the Plan Administrator.

     The Plan Administrator shall receive all claims for benefits by Participants, former Participants or Beneficiaries. The Plan Administrator shall determine all facts necessary to establish the right of any Claimant to benefits and the amount of those benefits under the provisions of the Plan. The Plan Administrator may establish rules and procedures to be followed by Claimants in filing claims for benefits,

in furnishing and verifying proofs necessary to determine age, and in any other matters required to administer the Plan.

SECTION 9.02—EXPENSES.

     Expenses of the Plan, to the extent that the Employer does not pay such expenses, may be paid out of the assets of the Plan provided that such payment is consistent with ERISA. Such expenses include, but are not limited to, expenses for bonding required by ERISA; expenses for recordkeeping and other administrative services; fees and expenses of the Trustee or Annuity Contract; expenses for investment education service; and direct costs that the Employer incurs with respect to the Plan.

SECTION 9.03—RECORDS.

     All acts and determinations of the Plan Administrator shall be duly recorded. All these records, together with other documents necessary for the administration of the Plan, shall be preserved in the Plan Administrator’s custody.

     Writing (handwriting, typing, printing), photostating, photographing, microfilming, magnetic impulse, mechanical or electrical recording, or other forms of data compilation shall be acceptable means of keeping records.

SECTION 9.04—INFORMATION AVAILABLE.

     Any Participant in the Plan or any Beneficiary may examine copies of the Plan description, latest annual report, any bargaining agreement, this Plan, the Annuity Contract or any other instrument under which the Plan was established or is operated. The Plan Administrator shall maintain all of the items listed in this section in its office, or in such other place or places as it may designate in order to comply with governmental regulations. These items may be examined during reasonable business hours. Upon the written request of a Participant or Beneficiary receiving benefits under the Plan, the Plan Administrator shall furnish him with a copy of any of these items. The Plan Administrator may make a reasonable charge to the requesting person for the copy.

SECTION 9.05—CLAIM AND APPEAL PROCEDURES.

     A Claimant must submit any required forms and pertinent information when making a claim for benefits under the Plan.

     If a claim for benefits under the Plan is denied, the Plan Administrator shall provide adequate written notice to the Claimant whose claim for benefits under the Plan has been denied. The notice must be furnished within 90 days of the date that the claim is received by the Plan Administrator. The Claimant shall be notified in writing within this initial 90-day period if special circumstances require an extension of time needed to process the claim and the date by which the Plan Administrator’s decision is expected to be rendered. The written notice shall be furnished no later than 180 days after the date the claim was received by the Plan Administrator.

     The Plan Administrator’s notice to the Claimant shall specify the reason for the denial; specify references to pertinent Plan provisions on which denial is based; describe any additional material and

information needed for the Claimant to perfect his claim for benefits; explain why the material and information is needed; inform the Claimant that any appeal he wishes to make must be in writing to the Plan Administrator within 60 days after receipt of the Plan Administrator’s notice of denial of benefits and that failure to make the written appeal within such 60-day period renders the Plan Administrator’s determination of such denial final, binding and conclusive.

     If the Claimant appeals to the Plan Administrator, the Claimant (or his authorized representative) may submit in writing whatever issues and comments the Claimant (or his authorized representative) feels are pertinent. The Claimant (or his authorized representative) may review pertinent Plan documents. The Plan Administrator shall reexamine all facts related to the appeal and make a final determination as to whether the denial of benefits is justified under the circumstances. The Plan Administrator shall advise the Claimant of its decision within 60 days of his written request for review, unless special circumstances (such as a hearing) would make rendering a decision within the 60-day limit unfeasible. The Claimant must be notified within the 60-day limit if an extension is necessary. The Plan Administrator shall render a decision on a claim for benefits no later than 120 days after the request for review is received.

SECTION 9.06—DELEGATION OF AUTHORITY.

     All or any part of the administrative duties and responsibilities under this article may be delegated by the Plan Administrator to a retirement committee. The duties and responsibilities of the retirement committee shall be set out in a separate written agreement.

SECTION 9.07—EXERCISE OF DISCRETIONARY AUTHORITY.

     The Employer, Plan Administrator, and any other person or entity who has authority with respect to the management, administration, or investment of the Plan may exercise that authority in its/his full discretion, subject only to the duties imposed under ERISA. This discretionary authority includes, but is not limited to, the authority to make any and all factual determinations and interpret all terms and provisions of the Plan documents relevant to the issue under consideration. The exercise of authority will be binding upon all persons; will be given deference in all courts of law; and will not be overturned or set aside by any court of law unless found to be arbitrary and capricious or made in bad faith.

ARTICLE X

GENERAL PROVISIONS

SECTION 10.01—AMENDMENTS.

     The Employer may amend this Plan at any time, including any remedial retroactive changes (within the time specified by Internal Revenue Service regulations), to comply with any law or regulation issued by any governmental agency to which the Plan is subject.

     An amendment may not diminish or adversely affect any accrued interest or benefit of Participants or their Beneficiaries nor allow reversion or diversion of Plan assets to the Employer at any time, except as may be required to comply with any law or regulation issued by any governmental agency to which the Plan is subject.

     No amendment to this Plan shall be effective to the extent that it has the effect of decreasing a Participant’s accrued benefit. However, a Participant’s Account may be reduced to the extent permitted under Code Section 412(c)(8). For purposes of this paragraph, a Plan amendment which has the effect of decreasing a Participant’s Account with respect to benefits attributable to service before the amendment shall be treated as reducing an accrued benefit. Furthermore, if the vesting schedule of the Plan is amended, in the case of an Employee who is a Participant as of the later of the date such amendment is adopted or the date it becomes effective, the nonforfeitable percentage (determined as of such date) of such Employee’s right to his employer-derived accrued benefit shall not be less than his percentage computed under the Plan without regard to such amendment.

     No amendment to the Plan shall be effective to eliminate or restrict an optional form of benefit with respect to benefits attributable to service before the amendment except as provided in the MERGERS AND DIRECT TRANSFERS SECTION of this article and below:

(a)   The Plan is amended to eliminate or restrict the ability of a Participant to receive payment of his Account balance under a particular optional form of benefit and the amendment satisfies the condition in (1) and (2) below:

(1)

The amendment provides a single sum distribution form that is otherwise identical to the optional form of benefit eliminated or restricted. For purposes of this condition (1), a single sum distribution form is otherwise identical only if it is identical in all respects to the eliminated or restricted optional form of benefit (or would be identical except that it provides greater rights to the Participant) except with respect to the timing of payments after commencement.

(2)

The amendment provides that the amendment shall not apply to any distribution with an Annuity Starting Date earlier than the earlier of:

(i)	the 90th day after the date the Participant receiving the distribution has been furnished a summary that reflects the amendment and that satisfies the ERISA requirements at 29 CFR 2520.104b-3 relating to a summary of material modifications, or
(ii)	the first day of the second Plan Year following the Plan Year in which the amendment is adopted.

(b)   The Plan is amended to eliminate or restrict in-kind distributions and the conditions in Q&A 2(b)(2)(iii) in section 1.411(d)-4 of the regulations are met.

     If, as a result of an amendment, an Employer Contribution is removed that is not 100% immediately vested when made, the applicable vesting schedule shall remain in effect after the date of such amendment. The Participant shall not become immediately 100% vested in such Contributions as a result of the elimination of such Contribution except as otherwise specifically provided in the Plan.

     An amendment shall not decrease a Participant’s vested interest in the Plan. If an amendment to the Plan, or a deemed amendment in the case of a change in top-heavy status of the Plan as provided in the

MODIFICATION OF VESTING REQUIREMENTS SECTION of Article XI, changes the computation of the percentage used to determine that portion of a Participant’s Account attributable to Employer Contributions which is nonforfeitable (whether directly or indirectly), each Participant or former Participant

(c)	who has completed at least three Years of Service on the date the election period described below ends (five Years of Service if the Participant does not have at least one Hour-of-Service in a Plan Year beginning after December 31, 1988) and
(d)	whose nonforfeitable percentage will be determined on any date after the date of the change

may elect, during the election period, to have the nonforfeitable percentage of his Account that results from Employer Contributions determined without regard to the amendment. This election may not be revoked. If after the Plan is changed, the Participant’s nonforfeitable percentage will at all times be as great as it would have been if the change had not been made, no election needs to be provided. The election period shall begin no later than the date the Plan amendment is adopted, or deemed adopted in the case of a change in the top-heavy status of the Plan, and end no earlier than the 60th day after the latest of the date the amendment is adopted (deemed adopted) or becomes effective, or the date the Participant is issued written notice of the amendment (deemed amendment) by the Employer or the Plan Administrator.

SECTION 10.02—DIRECT ROLLOVERS.

     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.

     Any part of a distribution made under the SMALL AMOUNTS SECTION of this article (or which is a small amounts payment made under Article VIII at complete termination of the Plan) which is an Eligible Rollover Distribution, which is equal to or more than $1,000, and for which the Distributee has not elected to either have such distribution paid to him or to an Eligible Retirement Plan shall be rolled over to an Individual Retirement Account (IRA) with an affiliate of Principal Life Insurance Company. Such amounts shall be initially invested in the Principal Investor Funds Money Market Fund. The Distributee shall have the option to change the investment after the IRA has been established.

     Any part of a distribution made under the SMALL AMOUNTS SECTION of this article (or which is a small amounts payment made under Article VIII at complete termination of the Plan) which is an Eligible Rollover Distribution, which is less than $1,000, and for which the Distributee has not elected to either have such distribution paid to him or to an Eligible Retirement Plan shall be paid to the Distributee.

SECTION 10.03—MERGERS AND DIRECT TRANSFERS.

     The Plan may not be merged or consolidated with, nor have its assets or liabilities transferred to, any other retirement plan, unless each Participant in the plan would (if the plan then terminated) receive a benefit immediately after the merger, consolidation, or transfer which is equal to or greater than the benefit the Participant would have been entitled to receive immediately before the merger, consolidation, or transfer (if this Plan had then terminated). The Employer may enter into merger agreements or direct transfer of assets agreements with the employers under other retirement plans which are qualifiable under Code Section

401(a), including an elective transfer, and may accept the direct transfer of plan assets, or may transfer plan assets, as a party to any such agreement. The Employer shall not consent to, or be a party to a merger, consolidation, or transfer of assets with a plan which is subject to the survivor annuity requirements of Code Section 401(a)(11) if such action would result in survivor annuity feature being maintained under this Plan.

     Notwithstanding any provision of the Plan to the contrary, to the extent any optional form of benefit under the Plan permits a distribution prior to the Employee’s retirement, death, disability, or severance from employment, and prior to plan termination, the optional form of benefit is not available with respect to benefits attributable to assets (including the post-transfer earnings thereon) and liabilities that are transferred, within the meaning of Code Section 414(l), to this Plan from a money purchase pension plan qualified under Code Section 401(a) (other than any portion of those assets and liabilities attributable to voluntary employee contributions).

     The Plan may accept a direct transfer of plan assets on behalf of an Eligible Employee. If the Eligible Employee is not an Active Participant when the transfer is made, the Eligible Employee shall be deemed to be an Active Participant only for the purpose of investment and distribution of the transferred assets. Employer Contributions shall not be made for or allocated to the Eligible Employee, until the time he meets all of the requirements to become an Active Participant.

     The Plan shall hold, administer, and distribute the transferred assets as a part of the Plan. The Plan shall maintain a separate account for the benefit of the Employee on whose behalf the Plan accepted the transfer in order to reflect the value of the transferred assets.

     Unless a transfer of assets to the Plan is an elective transfer as described below, the Plan shall apply the optional forms of benefit protections described in the AMENDMENTS SECTION of this article to all transferred assets.

     A Participant’s protected benefits may be eliminated upon transfer between qualified defined contribution plans if the conditions in Q&A 3(b)(1) in section 1.411(d)-4 of the regulations are met. The transfer must meet all of the other applicable qualification requirements.

     A Participant’s protected benefits may be eliminated upon transfer between qualified plans (both defined benefit and defined contribution) if the conditions in Q&A 3(c)(1) in section 1.411(d)-4 of the regulations are met. Beginning January 1, 2002, if the Participant is eligible to receive an immediate distribution of his entire nonforfeitable accrued benefit in a single sum distribution that would consist entirely of an eligible rollover distribution under Code Section 401(a)(31), such transfer will be accomplished as a direct rollover under Code Section 401(a)(31). The rules applicable to distributions under the plan would apply to the transfer, but the transfer would not be treated as a distribution for purposes of the minimum distribution requirements of Code Section 401(a)(9).

SECTION 10.04—PROVISIONS RELATING TO THE INSURER AND OTHER PARTIES.

     The obligations of an Insurer shall be governed solely by the provisions of the Annuity Contract. The Insurer shall not be required to perform any act not provided in or contrary to the provisions of the Annuity Contract. Each Annuity Contract when purchased shall comply with the Plan. See the CONSTRUCTION SECTION of this article.

     Any issuer or distributor of investment contracts or securities is governed solely by the terms of its policies, written investment contract, prospectuses, security instruments, and any other written agreements entered into with the Trustee with regard to such investment contracts or securities.

     Such Insurer, issuer or distributor is not a party to the Plan, nor bound in any way by the Plan provisions. Such parties shall not be required to look to the terms of this Plan, nor to determine whether the Employer, the Plan Administrator, the Trustee, or the Named Fiduciary have the authority to act in any particular manner or to make any contract or agreement.

     Until notice of any amendment or termination of this Plan or a change in Trustee has been received by the Insurer at its home office or an issuer or distributor at their principal address, they are and shall be fully protected in assuming that the Plan has not been amended or terminated and in dealing with any party acting as Trustee according to the latest information which they have received at their home office or principal address.

SECTION 10.05—EMPLOYMENT STATUS.

     Nothing contained in this Plan gives an Employee the right to be retained in the Employer’s employ or to interfere with the Employer’s right to discharge any Employee.

SECTION 10.06—RIGHTS TO PLAN ASSETS.

     An Employee shall not have any right to or interest in any assets of the Plan upon termination of employment or otherwise except as specifically provided under this Plan, and then only to the extent of the benefits payable to such Employee according to the Plan provisions.

     Any final payment or distribution to a Participant or his legal representative or to any Beneficiaries of such Participant under the Plan provisions shall be in full satisfaction of all claims against the Plan, the Named Fiduciary, the Plan Administrator, the Insurer, the Trustee, and the Employer arising under or by virtue of the Plan.

SECTION 10.07—BENEFICIARY.

     Each Participant may name a Beneficiary to receive any death benefit that may arise out of his participation in the Plan. The Participant may change his Beneficiary from time to time. Unless a qualified election has been made, for purposes of distributing any death benefits before the Participant’s Retirement Date, the Beneficiary of a Participant who has a spouse shall be the Participant’s spouse. The Participant’s Beneficiary designation and any change of Beneficiary shall be subject to the provisions of the ELECTION PROCEDURES SECTION of Article VI. It is the responsibility of the Participant to give written notice to the Insurer of the name of the Beneficiary on a form furnished for that purpose.

     With the Employer’s consent, the Plan Administrator may maintain records of Beneficiary designations for Participants before their Retirement Dates. In that event, the written designations made by Participants shall be filed with the Plan Administrator. If a Participant dies before his Retirement Date, the Plan Administrator shall certify to the Insurer the Beneficiary designation on its records for the Participant.

     If there is no Beneficiary designation form on file, or if the designated Beneficiary predeceases the

Participant, any death benefits under the Plan payable to the Beneficiary 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.

SECTION 10.08—NONALIENATION OF BENEFITS.

     Benefits payable under the Plan are not subject to the claims of any creditor of any Participant, Beneficiary or spouse. A Participant, Beneficiary or spouse does not have any rights to alienate, anticipate, commute, pledge, encumber, or assign any of such benefits, except in the case of a loan as provided in the LOANS TO PARTICIPANTS SECTION of Article V. The preceding sentences shall also apply to the creation, assignment, or recognition of a right to any benefit payable with respect to a Participant according to a domestic relations order, unless such order is determined by the Plan Administrator to be a qualified domestic relations order, as defined in Code Section 414(p), or any domestic relations order entered before January 1, 1985. The preceding sentences shall not apply to any offset of a Participant’s benefits provided under the Plan against an amount the Participant is required to pay the Plan with respect to a judgement, order, or decree issued, or a settlement entered into, on or after August 5, 1997, which meets the requirements of Code Sections 401(a)(13)(C) or (D).

SECTION 10.09—CONSTRUCTION.

     The validity of the Plan or any of its provisions is determined under and construed according to Federal law and, to the extent permissible, according to the laws of the state in which the Employer has its principal office. In case any provision of this Plan is held illegal or invalid for any reason, such determination shall not affect the remaining provisions of this Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had never been included.

     In the event of any conflict between the provisions of the Plan and the terms of any Annuity Contract issued hereunder, the provisions of the Plan control.

SECTION 10.10—LEGAL ACTIONS.

     No person employed by the Employer; no Participant, former Participant, or their Beneficiaries; nor any other person having or claiming to have an interest in the Plan is entitled to any notice of process. A final judgment entered in any such action or proceeding shall be binding and conclusive on all persons having or claiming to have an interest in the Plan.

SECTION 10.11—SMALL AMOUNTS.

     If consent of the Participant is not required for a benefit which is immediately distributable in the ELECTION PROCEDURES SECTION of Article VI, a Participant’s entire Vested Account shall be paid in

a single sum as of the earliest of his Retirement Date, the date he dies, or the date he ceases to be an Employee for any other reason (the date the Employer provides notice to the record keeper of the Plan of such event, if later). For purposes of this section, if the Participant’s Vested Account is zero, the Participant shall be deemed to have received a distribution of such Vested Account. If a Participant would have received a distribution under the first sentence of this paragraph but for the fact that the Participant’s consent was needed to distribute a benefit which is immediately distributable, and if at a later time consent would not be needed to distribute a benefit which is immediately distributable and such Participant has not again become an Employee, such Vested Account shall be paid in a single sum. This is a small amounts payment.

     If a small amounts payment is made as of the date the Participant dies, the small amounts payment shall be made to the Participant’s Beneficiary. If a small amounts payment is made while the Participant is living, the small amounts payment shall be made to the Participant. The small amounts payment is in full settlement of benefits otherwise payable.

     No other small amounts payments shall be made.

SECTION 10.12—WORD USAGE.

     The masculine gender, where used in this Plan, shall include the feminine gender and the singular words, as used in this Plan, may include the plural, unless the context indicates otherwise.

     The words “in writing” and “written,” where used in this Plan, shall include any other forms, such as voice response or other electronic system, as permitted by any governmental agency to which the Plan is subject.

SECTION 10.13—CHANGE IN SERVICE METHOD.

(a)   Change of Service Method Under This Plan. If this Plan is amended to change the method of crediting service from the elapsed time method to the hours method for any purpose under this Plan, the Employee’s service shall be equal to the sum of (1), (2), and (3) below:

(1) The number of whole years of service credited to the Employee under the Plan as of the date the change is effective.

(2) One year of service for the applicable computation period in which the change is effective if he is credited with the required number of Hours-of-Service. If the Employer does not have sufficient records to determine the Employee’s actual Hours-of-Service in that part of the service period before the effective date of the change, the Hours-of-Service shall be determined using an equivalency. For any month in which he would be required to be credited with one Hour-of-Service, the Employee shall be deemed for purposes of this section to be credited with 190 Hours-of-Service.

(3) The Employee’s service determined under this Plan using the hours method after the end of the computation period in which the change in service method was effective.

