<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 17, 2000
REGISTRATION NO. 333-93333
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
PRE-EFFECTIVE AMENDMENT NO. 1 TO
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
----------------------
ANSELL HEALTHCARE INCORPORATED
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C> <C>
DELAWARE 3069 22-3686084
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
200 SCHULZ DRIVE
RED BANK, NEW JERSEY 07701
(732) 345-5400
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive office)
----------------------
HARRY BOON
CHIEF EXECUTIVE OFFICER
ANSELL HEALTHCARE INCORPORATED
200 SCHULZ DRIVE
RED BANK, NEW JERSEY 07701
(732) 345-5400
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
----------------------
COPIES TO:
<TABLE>
<S> <C>
ROBERT J. WILCZEK RICHARD B. VILSOET
GARDNER, CARTON & DOUGLAS SHEARMAN & STERLING
321 NORTH CLARK STREET, SUITE 3400 599 LEXINGTON AVENUE
CHICAGO, ILLINOIS 60610 NEW YORK, NEW YORK 10022
(312) 644-3000 (212) 848-4000
</TABLE>
----------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
----------------------
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ] _______________ .
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] _______________ .
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _______________ .
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _______________ .
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM AGGREGATE
TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED OFFERING PRICE(1) AMOUNT OF REGISTRATION FEE(2)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stock, par value $0.01 per share........ $175,000,000 $46,200
- ---------------------------------------------------------------------------------------------------------------
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</TABLE>
(1) Estimated solely for purpose of determining the amount of the registration
fee, in accordance with Rule 457(o) under the Securities Act.
(2) The registration fee was paid at the time of the initial filing of the
registration statement.
----------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
The information in this prospectus is not complete and may be changed. We
may not sell these securities until the registration statement filed with
Securities and Exchange Commission is effective. This prospectus is not
an offer to sell these securities and it is not soliciting an offer to
buy these securities in any state where the offer or sale is not
permitted.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED , 2000
PROSPECTUS
8,700,000 SHARES
ANSELL HEALTHCARE INCORPORATED
COMMON STOCK
----------------------
P.D. International Pty Ltd, a wholly owned indirect subsidiary of Pacific
Dunlop Limited, is selling 8,700,000 shares of Ansell Healthcare Incorporated's
common stock. This is the initial public offering of Ansell's common stock.
Ansell will not receive any proceeds from the offering.
We expect the public offering price to be between $ and $ per
share. Currently, no public market exists for the shares. After pricing of the
offering, we expect that the shares of common stock will trade on the New York
Stock Exchange under the symbol "AHX."
Prior to the offering, Pacific Dunlop Limited indirectly owned beneficially
all of our common stock. Following the offering, Pacific Dunlop Limited will
indirectly beneficially own at least 80% of our common stock.
INVESTING IN THE COMMON STOCK INVOLVES RISKS THAT ARE DESCRIBED IN THE
"RISK FACTORS" SECTION BEGINNING ON PAGE 6 OF THIS PROSPECTUS.
----------------------
<TABLE>
<CAPTION>
PER SHARE TOTAL
--------- --------
<S> <C> <C>
Public offering price........................... $ $
Underwriting discount........................... $ $
Proceeds, before expenses, to the selling
stockholder................................... $ $
</TABLE>
The underwriters may also purchase up to an additional 1,300,000 shares of
common stock at the public offering price, less the underwriting discount,
within 30 days from the date of this prospectus to cover over-allotments. Ansell
will not receive any proceeds from the sale of the additional shares by P.D.
International Pty Ltd.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The shares of common stock will be ready for delivery in New York, New York
on or about , 2000.
----------------------
MERRILL LYNCH & CO.
BEAR, STEARNS & CO. INC.
J.P. MORGAN & CO.
----------------------
The date of this prospectus is , 2000
<PAGE> 3
[Insert "Ansell Healthcare Incorporated" as graphics text]
[Photos/Graphics: 1 medical glove; 1 glove from occupational healthcare segment;
packaging for condoms].
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.......................................... 1
Risk Factors................................................ 6
Forward-Looking Statements.................................. 14
Capitalization.............................................. 15
The Reorganization.......................................... 16
Use of Proceeds............................................. 16
Dividend Policy............................................. 16
Selected Combined Financial Data............................ 17
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 20
Business.................................................... 34
Management.................................................. 55
Relationship and Agreements with the Pacific Dunlop Group... 61
Principal and Selling Stockholders.......................... 66
Description of Capital Stock................................ 66
Shares Eligible for Future Sale............................. 68
Certain United States Federal Tax Considerations for
Non-United States Holders................................. 69
Underwriting................................................ 72
Legal Matters............................................... 75
Experts..................................................... 75
Where to Find More Information.............................. 75
Index to Financial Statements............................... F-1
Unaudited Pro Forma Condensed Combined Financial
Statements................................................ P-1
</TABLE>
----------------------
You should rely only on the information contained in this prospectus. We
have not, and the underwriters have not, authorized any other person to provide
you with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. We are not, and the
underwriters are not, making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted. You should assume that
the information appearing in this prospectus is accurate only as of the date on
the front cover of this prospectus. Our business, financial condition, results
of operations and prospects may have changed since that date.
<PAGE> 5
PROSPECTUS SUMMARY
This is a summary and does not contain all the information that may be
important to you. You should read the more detailed information included
elsewhere in this prospectus. Except as otherwise noted, the information
contained in this prospectus assumes that the underwriters will not exercise the
over-allotment option and that our reorganization has been completed.
References to "Ansell Group" mean the businesses that are included in the
Ansell segment data as historically reported by Pacific Dunlop Limited and that
have been reorganized into Ansell. "Pacific Dunlop Group" refers to Pacific
Dunlop Limited and its direct and indirect subsidiaries. We call those companies
in the Pacific Dunlop Group that will own our shares after completion of this
offering the "Pacific Dunlop Stockholders." Our fiscal year ends on June 30 of
each year, so that references to fiscal 1999 and the like are to the year ended
June 30 of the referenced year. All financial information presented in this
prospectus is in U.S. dollars and is presented in accordance with U.S. GAAP.
Certain market size information and other statements relating to our
position relative to our competitors are not based entirely on published
statistical data or information obtained from independent third parties, but
reflect our best estimates. We have based these estimates on third party reports
and on information obtained from our customers, competitors, distributors, trade
and business organizations and associations and other contacts in our industry.
ANSELL HEALTHCARE INCORPORATED
We are a global leader in the design, development, manufacture and
marketing of protective gloves and condoms. Our operations are organized into
three business segments:
- Professional Healthcare, which consists of medical examination and
surgical gloves,
- Occupational Healthcare, which consists of industrial and consumer
gloves, and
- Personal Healthcare, which consists of condoms.
We compete in the worldwide protective glove and condom markets that we
estimated to be $5.8 billion in 1998. We believe that we have the leading global
market share in, and the broadest product range of, protective gloves serving
the healthcare and occupational sectors of the protective barrier market. We
also believe that we are one of the world's largest manufacturers and marketers
of condoms.
In fiscal 1999, we generated $738 million in net sales of which:
- Professional Healthcare contributed 36%,
- Occupational Healthcare contributed 51%, and
- Personal Healthcare contributed 13%.
In fiscal 1999, we sold products into more than 100 countries, including:
- the Americas, which accounted for approximately 56% of our net sales,
- Europe, which accounted for approximately 32% of our net sales, and
- Asia/Pacific, which accounted for approximately 12% of our net sales.
We are an innovator in the design and manufacture of protective gloves and
condoms. In each of the past three years more than 15% of our sales have come
from products that have been on the market for three years or less and that we
have developed internally.
We have been an active acquirer of businesses within the protective barrier
products industry. We have pursued acquisitions to expand and augment our main
product lines, provide additional distribution channels, add new technologies,
enhance our manufacturing capabilities and enter new geographic markets. We are
in the process of acquiring, for approximately $97.6 million, the medical glove
business of Johnson & Johnson which will enable us to further our leadership
position in the medical glove market
1
<PAGE> 6
and obtain a modern manufacturing facility in Malaysia. This acquisition is
expected to close in early 2000.
We currently operate 31 facilities in 16 countries. The majority of our
manufacturing facilities are located in Southeast Asia in close proximity to the
rubber tree plantations that serve as our source of natural latex. Our products
are made predominantly of natural and synthetic latex, which share common
manufacturing processes and polymer dipping technologies. Our proprietary
formulations and related manufacturing processes enable us to produce many
different types and styles of high quality gloves and condoms. We maintain a
flexible supply and logistics infrastructure that allows us to switch production
between various products based on market demand. We believe that we are well
positioned to capitalize on the technology transfer opportunities that exist
among our three business segments, our recent acquisitions and our manufacturing
facilities.
We believe that we have some of the most recognizable brands in the
protective glove and condom markets. Our medical gloves are marketed principally
under the umbrella brands of Ansell and Ansell Perry. Specific product brands
include: Gammex, Conform, Encore, NuTex, MicrOptic, X-AM, Synsation, DermaClean
and Nitra-Touch. Through our pending acquisition of the medical glove business
of Johnson & Johnson, we will acquire the brands Micro-Touch, Maxxus, Neutralon,
Ultralon, Surgikos, Dispos-a-Glove and Allergard. Our Occupational Healthcare
gloves are principally branded Ansell Edmont. Specific product brands include:
Ansell, Nitrilite, Solvex, Hynit, Touch'n Tuff, Duratouch, Hycron, Golden
Needles and Hyflex. Our condoms are principally branded LifeStyles, Mates,
Manix, Contempo, Primex, Chekmate and KamaSutra, as well as Benetton, which is
sold under license.
We intend to be the leading designer, developer, manufacturer and marketer
of protective gloves, condoms and other healthcare barrier products worldwide.
In order to achieve our objective, we will continue to:
- offer a broad range of products and brands,
- focus on value added, higher margin branded products,
- leverage research and development,
- augment internal growth with acquisitions,
- leverage manufacturing where we have a technological advantage, and
- focus on customer service.
RELATIONSHIP WITH THE PACIFIC DUNLOP GROUP
We were founded in 1905 by Eric Ansell in Melbourne, Australia and acquired
by Dunlop Australia Limited (now Pacific Dunlop Limited) in 1969. Pacific Dunlop
Limited is a diversified multinational marketer and manufacturer of consumer and
industrial products based in Australia. In 1997, we relocated our executive
offices from Melbourne, Australia to Red Bank, New Jersey.
Prior to this offering, Pacific Dunlop Limited indirectly owned 100% of our
common stock. After completion of this offering, the Pacific Dunlop Stockholders
will own at least 80% of our common stock. We believe that the Pacific Dunlop
Stockholders will continue to exercise influence and control over us and
currently intend to retain at least 80% of our common stock, so that we remain a
part of the Pacific Dunlop Group's U.S. federal income tax consolidated group.
CORPORATE INFORMATION
We were incorporated in Delaware in 1999. Our executive offices are located
at 200 Schulz Drive, Red Bank, New Jersey 07701 and our telephone number is
(732)345-5400. We maintain websites at www.ansell.com, www.anselledmont.com,
www.ansellhealthcare.com, www.safetynews.com/ansell and www.lifestyles.com.
Information contained on our websites is not part of this prospectus.
2
<PAGE> 7
THE OFFERING
Common stock offered by the selling
stockholder...................... 8,700,000 shares
Common stock outstanding after the
offering........................... 50,000,000 shares
Use of proceeds.................... We will not receive any of the proceeds
from the offering.
Dividend policy.................... We do not anticipate paying any dividends
in the foreseeable future. See "Dividend
Policy."
Risk factors....................... See "Risk Factors" and other information
included in this prospectus for a
discussion of factors you should
carefully consider before deciding to
invest in shares of our common stock.
New York Stock Exchange symbol..... "AHX"
Ownership by the Pacific Dunlop
Group.............................. We are currently wholly owned by
companies in the Pacific Dunlop Group.
After the offering, the Pacific Dunlop
Stockholders will beneficially own at
least 80% of our common stock.
3
<PAGE> 8
SUMMARY COMBINED FINANCIAL DATA
(IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
The following table presents summary combined historical financial data of
Ansell Group and pro forma financial data.
The pro forma data set forth below is derived from the Unaudited Pro Forma
Condensed Combined Financial Statements included elsewhere in this prospectus
and gives effect to:
- the reorganization of Ansell Group into Ansell Healthcare Incorporated,
including the elimination of a substantial portion of debt owed to
affiliates and cash, and
- the sale of up to 20% of Ansell Healthcare Incorporated by the selling
stockholder which results in the transfer of Ansell Group's U.S. tax net
operating loss carryforwards to other members of the Pacific Dunlop
Group.