If this Plan is amended to change the method of crediting service from the hours method to the

elapsed time method for any purpose under this Plan, the Employee’s service shall be equal to the sum of (4), (5), and (6) below:

(4) The number of whole years of service credited to the Employee under the Plan as of the beginning of the computation period in which the change in service method is effective.

(5) the greater of (i) the service that would be credited to the Employee for that entire computation period using the elapsed time method or (ii) the service credited to him under the Plan as of the date the change is effective.

(6) The Employee’s service determined under this Plan using the elapsed time method after the end of the applicable computation period in which the change in service method was effective.

(b)   Transfers Between Plans with Different Service Methods. If an Employee has been a participant in another plan of the Employer which credited service under the elapsed time method for any purpose which under this Plan is determined using the hours method, then the Employee’s service shall be equal to the sum of (1), (2), and (3) below:

(1) The number of whole years of service credited to the Employee under the plan as of the date he became an Eligible Employee under this Plan.

(2) One year of service for the applicable computation period in which he became an Eligible Employee if he is credited with the required number of Hours-of-Service. If the Employer does not have sufficient records to determine the Employee’s actual Hours-of-Service in that part of the service period before the date he became an Eligible Employee, the Hours-of-Service shall be determined using an equivalency. For any month in which he would be required to be credited with one Hour-of-Service, the Employee shall be deemed for purposes of this section to be credited with 190 Hours-of-Service.

(3) The Employee’s service determined under this Plan using the hours method after the end of the computation period in which he became an Eligible Employee.

If an Employee has been a participant in another plan of the Employer which credited service under the hours method for any purpose which under this Plan is determined using the elapsed time method, then the Employee’s service shall be equal to the sum of (4), (5), and (6) below:

(4) The number of whole years of service credited to the Employee under the other plan as of the beginning of the computation period under that plan in which he became an Eligible Employee under this Plan.

(5) The greater of (i) the service that would be credited to the Employee for that entire computation period using the elapsed time method or (ii) the service credited to him under the other plan as of the date he became an Eligible Employee under this Plan.

(6) The Employee’s service determined under this Plan using the elapsed time method after the end of the applicable computation period under the other plan in which he became an Eligible Employee.

     If an Employee has been a participant in a Controlled Group member’s plan which credited service under a different method than is used in this Plan, in order to determine entry and vesting, the provisions in (b) above shall apply as though the Controlled Group member’s plan were a plan of the Employer.

     Any modification of service contained in this Plan shall be applicable to the service determined pursuant to this section.

SECTION 10.14—MILITARY SERVICE.

     Notwithstanding any provision of this Plan to the contrary, the Plan shall provide contributions, benefits, and service credit with respect to qualified military service in accordance with Code Section 414(u). Loan repayments shall be suspended under this Plan as permitted under Code Section 414(u).

ARTICLE XI

TOP-HEAVY PLAN REQUIREMENTS

SECTION 11.01—APPLICATION.

     The provisions of this article shall supersede all other provisions in the Plan to the contrary.

     For the purpose of applying the Top-heavy Plan requirements of this article, all members of the Controlled Group shall be treated as one Employer. The term Employer, as used in this article, shall be deemed to include all members of the Controlled Group, unless the term as used clearly indicates only the Employer is meant.

     The accrued benefit or account of a participant which results from deductible employee contributions shall not be included for any purpose under this article.

     The minimum vesting and contribution provisions of the MODIFICATION OF VESTING REQUIREMENTS and MODIFICATION OF CONTRIBUTIONS SECTIONS of this article shall not apply to any Employee who is included in a group of Employees covered by a collective bargaining agreement which the Secretary of Labor finds to be a collective bargaining agreement between employee representatives and one or more employers, including the Employer, if there is evidence that retirement benefits were the subject of good faith bargaining between such representatives. For this purpose, the term “employee representatives” does not include any organization more than half of whose members are employees who are owners, officers, or executives.

SECTION 11.02—DEFINITIONS.

     For purposes of this article the following terms are defined:

     Aggregation Group means:

(a)   each of the Employer’s qualified plans in which a Key Employee is a participant during the Plan

	Year containing the Determination Date (regardless of whether the plan was terminated) or one of the four preceding Plan Years,
(b)	each of the Employer’s other qualified plans which allows the plan(s) described in (a) above to meet the nondiscrimination requirement of Code Section 401(a)(4) or the minimum coverage requirement of Code Section 410, and
(c)	any of the Employer’s other qualified plans not included in (a) or (b) above which the Employer desires to include as part of the Aggregation Group. Such a qualified plan shall be included only if the Aggregation Group would continue to satisfy the requirements of Code Section 401(a)(4) and Code Section 410.

     The plans in (a) and (b) above constitute the “required” Aggregation Group. The plans in (a), (b), and (c) above constitute the “permissive” Aggregation Group.

     Compensation means compensation as defined in the CONTRIBUTION LIMITATION SECTION of Article III. For purposes of determining who is a Key Employee in years beginning before January 1, 1998, Compensation shall include, in addition to compensation as defined in the CONTRIBUTION LIMITATION SECTION of Article III, elective contributions. Elective contributions are amounts excludible from the gross income of the Employee under Code Sections 125, 402(e)(3), 402(h)(1)(B), or 403(b), and contributed by the Employer, at the Employee’s election, to a Code Section 401(k) arrangement, a simplified employee pension, cafeteria plan, or tax-sheltered annuity. Elective contributions also include amounts deferred under a Code Section 457 plan maintained by the Employer.

     Determination Date means as to any plan, 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.

     Key Employee means any Employee or former Employee (and the Beneficiaries of such Employee) who at any time during the determination period was:

(a)	an officer of the Employer if such individual’s annual Compensation exceeds 50 percent of the dollar limitation under Code Section 415(b)(1)(A),
(b)	an owner (or considered an owner under Code Section 318) of one of the ten largest interests in the Employer if such individual’s annual Compensation exceeds 100 percent of the dollar limitation under Code Section 415(c)(1)(A),
(c)	a 5-percent owner of the Employer, or
(d)	a 1-percent owner of the Employer who has annual Compensation of more than $150,000.

     The determination period is the Plan Year containing the Determination Date and the four preceding Plan Years.

     The determination of who is a Key Employee shall be made according to Code Section 416(i)(1) and the regulations thereunder.

     Non-key Employee means any Employee who is not a Key Employee.

     Present Value means the present value of a participant’s accrued benefit under a defined benefit plan. For purposes of establishing Present Value to compute the Top-heavy Ratio, any benefit shall be discounted only for 7.5% interest and mortality according to the 1971 Group Annuity Table (Male) without the 7% margin but with projection by Scale E from 1971 to the later of (a) 1974, or (b) the year determined by adding the age to 1920, and wherein for females the male age six years younger is used.

     Top-heavy Plan means a plan which is top-heavy for any plan year beginning after December 31, 1983. This Plan shall be top-heavy if any of the following conditions exist:

(a)	The Top-heavy Ratio for this Plan exceeds 60 percent and this Plan is not part of any required Aggregation Group or permissive Aggregation Group.
(b)	This Plan is a part of a required Aggregation Group, but not part of a permissive Aggregation Group, and the Top-heavy Ratio for the required Aggregation Group exceeds 60 percent.
(c)	This Plan is a part of a required Aggregation Group and part of a permissive Aggregation Group and the Top-heavy Ratio for the permissive Aggregation Group exceeds 60 percent.

     Top-heavy Ratio means:

(a)

If the Employer maintains one or more defined contribution plans (including any simplified employee pension plan) and the Employer has not maintained any defined benefit plan which during the five-year period ending on the Determination Date(s) has or has had accrued benefits, 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 account balances of all Key Employees as of the Determination Date(s) (including any part of any account balance distributed in the five-year period ending on the Determination Date(s)), and the denominator of which is the sum of all account balances (including any part of any account balance distributed in the five-year period ending on the Distribution Date(s)), both computed in accordance with Code Section 416 and the regulations thereunder. Both the numerator and denominator of the Top-heavy Ratio are increased to reflect any contribution not actually made as of the Determination Date, but which is required to be taken into account on that date under Code Section 416 and the regulations thereunder.

(b)

If the Employer maintains one or more defined contribution plans (including any simplified employee pension plan) and the Employer maintains or has maintained one or more defined benefit plans which during the five-year period ending on the Determination Date(s) has or has had accrued benefits, the Top-heavy Ratio for any required or permissive Aggregation Group, as appropriate, is a fraction, the numerator of which is the sum of the account balances under the aggregated defined contribution plan or plans of all Key Employees determined in accordance with (a) above, and the Present Value of accrued benefits under the aggregated defined benefit plan or plans for all Key Employees as of the Determination Date(s), and the denominator of which is the sum of the account balances under the aggregated defined contribution plan or plans for all participants, determined in accordance with (a) above, and the Present Value of accrued benefits under the defined benefit plan or plans for all participants as of the Determination Date(s), all determined in accordance with Code Section 416 and the regulations

thereunder. The accrued benefits under a defined benefit plan in both the numerator and denominator of the Top-heavy Ratio are increased for any distribution of an accrued benefit made in the five-year period ending on the Determination Date.

(c)   For purposes of (a) and (b) 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 Code Section 416 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 been credited with at least an hour of service with any employer maintaining the plan at any time during the five-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 Code Section 416 and the regulations thereunder. Deductible employee contributions will not be taken into account for purposes of computing the Top-heavy Ratio. When aggregating plans, the value of account balances and accrued benefits will be calculated with reference to the Determination Dates that fall within the same calendar year. The accrued benefit of a participant other than a Key Employee shall be determined under (i) the method, if any, that uniformly applies for accrual purposes under all defined benefit plans maintained by the Employer, or (ii) if there is no such method, as if such benefit accrued not more rapidly than the slowest accrual rate permitted under the fractional rule of Code Section 411(b)(1)(C).

SECTION 11.03—MODIFICATION OF VESTING REQUIREMENTS.

     If a Participant’s Vesting Percentage determined under Article I is not at least as great as his Vesting Percentage would be if it were determined under a schedule permitted in Code Section 416, the following shall apply. During any Plan Year in which the Plan is a Top-heavy Plan, the Participant’s Vesting Percentage shall be the greater of the Vesting Percentage determined under Article I or the schedule below.

VESTING SERVICE	NONFORFEITABLE
(whole years)	PERCENTAGE.
Less than 3	0
3 or more	100

     The schedule above shall not apply to Participants who are not credited with an Hour-of-Service after the Plan first becomes a Top-heavy Plan. The Vesting Percentage determined above applies to the portion of the Participant’s Account which is multiplied by a Vesting Percentage to determine his Vested Account, including benefits accrued before the effective date of Code Section 416 and benefits accrued before this Plan became a Top-heavy Plan.

     If, in a later Plan Year, this Plan is not a Top-heavy Plan, a Participant’s Vesting Percentage shall be determined under Article I. A Participant’s Vesting Percentage determined under either Article I or the schedule above shall never be reduced and the election procedures of the AMENDMENTS SECTION of Article X shall apply when changing to or from the schedule as though the automatic change were the result of an amendment.

     The part of the Participant’s Vested Account resulting from the minimum contributions required pursuant to the MODIFICATION OF CONTRIBUTIONS SECTION of this article (to the extent required to be nonforfeitable under Code Section 416(b)) may not be forfeited under Code Section 411(a)(3)(B) or (D).

SECTION 11.04—MODIFICATION OF CONTRIBUTIONS.

     During any Plan Year in which this Plan is a Top-heavy Plan, the Employer shall make a minimum contribution as of the last day of the Plan Year for each Non-key Employee who is an Employee on the last day of the Plan Year and who was an Active Participant at any time during the Plan Year. A Non-key Employee is not required to have a minimum number of Hours-of-Service or minimum amount of Compensation in order to be entitled to this minimum. A Non-key Employee who fails to be an Active Participant merely because his Compensation is less than a stated amount or merely because of a failure to make mandatory participant contributions or, in the case of a cash or deferred arrangement, elective contributions shall be treated as if he were an Active Participant. The minimum is the lesser of (a) or (b) below:

(a)

3 percent of such person’s Compensation for such Plan Year.

(b)

The “highest percentage” of Compensation for such Plan Year at which the Employer’s contributions are made for or allocated to any Key Employee. The highest percentage shall be determined by dividing the Employer Contributions made for or allocated to each Key Employee during the Plan Year by the amount of his Compensation for such Plan Year, and selecting the greatest quotient (expressed as a percentage). To determine the highest percentage, all of the Employer’s defined contribution plans within the Aggregation Group shall be treated as one plan. The minimum shall be the amount in (a) above if this Plan and a defined benefit plan of the Employer are required to be included in the Aggregation Group and this Plan enables the defined benefit plan to meet the requirements of Code Section 401(a)(4) or 410.

     For purposes of (a) and (b) above, Compensation shall be limited by Code Section 401(a)(17).

     If the Employer’s contributions and allocations otherwise required under the defined contribution plan(s) are at least equal to the minimum above, no additional contribution shall be required. If the Employer’s total contributions and allocations are less than the minimum above, the Employer shall contribute the difference for the Plan Year.

     The minimum contribution applies to all of the Employer’s defined contribution plans in the aggregate which are Top-heavy Plans. A minimum contribution under a profit sharing plan shall be made without regard to whether or not the Employer has profits.

     If a person who is otherwise entitled to a minimum contribution above is also covered under another defined contribution plan of the Employer’s which is a Top-heavy Plan during that same Plan Year, any additional contribution required to meet the minimum above shall be provided in this plan.

     If a person who is otherwise entitled to a minimum contribution above is also covered under a defined benefit plan of the Employer’s which is a Top-heavy Plan during that same Plan Year, the minimum benefits for him shall not be duplicated. The defined benefit plan shall provide an annual benefit for him on, or

adjusted to, a straight life basis equal to the lesser of:

(c)	2 percent of his average compensation multiplied by his years of service, or
(d)	20 percent of his average compensation.

Average compensation and years of service shall have the meaning set forth in such defined benefit plan for this purpose. The Employer’s profit sharing plan shall provide a minimum contribution of 5 percent of such Participant’s Compensation for the Plan Year.

     For purposes of this section, any employer contribution made according to a salary reduction or similar arrangement and employer contributions which are matching contributions, as defined in Code Section 401(m), shall not apply in determining if the minimum contribution requirement has been met, but shall apply in determining the minimum contribution required.

     The requirements of this section shall be met without regard to any Social Security contribution.

     By executing this Plan, the Primary Employer acknowledges having counseled to the extent necessary with selected legal and tax advisors regarding the Plan’s legal and tax implications.

     Executed this 31 day of December       , 2003

OSHKOSH B’GOSH, INC.

By: /S/ DAVID L. OMACHINSKI

Exec VP, COO, CFO & Treasurer

Title

Defined Contribution Plan 8.0

     The Adopting Employer must agree to participate in or adopt the Plan in writing. If this has not already been done, it may be done by signing below.

OSHKOSH B’GOSH, INC.

By: /S/ DAVID L. OMACHINSKI

Exec VP, COO, CFO & Treasurer

Title

12-31-03

Date

OSHKOSH B’GOSH, RETAIL, INC.

By: /S/ DAVID L. OMACHINSKI

Exec VP, COO, CFO & Treasurer

Title

12-31-03

Date

OBG PRODUCT DEVELOPMENT AND SALES, INC.

By: /S/ DAVID L. OMACHINSKI

Exec VP, COO, CFO & Treasurer

Title

12-31-03

Date

OBG DISTRIBUTION COMPANY, LLC

By: /S/ DAVID L. OMACHINSKI

Exec VP, COO, CFO & Treasurer

Title

12-31-03

Date

OBG MANUFACTURING COMPANY

By: /S/ DAVID L. OMACHINSKI

Exec VP, COO, CFO & Treasurer

Title

12-31-03

Date

MODEL AMENDMENT TO COMPLY WITH THE 401(a)(9) FINAL AND TEMPORARY REGULATIONS

Plan Name OSHKOSH B’GOSH, INC. 401(k) PLAN

The Plan named above gives the Employer the right to amend it at any time. According to that right, the Plan is amended by adopting the model amendment set forth below.

The plan’s existing minimum distribution provisions are superseded to the extent they are inconsistent with

the provisions of this model amendment, but those provisions that are not inconsistent (such as the plan’s definition of required beginning date) shall be retained. The plan’s minimum distribution provisions are amended as follows:

ARTICLE VII. MINIMUM DISTRIBUTION REQUIREMENTS.

Section 1. General Rules

1.1.	Effective Date. The provisions of this article will apply for purposes of determining required minimum distributions for calendar years beginning with the 2003 calendar year.
1.2.	Coordination with Minimum Distribution Requirements Previously in Effect. This amendment is not effective until calendar years beginning with the 2003 calendar year, therefore, no coordination is required.
1.3.	Precedence. The requirements of this article will take precedence over any inconsistent provisions of the plan.
1.4.	Requirements of Treasury Regulations Incorporated. All distributions required under this article will be determined and made in accordance with the Treasury regulations under section 401(a)(9) of the Internal Revenue Code.
1.5.	TEFRA Section 242(b)(2) Elections. Notwithstanding the other provisions of this article, distributions may be made under a designation made before January 1, 1984, in accordance with section 242(b)(2) of the Tax Equity and Fiscal Responsibility Act (TEFRA) and the provisions of the plan that relate to section 242(b)(2) of TEFRA.

Section 2. Time and Manner of Distribution.

2.1.	Required Beginning Date. The participant’s entire interest will be distributed, or begin to be distributed, to the participant no later than the participant’s required beginning date.
2.2.	Death of Participant Before Distributions Begin. If the participant dies before distributions begin, the participant’s entire interest will be distributed, or begin to be distributed, no later than as follows:

(a)

If the participant’s surviving spouse is the participant’s sole designated beneficiary, then distributions to the surviving spouse will begin by December 31 of the calendar year immediately following the calendar year in which the participant died, or by December 31 of the calendar year in which the participant would have attained age 70 1/2 if later, except to the extent that an election is made to receive distributions in accordance with the 5-year rule. Under the 5-year rule, the participant’s entire interest will be distributed to the designated beneficiary by December 31 of the calendar year containing the fifth anniversary of the participant’s death.

(b)

If the participant’s surviving spouse is not the participant’s sole designated beneficiary, then distributions to the designated beneficiary will begin by December 31 of the calendar year immediately following the calendar year in which the participant died, except to the extent that an election is made to receive distributions in accordance with the 5-year rule. Under the 5-year rule,

	the participant’s entire interest will be distributed to the designated beneficiary by December 31 of the calendar year containing the fifth anniversary of the participant’s death.
(c)	If there is no designated beneficiary as of September 30 of the year following the year of the participant’s death, the participant’s entire interest will be distributed by December 31 of the calendar year containing the fifth anniversary of the participant’s death.
(d)	If the participant’s surviving spouse is the participant’s sole designated beneficiary and the surviving spouse dies after the participant but before distributions to the surviving spouse begin, this section 2.2, other than section 2.2(a), will apply as if the surviving spouse were the participant.

For purposes of this section 2.2 and section 4, unless section 2.2(d) applies, distributions are considered to begin on the participant’s required beginning date. If section 2.2(d) applies, distributions are considered to begin on the date distributions are required to begin to the surviving spouse under section 2.2(a). If distributions under an annuity purchased from an insurance company irrevocably commence to the participant before the participant’s required beginning date (or to the participant’s surviving spouse before the date distributions are required to begin to the surviving spouse under section 2.2(a)), the date distributions are considered to begin is the date distributions actually commence.

2.3.   Forms of Distribution. Unless the participant’s interest is distributed in the form of an annuity purchased from an insurance company or in a single sum on or before the required beginning date, as of the first distribution calendar year distributions will be made in accordance with sections 3 and 4 of this article. If the participant’s interest is distributed in the form of an annuity purchased from an insurance company, distributions thereunder will be made in accordance with the requirements of section 401(a)(9) of the Code and the Treasury regulations.

Section 3. Required Minimum Distributions During Participant’s Lifetime.

3.1.   Amount of Required Minimum Distribution For Each Distribution Calendar Year. During the participant’s lifetime, the minimum amount that will be distributed for each distribution calendar year is the lesser of:

(a)	the quotient obtained by dividing the participant’s account balance by the
	distribution period in the Uniform Lifetime Table set forth in section 1.401(a)(9)-9 of the Treasury regulations, using the participant’s age as of the participant’s birthday in the distribution calendar year; or
(b)	if the participant’s sole designated beneficiary for the distribution calendar year is the participant’s spouse, the quotient obtained by dividing the participant’s account balance by the number in the Joint and Last Survivor Table set forth in section 1.401(a)(9)-9 of the Treasury regulations, using the participant’s and spouse’s attained ages as of the participant’s and spouse’s birthdays in the distribution calendar year.

3.2.   Lifetime Required Minimum Distributions Continue Through Year of Participant’s Death. Required minimum distributions will be determined under this section 3 beginning with the first distribution calendar year and up to and including the distribution calendar year that includes the participant’s date

of death.

Section 4. Required Minimum Distributions After Participant’s Death.

4.1.   Death On or After Date Distributions Begin.

(a)   Participant Survived by Designated Beneficiary. If the participant dies on or after the date distributions begin and there is a designated beneficiary, the minimum amount that will be distributed for each distribution calendar year after the year of the participant’s death is the quotient obtained by dividing the participant’s account balance by the longer of the remaining life expectancy of the participant or the remaining life expectancy of the participant’s designated beneficiary, determined as follows:

(1)	The participant’s remaining life expectancy is calculated using the age of the participant in the year of death, reduced by one for each subsequent year.
(2)	If the participant’s surviving spouse is the participant’s sole designated beneficiary, the remaining life expectancy of the surviving spouse is calculated for each distribution calendar year after the year of the participant’s death using the surviving spouse’s age as of the spouse’s birthday in that year. For distribution calendar years after the year of the surviving spouse’s death, the remaining life expectancy of the surviving spouse is calculated using the age of the surviving spouse as of the spouse’s birthday in the calendar year of the spouse’s death, reduced by one for each subsequent calendar year.
(3)	If the participant’s surviving spouse is not the participant’s sole designated beneficiary, the designated beneficiary’s remaining life expectancy is calculated using the age of the beneficiary in the year following the year of the participant’s death, reduced by one for each subsequent year.

(b)   No Designated Beneficiary. If the participant dies on or after the date distributions begin and there is no designated beneficiary as of September 30 of the year after the year of the participant’s death, the minimum amount that will be distributed for each distribution calendar year after the year of the participant’s death is the quotient obtained by dividing the participant’s account balance by the participant’s remaining life expectancy calculated using the age of the participant in the year of death, reduced by one for each subsequent year.

4.2. Death Before Date Distributions Begin.

(a)   Participant Survived by Designated Beneficiary. If the participant dies before the date distributions begin and there is a designated beneficiary, the minimum amount that will be distributed for each distribution calendar year after the year of the participant’s death is the quotient obtained by dividing the participant’s account balance by the remaining life expectancy of the participant’s designated beneficiary, determined as provided in section 4.1, except to the extent that an election is made to receive distributions in accordance with the 5-year rule. Under the 5-year rule, the participant’s entire interest will be distributed to the designated beneficiary by December 31 of the calendar year containing the fifth anniversary of the participant’s death.

(b)

No Designated Beneficiary. If the participant dies before the date distributions begin and there is no designated beneficiary as of September 30 of the year following the year of the participant’s death, distribution of the participant’s entire interest will be completed by December 31 of the calendar year containing the fifth anniversary of the participant’s death.

(c)

Death of Surviving Spouse Before Distributions to Surviving Spouse Are Required to Begin. If the participant dies before the date distributions begin, the participant’s surviving spouse is the participant’s sole designated beneficiary, and the surviving spouse dies before the distributions are required to begin to the surviving spouse under section 2.2(a), this section 4.2 will apply as if the surviving spouse were the participant.

Section 5. Definitions.

5.1.	Designated Beneficiary. The individual who is designated as the beneficiary under the BENEFICIARY SECTION of Article X of the plan and is the designated beneficiary under section 401(a)(9) of the Internal Revenue Code and section 1.401(a)(9)-1, Q&A-4, of the Treasury regulations.
5.2.	Distribution Calendar Year. A calendar year for which a minimum distribution is required. For distributions beginning before the participant’s death, the first distribution calendar year is the calendar year immediately preceding the calendar year which contains the participant’s required beginning date. For distributions beginning after the participant’s death, the first distribution calendar year is the calendar year in which distributions are required to begin under section 2.2. The required minimum distribution for the participant’s first distribution calendar year will be made on or before the participant’s required beginning date. The required minimum distribution for other distribution calendar years, including the required minimum distribution for the distribution year in which the participant’s required beginning date occurs, will be made on or before December 31 of that distribution calendar year.
5.3.	Life Expectancy. Life expectancy as computed by use of the Single Life Table in section 1.401(a)(9)-9 of the Treasury regulations.
5.4.	Participant’s Account Balance. The account balance as of the last valuation date in the calendar year immediately preceding the distribution calendar year (valuation calendar year) increased by the amount of any contributions made and allocated or forfeitures allocated to the account balance as of dates in the valuation calendar year after the valuation date and decreased by distributions made in the valuation calendar year after the valuation date. The account balance for the valuation calendar year includes any amounts rolled over or transferred to the plan either in the valuation calendar year or in the distribution calendar year if distributed or transferred in the valuation calendar year.
5.5.	Required Beginning Date. The date specified in the DEFINITIONS SECTION of Article VII of the plan.

Section 6. Election to Allow Participants or Beneficiaries to Elect 5-Year Rule.

Participants or beneficiaries may elect on an individual basis whether the 5-year rule or the life expectancy rule in sections 2.2 and 4.2 of Article VII of the plan applies to distributions after the death

of a participant who has a designated beneficiary. The election must be made no later than the earlier of September 30 of the calendar year in which distribution would be required to begin under section 2.2 of Article VII of the plan, or by September 30 of the calendar year which contains the fifth anniversary of the participant’s (or, if applicable, surviving spouse’s) death. If neither the participant nor beneficiary makes an election under this paragraph, distributions will be made in accordance with the life expectancy rule under sections 2.2 and 4.2 of Article VII of the plan.

Section 7. Election to Allow Designated Beneficiary Receiving Distributions Under 5-Year Rule to Elect Life Expectancy Distributions.

A designated beneficiary who is receiving payments under the 5-year rule may make a new election to receive payments under the life expectancy rule until December 31, 2003, provided that all amounts that would have been required to be distributed under the life expectancy rule for all distribution calendar years before 2004 are distributed by the earlier of December 31, 2003 or the end of the 5-year period.

This amendment is made an integral part of the aforesaid Plan and is controlling over the terms of said Plan with respect to the particular items addressed expressly therein. All other provisions of the Plan remain unchanged and controlling.

Unless otherwise stated on any page of this amendment, eligibility for benefits and the amount of any benefits payable to or on behalf of an individual who is an inactive participant on the effective date(s) stated above, shall be determined according to the provisions of the aforesaid Plan as in effect on the day before he became an inactive participant.

Signing this amendment, the Employer, as plan sponsor, has made the decision to adopt this plan amendment. The Employer is acting in reliance on its own discretion and on the legal and tax advice of its own advisors, and not that of any member of the Principal Financial Group or any representative of a member company of the Principal Financial Group.

	For the Employer,
	By: /S/ PAUL CHRISTENSEN
	Vice President Human Resources
	Business Title
	February 11, 2004
	Date
(4-49731)-1

GOOD FAITH COMPLIANCE AMENDMENT FOR THE

ECONOMIC GROWTH AND TAX RELIEF RECONCILIATION ACT OF 2001 (EGTRRA)

This amendment of the Plan is adopted to reflect certain provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA). This amendment is intended as good faith compliance with the requirements of EGTRRA and is to be construed in accordance with EGTRRA and guidance issued thereunder. Except as otherwise provided, this amendment shall be effective as of the first day of the first Plan Year beginning after December 31, 2001. This amendment shall continue to apply to the Plan, including the Plan as later amended, until such provisions are integrated into the Plan or the good faith compliance EGTRRA amendment provisions are specifically amended.

This amendment shall supersede the provisions of the Plan to the extent those provisions are inconsistent with the provisions of this amendment.

OSHKOSH B’ GOSH, INC. 401(k) PLAN

The Plan named above gives the Employer the right to amend it at any time. According to that right, the Plan is amended as follows:

INCREASE IN COMPENSATION LIMIT

For Plan Years beginning on and after January 1, 2002, the annual Compensation of each Participant taken into account for determining all benefits provided under the Plan for any determination period shall not exceed $200,000, as adjusted for increases in the cost-of-living in accordance with Code Section 401(a)(17)(B). The cost-of-living adjustment in effect for a calendar year applies to any determination period beginning in such calendar year.

If Compensation for any prior determination period is taken into account in determining a Participant’s contributions or benefits for the current Plan Year, the Compensation for such prior determination period is subject to the applicable annual compensation limit in effect for that determination period. For this purpose, in determining contributions or benefits in Plan Years beginning on or after January 1, 2002, the annual Compensation limit in effect for determination periods beginning before that date is $200,000.

LIMITATIONS ON CONTRIBUTIONS

Effective date. This section shall be effective for Limitation Years beginning after December 31, 2001.

Maximum Annual Addition. Except to the extent permitted in the Catch-up Contributions section of this amendment that provides for catch-up contributions under EGTRRA section 631 and Code Section 414(v), if applicable, the Annual Addition that may be contributed or allocated to a Participant’s Account under the Plan for any Limitation Year shall not exceed the lesser of:

$40,000, as adjusted for increases in the cost-of-living under Code Section 415(d), or

100 percent of the Participant’s Compensation, for the Limitation Year.

The compensation limitation referred to in (b) shall not apply to any contribution for medical benefits after separation from service (within the meaning of Code Section 401(h) or 419A(f)(2)) which is

otherwise treated as an Annual Addition.

ELECTIVE DEFERRALS — CONTRIBUTION LIMITATION

No Participant shall be permitted to have Elective Deferral Contributions, as defined in the EXCESS AMOUNTS Section, made under this Plan, or any other qualified plan maintained by the Employer, during any taxable year in excess of the dollar limitation contained in Code Section 402(g) in effect for such taxable year, except to the extent permitted in the Catch-up Contributions section of this amendment that provides for catch-up contributions under EGTRRA section 631 and Code Section 414(v), if applicable.

CATCH-UP CONTRIBUTIONS

Effective Date. This section shall apply to Contributions received after December 31, 2001.

Catch-up Contributions. All employees who are eligible to make Elective Deferral Contributions under this Plan and who have attained age 50 before the close of the Plan Year shall be eligible to make catch-up contributions in accordance with, and subject to the limitations of, Code Section 414(v), unless otherwise specified below. Such catch-up contributions shall not be taken into account for purposes of the provisions of the Plan implementing the required limitations of Code Sections 402(g) and 415. The Plan shall not be treated as failing to satisfy the provisions of the Plan implementing the requirements of Code Section 401(k)(3), 401(k)(11), 401(k)(12), 410(b), or 416, as applicable, by reason of the making of such catch-up contributions.

DIRECT ROLLOVERS OF PLAN DISTRIBUTIONS

Effective date. This section shall apply to distributions made after December 31, 2001. The provisions of the second modification of this section shall not apply if the Plan does not provide for hardship distributions. The provisions of the third modification of this section shall not apply if the Plan does not have after-tax employee contributions.

Modification of definition of Eligible Retirement Plan. For purposes of the DIRECT ROLLOVER Section, an Eligible Retirement Plan shall also mean an annuity contract described in Code Section 403(b) and an eligible plan under Code Section 457(b) which is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state and which agrees to separately account for amounts transferred into such plan from this Plan. The definition of Eligible Retirement Plan shall also apply in the case of a distribution to a surviving spouse, or to a spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in Code Section 414(p).

Modification of definition of Eligible Rollover Distribution to exclude hardship distributions. For purposes of the DIRECT ROLLOVER Section, any amount that is distributed on account of hardship shall not be an Eligible Rollover Distribution and the Distributee may not elect to have any portion of such a distribution paid directly to an Eligible Retirement Plan.

Modification of definition of Eligible Rollover Distribution to include after-tax employee contributions. For purposes of the DIRECT ROLLOVER Section, a portion of a distribution shall not fail to be an Eligible Rollover Distribution merely because the portion consists of after-tax employee

contributions which are not includible in gross income. However, such portion may be transferred only to an individual retirement account or individual retirement annuity described in Code Section 408(a) or (b), or to a qualified defined contribution plan described in Code Section 401(a) or 403(a) that agrees to separately account for amounts so transferred, including separately accounting for the portion of such distribution which is includible in gross income and the portion of such distribution which is not so includible.

ROLLOVERS FROM OTHER PLANS

The Plan will accept Participant Rollover Contributions and/or direct rollovers of distributions made after December 31, 2001 from the types of plans specified below beginning January 1, 2002. The Plan will accept all of the following sources of rollovers, unless otherwise specified in (a) below.

Direct Rollovers

The Plan will accept a direct rollover of an Eligible Rollover Distribution from:

     a qualified plan described in Code Section 401(a) or 403(a), including after-tax employee contributions.

     an annuity contract described in Code Section 403(b), excluding after-tax employee contributions.

     an eligible plan under Code Section 457(b) which is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state.

Participant Rollover Contributions from Other Plans

The Plan will accept a Participant contribution of an Eligible Rollover Distribution from:

     a qualified plan described in Code Section 401(a) or 403(a).

     an annuity contract described in Code Section 403(b).

     an eligible plan under Code Section 457(b) which is maintained by a state, political subdivision of a
          state, or any agency or instrumentality of a state or political subdivision of a state.

Participant Rollover Contributions from IRAs

The Plan will accept a Participant Rollover Contribution of the portion of a distribution from an individual retirement account or individual retirement annuity described in Code Section 408(a) or (b) that is eligible to be rolled over and would otherwise be includible in gross income.

The Plan will accept Participant Rollover Contributions and/or direct rollovers of distributions made after December 31, 2001 from the types of plans specified below beginning January 1, 2002. (Select any that apply.)

Direct Rollovers

The Plan will accept a direct rollover of an Eligible Rollover Distribution from:

a qualified plan described in Code Section 401(a) or 403(a), excluding after-tax employee contributions. (Cannot select if (i) is selected.)

an annuity contract described in Code Section 403(b), excluding after-tax employee contributions.

REPEAL OF MULTIPLE USE TEST

The multiple use test described in Treasury Regulation section 1.401(m)-2 and the EXCESS AMOUNTS Section shall not apply for Plan Years beginning after December 31, 2001.

DISTRIBUTION UPON SEVERANCE FROM EMPLOYMENT

Effective date. This section shall apply for distributions due to severance from employment occurring after December 31, 2001 and distributions that are processed after December 31, 2001 regardless of when the severance from employment occurred.

New distributable event — Distribution Upon Severance From Employment. A Participant’s Elective Deferral Contributions, Qualified Nonelective Contributions, if any, Qualified Matching Contributions, if any, and earnings attributable to these Contributions shall be distributed on account of the Participant’s severance from employment. However, such a distribution shall be subject to the other provisions of the Plan regarding distributions, other than provisions that require a separation from service before such amounts may be distributed.

SUSPENSION PERIOD FOLLOWING HARDSHIP DISTRIBUTION

The suspension period following a hardship distribution will be decreased, unless otherwise specified in (a) below. A Participant who receives a distribution of elective deferrals after December 31, 2001, on account of hardship shall be prohibited from making elective deferrals and participant contributions under this and all other plans of the Employer for six months after receipt of the distribution. A Participant who receives a distribution of elective deferrals in calendar year 2001 on account of hardship shall be prohibited from making elective deferrals and participant contributions under this and all other plans of the Employer for six months after receipt of the distribution or until January 1, 2002, if later.

MODIFICATION OF TOP-HEAVY RULES

Effective date. This section shall apply for purposes of determining whether the Plan is a Top-heavy Plan for Plan Years beginning after December 31, 2001, and whether the Plan satisfies the minimum benefits requirements of Code Section 416(c) for such years. This section amends the Top-heavy Plan Requirements Article of the Plan.

Determination of top-heavy status.

Key Employee means any Employee or former Employee (and the Beneficiaries of such Employee) who at any time during the determination period was:

a)	an officer of the Employer if such individual’s annual Compensation is more than $130,000 (as adjusted under Code Section 416(i)(1) for Plan Years beginning after December 31, 2002),
b)	a 5-percent owner of the Employer, or
c)	a 1-percent owner of the Employer who has annual Compensation of more than $150,000.

The determination period is the Plan Year containing the Determination Date.

The determination of who is a Key Employee shall be made according to Code Section 416(i)(1) and the applicable regulations and other guidance of general applicability issued thereunder.

Determination of present values and amounts. This section shall apply for purposes of determining the present values of accrued benefits and the amounts of account balances of Employees as of the Determination Date.

Distributions during year ending on the Determination Date. The present values of accrued benefits and the amounts of account balances of an Employee as of the Determination Date shall be increased by the distributions made with respect to the Employee under the Plan and any plan aggregated with the Plan under Code Section 416(g)(2) during the one-year period ending on the Determination Date. The preceding sentence shall also apply to distributions under a terminated plan which, had it not been terminated, would have been aggregated with the Plan under Code Section 416(g)(2)(A)(i). In the case of a distribution made for a reason other than separation from service, death, or disability, this provision shall be applied by substituting “five-year period” for “one-year period.”

Employees not performing services during year ending on the Determination Date. The accrued benefits and accounts of any individual who has not performed services for the Employer during the one-year period ending on the Determination Date shall not be taken into account.

Minimum benefits.

Matching contributions. Employer matching contributions shall be taken into account for purposes of satisfying the minimum contribution requirements of Code Section 416(c)(2) and the Plan. The preceding sentence shall apply with respect to Matching Contributions under the Plan or, if the Plan provides that the minimum contribution requirement shall be met in another plan, such other plan. Employer matching contributions that are used to satisfy the minimum contribution requirements shall be treated as matching contributions for purposes of the actual contribution percentage test and other requirements of Code Section 401(m).

Contributions under other plans. The Employer may provide in the Plan that the minimum benefit requirement shall be met in another plan (including another plan that consists solely of a cash or deferred arrangement which meets the requirements of Code Section 401(k)(12) and matching contributions with respect to which the requirements of Code Section 401(m)(11) are met).

PLAN LOANS FOR OWNER-EMPLOYEES AND SHAREHOLDER EMPLOYEES

Effective for plan loans made after December 31, 2001, plan provisions prohibiting loans to any shareholder-employee or Owner-employee shall cease to apply.

This amendment is made an integral part of the aforesaid Plan and is controlling over the terms of said Plan with respect to the particular items addressed expressly therein. All other provisions of the Plan remain unchanged and controlling.

Unless otherwise stated on any page of this amendment, eligibility for benefits and the amount of any

benefits payable to or on behalf of an individual who is an Inactive Participant on the effective date(s) stated above, shall be determined according to the provisions of the aforesaid Plan as in effect on the day before he became an Inactive Participant.