The reorganization and the offering have been recorded as if they had
actually occurred on the first day of our 1999 and 2000 fiscal years with
respect to the pro forma statement of operations data for the fiscal year ended
June 30, 1999 and the six months ended December 31, 1999, respectively, and on
December 31, 1999 with respect to pro forma balance sheet data. The pro forma
data does not necessarily represent what our financial position or results of
operations would have been had such transactions been completed on such dates,
nor does it give effect to any events other than those discussed in the notes to
the Unaudited Pro Forma Condensed Combined Financial Statements. The pro forma
data also does not project our financial position or results of operations as of
any future date or for any future period.
You should also refer to the more complete information contained in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," the audited Combined Financial Statements of the Ansell Group and
the Unaudited Pro Forma Condensed Combined Financial Statements which are
included elsewhere in this prospectus.
<TABLE>
<CAPTION>
FISCAL YEARS ENDED JUNE 30,
------------------------------------------------------------------
1999
1995 1996 1997 1998 1999 PRO FORMA
-------- -------- -------- -------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales.......................... $534,366 $627,004 $669,749 $735,263 $738,382 $738,382
Cost of goods sold................. 354,514 413,965 452,529 487,785 483,464 483,464
-------- -------- -------- -------- -------- --------
Gross profit....................... 179,852 213,039 217,220 247,478 254,918 254,918
Costs and expenses:
Selling, general and
administrative.................. 93,652 127,035 125,760 138,501 149,621 150,621
Research and development.......... 3,426 4,550 10,435 8,824 8,315 8,315
Restructuring charges(1).......... -- 5,258 -- -- 1,298 1,298
Amortization of intangibles....... 4,344 5,412 5,877 7,127 8,786 8,786
-------- -------- -------- -------- -------- --------
Income from operations............. 78,430 70,784 75,148 93,026 86,898 85,898
Interest expense, net.............. 26,990 25,735 25,055 21,054 21,128 16,134
Foreign currency transactions and
other, net........................ (78) (2,991) 1,216 (4,441) (1,284) (1,284)
Income taxes....................... 10,758 8,998 10,026 9,202 10,967 12,485
Minority interests................. 3,795 3,111 3,085 4,343 3,468 3,468
-------- -------- -------- -------- -------- --------
Net income before cumulative effect
of accounting change.............. 36,965 35,931 35,766 62,868 52,619 55,095
Cumulative effect of accounting
change, net of income tax(2)...... 3,538 -- -- -- -- --
-------- -------- -------- -------- -------- --------
Net income......................... $33,427 $35,931 $35,766 $62,868 $52,619 $55,095
======== ======== ======== ======== ======== ========
Pro forma basic and diluted net
income per share(3)............... $1.10
========
Weighted avg. shares
outstanding(3).................... 50,000
OTHER DATA:
EBITDA(4)......................... $94,174 $96,270 $96,528 $119,253 $115,228 $114,228
Adjustments(5).................... 7,255 5,378 4,301 (98) 3,482 2,184
-------- -------- -------- -------- -------- --------
Adjusted EBITDA(5)................ $101,429 $101,648 $100,829 $119,155 $118,710 $116,412
======== ======== ======== ======== ======== ========
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31,
---------------------------------------
1999
1998 1999 PRO FORMA
----------- ----------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales.......................... $358,708 $354,747 $354,747
Cost of goods sold................. 233,792 228,481 228,481
-------- -------- --------
Gross profit....................... 124,916 126,266 126,266
Costs and expenses:
Selling, general and
administrative.................. 72,254 79,621 80,121
Research and development.......... 4,176 4,488 4,488
Restructuring charges(1).......... 1,046 -- --
Amortization of intangibles....... 4,432 4,461 4,461
-------- -------- --------
Income from operations............. 42,738 37,696 37,196
Interest expense, net.............. 10,062 12,548 8,067
Foreign currency transactions and
other, net........................ 498 (831) (831)
Income taxes....................... 4,588 4,971 6,484
Minority interests................. 2,214 1,275 1,275
-------- -------- --------
Net income before cumulative effect
of accounting change.............. 25,376 19,733 22,201
Cumulative effect of accounting
change, net of income tax(2)...... -- -- --
-------- -------- --------
Net income......................... $25,376 $19,733 $22,201
======== ======== ========
Pro forma basic and diluted net
income per share(3)............... $0.44
========
Weighted avg. shares
outstanding(3).................... 50,000
OTHER DATA:
EBITDA(4)......................... $54,742 $53,498 $52,998
Adjustments(5).................... 3,758 444 444
-------- -------- --------
Adjusted EBITDA(5)................ $58,500 $53,942 $53,442
======== ======== ========
</TABLE>
footnotes on following page
4
<PAGE> 9
SUMMARY COMBINED FINANCIAL DATA -- (CONTINUED)
(IN THOUSANDS, UNLESS OTHERWISE STATED)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31, 1999
--------------------------------------------------------- ---------------------
1995 1996 1997 1998 1999 ACTUAL PRO FORMA
--------- --------- --------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents........... $54,838 $23,197 $28,242 $53,668 $59,132 $65,564 $10,000
Working capital (deficit)........... (141,626) (169,208) (166,884) (100,027) (146,394) (155,292) 19,565
Total assets........................ 770,172 718,672 817,962 755,923 836,394 860,755 805,191
Total debt(6)....................... 375,437 373,048 361,820 349,885 408,671 440,421 210,000
Total liabilities................... 506,088 491,823 532,464 460,836 525,740 558,106 340,385
Stockholder's equity(7)............. 264,083 218,129 275,529 287,779 301,530 292,192 454,349
</TABLE>
- ---------------
(1) Restructuring charges consist of the costs related to the closure of Ansell
Group's balloon production and marketing operations in 1996, and the
severance costs and the writedown to net realizable value of equipment
related to the restructuring of two manufacturing facilities and certain
administrative functions in 1999.
(2) In 1995 the method of amortizing goodwill was changed to straight-line.
(3) The weighted average shares are calculated assuming the shares outstanding
immediately after the reorganization were outstanding for the entire period.
For purposes of the pro forma net income per share data, net interest
expense and income taxes are adjusted to reflect the elimination of $230.4
million of debt owed to affiliates and $55.6 million of cash balances as
part of the reorganization, and $1.0 million and $0.5 million in additional
costs were added to selling, general and administrative expenses for fiscal
1999 and the six months ended December 31, 1999, respectively.
(4) "EBITDA" represents net income before net interest expense, income taxes,
depreciation and amortization. EBITDA is not intended to represent and
should not be considered more meaningful than, or an alternative to, net
income, cash flow or other performance measures in accordance with generally
accepted accounting principles.
(5) Adjusted EBITDA represents "EBITDA" as defined in Note (4) before
adjustments for restructuring charges; foreign currency transactions and
other, net; minority interest and cumulative effect of accounting change,
net of tax effect. Adjusted EBITDA is not intended to represent and should
not be considered more meaningful than or an alternative to, net income,
cash flow or other performance measures in accordance with generally
accepted accounting principles.
(6) Total debt includes revolving lines of credit due to affiliates, current
portion of long-term debt and long-term debt.
(7) Stockholder's equity consists of the combined net assets of the Ansell Group
prior to the offering.
5
<PAGE> 10
RISK FACTORS
You should carefully consider the risks and uncertainties described below
and other information in this prospectus before deciding to invest in our common
stock.
We have separated the risks and uncertainties into three categories:
- risks relating to our company and our industry,
- risks relating to our relationship and agreements with the Pacific Dunlop
Group, and
- risks relating to this offering and our common stock.
These are not the only risks and uncertainties that we face. Additional
risks and uncertainties that we do not currently know about or that we currently
believe are immaterial may also harm our business, results of operations and
financial condition. If any of these risks or uncertainties occurs, it could
have a material adverse effect on our business, the trading price of our common
stock could decline and you could lose all or part of your investment.
RISKS RELATING TO OUR COMPANY AND OUR INDUSTRY
SINCE A SUBSTANTIAL PORTION OF OUR COSTS AND NET SALES ARE INCURRED AND REALIZED
IN CURRENCIES OTHER THAN U.S. DOLLARS, FLUCTUATIONS IN CURRENCY EXCHANGE RATES
COULD HAVE A MATERIAL EFFECT ON OUR RESULTS OF OPERATIONS.
Due to the worldwide locations of many of our manufacturing facilities, a
substantial portion of our costs are incurred in currencies other than U.S.
dollars, primarily currencies of various Southeast Asian countries. In fiscal
1997, 1998, 1999 and in the six months ended December 31, 1999, approximately
43%, 38%, 36% and 36%, respectively, of our costs were denominated in currencies
other than U.S. dollars.
Similarly, due to the worldwide presence of our customer base, a
substantial portion of our net sales are realized in various currencies other
than U.S. dollars, primarily the euro and to a lesser extent British pounds,
Canadian dollars, Australian dollars and several other currencies. In fiscal
1997, 1998, 1999 and in the six months ended December 31, 1999, approximately
46%, 43%, 42% and 41%, respectively, of our net sales were denominated in
currencies other than U.S. dollars. Our net sales and costs are not well aligned
in certain regions, which limits natural currency hedges.
We expect that a large part of our costs and sales will continue to be in
non-U.S. currencies. As a result, fluctuations in currency exchange rates,
particularly of various Southeast Asian currencies and the euro relative to the
U.S. dollar, could have a material positive or negative effect on our results of
operations.
We have at various times over the last several years taken hedging
positions against the Australian dollar, the currency in which we historically
reported our results of operations. We will report our results of future
operations in U.S. dollars after the reorganization. Currency and hedging
strategies will be determined by our board of directors. If the board of
directors adopts a policy that calls for us to hedge our currency exposure,
implementation of that policy should reduce but not eliminate the risks of
currency exchange rate fluctuations and will result in transaction costs
associated with those hedging transactions. Any hedging transactions we do will
be with Pacific Dunlop Limited as a counterparty on terms that it believes are
terms that would be available to us in the open market. Because we rely on
Pacific Dunlop Limited to set the terms, we are subject to its judgment as to
what are market terms. See "Relationship and Agreements with the Pacific Dunlop
Group -- Intercompany Agreements -- Services Agreement."
6
<PAGE> 11
SINCE A LARGE PORTION OF OUR U.S. SALES OF MEDICAL GLOVES IN THE PROFESSIONAL
HEALTHCARE DIVISION ARE MADE PURSUANT TO CONTRACTS WITH A SMALL NUMBER OF GROUP
PURCHASING ORGANIZATIONS (WHICH ARE CALLED GPOS), IF ONE OR MORE OF THESE
CONTRACTS IS TERMINATED, NOT RENEWED OR RENEWED WITH LESS FAVORABLE TERMS, OUR
NET SALES OF MEDICAL GLOVES COULD SIGNIFICANTLY DECLINE.
Many existing and potential U.S. customers for our medical examination and
surgical gloves have affiliation or membership contracts with GPOs that
influence or mandate a substantial portion of their purchasing decisions and
often include formal compliance thresholds. GPOs with whom we have contracts
often select only a few suppliers as preferred vendors to their members and
provide incentives or require their members to purchase products or categories
of products from selected suppliers. This selection process typically involves
competitive bidding and the award of a contract to a limited number of selected
suppliers. These contracts are typically two to five years in duration but can
be terminated on short notice, typically 30 to 60 days, at the sole discretion
of the GPOs.
The top three GPOs with whom we contract, Premier Purchasing Partners,
L.P., Novation, LLC and AmeriNet, Inc., together, accounted for approximately:
- 3.3% of our net sales and 8.7% of the net sales in our Professional
Healthcare segment in fiscal 1997,
- 7.0% of our net sales and 20.1% of the net sales in our Professional
Healthcare segment in fiscal 1998,
- 7.4% of our net sales and 20.6% of the net sales in our Professional
Healthcare segment in fiscal 1999, and
- 7.0% of our net sales and 19.5% of the net sales in our Professional
Healthcare segment in the six months ended December 31, 1999.
In March 1999, Premier announced its intention to reconfigure its medical
glove contract portfolio prior to termination of the existing contract and
requested the submission of new bids. We may not be one of the suppliers
ultimately selected by Premier.
If one or more of these agreements is terminated, not renewed or renewed
with less favorable terms, our net sales of medical gloves could significantly
decline.