Signing this amendment, the Employer, as plan sponsor, has made the decision to adopt this plan amendment. The Employer is acting in reliance on its own discretion and on the legal and tax advice of its own advisors, and not that of any member of the Principal Financial Group or any representative of a member company of the Principal Financial Group.

Signed this 31 day of December  , 2003.

For the Employer

By /S/ DAVID L. OMACHINSKI

Title Exec VP, COO, CFO & Treasurer

AMENDMENT TO ADD TRANSACTION PROCESSING SECTION

OSHKOSH B’GOSH, INC. 401(K) PLAN

The Plan named above gives the Employer the right to amend it at any time. According to that right, the Plan is amended effective as of the signature date below, as follows:

By adding to the Table of Contents the following Section 9.08:

Section 9.08 —— Transaction Processing

By adding the following Section 9.08 to Article IX:

SECTION 9.08—TRANSACTION PROCESSING.

Transactions (including, but not limited to, investment directions, trades, loans, and distributions) shall be processed as soon as administratively practicable after proper directions are received from the Participant or such other parties. No guarantee is made by the Plan, Plan Administrator, Trustee,

Insurer, or Employer that such transactions will be processed on a daily or other basis, and no guarantee is made in any respect regarding the processing time of such transactions.

Notwithstanding any other provision of the Plan, the Employer, the Plan Administrator, or the Trustee reserves the right to not value an investment option on any given Valuation Date for any reason deemed appropriate by the Employer, the Plan Administrator, or the Trustee. Administrative practicality will be determined by legitimate business factors (including, but not limited to, failure of systems or computer programs, failure of the means of the transmission of data, force majeure, the failure of a service provider to timely receive values or prices, and correction for errors or omissions or the errors or omissions of any service provider) and in no event will be deemed to be less than 14 days. The processing date of a transaction shall be binding for all purposes of the Plan and considered the applicable Valuation Date for any transaction.

This amendment is made an integral part of the aforesaid Plan and is controlling over the terms of said Plan with respect to the particular items addressed expressly herein. All other provisions of the Plan remain unchanged and controlling.

Unless otherwise stated on any page of this amendment, eligibility for benefits and the amount of any benefits payable to or on behalf of an individual who is an Inactive Participant on the effective date(s) stated above, shall be determined according to the provisions of the aforesaid Plan as in effect on the day before he became an Inactive Participant.

Signed this 31 day of December   , 2003.

For the Employer

By /S/ DAVID L. OMACHINSKI

Title Exec VP, COO, CFO & Treasurer

AMENDMENT NO. 1

OSHKOSH B’GOSH, INC. 401(K) PLAN

The Plan named above gives the Employer the right to amend it at any time. According to that right, the Plan is amended as follows:

Effective as of January 1, 2004,

By adding the following to the DEFINITIONS SECTION of Article I:

Allocation Group means the designated groups of Employees for purposes of determining separate Discretionary Contributions in the EMPLOYER CONTRIBUTIONS SECTION of Article III. For this purpose the groups shall be as follows:

(a)	Group 1 – Eligible non-highly compensated Participants
(b)	Group 2 – Eligible highly compensated Participants

By striking the second paragraph from the Eligible Employee definition in the DEFINITIONS SECTION of Article I and substituting the following:

Eligible Employee means any Employee of the Employer, for purposes of Discretionary Contributions, who meets the following requirement. His employment classification with the Employer is all of the following:

Salaried class (pays social security and employed in classification codes 220, 750, 840 and 850.)

Nonbargaining class. Not represented for collective bargaining purposes by any collective bargaining agreement between the Employer and employee representatives, if retirement benefits were the subject of good faith bargaining and if two percent or less of the Employees who are covered pursuant to that agreement are professionals as defined in section 1.410(b)-9 of the regulations. For this purpose, the term “employee representatives” does not include any organization more than half of whose members are Employees who are owners, officers, or executives of the Employer.

Not a nonresident alien, within the meaning of Code Section 7701(b)(1)(B), who receives no earned income, within the meaning of Code Section 911(d)(2), from the Employer which constitutes income from sources within the United States, within the meaning of Code Section 861(a)(3), or who receives such earned income but it is all exempt from income tax in the United States under the terms of an income tax convention.

Not a Leased Employee.

Not an Employee considered by the Employer to be an independent contractor, or

the employee of an independent contractor, who is later determined by the Internal Revenue Service to be an Employee.

Not a Highly Compensated Employee who works at the New York Design Studio or who is performing services outside of the United States under an expatriate assignment.

By striking subparagraph (c) from the EMPLOYER CONTRIBUTIONS SECTION of Article III and substituting the following:

(c)

Discretionary Contributions may be made for each Plan Year for each Allocation Group in an amount determined by the Employer. The Employer shall notify the Plan Administrator in writing of the amount of Discretionary Contributions, if any, determined for each Allocation Group. In no event shall the percentage of Annual Compensation allocated under Step Two of the ALLOCATION SECTION of this article for Group 2 exceed the percentage of Annual Compensation allocated thereunder for Group 1.

Discretionary Contributions are subject to the Vesting Percentage .

By striking the fourth paragraph from the ALLOCATION SECTION of Article III and substituting the following:

     Discretionary Contributions determined for an Allocation Group shall be allocated as of the last day of the Plan Year using Annual Compensation for the Plan Year. The amount allocated shall be determined as follows:

STEP ONE: This step one shall only apply in years in which the Plan is a Top-heavy Plan, as defined in the DEFINITIONS SECTION of Article XI, and the minimum contribution under the MODIFICATION OF CONTRIBUTIONS SECTION of Article XI is not being provided by other contributions to this Plan or another plan of the Employer.

The allocation in this step one shall be made to each person meeting the allocation requirements of this section and each person who is entitled to a minimum contribution under the MODIFICATION OF CONTRIBUTIONS SECTION of Article XI. Each such person’s allocation shall be an amount equal to the Discretionary Contributions determined for the Allocation Group multiplied by the ratio of such person’s Annual Compensation to the total Annual Compensation of all such persons in the Allocation Group. Such amount shall not exceed 3% of such person’s Annual Compensation. The allocation for any person who does not meet the allocation requirements of this section shall be limited to the amount necessary to fund the minimum contribution.

STEP TWO: The allocation in this step two shall be made to each person meeting the allocation requirements of this section. Each such person’s allocation shall be equal to any amount remaining after the allocation in step one multiplied by the ratio of such person’s Annual Compensation to the total Annual Compensation of all such persons in the Allocation Group.

This amount shall be credited to the person’s Account.

Effective as of January 1, 2005,

By adding the following to the DEFINITIONS SECTION of Article I:

Quarterly Date means each Yearly Date and the third, sixth, and ninth Monthly Date after each Yearly Date which is within the same Plan Year.

By adding the following as the third paragraph of subparagraph (a) of the ACTIVE PARTICIPANT SECTION of Article II:

For purposes of all Employees hired after December 31, 2004, an Employee shall first become an Active Participant (begin active participation in the Plan) on the earliest Quarterly Date on which he is an Eligible Employee and has met both of the eligibility requirements set forth below. This date is his Entry Date.

(1)	He has completed one year of Eligibility Service before his Entry Date.
(2)	He is age 21 or older.

By adding the following as the third paragraph of subparagraph (a) of the EMPLOYER CONTRIBUTIONS SECTION of Article III:

The Plan provides for an automatic election to have Elective Deferral Contributions made. The automatic Elective Deferral Contribution shall be 2% of Compensation. The Participant may affirmatively elect a different percentage or elect not to make Elective Deferral Contributions. If the Participant elects a different percentage, such percentage must comply with any limitations otherwise provided in the Plan.

By adding the following as the last sentence of the first paragraph of subparagraph (b) of the EMPLOYER CONTRIBUTIONS SECTION of Article III:

The Employer reserves the right to use a different formula for determining the percentage of Elective Deferral Contributions matched, if any, for retail store Employees who are hired or rehired after December 31, 2004, than it uses for all other Employees.

By adding the following as the third paragraph of the EMPLOYER CONTRIBUTIONS SECTION of Article III:

     The Plan provides for an automatic election to have Elective Deferral Contributions made. Such automatic election shall apply when a Participant first becomes eligible to make Elective Deferral Contributions (or again becomes eligible after a period during which he was not an Active Participant). The automatic election shall also apply to all Active Participants as of January 1, 2005, who have not elected to make Elective Deferral Contributions. The Participant shall be provided a notice that explains the automatic election and his right to elect a different rate of Elective Deferral

Contributions or no Elective Deferral Contributions. The notice shall include the procedure for exercising that right and the timing for implementing any such election. The Participant shall be given a reasonable period thereafter to elect a different rate of Elective Deferral Contributions or no Elective Deferral Contributions.

This amendment is made an integral part of the aforesaid Plan and is controlling over the terms of said Plan with respect to the particular items addressed expressly herein. All other provisions of the Plan remain unchanged and controlling.

Unless otherwise stated on any page of this amendment, eligibility for benefits and the amount of any benefits payable to or on behalf of an individual who is an Inactive Participant on the effective date(s) stated above, shall be determined according to the provisions of the aforesaid Plan as in effect on the day before he became an Inactive Participant.

Signing this amendment, the Employer, as plan sponsor, has made the decision to adopt this plan amendment. The Employer is acting in reliance on its own discretion and on the legal and tax advice of its own advisors, and not that of any member of the Principal Financial Group or any representative of a member company of the Principal Financial Group.

Signed this 14th day of December, 2004.

OSHKOSH B’GOSH, INC.
By:	/S/ MICHAEL L. HEIDER
	Michael L. Heider
	Vice President Finance, Treasurer and
	Chief Financial Officer
OSHKOSH B’GOSH RETAIL, INC.
By:	/S/ PAUL CHRISTENSEN
	Paul Christensen
	Assistant Secretary
OBG PRODUCT DEVELOPMENT AND SALES, INC.
By:	/S/ PAUL CHRISTENSEN
	Paul Christensen
	Assistant Secretary
OBG DISTRIBTION COMPANY, LLC
By:	/S/ MICHAEL L. HEIDER
	Michael L. Heider
	Vice President Finance, Treasurer and
	Chief Financial Officer
OBG MANUFACTURING COMPANY
By:	/S/ MICHAEL L. HEIDER
	Michael L. Heider
	Vice President Finance, Treasurer and
	Chief Financial Officer

EX-10.1

exv10w1

EX-10.2

Exhibit 10.2

OSHKOSH B’GOSH, INC.
PENSION PLAN

As Amended and Restated on November 6, 2001

With Amendment effective as of December 31, 2002

Generally Effective: January 1, 1998 (unless otherwise stated)

TABLE OF CONTENTS

		Page
INTRODUCTION			1
CHAPTER I	DEFINITIONS		1
CHAPTER 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
CHAPTER III	CONTRIBUTIONS		10
3.01	Employer Contributions		10
3.02	Funding Policy		11
3.03	Employee Contributions		11
CHAPTER IV	RETIREMENT BENEFITS		11
4.01	Normal Retirement Benefit		11
4.02	Early Retirement		12
4.03	Late Retirement		12
4.04	Non-Duplication of Benefit		13
4.05	Re-Employment		13
CHAPTER V	BENEFIT LIMITATIONS		13
5.01	Definitions		13
5.02	General Limitations		15
5.03	Less Than 10 Years		16
5.04	Limitations if Participant in Other Plan(s)		16
CHAPTER VI	PRE-RETIREMENT DEATH BENEFITS		17
6.01	Death Benefits		17
6.02	Death Benefit Limitations		17
6.03	Pre-Retirement Death Benefit for Surviving Spouse; Post-Retirement Death Benefits		17
CHAPTER VII	OTHER TERMINATION AND VESTING		17
7.01	Full Vesting Dates		17
7.02	Vesting Schedule		17
7.03	Commencement of Benefits		18
7.04	Forfeiture		18
7.05	Resumption of Participation		18

TABLE OF CONTENTS
(continued)

		Page
CHAPTER VIII	PAYMENT OF BENEFITS		18
8.01	Commencement of Benefits		18
8.02	Automatic Joint and Survivor Benefits		19
8.03	Optional Forms of Payment		20
8.04	Incidental Death Benefits		21
8.04A	New Minimum Distribution Regulations		22
8.05	Transfers		22
8.06	No Other Benefits		22
8.07	Direct Rollover		22
CHAPTER IX	DESIGNATION OF BENEFICIARY		24
9.01	Beneficiary Designation; Election of Non-Spouse Beneficiary		24
9.02	Priority If No Designated Beneficiary		25
CHAPTER X	TOP-HEAVY PROVISIONS		25
10.01	Provisions Will Control		25
10.02	Definitions		25
10.03	Minimum Accrued Benefit		28
10.04	Adjustment for Benefit Form Other Than Life Annuity		29
10.05	Nonforfeitability of Minimum Accrued Benefit		29
10.06	Minimum Vesting Schedules		29
10.07	Compensation Limitation		29
CHAPTER XI	AMENDMENT OF THE PLAN		30
11.01	Amendment by Employer		30
11.02	Conformance to Law		30
11.03	Merger, Consolidation, or Transfer		31
CHAPTER XII	TERMINATION OF THE PLAN		31
12.01	Right to Terminate		31
12.02	Termination Priorities		31
12.03	Reversion to Employer		32
12.04	Subsequent Benefit Payments		32
CHAPTER XIII	CLAIMS PROCEDURE		32
13.01	Written Claim		32
13.02	Claim Denial		32
13.03	Request for Review of Denial		33
13.04	Decision on Review		33
13.05	Additional Time		33

ii

TABLE OF CONTENTS
(continued)

		Page
CHAPTER XIV	CONTRIBUTION AND BENEFIT LIMITS TO HIGH PAID EMPLOYEES		33
14.01	When Applicable		33
14.02	Limitations		33
14.03	Limitations if Plan Amended		34
14.04	Alternate Limitations		34
CHAPTER XV	MISCELLANEOUS PROVISIONS		35
15.01	Reversion of Assets		35
15.02	Equitable Adjustment		35
15.03	Reasonable Compensation		35
15.04	Indemnification		35
15.05	Protection From Loss		35
15.06	Protection From Liability		36
15.07	Adoption of Rules and Procedures		36
15.08	Assignment of Benefits		36
15.09	Mental Competency		36
15.10	Authentication		37
15.11	Not an Employment Contract		37
15.12	Appointment of Auditor		37
15.13	Uniform Treatment		37
15.14	Interpretation		37
15.15	Plural and Gender		37
15.16	Headings		37
15.17	Expenses		37
15.18	Prevention of Escheat		37
15.19	Special Provisions Respecting Military Service		38
15.20	Participation of Affiliated Employers		38
CHAPTER XVI	EGTRRA PROVISIONS		38
16.01	Adoption and Effective Date of Amendment		38
16.02	Supersession of Inconsistent Provisions		38
16.03	Increase in Compensation Limit		38
16.04	Modification of Top-Heavy Rules		39
16.05	Direct Rollovers of Plan Distributions		40

iii

INTRODUCTION

     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 either 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 I

DEFINITIONS

     1.01 Unless the context requires otherwise, the capitalized terms defined below will have the following meanings throughout this Plan when capitalized:

     (a) Accrued Benefit means a Participant’s Normal Retirement Benefit earned under the Plan payable at a Participant’s Normal Retirement Date based on his Years of Benefit Service and monthly Compensation up to the date for which the Accrued Benefit is being determined.

     Unless otherwise provided under the Plan, each Section 401(a)(17) employee’s Accrued Benefit under this Plan will be the greater of the Accrued Benefit determined for the employee under (1) or (2) below:

     (1) the employee’s Accrued Benefit determined with respect to the benefit formula applicable for the Plan Year beginning on or after January 1, 1994, as applied to the employee’s total years of service taken into account under the Plan for the purposes of benefit accruals, or

     (2) the sum of:

     a. the employee’s Accrued Benefit as of the last day of the last Plan Year beginning before January 1, 1994, frozen in accordance with Section 1.401(a)(4)-13 of the regulations, and

     b. the employee’s Accrued Benefit determined under the benefit formula applicable for the Plan Year beginning on or after January 1, 1994, as applied to the employee’s years of service credited to the employee for the Plan Years beginning on or after January 1, 1994, for purposes of benefit accruals.

     A Section 401(a)(17) employee means an employee whose current Accrued Benefit as of a date on or after the first day of the first Plan Year beginning on or after January 1, 1994, is based on Compensation for a year beginning prior to the first day of the first Plan Year beginning on or after January 1, 1994, that exceeded $150,000.

     (b) Actuary is any person or firm selected by the Employer (as provided by applicable law) to make calculations required by law or otherwise desired to be made under the Plan. The Actuary is also responsible for calculating the Actuarial Equivalents required by the Plan in accordance with generally accepted actuarial principles. An Actuary may be removed by the Employer or resign at any time by written notice.

     (c) Actuarial Equivalent. Two benefits are said to be Actuarial Equivalents if they have the same present value as determined by the Actuary in accordance with

generally accepted actuarial principles applied in a uniform and nondiscriminatory manner. The actuarial assumptions to be used in determining Actuarial Equivalents are as follows:

     (1) For purposes of the small amount cash-out provision of Section 8.01 (relating to amounts not in excess of $3,500, changing to $5,000 on January 1, 2002) and for purposes of any lump sum payment which may become due because of the pre-retirement death of the Participant, the actuarial assumptions to be used shall be the “applicable mortality table” and the “applicable interest rate.” The term “applicable mortality table” means the table prescribed by the IRS from time to time under Section 417(e)(3) of the Code. The term “applicable interest rate” means the annual rate of interest on 30-year Treasury securities as published by the IRS for the second full calendar month preceding the calendar month that contains the annuity starting date (distribution date). However, at any time on or after July 1, 1998, the single sum distribution payable under such small account cash-out provision or because of the pre-retirement death of the Participant must be no less than the single sum distribution calculated using the Unisex Pension 1984 Mortality Table and an interest rate of 5.5%, based upon the Participant’s Accrued Benefit under the Plan through June 30, 1997 and based upon the Participant’s age on the annuity starting date (distribution date) or the date of death.

     (2) For purposes of any lump sum payment under the provisions of Section 8.03(d), excluding only any lump sum payment which may become due because of the pre-retirement death of the Participant, the actuarial assumptions to be used shall be the “applicable mortality table” and the “applicable interest rate,” as such terms are defined in subsection (1) above.

     (3) For purposes of optional forms of payment, in circumstances other than those covered by the special rules set forth in paragraphs (1) and (2) above, the actuarial assumptions to be used are the Unisex Pension 1984 Mortality Table and 5.5% interest; provided, however, that in no event may the interest rate exceed the PBGC rates in effect at the date of distribution.

     (4) For purposes of the benefit increase covered in Plan Section 4.03, the actuarial assumptions to be used are the Unisex Pension 1984 Mortality Table and 5.5% interest; provided, however, that in no event may the interest rate exceed the PBGC rates in effect at the date of distribution.

     (d) Affiliated Employer. Affiliated Employer means each corporation which is included as a member of a controlled group with the Employer, and trades and 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. Further, the term shall include any members of the same “affiliated service group” within the meaning of Code Section 414(m) and any other entity required to be aggregated with the Employer under Code Section 414(o).

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     (e) Annuity Starting Date means the first day of the first period for which an amount is payable as an annuity or in any other form, all as provided in Section 417(f) of the Code and regulations thereunder.

     (f) Beneficiary is the person or entity designated in Chapter IX to receive any death benefits of a Participant which become payable under the Plan.

     (g) 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 means a Plan Year in which the Employee does not complete an aggregate of more than 500 Hours of Service with the Employer or Affiliated Employers.