WE DEPEND UPON DISTRIBUTORS, INCLUDING ONE THAT IS ALSO A COMPETITOR OF OURS IN
CERTAIN BUSINESSES, TO DISTRIBUTE OUR MEDICAL GLOVES, WHICH MAKES US SUSCEPTIBLE
TO PRICE FLUCTUATIONS, SERVICE DISRUPTIONS AND CANCELLATIONS THAT ARE OUTSIDE
OUR CONTROL.
Substantially all U.S. sales of our medical gloves are made through
independent distributors selected by our customers. The three largest
distributors selected by our customers, Owens & Minor, Inc., Allegiance and
General Medical Co. together accounted for approximately:
- 7.7% of our net sales and 20.2% of the net sales in our Professional
Healthcare segment in fiscal 1997,
- 10.4% of our net sales and 29.6% of the net sales in our Professional
Healthcare segment in fiscal 1998,
- 10.5% of our net sales and 29.5% of the net sales in our Professional
Healthcare segment in fiscal 1999, and
- 11.0% of our net sales and 27.4% of the net sales in our Professional
Healthcare segment in the quarter ended December 31, 1999.
Allegiance is also one of our direct competitors with respect to the sale
of medical gloves.
Our dependence on these distributors to distribute our medical gloves makes
us susceptible to price fluctuations, service disruptions and cancellations that
are outside our control. Also, if the efforts of any of
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<PAGE> 12
our distributors prove unsuccessful, if any distributor abandons or limits its
distribution of our products or if any distributor encounters serious financial
difficulties, our net sales could significantly decline and our results of
operations and financial condition could be negatively affected.
OUR MANUFACTURING OPERATIONS ARE BASED, AND OUR REVENUES ORIGINATE, IN MANY
DIFFERENT COUNTRIES AND ARE, THEREFORE, SUBJECT TO INSTABILITY AND FLUCTUATION
IN POLITICAL, DIPLOMATIC AND ECONOMIC CONDITIONS, INCLUDING CHANGES IN POLICIES
REGARDING TAXATION.
In fiscal 1999, approximately 50% of our manufacturing operations, measured
in terms of cost of production, and approximately 51% of our net sales were
outside the United States. As a company with worldwide presence, we are subject
to economic, political and diplomatic factors in countries where we have
operations that could adversely affect our financial results, restrict our
ability to expand or limit our current operations.
Our latex product factories and latex concentrate manufacturing and
processing plants outside the United States are located in Malaysia, Thailand,
Sri Lanka and India, as are those of most of our competitors. As a result, we
are directly affected by the political and economic conditions that exist in
those parts of the world. Any political or economic instability, a significant
increase in the rate of corporate taxation, a discontinuance or reduction in
export tax rebates or any other change in a country's policies regarding foreign
ownership of manufacturing facilities could have significant adverse effects on
our business, financial condition and results of operations. We expect that
non-U.S. expenses will continue to represent the major portion of our expenses.
We also expect that we will be subject to the risks of conducting business
internationally, including foreign currency exchange rate fluctuations,
unexpected changes in regulatory requirements, tariffs and other barriers. Our
financial condition or results of operations may be adversely affected by these
factors. See "Business -- Manufacturing" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
WE, AND OTHER COMPANIES IN OUR INDUSTRY, ARE CURRENTLY DEFENDANTS IN NUMEROUS
PRODUCT LIABILITY LAWSUITS ALLEGING FAULT FOR ALLERGIC REACTIONS TO NATURAL
RUBBER LATEX GLOVES EXPERIENCED BY SOME USERS. ALTHOUGH WE CANNOT QUANTIFY OUR
LIABILITY IN THESE CASES, WE ARE INCURRING AND EXPECT TO INCUR ADDITIONAL
EXPENSES IN DEFENDING THESE PROCEEDINGS WHICH MAY AFFECT OUR FUTURE FINANCIAL
CONDITION OR RESULTS OF OPERATIONS.
As of January 31, 2000, we were a defendant along with other manufacturers
and distributors of latex gloves in 310 lawsuits filed in the United States and
two in Australia on behalf of individuals alleging wrongful death, personal
injuries and lost wages as a result of their exposure to natural rubber latex
gloves. The lawsuits allege, among other things, that the defendants were
negligent in the design and manufacture of the gloves and failed to adequately
warn users of the possibility of allergic reactions to latex products. As of
January 31, 2000, the 310 lawsuits pending against us in the United States
represented approximately 50% of latex related cases filed against all
defendants in the United States. In the United States, we had 167 and 257 latex
allergy lawsuits pending against us at June 30, 1998 and June 30, 1999,
respectively. We are unable to anticipate how many additional plaintiffs may
file similar lawsuits or how many lawsuits may be filed in other countries.
The latex glove cases in which Ansell is a defendant are in the discovery
phase of litigation. Because of the uncertainty as to the outcome of these cases
created by the presence of multiple defendants in these cases, the difficulty of
establishing whose natural rubber latex gloves were used by particular
plaintiffs and the need to determine whether latex gloves were the cause of any
particular injury, any liability that we may incur in relation to these claims
cannot be quantified. The outcome of these proceedings may have an adverse
effect on our future financial condition or results of operations. Additionally,
we are incurring expenses in defending these proceedings and expect to incur
additional expenses in the future.
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<PAGE> 13
IF WE ARE UNABLE TO IMPLEMENT OUR ACQUISITION STRATEGY SUCCESSFULLY AND PROPERLY
INTEGRATE ACQUIRED BUSINESSES, OUR ABILITY TO EXPAND OUR PRODUCT OFFERINGS AND
GROW OUR CUSTOMER BASE MAY BE LIMITED.
We have historically made acquisitions to augment and expand our
technology, manufacturing, product lines and geographic coverage. Our
acquisition of the medical glove business of Johnson & Johnson is pending. Our
strategic transactions over the last three fiscal years include the acquisitions
of:
- Suretex Limited (Thailand) and Kemwell International Limited (India) in
fiscal 1999,
- our joint venture with Raymond Limited for what is now known as JK
Ansell, Ltd. (India) in fiscal 1998, and
- the acquisition of Golden Needles Knitting, Inc. (United States) in
fiscal 1997.
In order to expand our product offerings and to grow our business by
reaching new customers, we anticipate that we will continue to acquire
businesses that we believe are complementary. The successful implementation of
this strategy depends on our ability:
- to identify suitable acquisition candidates,
- to acquire companies on acceptable terms,
- to integrate their operations and technology successfully with our own,
and
- to maintain the goodwill of the acquired business.
Acquisitions involve numerous risks, including:
- the integration of the operations, services, products and personnel of
the acquired company,
- the diversion of management's attention from other business concerns,
- the loss of key employees, key customers and distributors, and
- the inability to maintain the goodwill of the acquired businesses.
We are unable to predict whether or when any prospective acquisition
candidate will become available or the likelihood that any proposed acquisition
will be completed. Moreover, in pursuing acquisition opportunities, we may
compete for acquisition targets with other companies with similar growth
strategies. Some of these competitors may be larger and may have greater
financial and other resources than we do. Our future acquisition strategy may
not be successful and acquisitions may be more costly in the future due to
increased competition in our industry for acquisition targets and strategic
relationships.
BECAUSE THE HISTORICAL AND PRO FORMA FINANCIAL INFORMATION INCLUDED IN THIS
PROSPECTUS RELATES TO PERIODS DURING WHICH WE WERE WHOLLY OWNED BY THE PACIFIC
DUNLOP GROUP, IT MAY NOT BE INDICATIVE OF HOW WE WOULD HAVE PERFORMED OR HOW WE
WILL PERFORM AS AN INDEPENDENT PUBLIC COMPANY.
While we have been profitable on an operating basis as part of the Pacific
Dunlop Group, there is no assurance that operating profits will continue at the
same level or at all when we are a public company. Moreover, prior to the
completion of this offering, we will enter into a Services Agreement with
Pacific Dunlop Limited pursuant to which it will continue to provide us with
corporate services. Pacific Dunlop Limited will have no obligation to provide
assistance to us, except as provided in the Services Agreement. See
"Relationship and Agreements with the Pacific Dunlop Group -- Intercompany
Agreements -- Services Agreement."
It is possible that we may not be viable as a public company, and that the
change from a wholly owned subsidiary to a public company may adversely affect
us. This could lead to a partial or complete loss of your investment in our
common stock. Because the financial information included in this prospectus
relates to periods during which we were wholly owned by the Pacific Dunlop
Group, it is not necessarily indicative of our future results of operations,
financial position and cash flows.
9
<PAGE> 14
WE ARE SUBJECT TO REGULATION BY GOVERNMENTS AROUND THE WORLD, AND IF WE DO NOT
COMPLY WITH THESE REGULATIONS, OUR EXISTING AND FUTURE OPERATIONS MAY BE
CURTAILED, AND WE COULD BE SUBJECT TO LIABILITY.
The design, development, manufacturing, marketing and labeling of our
products are subject to regulation by governmental authorities in the United
States, Europe and other countries, including the Food and Drug Administration
and the European Committee for Standardization, known as the FDA and CEN,
respectively. The regulatory process can result in required modification or
withdrawal of existing products and a substantial delay in the introduction of
new products. Also, it is possible that regulatory approval may not be obtained
for a new product.
Periodic testing by the FDA of shipments to the United States of medical
gloves and condoms has resulted in the past, and may in the future, result in:
- the temporary detention of shipments,
- required destruction, or
- re-export of defective products, and
- delays in the recognition of income by us for the period during which the
FDA tests are being conducted and the results reviewed for compliance
with FDA standards.
The discovery of previously unknown problems with a product or facility may
result in regulatory restrictions on the product or manufacturing facility,
including the withdrawal of the product from the market.
Failure to comply with applicable regulatory requirements can result in
actions that could adversely affect our business and financial performance. See
"Business -- Government Regulation and Quality Control."
WE OPERATE IN COMPETITIVE MARKETS, AND IF OUR COMPETITORS DEVELOP SUPERIOR
PRODUCTS, MANUFACTURING PROCESSES OR NEW TECHNOLOGIES OR LEVERAGE THEIR MARKET
POSITION TO OBTAIN PREFERRED CONTRACTS OR PRICING POSITION WITH OUR CUSTOMERS,
SUCH COMPETITION COULD NEGATIVELY AFFECT OUR BUSINESS, FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
We compete with many other companies, including several large companies
that have greater financial, management and marketing resources than we do. Our
competitors or others may develop products that are substantially equivalent or
superior to our products. Additionally, our competitors may develop
manufacturing processes or new technologies that would render our products
obsolete or not competitive or that would be more cost effective or more
efficient than our processes and technologies. Furthermore, our competitors may
be able to leverage their market positions in related industry segments and
business relationships to obtain preferred contracts or pricing positions with
GPOs, distributors, customers or vendors. For example, competitors that have a
broader range of health care supplies and products to sell through GPO and
distributor arrangements may be able to use their position with regard to other
products they offer to increase their sales of medical gloves. Such competition
could have a negative effect on our business, financial condition and results of
operations. See "Business -- Competition."
WE ARE HEAVILY DEPENDENT UPON THE RUBBER CROP AND THE AVAILABILITY OF LATEX
CONCENTRATE, AND A MATERIAL DISRUPTION IN THE REGULAR SUPPLY OF RUBBER FOR LATEX
CONCENTRATE OR INCREASES IN THE PRICE OF LATEX CONCENTRATE COULD NEGATIVELY
AFFECT OUR RESULTS OF OPERATIONS.
We accounted for approximately 5% of worldwide liquid natural latex
consumption in fiscal 1999. Our ability to produce natural latex products is
heavily dependent upon the regular availability of raw rubber harvested by
independent growers in Southeast Asia and processed into latex concentrate. A
material disruption in the regular supply of rubber for latex concentrate due to
weather or other natural phenomena, labor or transportation stoppages or
shortages, political unrest or otherwise, would cause significant adverse
effects to our business, financial condition and results of operations. In
addition, rubber is a commodity
10
<PAGE> 15
traded on world commodities exchanges and is subject to price fluctuations
driven by changing market conditions. Increases in the price of latex
concentrate could have a negative effect on our results of operations.
NOT ALL OF OUR PRODUCTS AND PROPRIETARY TECHNOLOGIES AND PROCESSES ARE PROTECTED
FROM INFRINGEMENT. IF WE ARE UNABLE TO PREVENT MISAPPROPRIATION OR PROTECT OUR
RIGHTS THROUGH EFFECTIVE LEGAL REMEDIES, OUR COMPETITORS MAY BE ABLE TO CREATE
SUBSTANTIALLY SIMILAR OR DUPLICATE PRODUCTS WHICH COULD NEGATIVELY AFFECT OUR
RESULTS OF OPERATIONS.