     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.

     Special provisions with respect to military service are contained in Section 15.19 hereof.

     (h) Code means the Internal Revenue Code of 1986, as amended and as it may be amended.

     (i) Committee is the organization appointed by the Board of Directors of the Employer (which may name itself as the Committee) for purposes of overseeing the administration of the Plan, and performing any other duties specified in this Plan. A Committee member may resign or be removed at any time by the Board of Directors of the Employer by written notice. To assist it in its duties, the Committee may employ agents or legal counsel.

     Any such Committee may in its regulations or by action delegate the authority to any one or more of its members to take any action on behalf of the Committee and as to such actions, no meetings or unanimous consent shall be required. The Committee may also act at a meeting or by its unanimous written consent. A majority of the members of the Committee shall constitute a quorum for the transaction of business and shall have full power to act hereunder. All decisions shall be made by vote of the majority present at any meeting at which a quorum is present, except for actions in writing without a meeting which must be unanimous. The Committee may appoint a Secretary who may, but need not, be a member of the Committee. The Committee may adopt such bylaws and regulations as it deems desirable for the conduct of its affairs. Any absent Committee member, and any dissenting Committee member who (at the time of the making of any decision by the majority) registers his dissent in writing delivered at that time to the other Committee members, shall be immune to the fullest extent permitted by law from any and all liability occasioned by or resulting from the decision of the majority. All rules and decisions of the Committee shall be uniformly and consistently applied to all persons in similar circumstances. The Committee shall be entitled to rely upon the records of the Employer or any Affiliated Employer as to information pertinent

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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.

     (j) Compensation is the quotient of 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 a Participating Employer to the extent that the amounts are includable in gross income (or such Compensation paid or accrued for Plan Years prior to January 1, 1991), and including any elective contributions not otherwise includable in income under a Code Section 125 cafeteria plan or Section 401(k) plan, but excluding reimbursements or other allowances, fringe benefits (cash and noncash, including, without limitation, any income arising in connection with any stock options, restricted stock or other equity based incentives relating to stock of the Employer), moving expenses, deferred compensation and welfare benefits, divided by 12 (or the number of actual completed calendar months for purposes of the first or last Plan Years of employment).

     Effective as of January 1, 2001, for Employees who are salespersons receiving any commissions during the Plan Year, no more than $50,000 of Compensation while so employed (as adjusted under Code Section 414(q)(1)(C); $54,480 in 1989, $56,990 in 1990, $60,535 in 1991, $62,345 in 1992, $64,245 in 1993, and $66,000 in 1994, 1995 and 1996, and changing for 1997 to the limit represented in Code Section 414(q)(1)(B) which was $80,000, and as adjusted thereafter) will be used for purposes of determining benefits under the Plan. This restriction shall not apply to national account executives or sales employees with a security code classification of 710.

     Notwithstanding any provision of the Plan to the contrary, prior to January 1, 1989, “Compensation” will be determined under the terms of the Plan then in effect; provided, however, that with respect to any Employee with an Hour of Service after December 31, 1988, a special rule will apply. For any given Plan Year commencing on or after January 1, 1989, if such Employee is not a “Highly Compensated Employee” (within the meaning of Code Section 414(q)) during such Plan Year, then the five year average monthly Compensation will be determined without regard to (i) the adjusted $50,000 limit provided above, and (ii) the Compensation limitations that were applicable to salespersons under the terms of the Plan as in effect prior to January 1, 1989, for each prior Plan Year during which the Employee was not a Highly Compensated Employee.

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     However, for any Plan Year beginning after December 31, 1988, Compensation in excess of $200,000 (as adjusted as permitted under Code Section 401(a)(17) from time to time) shall be disregarded.

     In addition to other applicable limitations set forth in the Plan, and notwithstanding any other provision of the Plan to the contrary, for Plan Years beginning on or after January 1, 1994, the annual Compensation of each employee taken into account under the plan shall not exceed the OBRA ‘93 annual compensation limit. The OBRA ‘93 annual compensation limit is $150,000, as adjusted by the Commissioner for increases in the cost of living in accordance with Section 401(a)(17)(B) of the Internal Revenue Code. The cost-of-living adjustment in effect for a calendar year applies to any period, not exceeding 12 months, over which compensation is determined (determination period) beginning in such calendar year. If a determination period consists of fewer than 12 months, the OBRA ‘93 annual compensation limit will be multiplied by a fraction, the numerator of which is the number of months in the determination period, and the denominator of which is 12.

     For Plan Years beginning on or after January 1, 1994, any reference in this plan to the limitation under Section 401(a)(17) of the Code shall mean the OBRA ‘93 annual compensation limit set forth in this provision.

     If Compensation for any prior determination period is taken into account in determining an Employee’s benefits accruing in the current Plan Year, the Compensation for that prior determination period is subject 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 of the first Plan Year beginning on or after January 1, 1994, the OBRA ‘93 annual compensation limit is $150,000.

     However, for special rules with respect to the application of increases in Compensation limits due to EGTRRA, reference is made to Section 16.03 of the Plan.

     (k) 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 an Affiliated 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 Break in Service.

     (l) Disability is any impairment which arises before a Participant’s termination of employment with the Employer or an Affiliated Employer 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 an Affiliated Employer. Determination of such Disability will be made by a physician selected by the Committee.

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     (m) Early Retirement occurs on the first day of any month coinciding with or next following the Early Retirement Date of a Participant in which he incurs a Termination of Employment, provided he has not then attained his Normal Retirement Date.

     (n) Early Retirement Date is the date on which the Participant has attained the age of 60 and completed 5 years of Vesting Service.

     (o) Effective Date of the Plan is January 1, 1947. The Effective Date of this amendment and restatement is January 1, 1998, unless otherwise provided herein.

     (p) Employee is any person employed directly by the Employer or an Affiliated Employer and for whom the Employer or an Affiliated Employer pays Social Security taxes and who in each case is not excluded by the provisions of Section 2.03 hereof relating to collective bargaining employees. “Leased employees” as defined in Code Section 414(n) shall not be eligible to participate in the Plan although it is recognized that such leased employees, if any, must be treated as employees of the Employer or an Affiliated Employer for purposes of certain nondiscrimination, coverage, and other rules under the Code. Also excluded is any person who is classified by the Employer or an Affiliated Employer as other than as an Employee, for the entire period of such classification, without regard to any subsequent reclassification which may occur by operation of law or otherwise.

     It is recognized that the definition of an eligible “Employee” was significantly expanded as to certain classes of Employees (the “Newly Included Group”) by amendment to this Plan effective as of January 1, 1989. Notwithstanding any other provisions of this Plan, individuals in the Newly Included Group shall have all past periods of service with the Employer counted as Years of Eligibility and Vesting Service for purposes of this Plan. Such past service shall also be counted as Years of Benefit Service for purposes of this Plan, except for Years covered under another private defined benefit pension plan sponsored by the Employer.

     (q) Employer is OshKosh B’Gosh, Inc. and any successor corporation by merger, purchase, or otherwise.

     (r) Employment Year means a 12-month period following an Employee’s most recent Date of Employment.

     (s) Hours of Service means any of the following hours (assuming a 190 hour month for any Employee not employed on an hourly basis who works one hour during the month):

     (1) Each hour for which an Employee is 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 paid, or entitled to payment, by the Employer on account of a period of time during which no duties are

6

performed (irrespective of whether the employment relationship has terminated) due to vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty or leave of absence. No more than 501 Hours of Service will be credited under this paragraph for a single computation period (whether or not the period occurs in a single computation period). Hours under this paragraph will be calculated and credited pursuant to Section 2530.200b-2 of the Department of Labor Regulations which are incorporated herein by this reference; and

     (3) Each hour for which back pay, irrespective of mitigation of damages, is either awarded or agreed to by the Employer. The same Hours of Service will not be credited both under (1) or (2) above, as the case may be, and under this definition (3). These hours will be credited to the Employee for the computation period or periods to which the award or agreement pertains rather than the computation period in which the award, agreement, or payment is made.

     For purposes of determining whether a One Year Break in Service has occurred for participation and vesting purposes, 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 or (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 workday during the leave. Provided, however, the total number of Hours of Service required by this paragraph to be treated as completed for any period shall not exceed 501. The Hours of Service to be credited under this Section 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.

     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.

     Hours of Service attributable to employment with the Employer and any Affiliated Employer shall be counted for all purposes of this Plan, except for the determination of Years of Benefit Service under Section 1.01(ii), which credits only Hours of Service accrued while an Employee in the service of a Participating Employer.

     (t) Joint and Survivor Annuity is an annuity for the life of the Participant, with a survivor annuity for the life of a Participant’s spouse which is 50% of the amount

7

of the annuity payable for the life of the Participant and which is the Actuarial Equivalent of the Normal Form of Benefit.

     (u) Non-Vested or Forfeited means that portion of a benefit to which a Participant would not be entitled under Section 7.02 if he incurred a Termination of Employment.

     (v) Normal Form of Benefit is a benefit payable monthly for the life of a Participant with no benefits payable to a Beneficiary upon the Participant’s death.

     (w) Normal Retirement Date is the first of the month coinciding with or next following the Participant’s attainment of age 65. A Participant will be fully Vested at age 65.

     (x) Normal Retirement Benefit is the monthly benefit described in Section 4.01 payable beginning the first of the month following the Normal Retirement Date.

     (y) Participant is an Employee who has met the eligibility requirements of Chapter II.

     (z) Participating Employer means the Employer and any Affiliated Employer authorized by the Employer to participate in this Plan, by extending the same to such Affiliated Employer’s eligible Employees.

     (aa) Plan means the OshKosh B’Gosh, Inc. Pension Plan as it may be amended from time to time.

     (bb) Plan Administrator is OshKosh B’Gosh, Inc.

     (cc) Plan Year is January 1 to December 31.

     (dd) Termination of Employment of an Employee for purposes of the Plan shall be deemed to occur upon his resignation, discharge, retirement, death, disability, failure to return to active work at the end of an authorized leave of absence, or the authorized extension or extensions thereof, failure to return to work when duly called following a temporary layoff, failure to return from military service within the time prescribed by any law protecting employment rights, or upon the happening of any other event or circumstance, which, under the policy of the Employer or an Affiliated Employer, as in effect from time to time, results in the termination of the employer/employee relationship.

     (ee) Trust means the OshKosh B’Gosh, Inc. Pension Trust as it may be amended from time to time.

     (ff) Trustee is the person(s), corporation, or combination thereof, and any duly appointed successor or successors, named as Trustee in the Trust document.

8

     (gg) 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.

     (hh) Vested is that portion of an Accrued Benefit to which a Participant has a nonforfeitable right.

     (ii) Year of Benefit Service for an Employee means a Plan Year during which he completes at least 1,000 Hours of Service in the employ of a Participating Employer. In the event that a Participant is not employed for the entire Plan Year, a partial Year of Benefit Service will be earned as follows:

Number of Hours of Service
During a Plan Year	Year of Benefit Service
1,000 or more		1.0
900 but less than 1,000		.9
800 but less than 900		.8
700 but less than 800		.7
600 but less than 700		.6
500 but less than 600		.5
400 but less than 500		.4
300 but less than 400		.3
200 but less than 300		.2
100 but less than 200		.1
less than 100		0

     Years of Benefit Service prior to January 1, 1984 will be determined according to the provisions of the Plan in effect prior to January 1, 1984.

     Effective January 1, 1991, Employees at the Employer’s McEwen facility who become Participants under Section 2.01 may earn a Year of Benefit Service or a partial Year of Benefit Service under the above definition.

     (jj) 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 compete 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.

     (kk) Year of Vesting Service is any Plan Year, starting with the Plan Year in which an Employee is hired by the Employer or an Affiliated Employer during which such Employee completes at least 1,000 Hours of Service.

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CHAPTER II

ELIGIBILITY AND PARTICIPATION

     2.01 Eligibility. On and after January 1, 1989, each Employee of a Participating Employer will become a Participant in the Plan the first of the month coincident with or next following:

     (a) his attainment of at least age 21; and

     (b) his completion of one Year of Eligibility Service.

     Effective May 21, 1991, this Plan is merged with the OshKosh B’Gosh, Inc. McEwen Hourly Employees’ Pension Plan (the “McEwen Plan”). Employees participating in the McEwen Plan on May 20, 1991, will become Participants in this Plan on May 21, 1991. Otherwise, Employees at the McEwen facility will become Participants in this Plan as provided in this Section 2.01.

     2.02 Re-Employment. Notwithstanding the provisions of Section 2.01, any Participant who terminated employment with a Participating 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 a Participating Employer is a party will not be eligible to participate in this Plan unless that collective bargaining agreement specifically provides for coverage of such Employees under this Plan.

     2.04 Change in Participant Status. In the event a Participant is no longer a member of the eligible class of Employees and becomes ineligible to participate, such employee will participate immediately upon returning to the 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 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

     3.01 Employer Contributions. Upon advice from the Actuary, the Participating Employers will contribute from time to time amounts sufficient to fund the benefits under the Plan and Trust. Such contributions will be paid over to the Trustees of the Trust Fund. To the extent any contributions are not deductible under Code Section 404, such contributions shall be returned to the Participating Employers.

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     3.02 Funding Policy. In order to implement and carry out the provisions of the Plan and 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.

     3.03 Employee Contributions. Employee contributions are not permitted under this Plan.

CHAPTER IV

RETIREMENT BENEFITS

     4.01 Normal Retirement Benefit.

     (a) A Participant who retires from a Participating Employer on his Normal Retirement Date is entitled to a monthly Normal Retirement Benefit, payable in the Normal Form of Benefit, in an amount equal to the sum of 1% of the Participant’s five-year average monthly compensation (the average of any five consecutive Plan Years or if the actual number of such Years is less than five, the average based on the number of completed months, which produce the highest average) multiplied by his Years of Benefit Service.

     (b) A Participant who terminates from employment before January 1, 1992, and who was transferred by the Employer from employment covered by another pension plan of the Employer to employment covered by this Plan, will have his retirement benefits calculated based on his Years of Benefit Service earned after his date of transfer.

     (c) A Participant who terminates on or after January 1, 1992, but before January 1, 1993, and who was transferred by the Employer from employment covered by another pension plan of the Employer to employment covered by this Plan, will have his retirement benefits determined as follows: the Normal Retirement Benefit will be the greater of the amount determined under paragraph (a) of this Section 4.01 (based on his Years of Benefit Service earned after his date of transfer) or an amount equal to the product of (1) times (2), with such product reduced by (3), as follows:

     (1) the unit benefit (e.g., the dollar amount that is multiplied by Years of Benefit Service), as of the Employee’s Termination of Employment from this Plan, payable from the plan under which the Employee was covered prior to the transfer;

     (2) the Employee’s total Years of Benefit Service (including service under the plan which the Employee was covered prior to the transfer);

     (3) the actual benefit payable from the plan under which the Employee was covered prior to the transfer.

     (d) A Participant who terminates from employment on or after January 1, 1993, and who, before January 1, 1989, was transferred by the Employer from

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employment covered by another pension plan of the Employer to employment covered by this Plan, will have his retirement benefits calculated based on all of his Years of Benefit Service earned including employment covered by the other pension plan.

     (e) A Participant who terminates on or after January 1, 1993, and who, on or after January 1, 1989, was transferred by the Employer from employment covered by another pension plan of the Employer to employment covered by this Plan, will have his retirement benefits determined under paragraph (c) of this Section 4.01.

     (f) The retirement benefits under this Plan of an Employee who is transferred by the Employer from employment covered by this Plan to employment covered by another pension plan of an Affiliated Employer, will be calculated up to his date of transfer.

     (g) Effective May 21, 1991, this Plan and the McEwen Plan are merged. Any Accrued Benefit earned under the terms of the McEwen Plan before May 21, 1991, shall be payable under this Plan. The retirement benefits under this Plan applicable to Employees at the Employer’s McEwen facility will be calculated based on Years of Benefit Service on or after January 1, 1991. For the Plan Year ending December 31, 1991, such Employees shall accrue a benefit equal to the greater of the benefit accrued under this Plan (including all service on or after January 1, 1991) or the benefit accrued under the McEwen Plan between January 1, 1991 and May 20, 1991. For purposes of calculating a Participant’s five year average monthly compensation for any Plan Year before January 1, 1991, this Plan will take into account compensation earned under the terms of the McEwen Plan then in effect.

     4.02 Early Retirement. A Participant who is eligible for Early Retirement may retire from the employ of a Participating Employer at any time prior to his Normal Retirement Date. Such Participant may elect to begin receiving his early retirement benefit on or after his Early Retirement Date, subject to the provisions of Section 8.01. For purposes of this Section 4.02, the amount of a Participant’s early retirement benefit is equal to his Accrued Benefit. Such benefit will be reduced to its Actuarial Equivalent for each month that benefits commence before Normal Retirement Date.

     4.03 Late Retirement. If a Participant remains in the employ of a Participating Employer after his Normal Retirement Date, unless an election to the contrary is made under Section 8.01, his benefit payments will begin no later than his Required Beginning Date, as defined in Section 8.01. The amount of the benefit payable when such Participant actually retires from the employ of a Participating Employer will be calculated in the same manner as the Normal Retirement Benefit including Compensation and Years of Benefit Service after the Participant’s Normal Retirement Date. Such benefit will be offset by the Actuarial Equivalent of any benefit previously paid under this Plan to such Participant.

     However, if a Participant remains in the employ of a Participating Employer after his Normal Retirement Date, such Participant, upon his subsequent retirement, shall have the value of his benefit in the Normal Form increased by the Actuarial Equivalent of the monthly benefit in the Normal Form to which he would have been entitled had he not continued in employment, for any month after his Normal Retirement Date until the date that benefits actually commence. In

12

the event of such Participant’s death while continuing in the employ of a Participating Employer after his Normal Retirement Date, the Actuarial Equivalent value of the additional benefit that would have been provided under the preceding sentence shall be added to the value of his benefit for purposes of any death benefit that may be payable under Chapter VI or VIII.

     4.04 Non-Duplication of Benefit. Under no circumstances will the benefit of any Employee who has incurred a Termination of Employment and is later rehired by a Participating Employer be greater than the benefit he would have received if the Termination of Employment had not occurred and he had been continuously employed. Upon such Participant’s later retirement or Termination of Employment, the Participant’s Normal Retirement Benefit shall be reduced by the Actuarial Equivalent of any benefit previously paid under this Plan to such Participant.

     4.05 Re-Employment. If a former Employee who is receiving benefits from the Plan and Trust returns to the employ of the Employer or an Affiliated Employer, his benefit payments shall continue uninterrupted.

CHAPTER V

BENEFIT LIMITATIONS

     5.01 Definitions. For purposes of this Chapter V, 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;

     (c) Non-deductible voluntary Employee contributions; and

     (d) Any amount added to an individual medical account as defined in Section 415(e)(2) of the Code which is part of a pension or annuity plan of the Employer for the Participant (even if not in a defined contribution plan).

     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 Vesting Service and which produces the highest average.

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     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 (Forfeited) amounts from Participants who terminate employment before retirement.

     Employer means the employer that adopts this Plan. All members of a controlled group of corporations (as defined in Section 414(h) as modified by Section 415(h) of the Code), all trades or businesses (whether or not incorporated) under common control (as defined by Section 414(c) as modified by Section 415(h) of the Code), or all members of an affiliated service group (as defined in Section 414(m) of the Code), will be considered a single employer for the purposes of applying the limitations of this Chapter.

     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 of a percentage of profits, commissions on insurance premiums, tips and bonuses) and excluding the following:

     (a) Employer contributions to a plan of 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). Notwithstanding the above definition, from and after January 1, 1998, Total Compensation shall include any elective deferral contributions (as defined in Code Section 402(g)(3)) and any amounts contributed or deferred by the Employer at the election of the Participant which are not included in the

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gross income of the Participant by reason of Code Section 125 or 457, and, from and after January 1, 2001, by reason of Code Section 132(f).

     5.02 General Limitations. Under no circumstances will the total annual benefits (which, for purposes of this Chapter means benefits payable in the form of a straight life annuity, without ancillary benefits, or if payable in some other form, the Actuarial Equivalent (computed using an interest rate of 5%) of such form) derived from Employer contributions and payable under all Combined Plans to a Participant who retires at or after the Social Security Retirement Age (as defined in Code Section 415(b)(8)) exceed the lesser of the following for any Limitation Year:

     (a) $90,000 (the “Dollar Limitation”) (effective on January 1, 1988, and each January 1 thereafter, the $90,000 limitation above will be automatically adjusted to the new dollar limitation determined by the Commissioner of Internal Revenue for that calendar year. The new limitation will apply to Limitation Years ending within the calendar year of the date of the adjustment.)

     (b) 100% of his Average Compensation (as defined in Section 5.01) (the “Compensation Limitation”).

     If the annual benefit commences after the Social Security Retirement Age, the benefit may not exceed the Actuarial Equivalent of a single life annuity equal to the Dollar Limitation commencing on the Participant’s Social Security Retirement Age. To determine Actuarial Equivalence after the Social Security Retirement Age, in the preceding sentence, an interest rate assumption of 5% will be used.

     If the annual benefit commences before a Participant’s attainment of his Social Security Retirement Age, the Dollar Limitation applicable to such benefit shall be reduced to an amount which is equal to a single life annuity commencing at the same time which is the Actuarial Equivalent of a single life annuity equal to the Dollar Limitation commencing on the Participant’s Social Security Retirement Age.

     Notwithstanding the above, if the Participant was a Participant in a plan in existence on July 1, 1982, the maximum permissible amount shall not be less than the Participant’s accrued benefit as of September 30, 1983.

     Notwithstanding the foregoing provisions of this Section 5, if the maximum limitations on retirement benefits, with respect to any person who was a Participant prior to January 1, 1987 and whose retirement benefit (determined without regard to any changes in the Plan after May 6, 1986 and without regard to cost-of-living adjustments occurring after December 31, 1986) exceeds the limitations set forth in this Section, then, for purposes of such Section and Section 415(b) and (e) of the Code, the Dollar Limitations with respect to such Participant shall be equal to such Participant’s retirement benefit as of December 31, 1986; provided that such Participant’s retirement benefit did not exceed the maximum limitation as in effect for all the Plan Years prior to January 1, 1987.

     Regardless of anything to the contrary, the limitations described in Section 5.02(a) and (b) above will not apply if the annual benefits of a Participant under all Combined Defined

15

Benefit Plans do not exceed $10,000 in the Plan Year or any prior Plan Year, and if he has never been a Participant in any Defined Contribution Plan of the Employer.

     5.03 Less Than 10 Years. If the annual benefit commences when the Participant has completed less than ten years of Vesting Service with the Employer, the limitations described in Section 5.02 will be reduced by 10% for each Year of Vesting Service less than ten.

     5.04 Limitations if Participant in Other Plan(s). If a Participant is also a Participant in a Defined Contribution 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 greater, one-fourth of the Dollar Limitation in effect under Code Section 415(b)(1)(A)); 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 annual benefits under the Employer-sponsored Defined Benefit Plans will be reduced to the extent necessary so that the sum of the defined benefit plan fraction and defined contribution plan fraction do not exceed 1.0.

     From and after January 1, 2000, the special limitations set forth in this Section 5.04 shall no longer apply.

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     5.05 Applicable Mortality Table. This Section shall apply to distributions with Annuity Starting Dates on and after December 31, 2002. Notwithstanding any other Plan provisions to the contrary, the applicable mortality table used for purposes of adjusting any benefit or limitation under Code Section 415(b)(2)(B), (C) or (D) in this Chapter V is the table prescribed in Revenue Ruling 2001-62.

CHAPTER VI

PRE-RETIREMENT DEATH BENEFITS

     6.01 Death Benefits. Except as provided in Section 6.03 and Chapter VIII, any death benefits payable under the Plan and Trust will be according to the provisions of this Section 6.01.

     The Beneficiary of any Participant (including former Participants with deferred vested benefits) who dies before his Annuity Starting Date will be entitled to a lump sum death benefit, payable as soon as administratively possible after the Participant’s death, equal to the present Actuarial Equivalent value (as determined by the Actuary) of the Accrued Benefit of such Participant on his date of death.

     6.02 Death Benefit Limitations. Except as provided in Sections 6.01, 6.03 and Chapter VIII, the Beneficiary or spouse of any Participant who dies will not be entitled to any death benefit under the Plan and Trust.

     6.03 Pre-Retirement Death Benefit for Surviving Spouse; Post-Retirement Death Benefits. Unless the Participant has designated someone other than his spouse as the primary Beneficiary under the provisions of Section 9.01, the death benefit payable to the spouse of a Participant (including a former Participant with deferred vested benefits) who dies before his Annuity Starting Date will be in the form of a single life annuity for the life of such spouse which is the Actuarial Equivalent of the Accrued Benefit of such Participant. The surviving spouse may elect to commence payment of such annuity within a reasonable period after the Participant’s death. Absent an election by the surviving spouse, payment of such annuity will start on the later of the Participant’s date of death or the date when the Participant would have attained age 62. The surviving spouse may also elect the lump sum death benefit specified in Section 6.01 above in lieu of such annuity. If the Participant dies after benefits have commenced under one of the forms specified in Chapter VIII, the death benefits payable, if any, will be in accordance with the form of payment then in effect.

CHAPTER VII

OTHER TERMINATION AND VESTING

     7.01 Full Vesting Dates. Upon the date of a Participant’s death, retirement or incurrence of a Disability, he will be fully Vested in his Accrued Benefit.

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     7.02 Vesting Schedule. A Participant who has completed at least 5 Years of Vesting Service and who terminates his employment with the Employer or an Affiliated Employer for reasons other than death, Disability, or retirement will be fully Vested in his Accrued Benefit. If a Participant terminates his employment with the Employer or an Affiliated Employer for reasons other than death, Disability, or retirement before he has completed 5 Years of Vesting Service, he will not be Vested in any benefit in this Plan and his entire Accrued Benefit will be forfeited.

     7.03 Commencement of Benefits. The payment of any Vested Accrued Benefit determined under this Chapter will start on the date specified in Section 8.01, and will be adjusted for either or both of the following reasons:

     (a) If payments start on a date prior to the Participant’s Normal Retirement Date, such payments will be adjusted as specified in Section 4.02;

     (b) If payments are in a form other than the Normal Form of Benefits, such payments will have an Actuarial Equivalent adjustment made.

     7.04 Forfeiture. Any Non-Vested Accrued Benefit determined under this Chapter, or any other benefit forfeited by a Participant who dies but is not eligible for death benefits under the Plan and Trust will be retained in the Trust Fund and will be used to reduce the future Participating Employer contributions to the Plan.

     7.05 Resumption of Participation. If an Employee returns to the employ of a Participating Employer following a Break in Service, his Years of Vesting Service and Years of Benefit Service which occurred before such Break in Service will be aggregated with his Years of Vesting Service and Years of Benefit Service occurring after such Break in Service if he also meets either of the following requirements:

     (a) If he was Vested in some or all of his Accrued Benefit under this Plan at the time his Break in Service occurred; or

     (b) Even if he was not Vested in his Accrued Benefit at the time of his Break in Service, if the number of consecutive One Year Breaks in Service is less than the Years of Vesting Service which occurred before such Break in Service.

CHAPTER VIII

PAYMENT OF BENEFITS

     8.01 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; or

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     (b) the last day of the Plan Year in which he incurs a Termination of Employment.

     Effective January 1, 2000, and notwithstanding any other provisions of this Plan but subject to the special rules pertaining to 5% owners and certain other Participants set forth below, any benefit payable to a Participant shall commence no later than the “Required Beginning Date” for a Participant under Code Section 401(a)(9), as amended by the Small Business Job Protection Act of 1996, which is the April 1st of the calendar year following the later of (i) the calendar year in which the Participant attains age 70 1/2, or (ii) the calendar year in which the Participant retires or terminates service with the Employer or an Affiliated Employer.

     However, any benefit payable to a Participant who is a more than 5% owner of the “employer” as defined in Code Section 416 with respect to the Plan Year ending in the calendar year in which such Participant attains age 70 1/2 shall commence no later than the April 1st of the calendar year following the calendar year in which such Participant attains age 70 1/2, even if he has not separated from service as of such date.

     Further, any Participant continuing in the service of the Employer or an Affiliated Employer who attained age 70 1/2 after December 31, 1996 but before January 1, 2000 shall have an option to elect either to begin receiving benefits starting no later than April 1st of the calendar year following the calendar year in which such Participant attains age 70 1/2 or to defer the commencement thereof (and, if applicable, to stop the current receipt of benefits) until retirement or termination of service. Any distribution of benefits that was being made to such a Participant in the Joint and Survivor Annuity form may be stopped under the preceding sentence only if consent of the person who was such Participant’s spouse when the benefit payments initially commenced is obtained and such consent acknowledges the effect of the election to stop. Any commencement or recommencement of benefits starting after retirement or termination of service of a Participant who has elected to defer (and, if applicable to stop the current receipt of benefits) shall be subject to all of the provisions of Section 8.02 dealing with the mandatory Joint and Survivor Annuity form of distribution for married Participants and the single life annuity form for single Participants and the circumstances under which some other form of distribution may be elected.

     Any Participant who incurs a Termination of Employment and who later attains the age specified as an Early Retirement Date may elect in writing to the Committee to have his benefit payments begin at any time following such age. Once such election is made, benefit payments must begin within 60 days after the date specified in the election.

     Notwithstanding any provision of the Plan to the contrary, if the Vested portion of the Accrued Benefit of a Participant who terminates, retires, or dies does not exceed $3,500, or, from and after January 1, 2002, $5,000, the Vested Accrued Benefit shall be distributed in the form of a single sum cash distribution as soon as practicable following the Participant’s termination.

     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:

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     (a) the Plan Administrator clearly informs the Participant that the Participant has a right to a period of at least 30 days after receiving the notice to consider the decision of whether or not to elect a distribution (and, if applicable, a particular distribution option), and

     (b) the Participant, after receiving the notice, affirmatively elects a distribution.

     8.02 Automatic Joint and Survivor Benefits. Unless an optional form of benefit is selected pursuant to a qualified election within the 90-day period ending on the Annuity Starting Date, a married Participant’s Vested Accrued Benefit will be paid in the form of a Joint and Survivor Annuity. A qualified election is a waiver of a Joint and Survivor Annuity. The waiver must be in writing and must be consented to by the Participant’s spouse. The spouse’s consent to a waiver must acknowledge the designation of a specific alternative beneficiary in writing signed by the spouse and witnessed by a Plan representative or notary public. Notwithstanding this consent requirement, if the Participant establishes to the satisfaction of a Plan representative that such written consent may not be obtained because there is no spouse or the spouse cannot be located, waiver will be deemed a qualified election. Any consent necessary under this provision will be valid only with respect to the spouse who signs the consent, or in the event of a deemed qualified election, the designated spouse. Additionally, a revocation of a prior waiver may be made by a Participant without the consent of the spouse at any time before the commencement of benefit. The number of revocations shall not be limited.

     In the case of a Joint and Survivor Annuity as described above, the Committee shall provide each Participant within a reasonable period under applicable regulations (currently, not less than 30 and no more than 90 days) prior to the Annuity Starting Date a written explanation of:

     (a) the terms and conditions of a Joint and Survivor Annuity;

     (b) the Participant’s right to make and the effect of an election to waive the Joint and Survivor Annuity form of benefit;

     (c) the rights of a Participant’s spouse; and

     (d) the right to make, and the effect of, a revocation of a previous election to waive the Joint and Survivor Annuity. If the Participant, after having received the above written explanation, affirmatively elects a form of distribution (with spousal consent if the form is other than the Joint and Survivor Annuity), the Plan may treat such election as a waiver of any remaining portion of the 30-day notice period, provided the distribution does not commence before the expiration of a 7-day period beginning the day after the Participant has received the above written notice and other requirements of applicable regulations are satisfied.

     Unless an optional form of benefit is selected, an unmarried Participant’s Vested Accrued Benefit will be paid in the form of a single life annuity under Section 8.03.

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     8.03 Optional Forms of Payment. Except where a Joint and Survivor Annuity is required by Section 6.01 or Section 8.02, all benefit payments will be made in the Normal Form of Benefit unless the Participant (or his Beneficiary, if he is deceased) selects in writing one, or a combination of, the following optional forms of benefits:

     (a) life income annuity;

     (b) a joint and survivor annuity providing a survivor benefit to any Beneficiary which is at least 50% but not greater than 100% of the Participant’s benefit;

     (c) a term certain annuity for 120 months, or 180 months;

     (d) a lump sum payment, but only if Termination of Employment is due to retirement, death, or Disability.

     (e) if the Participant was employed at the McEwen facility, then he or his Beneficiary may select a life annuity with 120 or 180 monthly benefits guaranteed.

     Any benefit payable in a form other than the Normal Form of Benefit will be the Actuarial Equivalent of the benefit which would have been payable in the Normal Form of Benefit.

     Any annuity contracts which may be purchased to provide Plan benefits will be nontransferable.

     8.04 Incidental Death Benefits. Regardless of any statement (with the exception of Section 8.02) to the contrary, the ability of any Participant or any 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 Section 1.401(a)(9)-2 of the regulations which are incorporated herein by this reference.

     (b) If the Participant dies after distribution of his or her interest has commenced, the remaining portion of such interest will continue to be distributed at least as rapidly as under the method of distribution being used prior to the Participant’s death.

     (c) If the Participant dies before distribution of his or her interest commences, the Participant’s entire interest will be distributed no later than five years after the

21

Participant’s death except to the extent that an election is made to receive distribution in accordance with (1) or (2) below:

     (1) If any portion of the Participant’s interest is payable to a designated Beneficiary, distributions may be made in substantially equal installments over the life or life expectancy of the designated Beneficiary commencing no later than one year after the Participant’s death;

     (2) If the designated Beneficiary is the Participant’s surviving spouse, the date distributions are required to begin in accordance with (1) above shall not be earlier than the date on which the Participant would have attained age 70 1/2, and, if the spouse dies before payments begin, subsequent distributions shall be made as if the spouse had been the Participant.

     (d) For purposes of 8.04(c) 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.

      (e) For purposes of this Section 8.04, any amount paid to a child of the Participant will be treated as if it had been paid to the surviving spouse if the amount becomes payable to the surviving spouse when the child reaches the age of majority.

     8.04A New Minimum Distribution Regulations. With respect to distributions under the Plan made on or after April 1, 2001 for calendar years beginning on or after January 1, 2001, the Plan will apply to minimum distribution requirements of Section 401(a)(9) of the Code in accordance with the regulations under Section 401(a)(9) that were proposed on January 17, 2001 (the 2001 Proposed Regulations), notwithstanding any provision of the Plan to the contrary. If the total amount of required minimum distributions made to a Participant for 2001 prior to April 1, 2001 are equal to or greater than the amount of required minimum distributions determined under the 2001 Proposed Regulations, then no additional distributions are required for such Participant for 2001 on or after such date. If the total amount of required minimum distributions made to a Participant for 2001 prior to April 1, 2001 are less than the amount determined under the 2001 Proposed Regulations, then the amount of required minimum distributions for 2001 on or after such date will be determined so that the total amount of required minimum distribution for 2001 is the amount determined under the 2001 Proposed Regulations. This amendment shall continue in effect until the last calendar year beginning before the effective date of the final regulations under Section 401(a)(9) of the Code or such other date as may be published by the Internal Revenue Service.

     8.05 Transfers. The Plan will not accept the transfer into the Trust Fund of IRA’s or distributions to Participants from other retirement plans.

     8.06 No Other Benefits. Except as provided in Chapter XII, no payments shall be made from the Plan and Trust to a Participant except for retirement, death, Disability, or other Termination of Employment.

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     8.07 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 limitations;

     5) corrective distributions of excess contributions, excess deferrals, and excess aggregate contributions, together with the income allocable to these corrective distributions;

     6) loans treated as distributions under Section 72(p) and not excepted by Section 72(p)(2);

     7) loans in default that are deemed distributions;

     8) a distribution less than $200;

     9) for distribution made from and after December 31, 1999, any amount which is a hardship distribution under Section 401(K)(2) of the Code; and

     10) similar items designated by the IRS in revenue rulings, notices, and other guidance of general applicability.

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     (ii) Eligible Retirement Plan: An Eligible Retirement Plan is an individual retirement account described in Section 408(a) of the Code, an individual retirement annuity described in Section 408(b) of the Code, an annuity plan described in Section 403(a) of the Code, or a qualified trust described in Section 401(a) of the Code, that accepts the Distributee’s Eligible Rollover Distribution. However, in the case of an Eligible Rollover Distribution to the surviving spouse, an Eligible Retirement Plan is an individual retirement account or individual retirement annuity.

     (iii) Distributee: A Distributee includes an Employee or former Employee. In addition, the Employee’s or former Employee’s surviving spouse and the Employee’s or former Employees’ spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in Section 414(p) of the Code, are Distributees with regard to the interest of the spouse or former spouse.

     (iv) Direct Rollover: A Direct Rollover is a payment by the Plan to the Eligible Retirement Plan specified by the Distributee.

CHAPTER IX

DESIGNATION OF BENEFICIARY

     9.01 Beneficiary Designation; Election of Non-Spouse Beneficiary. Each Participant may name or change the name of his Beneficiary(ies) who will receive any death benefits payable under Chapters VI or VIII of the Plan. However, any designation by a married Participant of someone other than his spouse as the primary Beneficiary for any pre-retirement death benefit payable under Section 6.01 of the Plan is an election to waive the pre-retirement surviving spouse death benefit under Section 6.03 and must be made by the Participant in writing during the election period described below and shall not be effective unless:

     (a) the Participant’s spouse consents in writing to the election;

     (b) the election designates a specific alternate Beneficiary, including any class of Beneficiaries or any contingent Beneficiaries, which may not be changed without spousal consent (or the spouse expressly permits designations by the Participant without any further spousal consent);

     (c) the spouse’s consent acknowledges the effect of the election; and

     (d) the spouse’s consent is witnessed by a plan representative or notary public.

     If it is established to the satisfaction of a plan representative that such written consent may not be obtained because there is no spouse or the spouse cannot be located, a waiver will be deemed a qualified election.

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     The election period to waive the pre-retirement surviving spouse death benefit begins on the first day of the Plan Year in which the Participant attains age 35 or the date of the Participant’s termination of service, if earlier, and ends on the date of the Participant’s death. An earlier waiver (with spousal consent) may be made, but it will become invalid at the beginning of the Plan Year in which the Participant attains age 35 or the date of a vested Participant’s termination of service, if earlier. However, a new waiver and consent form may be signed thereafter at any time during the election period.