We believe that innovation and development of proprietary technologies and
processes are essential to our business. In addition to patents, we rely upon
trade secret and contract law to protect our proprietary technologies and
processes. We may be unable to protect our proprietary technologies from
infringement by others in all jurisdictions in which we operate. In addition,
for many of our proprietary technologies and processes we rely upon trade secret
laws for protection. However, this would not necessarily prevent others from
reverse engineering our technologies and processes and copying them. As a
result, our competitors may be able to create substantially similar or duplicate
products without having to incur the development costs we incur. We may not be
able to prevent misappropriation of our processes and these means of protecting
our rights may not provide us with effective legal remedies in all jurisdictions
where misappropriation may occur.
WE ARE SUBJECT TO ENVIRONMENTAL LAWS AND REGULATIONS IN THE UNITED STATES AND
ABROAD, AND THE DEVELOPMENT OR DISCOVERY OF FACTS OR CONDITIONS WITH RESPECT TO
POTENTIAL ENVIRONMENTAL EXPOSURE MAY RESULT IN ENVIRONMENTAL LIABILITIES THAT
HAVE A NEGATIVE EFFECT ON OUR RESULTS OF OPERATIONS.
Our operations are subject to numerous environmental laws and regulations
in the United States and abroad, including laws and regulations governing
emissions into the air, discharges into water, the use, handling and disposal of
hazardous substances, waste disposal and the remediation of soil and groundwater
contamination. While we believe that our operations comply, in all material
respects, with applicable environmental laws and regulations, we are presently
undertaking, and in the future may be required to undertake, work to correct
instances of noncompliance with environmental laws and regulations and to
address contamination at our facilities. Although, based on information
currently available, we do not expect our environmental exposure to have a
material effect upon our capital expenditures, earnings or competitive
positions. The development or discovery of facts or conditions may result in
environmental liabilities that have such a negative effect on our results of
operations.
YEAR 2000 PROBLEMS MAY ADVERSELY AFFECT US.
Based upon our assessment to date, we believe that we are Year 2000
compliant. We may, however, discover Year 2000 compliance problems that will
require substantial revisions to our systems, products or services. In addition,
third-party software, hardware or services that we rely on may need to be
revised or replaced, all of which could be time consuming and expensive. Any
failure to address on a timely basis any problems that may arise could result in
lost revenue, increased operating costs, the loss of customers and other
business interruptions. As of December 31, 1999, we had incurred cumulative
costs that we believe are allocable to the Year 2000 problem of approximately
$1.3 million. Although to date we are not aware of any significant Year 2000
issues relating to our business operations, we could possibly experience Year
2000 problems at any time during 2000 and beyond.
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<PAGE> 16
RISKS RELATING TO OUR RELATIONSHIP AND AGREEMENTS WITH THE PACIFIC DUNLOP GROUP
THE PACIFIC DUNLOP STOCKHOLDERS WILL BENEFICIALLY OWN A MAJORITY OF OUR
OUTSTANDING VOTING SECURITIES AND MAY HAVE INTERESTS THAT ARE ADVERSE TO YOURS.
Stockholder and Board of Director Control. After completion of this
offering, the Pacific Dunlop Stockholders will own at least 80% of our common
stock and be entitled to elect the entire board of directors. We currently
contemplate having eight directors, three of whom must be independent under the
rules of the New York Stock Exchange and one of whom is our Chief Executive
Officer. The Pacific Dunlop Stockholders are free to select the remaining four
directors without restriction and they may be officers or directors of any
member of the Pacific Dunlop Group.
Conflicts of Interest. Our directors affiliated with the Pacific Dunlop
Group may have conflicts of interest in transactions involving business dealings
between our company and members of the Pacific Dunlop Group, acquisition
opportunities, the issuance of additional shares of common stock, tax planning
and other matters involving conflicts which cannot now be foreseen and that may
affect us. Because the other businesses of the Pacific Dunlop Group are diverse
and unrelated to our business, we do not expect conflicts to arise over the
allocation of corporate opportunities and have not adopted policies relating to
the allocation of corporate opportunities. We do have a policy that requires our
independent directors to approve future transactions and agreements with the
Pacific Dunlop Group. This policy, however, is subject to change by the Pacific
Dunlop Group.
We will enter into a Services Agreement with Pacific Dunlop Limited, a Tax
Sharing Agreement among our company and the U.S.-domiciled members of the
Pacific Dunlop Group, a Registration Rights and Ownership Maintenance Agreement
with the Pacific Dunlop Stockholders and a Loan Facility Agreement with Pacific
Dunlop Holdings Inc. (an indirect subsidiary of Pacific Dunlop Limited). As our
majority stockholders, the Pacific Dunlop Stockholders may cause us to institute
a new business plan, change our management team or otherwise have interests that
may conflict with the interests of other holders of our common stock. See
"Relationship and Agreements with the Pacific Dunlop Group."
Services Agreement. The services provided by Pacific Dunlop Limited to us
pursuant to the Services Agreement may not be provided on terms that are as
favorable to us as terms that we could receive from unaffiliated third parties.
In addition, Pacific Dunlop Limited may be unwilling or unable to amend the
Services Agreement to accommodate our future operating needs. When the Services
Agreement with Pacific Dunlop Limited expires, is not renewed or is terminated,
it may be more expensive for us to provide these services internally or to
obtain them from other third parties. Any such increased expense could
negatively affect our results of operations. See "Relationship and Agreements
with the Pacific Dunlop Group -- Intercompany Agreements -- Services Agreement."
Tax Sharing Agreement. The Tax Sharing Agreement provides that we will not
be permitted to reduce future tax liability by using carryforward tax benefits
that were attributable to periods when we were wholly owned by members of the
Pacific Dunlop Group. Accordingly, upon completion of this offering, the U.S.
carryforward tax benefits attributable to us and reflected on the historical
financial statements of the Ansell Group included in this prospectus, will not
be available to reduce future income tax liabilities that we incur.
As long as we are a member of the Pacific Dunlop Group's U.S. consolidated
income tax group we will be severally liable for the federal and, in certain
instances, state income tax liability of the group. Accordingly, although the
Tax Sharing Agreement determines tax liabilities between Ansell and the Pacific
Dunlop Group, during the period in which we are included in the Pacific Dunlop
Group's consolidated federal and state income tax group, we could be liable in
the event that any federal or state tax liability is incurred by the
consolidated group but is not discharged by the Pacific Dunlop Group. See
"Relationship and Agreements with the Pacific Dunlop Group -- Intercompany
Agreements -- Tax Sharing Agreement."
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<PAGE> 17
Registration Rights and Ownership Maintenance Agreement. The Pacific Dunlop
Stockholders' ability to maintain their percentage ownership interest in our
common stock may limit our ability to use our common stock as consideration for
acquisitions and may prevent others from making or proceeding with takeover
offers for our company. Also, see "Relationship and Agreements with the Pacific
Dunlop Group -- Intercompany Agreements -- Registration Rights and Ownership
Maintenance Agreement."
Loan Facility Agreement. We will have a revolving credit facility with
Pacific Dunlop Holdings Inc., pursuant to which Pacific Dunlop Holdings Inc.
will commit to make or procure loans for us and our subsidiaries of up to $200
million. The loan facility is for a term of three years and loans under the
facility bear interest at a rate equal to 30-day LIBOR plus 0.95% per annum.
Without the prior consent of Pacific Dunlop Holdings Inc., we cannot incur
additional indebtedness with third parties. The interest rate may be revised by
Pacific Dunlop Holdings Inc., no more frequently than annually, upon thirty days
prior notice to us of the new rate. If we are not satisfied with the new rate,
we would need the consent of Pacific Dunlop Holdings Inc. to seek financing from
other sources. See "Relationship and Agreements with the Pacific Dunlop
Group -- Intercompany Agreements -- Loan Facility Agreement."
IN THE ABSENCE OF APPROVAL BY THE PACIFIC DUNLOP STOCKHOLDERS FOR A CHANGE IN
CONTROL, STOCKHOLDERS WILL BE PREVENTED FROM REALIZING A CONTROL PREMIUM ON
THEIR SHARES.
The level of ownership of our outstanding common stock by the Pacific
Dunlop Stockholders may have the effect of preventing, without their support, a
proxy contest, a merger involving our company, a tender offer, an open-market
purchase program or other purchase of our common stock that could give our
stockholders the opportunity to realize a premium over the then prevailing
market price of our common stock.
CERTAIN CREDIT AGREEMENTS TO WHICH MEMBERS OF THE PACIFIC DUNLOP GROUP ARE
PARTIES IMPOSE RESTRICTIONS ON OUR ABILITY TO BORROW MONEY AND TAKE OTHER
ACTIONS, SUCH AS OUR ABILITY TO SELL OUR COMMON STOCK AND THE STOCK OF OUR
SUBSIDIARIES, WHICH MAY NOT ALWAYS BE IN OUR BEST INTEREST AND MAY LIMIT OUR
GROWTH PROSPECTS.
The Pacific Dunlop Group's credit agreements may limit our ability to
borrow money and restrict the way in which we structure our borrowings. Under
such agreements, Pacific Dunlop Limited is obligated to cause its principal
subsidiaries, including us, to comply with various covenants. These covenants
may not always be in our best interests and may limit our future growth
prospects. For example, these covenants limit our ability to sell our common
stock and the stock of our subsidiaries. Additionally, with some exceptions, we
may not borrow under a secured credit agreement without providing the same
security arrangement for borrowings by the Pacific Dunlop Group under its
existing credit agreements with third parties. The covenants may also restrict
the ability of the Pacific Dunlop Stockholders to sell additional shares of our
common stock. Pacific Dunlop Limited may enter into credit agreements in the
future that would impose similar or greater restrictions on us. For more
information regarding potential conflicts with Pacific Dunlop Group, see
"Relationship and Agreements with the Pacific Dunlop Group."
RISKS RELATING TO THIS OFFERING AND OUR COMMON STOCK
THE PUBLIC MARKET FOR OUR COMMON STOCK MAY FLUCTUATE AND THE LIQUIDITY OF THAT
MARKET COULD BE ADVERSELY AFFECTED BY PURCHASES OF OUR COMMON STOCK BY MEMBERS
OF THE PACIFIC DUNLOP GROUP.
Prior to this offering, there has been no public market for our common
stock. An active trading market may not develop or be sustained and the market
price of our common stock may decline. Even if an active trading market
develops, the market price of our common stock could fluctuate significantly in
response to various factors, including:
- actual or anticipated variations in our quarterly operating results,
including currency translation,
- announcements of technological innovations or new services or products by
us or our competitors,
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<PAGE> 18
- the operating and stock price performance of other comparable companies,
- timeliness of our introductions of new products,
- changes in financial estimates by securities analysts,
- changes in expectations as to our future financial performance,
- changes in our expected capital needs,
- announcements relating to strategic relationships, mergers or
consolidations by us or our competitors,
- announcements of claims or judgments against us or our competitors
concerning latex allergies, and
- general market conditions.
In addition, the stock markets have experienced extreme price and volume
fluctuations that have affected the market prices of equity securities. These
fluctuations have often been unrelated or disproportionate to operating
performance. These broad market factors may materially affect the trading price
of our common stock. General economic, political and market conditions, like
recessions and interest rate fluctuations, may also have an adverse effect on
the market price of our common stock. In the past, following periods of
volatility in the market price for a company's securities, stockholders have
often initiated securities class action litigation. Any securities class action
litigation could result in substantial costs and the diversion of management's
attention and resources.
We filed an Original Listing Application for our common stock with the New
York Stock Exchange. Approval for listing on the New York Stock Exchange does
not, however, guarantee that a trading market for our common stock will develop
or, if a market does develop, the depth of the trading market for our common
stock or the prices at which our common stock will trade in such market.
After completion of the offering, the Pacific Dunlop Stockholders will own
at least 80% of our common stock. The liquidity of an investment in our common
stock could be adversely affected by repurchases of outstanding common stock by
us and other members of the Pacific Dunlop Group.
FUTURE SALES BY PACIFIC DUNLOP STOCKHOLDERS COULD CAUSE THE PRICE OF OUR COMMON
STOCK TO DECLINE.
After completion of the offering, there will be approximately 50,000,000
shares of our common stock outstanding, of which approximately 41,300,000 shares
will be held by the Pacific Dunlop Stockholders (40,000,000 shares if the
underwriters exercise their over-allotment option in full). Pacific Dunlop
Stockholders will be able to sell these shares in the public markets from time
to time, subject to limitations relating to the timing, amount and method of
such sales imposed by SEC regulations. We have entered into a Registration
Rights and Ownership Maintenance Agreement with the Pacific Dunlop Stockholders
which enables the Pacific Dunlop Stockholders to require us in their sole
discretion to register shares of our common stock owned by them. If Pacific
Dunlop Stockholders were to sell a large number of shares following this
offering, the market price of our common stock could decline significantly.
Moreover, the perception in the public markets that such sales by Pacific Dunlop
Stockholders might occur could also adversely affect the market price of our
common stock. For more information, see "Shares Eligible for Future Sale."
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements that involve risks and
uncertainties, including those discussed above and elsewhere in this prospectus.
We develop forward-looking statements by combining currently available
information with our beliefs and assumptions. These statements often contain
words like believe, expect, anticipate, intend, contemplate, seek, plan,
estimate or similar expressions. Forward-looking statements do not guarantee
future performance. Recognize these statements for what they are and do not rely
on them as facts.
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CAPITALIZATION
The following table shows (1) the actual capitalization of Ansell Group as
of December 31, 1999 and (2) the capitalization of Ansell Group on a pro forma
basis giving effect to the following:
- the reorganization of Ansell Group into Ansell Healthcare Incorporated,
including the elimination of a substantial portion of debt owed to
affiliates and cash, and
- the sale of up to 20% of Ansell Healthcare Incorporated by the selling
stockholder, which results in the transfer of Ansell Group's U.S. tax net
operating loss carryforwards to other members of the Pacific Dunlop
Group.
The table below should be read in conjunction with the audited Combined
Financial Statements of Ansell Group and Notes thereto and the Unaudited Pro
Forma Condensed Combined Financial Statements, included elsewhere in this
prospectus.
<TABLE>
<CAPTION>
DECEMBER 31, 1999
(IN THOUSANDS)
--------------------
ACTUAL PRO FORMA
-------- ---------
<S> <C> <C>
Cash and cash equivalents................................... $ 65,564 $ 10,000
======== ========
Revolving lines of credit due to affiliates................. $409,475 $179,054
Current portion of long-term debt........................... 29,249 29,249
-------- --------
Total short-term debt............................. 438,724 208,303
Long-term debt.............................................. 1,697 1,697
-------- --------
Total debt........................................ 440,421 210,000
Minority interest........................................... 10,457 10,457
Stockholders' equity:
Net assets -- capital employed.............................. 354,089 --
Common shares: $0.01 par value, 150,000,000 shares
authorized, 1,000 shares issued, actual; 150,000,000
shares authorized and 50,000,000 issued, pro forma........ -- 500
Preferred shares: $0.01 par value, 1,000,000 shares
authorized, none issued actual and pro forma.............. -- --
Additional paid-in capital.................................. -- 515,746
Accumulated other comprehensive income foreign currency
translation adjustment.................................... (61,897) (61,897)
-------- --------
Total stockholders' equity........................ 292,192 454,349
-------- --------
Total capitalization.............................. $743,070 $674,806
======== ========
</TABLE>
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THE REORGANIZATION
Ansell Healthcare Incorporated, the issuer of the common stock offered by
this prospectus, was formed on October 5, 1999 in contemplation of this offering
and the reorganization of Ansell Group. Prior to the reorganization, Ansell
Healthcare Incorporated conducted no business and had $1,000 cash and no
operations.
Before the reorganization, our businesses were owned and conducted by
various companies in the Pacific Dunlop Group. By the closing of this offering,
these operations will be substantially reorganized, and companies' assets,
liabilities and related operations will be transferred to us by the Pacific
Dunlop Group so that all of the assets and liabilities related to our business
operations that were part of the Pacific Dunlop Group will be owned or leased by
companies that are directly or indirectly owned by us.
As part of this reorganization, all of the shares of common stock of the
United States and Mexican companies that were owned by members of the Pacific
Dunlop Group were transferred to us. We also acquired the shares and/or assets
of entities owned by various other members of the Pacific Dunlop Group that were
related to our operations in Malaysia, the United Kingdom, France, Canada,
Belgium, Sri Lanka, Thailand, India, Mauritius, South Africa, Germany, Japan,
Australia and New Zealand. Cash, loans payable and/or shares of common stock
were issued by us to the owners of these various entities and assets as payment
for the acquisitions.
In connection with the reorganization, we have agreed to indemnify the
members of the Pacific Dunlop Group that sold us operating assets for any
contingent liabilities arising out of, or relating to, the ownership of the
assets sold, the operation of the transferred business or our breach of the
terms of the agreement transferring such assets or business. See "Relationship
and Agreements with the Pacific Dunlop Group."
USE OF PROCEEDS
We will not receive any of the net proceeds from this offering; nor will
any of the net proceeds be used by our principal and selling stockholder to fund
our business operations.
DIVIDEND POLICY
We were incorporated in October 1999 and have not yet paid dividends. We
currently intend to retain any future earnings to fund the development and
growth of our business and do not anticipate paying any dividends in the
foreseeable future.
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SELECTED COMBINED FINANCIAL DATA
The following selected combined financial data should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations," the audited Combined Financial Statements of Ansell
Group and the accompanying Notes thereto and the Unaudited Pro Forma Condensed
Combined Financial Statements which are included elsewhere in this prospectus.
The financial information for the fiscal years ended June 30, 1997, 1998 and
1999 has been derived from, and is qualified completely by reference to, the
audited Combined Financial Statements of Ansell Group appearing elsewhere in
this prospectus. The financial information of Ansell Group for the six months
ended December 31, 1998 and 1999 and balance sheet data as of December 31, 1999
are unaudited. The unaudited data, in the opinion of management, accurately
reflects all adjustments (which are of a recurring nature) necessary to present
fairly the information set forth herein and are not necessarily indicative of
results for the full year.
The pro forma data set forth below is derived from the Unaudited Pro Forma
Condensed Combined Financial Statements included elsewhere in this prospectus.
The Unaudited Pro Forma Condensed Combined Financial Statements give effect to
(1) the reorganization of Ansell Group into Ansell, including the elimination of
a substantial portion of debt with affiliates and cash and (2) this offering,
which results in the transfer to the other members of the Pacific Dunlop Group
of U.S. tax net operating loss carryforwards. These transactions have been
recorded as if they had actually occurred on the first day of our 1999 and 2000
fiscal years with respect to the pro forma statement of operations data and on
December 31, 1999 with respect to pro forma balance sheet data. The pro forma
data does not necessarily represent what our financial position or results of
operations would have been had such transactions been completed on such dates,
nor does it give effect to any events other than those discussed in the notes to
the Unaudited Pro Forma Condensed Combined Financial Statements. The pro forma
data also does not project our financial position or results of operations as of
any future date or for any future period.
17
<PAGE> 22
SELECTED COMBINED FINANCIAL DATA
(IN THOUSANDS, UNLESS OTHERWISE STATED)
<TABLE>
<CAPTION>
FISCAL YEARS ENDED JUNE 30,
------------------------------------------------------------------
1999
1995 1996 1997 1998 1999 PRO FORMA
-------- -------- -------- -------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales.......................... $534,366 $627,004 $669,749 $735,263 $738,382 $738,382
Cost of goods sold................. 354,514 413,965 452,529 487,785 483,464 483,464
-------- -------- -------- -------- -------- --------
Gross profit....................... 179,852 213,039 217,220 247,478 254,918 254,918
Costs and expenses:
Selling, general and
administrative.................. 93,652 127,035 125,760 138,501 149,621 150,621
Research and development.......... 3,426 4,550 10,435 8,824 8,315 8,315
Restructuring charges(1).......... -- 5,258 -- -- 1,298 1,298
Amortization of intangibles....... 4,344 5,412 5,877 7,127 8,786 8,786
-------- -------- -------- -------- -------- --------
Income from operations............. 78,430 70,784 75,148 93,026 86,898 85,898
Interest expense, net.............. 26,990 25,735 25,055 21,054 21,128 16,134
Foreign currency transactions and
other, net........................ (78) (2,991) 1,216 (4,441) (1,284) (1,284)
Income taxes....................... 10,758 8,998 10,026 9,202 10,967 12,485
Minority interests................. 3,795 3,111 3,085 4,343 3,468 3,468
-------- -------- -------- -------- -------- --------
Net income before cumulative effect
of accounting change.............. 36,965 35,931 35,766 62,868 52,619 55,095
Cumulative effect of accounting
change, net of income tax(2)...... 3,538 -- -- -- -- --
-------- -------- -------- -------- -------- --------
Net income......................... $33,427 $35,931 $35,766 $62,868 $52,619 $55,095
======== ======== ======== ======== ======== ========
Pro forma basic and diluted net
income per share(3)............... $1.10
========
Weighted average shares
outstanding(3).................... 50,000
OTHER DATA:
EBITDA(4)......................... $94,174 $96,270 $96,528 $119,253 $115,228 $114,228
Adjustments (5)................... 7,255 5,378 4,301 (98) 3,482 2,184
-------- -------- -------- -------- -------- --------
Adjusted EBITDA (5)............... $101,429 $101,648 $100,829 $119,155 $118,710 $116,412
======== ======== ======== ======== ======== ========
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31,
---------------------------------------
1999
1998 1999 PRO FORMA
----------- ----------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales.......................... $358,708 $354,747 $354,747
Cost of goods sold................. 233,792 228,481 228,481
-------- -------- --------
Gross profit....................... 124,916 126,266 126,266
Costs and expenses:
Selling, general and
administrative.................. 72,254 79,621 80,121
Research and development.......... 4,176 4,488 4,488
Restructuring charges(1).......... 1,046 -- --
Amortization of intangibles....... 4,432 4,461 4,461
-------- -------- --------
Income from operations............. 42,738 37,696 37,196
Interest expense, net.............. 10,062 12,548 8,067
Foreign currency transactions and
other, net........................ 498 (831) (831)
Income taxes....................... 4,588 4,971 6,484
Minority interests................. 2,214 1,275 1,275
-------- -------- --------
Net income before cumulative effect
of accounting change.............. 25,376 19,733 22,201
Cumulative effect of accounting
change, net of income tax(2)...... -- -- --
-------- -------- --------
Net income......................... $25,376 $19,733 $22,201
======== ======== ========
Pro forma basic and diluted net
income per share(3)............... $0.44
========
Weighted average shares
outstanding(3).................... 50,000
OTHER DATA:
EBITDA(4)......................... $54,742 $52,998 $52,998
Adjustments (5)................... 3,758 444 444
-------- -------- --------
Adjusted EBITDA (5)............... $58,500 $53,942 $53,442
======== ======== ========
</TABLE>
footnotes on following page
18
<PAGE> 23
SELECTED COMBINED FINANCIAL DATA -- (CONTINUED)
(IN THOUSANDS, UNLESS OTHERWISE STATED)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31, 1999
--------------------------------------------------------- ---------------------
1995 1996 1997 1998 1999 ACTUAL PRO FORMA
--------- --------- --------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents........... $54,838 $23,197 $28,242 $53,668 $59,132 $65,564 $10,000
Working capital (deficit)........... (141,626) (169,208) (166,884) (100,027) (146,394) (155,292) 19,565
Total assets........................ 770,172 718,672 817,962 755,923 836,394 860,755 805,191
Total debt(6)....................... 375,437 373,048 361,820 349,885 408,671 440,421 210,000
Total liabilities................... 506,088 491,823 532,464 460,836 525,740 558,106 340,385
Stockholder's equity(7)............. 264,083 218,129 275,529 287,779 301,530 292,192 454,349
</TABLE>
- ---------------
(1) Restructuring charges consist of the costs related to the closure of Ansell
Group's balloon production and marketing operations in 1996, and the
severance costs and the writedown to net realizable value of equipment
related to the restructuring of two manufacturing facilities and certain
administrative functions in 1999.
(2) In 1995 the method of amortizing goodwill was changed to straight-line.
(3) The weighted average shares are calculated assuming the shares outstanding
immediately after the reorganization were outstanding for the entire period.
For purposes of the pro forma net income per share data, net interest
expense and income taxes are adjusted to reflect the elimination of $230.4
million of debt owed to affiliates and $55.6 million of cash balances as
part of the reorganization, and $1.0 million and $0.5 million in additional
costs were added to selling, general and administrative expenses for fiscal
1999 and the six months ended December 31, 1999, respectively.