     With regard to the election, the Committee shall provide each Participant within the applicable period, with respect to such Participant (and consistent with regulations), a written explanation of the pre-retirement surviving spouse death benefit containing comparable information to that required pursuant to Section 8.02. For the purposes of this paragraph, the term “applicable period” means, with respect to a Participant, whichever of the following periods ends last:

     (a) The period beginning with the first day of the Plan Year in which the Participant attains age 32 and ending with the close of the Plan Year preceding the Plan Year in which the Participant attains age 35;

     (b) One year ending after the individual becomes a Participant;

     (c) One year ending after the Plan no longer fully subsidizes the cost of the pre-retirement surviving spouse death benefit with respect to the Participant; or

     (d) One year ending after Code Section 401(a)(11) first applies to the Participant.

     Notwithstanding the foregoing, notice must be provided within a reasonable period ending after separation from service in the case of a Participant who separates before attaining age 35. For this purpose, the Committee must provide the explanation within a period beginning one year before the separation from service and ending one year after such separation. If such a Participant thereafter returns to employment with a Participating Employer, the applicable period for such Participant shall be redetermined.

     9.02 Priority 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.

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CHAPTER X

TOP-HEAVY PROVISIONS

     10.01 Provisions Will Control. If the Plan is or becomes Top-Heavy in any Plan Year beginning after December 31, 1983, the provisions of Chapter X will supersede any conflicting provisions in the Plan.

     10.02 Definitions. For purposes of this Chapter X the following definitions shall apply:

     (a) Employer: Means all Participating Employers and all Affiliated Employers.

     (b) Key Employee: Any Employee or former Employee (and the Beneficiaries of such Employee) who at any time during the Determination Period was:

     (1) an officer of the Employer having annual compensation from the Employer greater than 1.5 times the amount in effect under Section 415(c)(1)(A) for any such Plan Year;

     (2) an owner (or considered an owner under Section 318 of the Code) of one of the ten largest interests in the Employer if such individual’s compensation exceeds the dollar limitation under Section 415(c)(1)(A) of the Code;

     (3) a 5% owner of the Employer; or

     (4) a 1% owner of the Employer who has an annual compensation of more than $150,000.

     The Determination Period is the Plan Year containing the Determination Date and the 4 preceding Plan Years. The determination of who is a Key Employee will be made in accordance with Section 416(i)(1) of the Code and the regulations thereunder.

     (c) 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 a Required Aggregation Group and part of a Permissive Aggregation Group of plans and the Top-Heavy Ratio for the Permissive Aggregation Group exceeds 60%.

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     (d) Top-Heavy Ratio:

     (1) If the Employer maintains one or more defined benefit plans and the Employer has not maintained any defined contribution plans (including any Simplified Employee Pension Plan) which during the 5-year period ending on the Determination Date(s) has or has had account balances, the Top-Heavy Ratio for this Plan alone or for the Required or Permissive Aggregation Group, as appropriate, is a fraction, the numerator of which is the sum of the Present Value of Accrued Benefits of all Key Employees as of the Determination Date(s) (including any part of any Accrued Benefit distributed in the 5-year period ending on the Determination Date(s)), and the denominator of which is the sum of all Accrued Benefits (including any part of any 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 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 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 who:

     (i) is not a Key Employee but who was a Key Employee in a prior year; or

     (ii) has not received any compensation from any Employer maintaining the Plan at any time during the 5-year period ending on the Determination Date, will be disregarded. The calculation of the Top-Heavy Ratio, and the extent to which distributions, rollovers, and

27

transfers are taken into account will be made in accordance with Section 416 of the Code and the regulations thereunder. Accordingly, the accrued benefit of any employee who has not performed an Hour of Service for the Employer at any time during the 5-year period ending on the Determination Date will be disregarded. Deductible employee contributions will not be taken into account for purposes of computing the Top-Heavy Ratio. When aggregating plans the value of account balances and Accrued Benefits will be calculated with reference to the Determination Dates that fall within the same calendar year.

     (e) 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.

     (f) Required Aggregation Group:

     (1) Each qualified plan of the Employer in which at least one Key Employee participates in the Plan Year containing the Determination Date or any of the four preceding Plan Years (including any such plan that terminated within 5-year period ending on the Determination Date), 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.

     (g) 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.

     (h) Valuation Date: The first day of the Plan Year, as of which account balances or Accrued Benefits are valued for purposes of calculating the Top-Heavy Ratio.

     (i) Present Value: Present Value shall be based only on the Actuarial Equivalent interest and mortality rates specified in Section 1.01(c)

     10.03 Minimum Accrued Benefit:

     (a) Notwithstanding any other provision in this Plan except (c), (d), and (e) below, for any Plan Year in which this Plan is Top-Heavy, each Participant who is employed on the last day of the Plan Year will accrue a benefit (to be provided solely by Employer contributions and payable in the Normal Form of Benefit) of 2.0% of his or her highest average compensation for the five consecutive years for which the Participant had the highest compensation. The minimum accrual is determined without regard to any Social Security contribution. The minimum accrual applies even though under other Plan provisions the Participant would not otherwise be entitled to receive an accrual, or would have received a lesser accrual for the year.

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     (b) For purposes of computing the minimum accrued benefit, compensation will include all wages subject to tax under Section 3101(a) without the dollar limitation of Section 3121(a), but not including deferred compensation other than contributions through a salary reduction agreement to a cash or deferred plan under Section 401(k) or to a tax deferred annuity under Section 403(b) of the Code.

     (c) No additional benefit accruals shall be provided pursuant to (a) above to the extent that the total accruals on behalf of the Participant attributable to Employer contributions will provide a benefit expressed as a life annuity commencing at the Normal Retirement Date that equals or exceeds 20% of the Participant’s highest average compensation for the five consecutive years for which the Participant had the highest compensation.

     (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. In such case, the minimum allocation or benefit requirement applicable to this Top-Heavy plan will be met in the other plan or plans.

     (e) All accruals of Employer derived benefit, whether or not attributable to years for which the Plan is Top-Heavy, may be used in computing whether the minimum accrual requirements of paragraph (c) above are satisfied.

     10.04 Adjustment for Benefit Form Other Than Life Annuity. If the Normal Form of Benefit is other than a single life annuity, the Employee must receive an amount that is the Actuarial Equivalent of the minimum single life annuity benefit. If the benefit commences at a date other than the Normal Retirement Date, the Employee must receive at least an amount that is the Actuarial Equivalent of the minimum single life annuity benefit commencing at the Normal Retirement Date.

     10.05 Nonforfeitability of Minimum Accrued Benefit. The minimum accrued benefit 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.

     10.06 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		40	%
4		60	%
5		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

29

Section does not apply to the Accrued Benefits of any Employee who does not have an Hour of Service after the Plan has initially become Top-Heavy and such Employee’s Accrued Benefits 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 11.01(c) of the Plan applies.

     10.07 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 benefits under the Plan.

CHAPTER XI

AMENDMENT OF THE PLAN

     11.01 Amendment by Employer. The Employer may, by resolution of its 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 any Participating 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 a Participating Employer or an Affiliated Employer on the date such amendment is adopted (or the date it is effective, if later) who has completed at least three Years of Vesting 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; or

     (3) the date written notice of the amendment is given to the Participant.

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     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 Accrued Benefit or Vested percentage of a Participant.

     11.02 Conformance to Law. Regardless of the provisions of Section 11.01, the Employer has the right to make whatever amendments are necessary to this Plan or the Trust to bring it into conformity with applicable law.

     11.03 Merger, Consolidation, or Transfer. If the Plan and Trust are merged or consolidated with, or the assets or liabilities are transferred to, any other plan and trust, the benefits payable to each Participant 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

TERMINATION OF THE PLAN

     12.01 Right to Terminate. It is the expectation of the Employer that it will continue the Plan and the payment of contributions indefinitely, but continuance of the Plan is not assumed as a contractual obligation of the Employer, and the right is reserved by the Employer, by resolution of its Board of Directors, at any time to reduce, suspend, or discontinue its contributions, or terminate the Plan with respect to certain or all of its Employees. Further, any other Participating Employer may do likewise as to its participation in the Plan by resolution of its Board of Directors. If the Plan is terminated or partially terminated, the Accrued Benefit of each Participant who is in the employ of the Participating Employer on the effective date of the Plan termination or partial termination (as specified by the Participating Employer unless otherwise specified by the PBGC) and whose employment is affected by such termination or partial termination will thereafter be fully vested and nonforfeitable. Such Participant will have recourse only to the assets of the Trust Fund and the PBGC for the payment of such Vested Accrued Benefit.

     12.02 Termination Priorities. If the Plan is terminated or partially terminated (whether by the Employer or the PBGC), and the PBGC has notified the Employer that it may proceed with benefit payments under this Plan, the Trust Fund assets (or portion thereof, in the case of partial termination) will be allocated to the appropriate Participants (all Participants in the event of complete Plan termination, in the event of partial termination, only those Participants whose Termination of Employment caused or was the result of such partial termination) in the following order of priority:

     (a) to provide for the return of Employee contributions, if any;

     (b) to provide for any benefit of a Participant which was payable as an annuity in either of the following categories:

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     (1) the benefit of a Participant which was in pay status as of the first day of the 3-year period immediately preceding the date the Plan was terminated, as specified by the PBGC;

     (2) the benefit of a Participant which could have been in pay status as of the first day of the 3-year period immediately preceding the date the Plan was terminated, as specified by the PBGC.

     For purposes of this Sub-Section (b), such benefit will be determined on the basis of the Plan’s provisions which were in effect at any time during the 5-year period ending on such date of Plan termination under which the benefit would be the least;

     (c) to provide for any other benefit of a Participant (not covered by any of the two previous priority classifications) which is insured and guaranteed by the PBGC;

     (d) to provide for all other nonforfeitable benefits;

     (e) to provide for all other benefits.

     Any allocations provided for under the above priority classifications will be payable to either a Participant or his Beneficiary, whichever is appropriate. In addition, with respect to priority classifications (b), (c), (d), and (e), the amount of an allocation to a Participant under a specified priority classification will be reduced by the amount of such Participant’s allocation under a previous priority classification.

     12.03 Reversion to Employer. In the event assets remain in the Trust Fund after the complete satisfaction of all liabilities of the Plan and Trust, as specified in Section 12.02, distribution may be made to the Employer of such remaining assets, which will be deemed attributable to the difference between the actuarial assumptions used by the Actuary to determine the funding requirements of the Plan and Trust and the actual experience of the Trust Fund during its operation.

     12.04 Subsequent Benefit Payments. Unless otherwise specified by law, the timing, form (with the addition of lump sum distributions), and amount of any benefit payments provided under this Chapter will be made in accordance with the provisions of Chapter VIII.

CHAPTER XIII

CLAIMS PROCEDURE

     13.01 Written Claim. A Participant or Beneficiary(ies) may make a claim for Plan benefits by filing a written request with the Committee, on a form provided by the Committee.

     13.02 Claim Denial. If a claim is wholly or partially denied, the Committee will furnish the Participant or Beneficiary(ies) with written notice of the denial within 60 days of the date the original claim was filed. The notice of denial will specify:

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     (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.

     13.03 Request for Review of Denial. The Participant or Beneficiary(ies) will have 60 days from receipt of 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.

     13.04 Decision on Review. The Committee will issue a decision on such review within 60 days after receipt of an application for review.

     The Committee 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 Committee 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 Committee at the time of such determination.

     13.05 Additional Time. The Committee may take additional time, as provided by government regulations, under this Chapter XIII, 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 XIV

CONTRIBUTION AND BENEFIT LIMITS
TO HIGH PAID EMPLOYEES

     14.01 When Applicable. Participating Employer contributions on behalf of any of the 25 highest paid Employees at the time the Plan is established and whose anticipated annual benefit exceeds $1,500 will be restricted as provided in Section 14.02 upon the occurrence of the following conditions:

     (a) The Plan is terminated within 10 years after its establishment;

     (b) The benefits of such highest paid Employee become payable within 10 years after the establishment of the Plan; or

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     (c) If Section 412 of the Code (without regard to Section 412(h)(2)) does not apply to this Plan, the benefits of such Employee become payable after the Plan has been in effect for 10 years, and the full current costs of the Plan for the first 10 years have not been funded.

     14.02 Limitations. Participating Employer contributions which may be used for the benefit of an Employee described in Section 14.01 shall not exceed the greater of $20,000, or 20% of the first $50,000 of the Employee’s compensation multiplied by the number of years between the date of the establishment of the Plan and:

     (a) if 14.0l(a) applies, the date of the termination of the plan;

     (b) if 14.0l(b) applies, the date the benefit becomes payable; or

     (c) if 14.0l(c) applies, the date of the failure to meet the full current costs.

     14.03 Limitations if Plan Amended. If the Plan is amended so as to increase the benefit actually payable in event of the subsequent termination of the Plan, or the subsequent discontinuance of contributions thereunder, then the provisions of the above Sections shall be applied to the Plan as so changed as if it were a new Plan established on the date of the change. The original group of 25 Employees (as described in Section 14.01 above) will continue to have the limitations in Section 14.02 apply as if the Plan had not been changed. The restriction relating to the change of Plan should apply to benefits or funds for each of the 25 highest paid Employees on the effective date of the change except that such restrictions need not apply with respect to any Employee in this group for whom the normal annual pension or annuity provided by Participating Employer contributions prior to that date and during the ensuing ten years, based on his rate of compensation on that date, could not exceed $1,500.

     The Participating Employer contributions which may be used for the benefit of the new group of 25 Employees will be limited to the greater of:

     (a) The Participating Employer contributions (or funds attributable thereto) which would have been applied to provide the benefits for the Employees if the previous Plan had been continued without change;

     (b) $20,000; or

     (c) The sum of:

     (1) the Participating Employer contributions (or funds attributable thereto) which would have been applied to provide benefits for the Employees under the previous Plan if it had been terminated the day before the effective date of change, and

     (2) an amount computed by multiplying the number of years (for which the current costs of the Plan after that date are met) by 20% of his annual compensation, or $10,000, whichever is smaller.

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     14.04 Alternate Limitations. Notwithstanding the above limitations the following limitations will apply if they would result in a greater amount of Participating Employer contributions to be used for the benefit of the restricted Employee:

     (a) In the case of a substantial owner (as defined in Section 4022(b)(5) of ERISA), a dollar amount which equals the present value of the benefit guaranteed for such Employee under Section 4022 of ERISA, or if the Plan has not terminated, the present value of the benefit that would be guaranteed if the Plan terminated on the date the benefit commences, determined in accordance with regulations of the PBGC; and

     (b) In the case of the other restricted Employees, a dollar amount which equals the present value of the maximum benefit described in Section 4022(b)(3)(B) of ERISA (determined on the earlier of the date the Plan terminates or the date benefits commence, and determined in accordance with regulations of the PBGC) without regard to any other limitations in Section 4022 of ERISA.

CHAPTER XV

MISCELLANEOUS PROVISIONS

     15.01 Reversion of Assets. This Plan and Trust are for the exclusive benefit of the Employees of the Participating Employers 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 any Participating 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 Participating Employer within one year after such contributions were made.

     (b) All Participating Employer contributions made to the Plan under Code Section 412(m) are conditioned on deductibility. For any year(s) that all or a part of a deduction for Participating Employer contributions to the Plan is disallowed by the Secretary of the Treasury, the amount of the contributions so disallowed shall be returned to the Participating Employer within one year after such disallowance.

     (c) The Plan is terminated as provided for in Chapter XII.

     15.02 Equitable Adjustment. The Committee may make equitable adjustments, which may be retroactive, to correct for mathematical, accounting, or factual errors made in good faith. Such adjustments will be final and binding on all Participants and other parties in interest.

     15.03 Reasonable Compensation. If for any Plan Year, the Internal Revenue Service determines that the total compensation of a Participant exceeds the amount which can be considered “reasonable” for purposes of the federal income tax return of the Participating

35

Employer, then the Committee will readjust the Accrued Benefit of such Participant to reflect only the “reasonable” compensation of said Participant.

     15.04 Indemnification. 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.

     15.05 Protection From Loss. Neither the Trustee, the Plan Administrator, the Committee nor the Employer guarantee the Trust Fund in any way from loss or depreciation. To the extent permitted by applicable law, the liability of any of these persons, groups of persons, or entities to make any payment under the Plan and Trust is limited to the available assets of the Trust Fund.

     15.06 Protection From Liability. To the maximum extent allowed by law, the Plan Administrator and the Participating Employers, and their agents, designees and employees, shall be free from all liability, joint or several, for their acts, omissions, and conduct, except in the case of their own willful misconduct, gross negligence or bad faith. Specifically and without limitation other than as follows, nothing in the first sentence of this Section or elsewhere in the Plan and Trust shall be construed to relieve any Fiduciary from responsibility or liability for any responsibility, obligation or duty Under Part 4 of Title 1 of ERISA (except as provided in Sections 405(b)(1) and 405(d) of ERISA).

     15.07 Adoption of Rules and Procedures. Any group of people acting in a specified capacity under the Plan and Trust (such as the Named Fiduciary, Trustee, Committee, Plan Administrator, “investment manager” (as defined by ERISA) if any, and so on) may create and abide by 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.

     15.08 Assignment of Benefits. A Participant’s interest in this Plan may not be assigned or alienated, either voluntarily or involuntarily. This shall not preclude the Trustee from complying with: (i) 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, or (ii) on or after August 5, 1997 and pursuant to Code Section 401(a)(13)(c), any court order, judgment, decree, or settlement agreement requiring that a Participant’s benefits be reduced where the Participant has committed a breach of fiduciary duty to the Plan or committed a criminal act against the Plan.

     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 an order described in the preceding paragraph, 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)).

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     15.09 Mental Competency. Every person receiving or claiming benefits under the Plan and Trust will be presumed to be mentally competent until the date on which the Committee receives a written notice (in a form and manner acceptable to it) that such person is incompetent, and that a guardian, conservator or other person legally vested with his care or the care of his estate has been appointed. If the Committee receives acceptable notice that a person to whom a benefit is payable under the 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 Participating 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 the 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.

     15.10 Authentication. The Participating 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, by 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.

     15.11 Not an Employment Contract. The Plan and Trust will not be construed as creating or modifying any contract of employment between any Participating Employer and the Employee.

     15.12 Appointment of Auditor. The Employer shall have the right to appoint an independent auditor to audit the books, records, and accounts of the Trustee as they relate to the Plan and the Trust.

     15.13 Uniform Treatment. All interpretations made in connection with the Plan and Trust are intended to be exercised in a nondiscriminatory manner so that all Employees in similar circumstances are treated alike.

     15.14 Interpretation. The provisions of the Plan and Trust are to be construed as a whole and not construed separately without relation to the context of the entire agreement.

     15.15 Plural and Gender. When appropriate, the singular nouns in the 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.

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     15.16 Headings. Headings at the beginnings of any Chapter, Section, or Sub-Section are for convenience only and are not to influence the construction of this Plan and Trust.

     15.17 Expenses. The Participating Employers 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.

     15.18 Prevention of Escheat. If the Participating Employer cannot ascertain the whereabouts of any person to whom a payment is due under the Plan, and if a notice of such payment due is mailed to the last known address of such person, as shown on the records of the Participating Employer, and within three months after such mailing such person has not made written claim therefor, the Participating Employer, if it so elects, may direct that such payment and all remaining payments otherwise due to such person be canceled on the records of the Plan and the amount thereof applied to reduce the contributions of the Participating Employer. The Plan and the Trust shall have no further liability therefor, except that, in the event such person later notifies the Participating Employer of his whereabouts and requests the payment due to him under the Plan, the amount so applied shall be paid to him.

     15.19 Special Provisions Respecting Military Service. Notwithstanding any provision of the Plan to the contrary, contributions, benefits and service credit with respect to qualified military service will be provided in accordance with Section 414(u) of the Code, effective for individuals whose re-employment occurs after December 11, 1994.