(4) "EBITDA" represents net income before net interest expense, income taxes,
depreciation and amortization. EBITDA is not intended to represent and
should not be considered more meaningful than, or an alternative to, net
income, cash flow or other performance measures in accordance with generally
accepted accounting principles.
(5) Adjusted EBITDA represents "EBITDA" as defined in Note (4) before adjustment
for restructuring charges; foreign currency transactions and other, net;
minority interest and cumulative effect of accounting change, net of tax
effect. Adjusted EBITDA is not intended to represent and should not be
considered more meaningful than or an alternative to, net income, cash flow
or other performance measures in accordance with generally accepted
accounting principles.
(6) Total debt includes revolving lines of credit due to affiliates, current
portion of long-term debt and long-term debt.
(7) Stockholder's equity consists of the combined net assets of the Ansell Group
prior to the offering.
19
<PAGE> 24
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis together with Ansell
Group's historical combined financial statements and related notes included in
this prospectus. This discussion contains forward-looking statements that
involve risks, uncertainties and assumptions. You should read the cautionary
statements made in this prospectus as applying to related forward-looking
statements wherever they appear in this prospectus. Our actual results may be
materially different from the results we discuss in the forward-looking
statements due to many factors, including those discussed in "Risk Factors" and
elsewhere in this prospectus.
BASIS OF PRESENTATION AND THE REORGANIZATION
This prospectus contains the combined historical financial statements of
Ansell Group which, prior to the reorganization described below, consisted of
separate subsidiaries and operating divisions of the Pacific Dunlop Group and
whose financial results were reported as a separate segment in the consolidated
financial statements of Pacific Dunlop Limited. In conjunction with this
offering, Ansell Group has been reorganized as Ansell Healthcare Incorporated
and its subsidiaries. Future financial results and other financial information
regarding Ansell Group will be reflected in the consolidated financial
statements of Ansell Healthcare Incorporated and will continue to be reported as
a separate segment in the consolidated financial statements of Pacific Dunlop
Limited. Ansell Group's historical net income and cash flows as a wholly owned
operation of the Pacific Dunlop Group are not necessarily indicative of the net
income and cash flows it might have realized as an independent entity.
Prior to the reorganization, Ansell Group recorded substantial levels of
intercompany debt and cash. As a part of the reorganization, $230.4 million of
the intercompany debt, including $98.3 million of non-interest bearing debt due
to affiliates, will be exchanged by the Pacific Dunlop Group for our common
stock and cash will be reduced by $55.6 million. If such debt and cash had been
transferred at the beginning of fiscal 1999, net interest expense of Ansell
Group would have been reduced by $6.3 million in fiscal 1999 and $3.2 million
for the six months ended December 31, 1999 on a pro forma basis. After this
offering, approximately $87.8 million of Ansell Group's U.S. federal Net
Operating Losses (which we call NOLs) will not be available to us to reduce our
liability for U.S. federal income taxes under the Tax Sharing Agreement among us
and other U.S.-domiciled members of the Pacific Dunlop Group. If the Tax Sharing
Agreement were in effect beginning with fiscal 1999, the amount of cash we would
have paid for taxes would have increased by $3.1 million and $0.7 million, on a
pro forma basis, for fiscal 1999 and the six months ended December 31, 1999,
respectively, because we could not have used existing NOLs to reduce our tax
liability. See "Relationship and Agreements with the Pacific Dunlop Group --
Intercompany Agreements -- Tax Sharing Agreement" and "Unaudited Pro Forma
Condensed Combined Financial Statements."
After the reorganization and this offering we estimate that we will incur
approximately $1 million annually in additional selling, general and
administrative expenses as a result of being a public company.
Prior to this offering the businesses to be owned and operated by us after
the reorganization were indirectly owned 100% by Pacific Dunlop Limited, and the
financial information for those businesses was reported in Australian dollars
and in accordance with Australian generally accepted accounting principles
(which we call Australian GAAP). Pacific Dunlop Limited will continue to report
its financial information in the United States, including Ansell Healthcare
segment data, in Australian dollars and in Australian GAAP, with a
reconciliation to U.S. GAAP.
REVENUES AND EXPENSES
Net sales represent the sale of finished products, less contractual
allowable rebates, incentives, fees and allowance for estimated returns. These
rebates are provided to distributors for the resale of products in specific
volumes to specified end-user customers, and fees are provided to GPOs based on
sales made to their members. An allowance is established for estimated returns
based on historical return patterns and
20
<PAGE> 25
estimated future returns. Cost of goods sold includes all costs to manufacture
or purchase finished products, plus related costs associated with freight to the
primary distribution facility and customs duty. Selling, general and
administrative expenses include salaries for sales and marketing staffs, and
other related expenses such as sales commissions and costs associated with
travel, trade show participation and advertising, salaries for administrative
and information technology staffs, and related expenses for travel, insurance,
facilities, consulting and professional fees. Corporate administration expenses
of Ansell Group are allocated to business segments using the percentage to sales
method, while selling and general expenses are actual for each segment. Research
and development expenses include salaries for research and development staffs
and related expenses for consulting, product development, testing and travel.
The goodwill and brand name amortization periods range from 20-40 years.
At various times during the last several years Ansell Group entered into
foreign exchange hedge contracts to partially cover the translation of foreign
sales and costs into Australian dollars. These hedging transactions were
designed to hedge exchange rate risk against the Australian dollar, the currency
in which the financial results of Ansell Group were reported. The period of
these contracts have usually spanned 1 to 18 months and all of these hedging
transactions were consummated with a member of the Pacific Dunlop Group as the
counterparty.
TAXATION
We will be subject to taxation in many jurisdictions throughout the world.
Our effective tax rate and tax liability will be affected by a number of
factors, such as the amount of taxable income in particular jurisdictions, the
tax rates and tax holidays in such jurisdictions, tax treaties between
jurisdictions, the extent to which we transfer funds between jurisdictions and
income is repatriated and future changes in law. Generally, the tax liability
for each legal entity is determined either on a non-consolidated basis or on a
consolidated basis only with other entities incorporated in the same
jurisdiction, in either case without regard to the taxable losses of
non-consolidated affiliated entities.
Ansell Group's tax rate has included, and will continue to include, the
benefit from the location of several manufacturing facilities in countries where
the income generated by such facility receives long-term tax-free or reduced tax
status, including:
- Ansell Group has tax-free status with respect to the surgical and
examination glove facility in Sri Lanka until 2019,
- the Suretex group of companies, which includes facilities located in
Thailand and India, operates on a tax-free status until 2005,
- the condom manufacturing facility in Surat Thani, Thailand has tax-free
status until 2007 and also has a reduced tax rate through 2012, and
- the disposable synthetic gloves production facility located in Bangkok,
Thailand has tax-free status expiring in 2002.
We expect that our overall tax rate will remain below the U.S. statutory
tax rate for the foreseeable future; however, it will be higher than it was for
Ansell Group in fiscal 1999, as we expect proportionately more profits in the
United States than in other lower tax jurisdictions. We estimate that our
effective tax rate will be in the mid-20% range over the next several years.
ACQUISITIONS AND JOINT VENTURES
During the three fiscal years ended June 30, 1997, 1998 and 1999, Ansell
Group made the acquisitions and entered into the joint ventures described below
with funds provided by the Pacific Dunlop Group:
- November 1998, Suretex Limited was acquired for $26.4 million in cash.
Suretex primarily manufactures condoms in facilities located in Thailand
and India,
21
<PAGE> 26
- September 1998, 74.8% of Kemwell International Limited was acquired for
$7.6 million in cash. Kemwell is a manufacturer of latex gloves located
in India,
- September 1997, a joint venture was entered into for 50% of what is now
known as J.K. Ansell, Ltd. for $2.7 million in cash. J.K. Ansell
manufactures and markets condoms primarily in India, and
- April 1997, the assets of Golden Needles Knitting, Inc. were acquired for
$81.2 million. Golden Needles primarily manufactures protective gloves,
and its manufacturing facilities are mainly in North Carolina. Of the
purchase price, $71.7 million was paid in cash and the remaining $9.5
million is a note payable on April 23, 2000.
PENDING ACQUISITION
On October 1, 1999, we entered into an agreement to acquire for $97.6
million the medical glove business of Johnson & Johnson. The acquisition
includes patents, know-how, research and development and a modern manufacturing
facility in Shah Alam, Malaysia. Also included in the acquisition are trademarks
including, Micro-Touch, Allergard, Surgikos, Maxxus, Dispos-a-Glove, Neutralon
and Ultralon. In addition, a number of existing employees of Johnson & Johnson
are expected to continue as our employees. The funds for this cash transaction
are to be provided by the Pacific Dunlop Group as a capital contribution. Under
the terms of the transaction, Johnson & Johnson is to retain any liabilities
related to latex allergy glove litigation arising from or related to gloves
manufactured or distributed prior to the closing dates with the exception of
inventories acquired at the closing date, for which a sharing agreement governs.
The acquisition is expected to close in early 2000.
We expect to record goodwill and brand name amortization of approximately
$1.6 million annually in connection with the acquisition. Additionally,
approximately $0.3 million will be allocated to the revaluation of inventories
to fair market value and will be charged to cost of sales over the period in
which the inventories are sold, which is expected to be one to two quarters
following the closing.
SEASONALITY
Ansell Group's business has historically experienced a slight amount of
seasonal variation, with sales in the first fiscal quarter slightly lower than
the sales in the other fiscal quarters. This trend has a somewhat greater effect
on net income than on net sales due to the effect of fixed costs.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------------------------------------------------------------------------
DECEMBER 31, MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31, JUNE 30,
1997 1998 1998 1998 1998 1999 1999
------------ --------- -------- ------------- ------------ --------- --------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales............ $178.9 $188.0 $186.5 $173.0 $185.7 $193.6 $186.1
Net income........... 14.0 18.0 15.7 11.1 13.3 13.1 15.1
Net income as a
percent of net
sales............... 7.8% 9.6% 8.4% 6.4% 7.2% 6.8% 8.1%
<CAPTION>
THREE MONTHS ENDED
----------------------------
SEPTEMBER 30, DECEMBER 31,
1999 1999
------------- ------------
(IN MILLIONS)
<S> <C> <C>
Net sales............ $173.8 $180.9
Net income........... 9.0 10.7
Net income as a
percent of net
sales............... 5.2% 5.9%
</TABLE>
22
<PAGE> 27
RESULTS OF OPERATIONS
The following table sets forth, as a percentage of net sales, certain items
in Ansell Group's statements of operations for the periods indicated:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED JUNE 30, DECEMBER 31,
--------------------------- ----------------
1997 1998 1999 1998 1999
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net sales............................................ 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of goods sold................................... 67.6 66.3 65.5 65.2 64.4
----- ----- ----- ----- -----
Gross profit....................................... 32.4 33.7 34.5 34.8 35.6
Costs and expenses:
Selling, general and administrative expenses......... 18.8 18.8 20.3 20.2 22.4
Research and development expenses.................... 1.6 1.2 1.1 1.2 1.3
Restructuring charges................................ -- -- 0.2 0.3 --
Amortization of intangibles.......................... 0.9 1.0 1.2 1.2 1.3
----- ----- ----- ----- -----
Income from operations............................. 11.2 12.7 11.8 11.9 10.6
----- ----- ----- ----- -----
Interest expense, net.............................. 3.7 2.9 2.9 2.8 3.5
Foreign currency transactions and other, net....... 0.2 (0.6) (0.2) 0.1 (0.2)
----- ----- ----- ----- -----
3.9 2.3 2.7 2.9 3.3
----- ----- ----- ----- -----
Income before taxes and minority interest.......... 7.3 10.4 9.1 9.0 7.3
Income taxes......................................... 1.5 1.3 1.5 1.3 1.4
Minority interests................................... 0.5 0.6 0.5 0.6 0.3
----- ----- ----- ----- -----
Net income......................................... 5.3% 8.6% 7.1% 7.1% 5.6%
===== ===== ===== ===== =====
</TABLE>
SIX MONTHS ENDED DECEMBER 31, 1999 COMPARED TO SIX MONTHS ENDED DECEMBER 31,
1998
Net Sales. Net sales declined by 1.1% to $354.7 million for the six months
ended December 30, 1999, compared to $358.7 million for the six months ended
December 31, 1998. Net sales in the Professional, Occupational and Personal
Healthcare segments were adversely impacted by the weakness of European
currencies compared to the U.S. dollar ($7.5 million), partially offset by
increased net sales from the strengthening of the Australian and Canadian
dollars ($1.5 million) compared to the U.S. dollar.
In the Professional Healthcare segment, net sales decreased 1.2% to $128.5
million for the six months ended December 31, 1999 from $130.1 million for the
six months ended December 31, 1998, with the decline primarily attributed to the
weakness of European currencies compared to the U.S. dollar and lower average
selling prices on medical examination gloves in response to lower priced
competitive products. These declines were offset in part by sales generated from
new products, especially coated powder-free surgical gloves in North America.
In the Occupational Healthcare segment, net sales remained relatively flat
at $182.4 million for the six months ended December 31, 1999 compared to $183.2
million for the six months ended December 31, 1998. An increase in sales of new
products (Hyflex, a light-duty general purpose glove) was offset by the weakness
of European currencies compared to the U.S. dollar.
In the Personal Healthcare segment, net sales decreased 3.7% to $43.8
million for the six months ended December 31, 1999 from $45.4 million for the
six months ended December 31, 1998, primarily due to lower sales in the public
tender business and the weakness of European currencies compared to the U.S.
dollar.
Gross Profit. Gross profit increased 1.1% to $126.3 million for the six
months ended December 31, 1999, compared to $124.9 million for the six months
ended December 31, 1998, as a result of the factors described below. In all
segments, gross profit was adversely impacted by the weakness of European
23
<PAGE> 28
currencies compared to the U.S. dollar ($7.5 million), partially offset by an
increase in net sales resulting from the strengthening of the Australian and
Canadian dollars ($1.5 million) compared to the U.S. dollar.
In the Professional Healthcare segment, gross profit margins increased due
primarily to manufacturing efficiency and productivity gains, sales of higher
margin new products and the increasing amount of sales of powder-free gloves, as
compared to powdered surgical and examination gloves. Gross margins in this
segment were adversely affected by a reduction in the average selling price of
medical examination gloves in response to lower priced competitive products and
the weakness of European currencies compared to the U.S. dollar.
In the Occupational Healthcare segment, gross profit margins increased
primarily due to increased sales of higher-margin new products, offset by the
weakness of European currencies compared to the U.S. dollar.
In the Personal Healthcare segment, gross profit margins increased as a
result of our transfer of condom production from our facility in Dothan, Alabama
to our facility in Surat Thani, Thailand, partially offset by the weakness of
European currencies compared to the U.S. dollar.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 10.1% to $79.6 million for the six months
ended December 31, 1999, from $72.3 million for the six months ended December
31, 1998, primarily due to legal defense costs of the latex allergy product
liability litigation, the write-down of some Eastern European receivables and
the increase in European distribution costs associated with the relocation of
our European Professional Healthcare distribution operations from Germany to
France. With respect to the latex allergy litigation expenses, expenses were
higher in the six months ended December 31, 1999 than in prior periods because
we are in an intense period of trial preparation that will be of value for cases
approaching trial and for future cases. We cannot estimate future latex
litigation defense costs because they will be a function of the number of cases
that are tried and the ultimate outcome of those cases.
Research and Development Expenses. Research and development (which we call
Science & Technology in "Business") expenses were $4.5 million for the six
months ended December 31, 1999, compared to $4.2 million for the six months
ended December 31, 1998. The increase results from an increase in the number and
scope of product and process development projects during the 1999 period.
Amortization of Intangibles. Amortization of intangibles was $4.5 million
for the six months ended December 31, 1999, compared to $4.4 million for the six
months ended December 31, 1998.
Income from Operations. As a result of the above, income from operations
fell 11.8% to $37.7 million for the six months ended December 31, 1999 from
$42.7 million for the six months ended December 31, 1998. Income from operations
for the Professional Healthcare segment, the Occupational Healthcare segment and
the Personal Healthcare segment were $19.5 million, $14.4 million and $3.8
million for the six months ended December 31, 1999, respectively, and $24.0,
$15.0 and $3.7 for the six months ended December 31, 1998, respectively.
Net Interest Expense. Net interest expense increased to $12.5 million for
the six months ended December 31, 1999 from $10.1 million for the six months
ended December 31, 1998, due to greater levels of debt as a result of the
acquisitions of Kemwell and Suretex in fiscal 1999. The weighted average
balances of non-interest bearing debt owed to affiliates that was outstanding
during the six months ended December 31, 1999 and 1998 were $98.3 million and
$105.2 million, respectively. If these balances bore interest at the average
rate charged to us by the Pacific Dunlop Group, net interest expense would have
increased by $3.8 million in each period. Additional inter-company debt was also
incurred in connection with the payment of dividends of $33.1 million to the
Pacific Dunlop Group in the latter half of fiscal 1999.
Foreign Currency Transactions, Net. Foreign currency transaction gains on a
pre-tax basis of $0.8 million were recorded for the six months ended December
31, 1999, compared to a loss of $0.5 million for the six months ended December
31, 1998. These gains primarily related to the net effect
24
<PAGE> 29
of Ansell Group's foreign currency hedge positions throughout the period. These
hedging transactions were designed to hedge exchange rate risk against the
Australian dollar, the currency in which the financial results of Ansell Group
were previously reported. We sold euros and purchased Australian dollars in May
1999 to cover translation exposures for the period from July 1999 to September
1999. We terminated these contracts in July 1999, resulting in a $0.8 million
gain for the six months ended December 31, 1999, due to the strengthening of the
Australian dollar against the euro.
Income Taxes. Ansell Group effective tax rate was 19.1% for the six months
ended December 31, 1999 compared to 14.3% for the six months ended December 31,
1998, primarily due to the resumption of tax payments in Malaysia, after a
government-sanctioned pause in the prior year.
FISCAL 1999 COMPARED TO FISCAL 1998
Net Sales. Net sales in fiscal 1999 remained essentially flat at $738.4
million compared to $735.3 million in fiscal 1998. Increases in net sales in our
Professional Healthcare and Personal Healthcare segments were offset by a
decline in net sales in our Occupational Healthcare segment. Significant
contributors to the performance of fiscal 1999 from fiscal 1998 were
acquisitions and new product introductions, offset by the loss of two major
customers, discontinuation of non-core lower margin parts of the business and
price reductions. Additionally, fiscal 1999 net sales were adversely affected by
foreign currency translation adjustments of $4.0 million, which was primarily
due to the weakening of the Australian dollar and the Canadian dollar against
the U.S. dollar.
In the Professional Healthcare segment, net sales increased 2.8% to $264.2
million in fiscal 1999 from $257.1 million in fiscal 1998, principally as a
result of acquired businesses and new product introductions. Of the increase,
$6.7 million was attributable to net sales added as a result of the acquisition
in September 1998 of the Kemwell surgical gloves business. Ansell Group also
experienced growth from the introduction of new products and from increased
sales to our existing customer base. During 1999 these improvements were offset
in part by a reduction in the average selling price of medical examination
gloves in response to lower priced competitive products.
In the Occupational Healthcare segment, net sales decreased 6.0% to $377.5
million in fiscal 1999 from $401.8 million in fiscal 1998, primarily due to
lower sales in the emerging markets in Eastern Europe and Latin America and,
with respect to the acquisition of the Golden Needles knitting operations in
April 1997, the earlier than expected loss of two major customers and
discontinuation of non-core, lower margin parts of the acquired business.
In the Personal Healthcare segment, net sales increased 26.5% to $96.6
million in fiscal 1999 from $76.4 million in fiscal 1998. Of this increase,
$16.2 million was due to the acquisition in November 1998 of Suretex, with the
remainder attributable to the introduction of new products, primarily the full
year effect of the LifeStyles XtraPleasure condom and the LifeStyles Discs
packaging, as well as the continued penetration of new markets, particularly in
Europe.
Gross Profit. Gross profit increased 3.0% to $254.9 million in fiscal 1999
from $247.5 million in fiscal 1998, increasing to 34.5% of net sales in fiscal
1999 compared to 33.7% of net sales in fiscal 1998. The gross profit increase
includes the benefit of lower costs in the amount of $6.0 million, which was due
to the weakness of the Malaysian ringgit and the Sri Lankan rupee against the
U.S. dollar, partially offset by lower net sales in the amount of $4.0 million,
which was due to the weakness in the Australian dollar and the Canadian dollar
against the U.S. dollar.
This increase was also due to the increasing margins in the Professional
Healthcare segment associated with new products and the increasing sales of
higher margin powder-free as compared to powdered surgical and examination
gloves. Partially offsetting these increases was a reduction in the average
selling price of our medical examination glove products in response to
lower-priced competitive products.
In the Occupational Healthcare segment the fiscal 1999 gross profit margins
were in line with the fiscal 1998 gross profit margins.
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<PAGE> 30
In the Personal Healthcare segment, gross profit margins were adversely
affected by the lower margins attributable to the acquired Suretex business.
This business participates in the low margin, public bid and tender business
operated by government departments and multinational public sector organizations
in developing countries. Ansell Group also incurred the increased costs in the
Personal Healthcare segment that it had anticipated due to outsourcing
production during the transition from U.S. manufactured product to the
lower-cost Thailand manufactured product at the facility in Surat Thani,
Thailand obtained with the acquisition of Suretex.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 8.0% to $149.6 million in fiscal 1999 from
$138.5 million in fiscal 1998. Sales, general and administrative expenses were
20.3% of net sales in fiscal 1999 compared to 18.8% of net sales in fiscal 1998.
In the Professional Healthcare segment, selling, general and administrative
expenses increased from 17.2% to 20.2% of net sales, as a result of the
expansion of our global work force and the costs incurred in centralizing our
European operations in France. Ansell Group also incurred increased costs
relating to an increase in activity of latex litigation defense cases and in
updating global information technology systems.
In the Occupational Healthcare segment, selling, general and administrative
expenses increased from 15.9% to 16.8% of net sales, due to the expenses of
closing owned and managed warehousing facilities in Ohio and the transfer to a
third party managed facility. Additional costs were incurred during fiscal 1999
in updating global information technology systems.
In the Personal Healthcare segment, selling, general and administrative
expenses were 38.5% of net sales in fiscal 1999, in line with such expenses in
fiscal 1998.
Research and Development Expenses. Research and development expenses
decreased 5.8% to $8.3 million in fiscal 1999 from $8.8 million in fiscal 1998.
As a percentage of net sales, research and development expenses were 1.1% in
fiscal 1999 compared to 1.2% in fiscal 1998. The reduction in these expenses
resulted from a reduction in the number and scope of product and process
development projects undertaken in fiscal 1999 compared to fiscal 1998.
Restructuring Charges. Restructuring charges of $1.3 million were incurred
in fiscal 1999 as a result of employee severance costs and related expenses
associated with implementing a manufacturing expansion and reconfiguration plan
and reorganization of certain administrative functions. See "-- Restructuring."
Amortization of Intangibles. Amortization of intangibles increased to $8.8
million in fiscal 1999 from $7.1 million in fiscal 1998 due to a full year of
amortization charges associated with the acquisitions of Kemwell and Suretex.
Income from Operations. Income from operations for the Professional
Healthcare segment, the Occupational Healthcare segment and the Personal
Healthcare segment were $46.9 million, $34.6 million and $5.4 million,
respectively, in fiscal 1999, respectively and $47.3 million, $37.8 million and
$7.9 million, respectively, in fiscal 1998, respectively.
Net Interest Expense. Interest expense remained steady at $23.9 million in
fiscal 1999 compared to $23.4 million in fiscal 1998. Interest expense was
offset by interest income of $2.8 million in 1999 and $2.4 million in 1998. We
had outstanding debt of $408.7 million at June 30, 1999 compared to $349.9
million at June 30, 1998, which principally increased in June 1999. The weighted
average balances of non-interest bearing debt owed to affiliates that was
outstanding during fiscal 1998 and 1999 was $106.0 million and $100.7 million.
If these balances bore interest at the average rate charged to us by the Pacific
Dunlop Group, net interest expense would have increased by $7.8 million and $7.5
million, respectively. Net interest expense was flat at $21.1 million in fiscal
1999 and 1998.
Foreign Currency Transactions, net. Foreign currency transaction gains on a
pre-tax basis were $2.0 million in fiscal 1999 and $4.4 million in fiscal 1998.
These gains primarily related to the net effect of Ansell Group's foreign
currency hedge positions throughout the period. These hedging transactions were
designed to hedge exchange rate risk against the Australian dollar, the currency
in which the Ansell Group's financial results were reported. We sold euros and
purchased Australian dollars in March 1999 to
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<PAGE> 31
cover translation exposures for the March 1999 to June 1999 period. We
terminated these contracts in late April 1999 when the Australian dollar was
strengthening against the euro resulting in the fiscal 1999 $2.0 million gain.