     15.20 Participation of Affiliated Employers. The administrative powers and control of the Employer, as provided in this Plan and the Trust agreement, as well as the sole and exclusive right of amendment and termination (as covered in Chapters XI and XII) and of appointment and removal of the Plan Administrator, the Trustee, and their successors, shall remain solely with OshKosh B’Gosh, Inc. and shall not be diminished in any way by reason of the participation of any Affiliated Employer in the Plan and the Trust agreement.

CHAPTER XVI

EGTRRA PROVISIONS

     16.01 Adoption and Effective Date of Amendment. This amendment of the Plan is adopted to reflect certain provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 (“EGTRRA”). This amendment is intended as good faith compliance with the requirements of EGTRRA and is to be construed in accordance with EGTRRA and guidance issued thereunder. Except as otherwise provided, this amendment shall be effective as of the first day of the first Plan year beginning after December 31, 2001.

     16.02 Supersession of Inconsistent Provisions. This amendment shall supersede the provisions of the Plan to the extent those provisions are inconsistent with the provisions of this amendment.

     16.03 Increase in Compensation Limit.

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     (a) Increase in limit. The annual compensation of each Participant taken into account in determining benefit accruals in any Plan Year beginning after December 31, 2001, shall not exceed $200,000. Annual compensation means compensation during the plan year or such other consecutive 12-month period over which compensation is otherwise determined under the plan (the determination period). For purposes of determining benefit accruals in a plan year beginning after December 31, 2001, the compensation for any prior determination period shall be $200,000.

     (b) Cost-of-living adjustment. The $200,000 limit on annual compensation in paragraph (a) shall be adjusted for cost-of-living increases in accordance with Section 401(a)(17)(B) of the Code. The cost-of-living adjustment in effect for a calendar year applies to annual compensation for the determination period that begins with or within such calendar year.

     16.04 Modification of Top-Heavy Rules.

     (a) Effective date. This section shall apply for purposes of determining whether the Plan is a top-heavy plan under Section 416(g) of the Code for plan years beginning after December 31, 2001, and whether the plan satisfies the minimum benefits requirements of Section 416(c) of the Code for such years. This section amends Chapter V of the Plan.

     (b) Determination of top-heavy status.

     (1) Key employee. Key employee means any employee or former employee (including any deceased employee) who at any time during the Plan Year that includes the determination date was an officer of the employer having annual compensation greater than $130,000 (as adjusted under Section 416(i)(1) of the Code for plan years beginning after December 31, 2002), a 5-percent owner of the employer, or a 1-percent owner of the employer having annual compensation of more than $150,000. For this purpose, annual compensation means compensation within the meaning of Section 415(c)(3) of the Code. The determination of who is a key employee will be made in accordance with Section 416(i)(1) of the Code and the applicable regulations and other guidance of general applicability issued thereunder.

     (2) Determination of present values and amounts. Subsections (3) and (4) below shall apply for purposes of determining the present values of accrued benefits and the amounts of account balances of employees as of the determination date.

     (3) Distributions during year ending on the determination date. The present values of accrued benefits and the amounts of account balances of an employee as of the determination date shall be increased by the distributions made with respect to the employee under the plan and any plan aggregated with the Plan under Section 416(g)(2) of the Code during the 1-year period ending on the determination date. The preceding sentence shall also apply to distributions under a terminated plan which, had it not been terminated, would have been aggregated

39

with the plan under Section 416(g)(2)(A)(i) of the Code. In the case of a distribution made for a reason other than separation from service, death, or disability, this provision shall be applied by substituting “5-year period” for “1-year period.”

     (4) Employees not performing services during year ending on the determination date. The accrued benefits and accounts of any individual who has not performed services for the employer during the 1-year period ending on the determination date shall not be taken into account.

     (c) Minimum benefits. For purposes of satisfying the minimum benefit requirements of Section 416(c)(1) of the Code and the Plan, in determining years of service with the employer, any service with the employer shall be disregarded to the extent that such service occurs during a Plan Year when the Plan benefits (within the meaning of Section 410(b) of the Code) no key employee or former key employee.

     16.05 Direct Rollovers of Plan Distributions.

     (a) Effective date. This section shall apply to distributions made after December 31, 2001.

     (b) Modification of definition of eligible retirement plan. For purposes of the direct rollover provisions in Section 8.07 of the Plan, an eligible retirement plan shall also mean an annuity contract described in Section 403(b) of the Code and an eligible plan under Section 457(b) of the Code which is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state and which agrees to separately account for amounts transferred into such plan from this plan. The definition of eligible retirement plan shall also apply in the case of a distribution to a surviving spouse, or to a spouse or former spouse who is the alternate payee under a qualified domestic relation order, as defined in Section 414(p) of the Code.

     (c) Modification of definition of eligible rollover distribution to include after-tax employee contributions. For purposes of the direct rollover provisions in Section 8.07 of the Plan, a portion of a distribution shall not fail to be an eligible rollover distribution merely because the portion consists of after-tax employee contributions which are not includible in gross income. However, such portion may be paid only to an individual retirement account or annuity described in Section 408(a) or (b) of the Code, or to a qualified defined contribution plan described in Section 401(a) or 403(a) of the Code that agrees to separately account for amounts so transferred, including separately accounting for the portion of such distribution which is includible in gross income and the portion of such distribution which is not so includible.

     IN WITNESS WHEREOF, this Plan is executed by the Employer through its duly authorized officers, on this    6    day of   November  , 2001.

By:	/S/ David L. Omachinski
Attest:	/S/ Margaret Wacholtz

40

OSHKOSH B’GOSH, INC.

OFFICERS’ CERTIFICATE

     WHEREAS, OshKosh B’Gosh, Inc. has established and currently maintains the OshKosh B’Gosh, Inc. Pension Plan (the “Plan”) on behalf of certain eligible employees of OshKosh B’Gosh, Inc. (the “Company”);

     WHEREAS, the Company wishes to amend the Plan to make certain changes to the Plan’s eligibility provisions and benefit formula; and

     WHEREAS, by prior resolution, the Company has authorized Paul S. Christensen and Michael L. Heider to make such eligibility and formula changes and any further amendments to the Plan as they deem necessary or desirable;

NOW THEREFORE, the OshKosh B’Gosh, Inc. Pension Plan is hereby amended, effective as of January 1, 2005, as follows:

1.   Effective January 1, 2005, the definition of “Accrued Benefit” in Section 1.01(a) shall be amended in its entirety to read as follows:

(a) Accrued Benefit means a Participant’s Normal Retirement Benefit earned under the Plan payable at a Participant’s Normal Retirement Date based on his Years of Benefit Service and monthly Compensation up to the date for which the Accrued Benefit is being determined. Notwithstanding the foregoing, the Accrued Benefit of an Employee who was a Participant on December 31, 2004 and who continues as a Participant on January 1, 2005, shall not be less than such Participant’s Accrued Benefit determined under the terms of the Plan as in effect on December 31, 2004.

2.	Effective January 1, 2005, a final paragraph shall be added to the definition of “Employee” in Section 1.01(p) of the Plan to read as follows:
	Notwithstanding the foregoing provisions of this Section 1.01(p), “Employee” shall not include any employee hired as a “retail store employee” (i.e., an employee designated either as classification code 200 and 225 or successor designation of similar import) who is hired on or after January 1, 2005. Further, an Employee who either becomes a “retail store employee” after January 1, 2005, as a result of transfer or otherwise, or who terminates employment and is rehired as a “retail store employee” on or after January 1, 2005, shall not be an Employee hereunder while employed as a “retail store employee.”
3.	Section 2.02 shall be clarified by adding the phrase “as an Employee” after the phrase “and is later rehired” as it appears in such Section 2.02.

41

4.   Effective January 1, 2005, Section 4.01(a) of the Plan shall be amended in its entirety to read as follows:

(a) Effective January 1, 2005, a Participant who retires from a Participating Employer on his Normal Retirement Date is entitled to a monthly Normal Retirement Benefit, payable in the Normal Form of Benefit, in an amount equal to the Participant’s five-year average monthly compensation (i.e., the average of any five consecutive Plan Years or if the actual number of such Years in less than five, the average based on the number of completed months, which produce the highest average) multiplied by the sum of (i) plus (ii), where (i) equals 1% multiplied by the Participant’s Years of Benefit Service prior to January 1, 2005, and (ii) equals .75% multiplied by the Participant’s Years of Benefit Service after December 31, 2004.

Notwithstanding the foregoing, in no event shall such Participant’s Normal Retirement Benefit be less than that accrued under the Plan as of December 31, 2004 under the Plan formula then in effect.

     The foregoing actions are taken with the understanding that such actions are consistent with the desires and intentions of the Company.

OSHKOSH B’GOSH, INC.
By:	/S/ MICHAEL L. HEIDER
	Michael L. Heider
	Vice President Finance, Treasurer and
	Chief Financial Officer
Date:	December 30, 2004
OSHKOSH B’GOSH RETAIL, INC.
By:	/S/ PAUL CHRISTENSEN
	Paul Christensen
	Assistant Secretary
Date:	December 30, 2004
OBG PRODUCT DEVELOPMENT AND SALES, INC.
By:	/S/ PAUL CHRISTENSEN
	Paul Christensen
	Assistant Secretary
Date:	December 30, 2004
OBG DISTRIBUTION COMPANY, LLC
By:	/S/ MICHAEL L. HEIDER
	Michael L. Heider
	Vice President Finance, Treasurer and
	Chief Financial Officer
Date:	December 30, 2004
OBG MANUFACTURING COMPANY
By:	/S/ MICHAEL L. HEIDER
	Michael L. Heider
	Vice President Finance, Treasurer and
	Chief Financial Officer
Date:	December 30, 2004

42

EX-10.7

EXHIBIT 10.7

OSHKOSH B’GOSH, INC.
Officers Medical and Dental Reimbursement Plan
(amended and restated to include Amendments
through May 4, 2004)

          OSHKOSH B’GOSH, INC., a Delaware corporation (hereinafter referred to as the “Corporation”) hereby establishes this Officers Medical and Dental Reimbursement Plan (hereinafter referred to as the “Plan”) for the benefit of certain of its officer-employees as more fully set forth below.

     1. Purpose. The purpose of this Plan is to encourage and insure full and complete health care for the welfare of each covered employee, his or her spouse and dependents.

     2. Coverage. This Plan is for the benefit of those employees of the Corporation who from time to time hold any of the following elective offices: Chief Executive Officer, Chief Operating Officer, and Senior Vice President – Home Accessories and Global Licensing; provided such officer/employee is not eligible for hospital or medical insurance benefits under the Medicare provisions of the federal social security laws.

     3. Reimbursement for Expenses.

          (a) Effective March 1, 1978, and as to certain employees, January 1, 1978, the Corporation will pay the entire cost of each covered employee’s premium under the Corporation’s group medical insurance, including that portion of the premium attributable to the group term life insurance provided thereunder (not to exceed $50,000 of life insurance).

          (b) Effective May 1, 1978, the Corporation will reimburse the covered employees of the Corporation for all expenses incurred by such employees of the Corporation for dental care, psychiatric care, optometric expenses, hospital charges, nursing care, drugs and prescriptions, medical related transportation expense, health and accident insurance, as well as other medical care (to the extent allowable under and as defined in Section 213 of the Internal Revenue Code as amended) of such employees, their spouse, and dependents (as defined in Section 152 of the Internal Revenue Code, as amended) to the extent that such expenses are not reimbursable or payable under any other plan in effect on such date.

          (c) The Corporation may, in its discretion, pay any or all of the above-described expenses directly in lieu of making reimbursement therefor. In such event, the Corporation shall be relieved of all further responsibility with respect to that particular expense.

          (d) The reimbursement to, or the payment on behalf of any one covered employee, including his spouse and his dependents, shall be subject to an annual aggregate limit of $25,000.

          (e) Each covered employee who applies for reimbursement under this Plan shall submit to the Corporation all hospitalization, doctor, dental or other medical bills, including premium notices for accident or health insurance, for verification by the Corporation prior to payment. A failure to comply herewith may, at the discretion of the Corporation, terminate the right to reimbursement of such covered employee.

     4. Other Insurance. Reimbursement under this Plan shall be made by the Corporation only in the event and to the extent that such reimbursement or payment is not provided for under any insurance policy or policies, whether owned by the Corporation or the covered employee, or under any other health and accident plan. In the event that there is such a policy or plan in effect providing for reimbursement or payment in whole or in part, then to the extent of the coverage under such policy or plan the Corporation shall be relieved of any liability hereunder.

     5. Termination. This Plan shall be subject to termination at any time hereafter by action of the Board of Directors of the Corporation; provided, that such termination shall not affect any right to claim reimbursement for medical and dental expenses under the provisions of this Plan arising prior to such termination.

     6. ERISA Information. This Plan document shall constitute the summary plan description required by the Employee Retirement Income Security Act of 1974 (“ERISA”). Pursuant to the requirements of such law, the following information is provided:

          (a) The sponsor and plan administrator of this Plan is the Corporation, 112 Otter Avenue, Oshkosh, Wisconsin 54901 (phone: 920- 231-8800). The Corporation’s federal tax identification number is 39-0519915. The Corporation is the agent for service of legal process. The Plan is operated on a calendar year basis.

          (b) Paragraph 3(e) of this Plan describes the procedure for claiming benefits. If a claim is denied, the Corporation will provide a notice containing specific reasons for the denial, references to the pertinent Plan provisions, a description of any additional information needed to perfect the claim and an explanation of the claim review procedure. If a participant wishes to appeal a denial of benefits, he must submit a written request for review to the Corporation within 60 days of his receipt of the notice of denial. Such request should include any comments and data the participant believes are relevant to the review. The Corporation will make a written decision on the appeal, including the reasons for the decision and references to the pertinent Plan provisions, and a copy will be sent to the participant.

          (c) A participant in the Plan is entitled to certain rights under ERISA. He may examine, without charge, at the Plan Administrator’s office and at other specified locations, all documents governing the Plan, including the latest annual report (Form 5500 series) filed by the Plan with the U.S. Department of Labor and available at the Public Disclosure Room of the Pension and Welfare Benefit Administration. He is also entitled to receive a summary of the Plan’s annual financial report. The Plan Administrator is required by law to furnish each participant with a copy of this summary annual report. He may obtain copies of all plan documents and other plan information upon written request to the Corporation. The Corporation may make a reasonable charge for the copies. He may file suit in federal court if any materials

- 2 -

requested to which he is entitled are not received within 30 days, unless the same were not sent because of matters beyond the control of the Corporation. The court has the discretion to require the Corporation to pay up to $110 for each day’s delay until the materials are received.

          (d) In addition to creating rights for Plan participants, ERISA imposes obligations on the persons responsible for the operation of a plan (“fiduciaries”). Fiduciaries must act solely in the interest of Plan participants and must act prudently. Fiduciaries who violate ERISA may be removed and required to make good any losses they caused the Plan.

          (e) If a participant’s claim for a benefit is denied or ignored, in whole or in part, he has the right to know why this was done, to obtain copies of documents relating to the decision without charge, and to appeal any denial, all within certain time schedules.

          (f) The Corporation may not discriminate against a participant to prevent him from obtaining a benefit or exercising his rights under ERISA. If a participant is improperly denied a benefit, he may file suit in state or federal court. If he wins his case, the court may order the other party to pay the costs and legal fees. If he loses, the court may order him to pay such items, for example, if it finds his claim frivolous.

          (g) If a participant has questions about the Plan, he should contact the Plan Administrator. If he has any questions about this statement or about his rights under ERISA, or if he needs assistance in obtaining documents from the Plan Administrator, he should contact the nearest Office of the Pension and Welfare Benefits Administration, U.S. Department of Labor, listed in the telephone directory or the Division of Technical Assistance and Inquires, Pension and Welfare Benefits Administration, U.S. Department of Labor, 200 Constitution Avenue N.W., Washington, D.C. 20210. He may also obtain certain publications about his rights and responsibilities under ERISA by calling the publications hotline of the Pension and Welfare Benefits Administration.

- 3 -

EX-21

EXHIBIT 21

      The following is a list of subsidiaries of the Company as of January 1, 2005. The consolidated financial statements reflect the operations of all subsidiaries as they existed on January 1, 2005.

	State or Other
	Jurisdiction of
	Incorporation or
Name of Subsidiary	Organization
Manufacturera International Apparel, S.A.	Honduras
OshKosh B’Gosh Asia/ Pacific Ltd. (Inactive)	Hong Kong
OshKosh B’Gosh Investments, Inc.	Nevada
OshKosh B’Gosh Retail, Inc.	Delaware
OBG Distribution Company, LLC	Wisconsin
OBG Manufacturing Company	Kentucky
OBG Product Development and Sales, Inc.	Delaware
OshKosh B’Gosh Operations, LLC	Wisconsin
Millennia Manufacturing SRL de CV	Mexico

60 EX-23 6 c92767exv23.htm CONSENT OF DELOITTE & TOUCHE LLP

EXHIBIT 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

      We consent to the incorporation by reference in Registration Statements Nos. 333-01051, 333-74038 and 333-122617 on Form S-8 of OshKosh B’Gosh, Inc. of our reports dated February 25, 2005, relating to the financial statements of Oshkosh B’Gosh, Inc. and management’s report on the effectiveness of internal control over financial reporting, appearing in this Annual Report on Form 10-K of OshKosh B’Gosh, Inc. for the year ended January 1, 2005.

Milwaukee, Wisconsin

March 14, 2005

61 EX-31.1 7 c92767exv31w1.htm CERTIFICATION BY THE CHIEF EXECUTIVE OFFICER

EXHIBIT 31.1

CERTIFICATION

I, Douglas W. Hyde, certify that:

      1. I have reviewed this annual report on Form 10-K of OshKosh B’Gosh, Inc.;

      2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

      3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

      4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

      a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

      b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

      c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

      d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

      5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

      a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

      b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:  /s/ DOUGLAS W. HYDE

Douglas W. Hyde

Chief Executive Officer

Date: March 14, 2005

62 EX-31.2 8 c92767exv31w2.htm CERTIFICATION BY THE VP FINANCE, TREASURER AND CFO

EXHIBIT 31.2

CERTIFICATION

I, Michael L. Heider, certify that:

      1. I have reviewed this annual report on Form 10-K of OshKosh B’Gosh, Inc.;

      2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

      3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

      4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

      a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

      b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

      c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

      d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

      5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

      a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

      b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:  /s/ MICHAEL L. HEIDER

Michael L. Heider

Vice President Finance, Treasurer and

Chief Financial Officer

Date: March 14, 2005

63 EX-32.1 9 c92767exv32w1.htm SECTION 906 CERTIFICATION BY THE CEO

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

      In connection with the Annual Report of OshKosh B’Gosh, Inc. (the “Company”) on Form 10-K for the period ended January 1, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Douglas W. Hyde, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

      (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

      (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ DOUGLAS W. HYDE

Douglas W. Hyde

Chief Executive Officer

March 14, 2005

      A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to OshKosh B’Gosh, Inc. and will be retained by OshKosh B’Gosh, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

64 EX-32.2 10 c92767exv32w2.htm SECTION 906 CERTIFICATION BY THE VP FINANCE, TREASURER AND CFO

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

      In connection with the Annual Report of OshKosh B’Gosh, Inc. (the “Company”) on Form 10-K for the period ended January 1, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael L. Heider, Vice President Finance, Treasurer and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

      (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

      (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ MICHAEL L. HEIDER

Michael L. Heider

Vice President Finance, Treasurer and

Chief Financial Officer

March 14, 2005

      A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to OshKosh B’Gosh, Inc. and will be retained by OshKosh B’Gosh, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

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