Income Taxes. Income taxes increased to $11.0 million in fiscal 1999 from
$9.2 million in fiscal 1998. Ansell Group's effective tax rate was 16.4% in
fiscal 1999, compared with 12.0% in fiscal 1998. In fiscal 1998 Ansell Group's
foreign operations reinstated the tax benefit of expenses that had previously
not been considered tax deductible. This recovery resulted in decreasing the
effective tax rate in fiscal 1998 by approximately 3.3%. Ansell Group's
effective tax rate was lower than the U.S. federal and state statutory rate, as
its operations have tax-free or reduced tax status in several jurisdictions
overseas.
FISCAL 1998 COMPARED TO FISCAL 1997
Net Sales. Net sales increased 9.8% to $735.3 million in fiscal 1998 from
$669.7 million in fiscal 1997. Significant contributors to the performance of
fiscal 1998 were inclusion of full year sales of Golden Needles and the
introduction of new products, offset by foreign currency translation adjustments
of $13.0 million, due to the weakness in European currencies, the Australian
dollar and the Canadian dollar against the U.S. dollar, our decision to withdraw
from a major Middle East medical glove tender, the divestiture of our direct
sales business in Sweden and the sale of our Mates condom vending business.
In the Professional Healthcare segment, net sales were relatively stable at
$257.1 million in fiscal 1998 compared with $255.7 million in fiscal 1997.
Increased sales from new products were offset by the decision to exit customer
relationships deemed unprofitable, such as the transfer of the direct sales
business in Sweden to a third party distributor ($3 million), and the decision
to withdraw from a major medical glove tender in the Middle East ($7 million)
due to delayed payments on a previous tender.
In the Occupational Healthcare segment, net sales increased 17.5% to $401.8
million in fiscal 1998 from $342.0 million in fiscal 1997. The net sales
increase was primarily due to the full-year inclusion of the sales of Golden
Needles ($55 million), and the introduction of new products, including Hyflex
and Touch 'N Tuff gloves, which offer improved dexterity and grip in light and
heavy duty applications, respectively, and Nitrilite gloves for product
protection in the critical environment market.
In the Personal Healthcare segment, net sales increased 6.2% to $76.4
million in fiscal 1998 from $72.0 million in fiscal 1997. The net sales increase
was primarily due to the introduction of new products including the LifeStyles
XtraPleasure condom and increased sales into Eastern Europe and Latin America,
partially offset by reduced sales as a result of the sale of our Mates condom
vending business.
Gross Profit. Gross profit increased 13.9% to $247.5 million in fiscal 1998
from $217.2 million in fiscal 1997, increasing to 33.7% of net sales in fiscal
1998 compared to 32.4% of net sales in fiscal 1997. The increase includes the
benefit of $25.0 million in lower costs, which was due to the weakness of the
Malaysian ringgit, the Sri Lankan rupee and the Thailand baht against the U.S.
dollar, partially offset by foreign currency translation adjustments in the
amount of $13.0 million due to the weakness in European currencies, the
Australian dollar and the Canadian dollar against the U.S. dollar.
In the Professional Healthcare segment, gross profit margins increased
primarily due to increased sales of higher margin powder-free medical gloves,
the benefit of lower manufacturing costs from automation and process
improvements and the currency weakness throughout Asia.
In the Occupational Healthcare segment, gross profit margins increased
primarily due to the benefit of lower manufacturing costs following the transfer
of certain manufacturing operations from the United States to plants located in
Asia and the currency weakness throughout Asia.
In the Personal Healthcare segment, gross profit margins decreased from
fiscal 1997, reflecting the growth in lower-price sales in Eastern Europe, Latin
America and Asia, as Ansell Group increased sales in these emerging markets.
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<PAGE> 32
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 10.1% to $138.5 million in fiscal 1998 from
$125.8 million in fiscal 1997. Selling, general and administrative expenses were
18.8% of net sales in both fiscal 1998 and fiscal 1997.
In the Professional Healthcare segment, selling general and administrative
expenses increased from 17.0% to 18.7% of net sales, as Ansell Group increased
its investment in its global sales force and continued to invest in upgrading
information technology systems and legal defense costs of the latex allergy
product liability cases.
In the Occupational Healthcare segment, selling general and administrative
expenses decreased from 18.5% to 15.9% of net sales, due to substantially lower
administration and management expenses following the closure of the Atlanta
corporate office and relocation to New Jersey.
In the Personal Healthcare segment, selling general and administrative
expenses increased from 35.7% to 38.4% of net sales, primarily due to additional
advertising and promotional expenses in new markets.
Research and Development Expenses. Research and development expenses
decreased 15.4% to $8.8 million in fiscal 1998 from $10.4 million in fiscal
1997. As a percentage of net sales, research and development expenses were 1.2%
in fiscal 1998 and 1.6% in fiscal 1997, reflecting the completion of various
projects in each year.
Amortization of Intangibles. Amortization of intangibles increased to $7.1
million in fiscal 1998 from $5.9 million in fiscal 1997, due to a full year of
amortization charges associated with the acquisition of Golden Needles.
Income from Operations. Income from operations for the Professional
Healthcare segment, the Occupational Healthcare segment and the Personal
Healthcare segment were $47.3 million, $37.8 million and $7.9 million,
respectively, in fiscal 1998, and $41.1 million, $23.6 million and $10.4
million, respectively, in fiscal 1997.
Net Interest Expense. Net interest expense decreased to $21.1 million in
fiscal 1998 from $25.1 million in fiscal 1997 due a change in Pacific Dunlop
Group policy, whereby interest was no longer charged on certain intergroup
funding account balances beginning July 1, 1997. The weighted average balances
of non-interest bearing debt outstanding during fiscal 1997 and during fiscal
1998 were $40.0 million and $106.0 million, respectively. If these balances bore
interest at the average rate charged to us by the Pacific Dunlop Group, net
interest expense would have been increased by $3.0 million and $7.8 million for
the respective periods.
Foreign Currency Transactions, net. Foreign currency transactions on a
pre-tax basis were $4.4 million of gains in fiscal 1998 and $1.2 million of
losses in fiscal 1997. These results primarily related to the net effect of
Ansell Group's foreign currency hedge positions throughout the period. These
hedging transactions were designed to hedge exchange rate risk against the
Australian dollar, the currency in which Ansell Group's financial results were
reported. The net gain of $4.4 million in fiscal 1998 resulted from selling
German, French, Japanese, British, Canadian and Italian currencies against the
U.S. dollar in July 1997 to cover translation exposures for the July 1997 to
June 1998 period. In addition, we sold German, French, Japanese, British,
Canadian and Italian currencies against the U.S. dollar and purchased Malaysian
ringgit and Thailand baht against the Australian dollar in July 1996 to cover
translation exposures for the July 1996 to June 1997 period. We terminated these
contracts in June 1997 resulting in a net loss of $1.2 million.
Income Taxes. Ansell Group's effective tax rate was 12.0% in fiscal 1998,
compared with 20.5% in fiscal 1997. During fiscal 1997, Ansell Group wrote off
tax benefits that management determined would not be recoverable in future
periods. This write-off resulted in increasing the effective tax rate in fiscal
1997 by approximately 8.3%. Ansell Group's effective tax rate was lower than the
U.S. federal and state statutory rate, as its operations had tax-free or reduced
tax status in several jurisdictions overseas.
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RESTRUCTURING
In fiscal 1999, Ansell Group undertook a number of restructuring
initiatives involving the relocation of its manufacturing and administrative
facilities. These initiatives included the relocation of two of our Occupational
Healthcare segment facilities to different locations within the United States
and relocation of certain administrative services previously located at
Eatontown, New Jersey to the newly created U.S. shared services group located at
Red Bank, New Jersey. Severance expenses amounted to approximately $1.1 million
and write down for machinery and equipment were approximately $0.2 million.
We continue to review our manufacturing activities and expect to further
relocate to lower cost regions. Currently we do not have a developed plan and
continue to consider a list of options as opportunities present themselves. Any
restructuring is intended to improve our competitive and financial position by
increasing our capacity and automation and reducing unit costs in certain of our
products. The restructuring will be designed to maximize the benefits from some
of the tax holidays in Southeast Asian countries in which we operate, including
Sri Lanka, Thailand and India. We anticipate completing this initiative in
fiscal 2002 and further anticipate incurring $10 million to $20 million in
restructuring charges.
LIQUIDITY AND CAPITAL RESOURCES
Historically, Ansell Group's cash flow from operations has been used to
repay acquisition indebtedness, fund capital expenditures and working capital
requirements, service debt and pay dividends to the Pacific Dunlop Group.
Net cash provided by operating activities was $91.9 million, $85.9 million
and $87.4 million in fiscal 1997, 1998 and 1999, respectively. Net income plus
non-cash items provided $62.0 million, $100.5 million and $90.3 million to
operating activities in fiscal 1997, 1998, and 1999, respectively, while working
capital provided or (used) $29.9 million, $(14.6) million and $(2.9) million in
fiscal 1997, 1998, and 1999, respectively. For the six months ended December 31,
1998 net cash provided by operating activities was $21.5 million compared to
$19.7 million for the six months ended December 31, 1999. Net income plus
non-cash items was $43.3 million for the six months ended December 31, 1998
compared to $35.6 million for the six months ended December 31, 1999 while
working capital used was $21.8 million for the six months ended December 31,
1998 compared to $15.9 million for the six months ended December 31, 1999.
For fiscal 1997, net cash used in investing activities for capital
expenditures was $31.3 million compared to $34.0 million in fiscal 1998 and
$57.9 million in fiscal 1999. Capital expenditures are primarily for machinery,
equipment and the purchase, modification and expansion of facilities. The
increase in capital expenditures in fiscal 1999 over fiscal 1998 and fiscal 1997
was largely attributed to restructuring, specifically the expansion of
Professional and Occupational Healthcare glove manufacturing capacity and the
commencement of the installation of additional Personal Healthcare condom
manufacturing capacity.
For the six months ended December 31, 1998 net cash used by investing
activities was $57.0 million compared to $18.5 million for the six months ended
December 31, 1999 and consisted of payments for acquisitions of $33.4 million
for the six months ended December 31, 1998. In addition, for the six months
ended December 31, 1998 capital expenditures of property, plant and equipment
were $23.7 million compared to $19.0 million for the six months ended December
31, 1999.
Net cash provided from financing activities was $4.3 million in fiscal 1997
compared to net cash used in financing activities of $13.7 million in fiscal
1998. Net cash provided from financing activities was $4.4 million in fiscal
1999. Combined borrowings and capital contributions from affiliates were $29.6
million, $61.9 million in fiscal 1997 and fiscal 1999, respectively, compared to
repayments to affiliates, net of capital contributions, of $3.9 million in
fiscal 1998. For the six months ended December 31, 1998 net cash provided from
financing activities was $20.6 million compared to $6.1 million in the six
months ended December 31, 1998. Combined borrowings and capital contributions
from affiliates were $43.9 million for the six months ended December 31, 1998
compared to $30.2 million for the six months ended
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December 31, 1999. The capital contributions from affiliates were made in
connection with Ansell Group acquisitions.
Ansell Group paid dividends to the Pacific Dunlop Group totaling $9.5
million, $15.0 million and $68.2 million in fiscal 1997, 1998, and 1999,
respectively. Dividends of $25.1 million and $26.2 million were paid in the six
months ended December 31, 1998 and 1999, respectively.
We anticipate capital expenditures in the $35 million to $40 million range
per year for the next two fiscal years, which includes expenditures expected to
be incurred in connection with our manufacturing expansion and facility
conversion program.
In addition, in the last three fiscal years, Ansell Group made acquisitions
with an aggregate purchase price of $117.9 million, not including the pending
acquisition of the medical glove business of Johnson & Johnson. These
acquisitions were funded by borrowings primarily from the Pacific Dunlop Group.
There was a net cash usage of $16.2 million for the six months ended
December 31, 1998 compared to a net cash generation of $6.4 million in the six
months ended December 31, 1999. The reduction in cash usage for the six months
ended December 31, 1999 of $5.8 million compared to the six months ended
December 31, 1998 was primarily due to lower seasonal build up of inventory and
slightly offset by the constant level of receivables at December 31, 1999
compared to a reduction of $4.4 million in the December 31, 1998 level of
receivables. The increase in taxes payable for the six months ended December 31,
1999 primarily relates to the conclusion of the tax concession in Malaysia.
Accrued and other liabilities decreased $8.1 million in the six months ended
December 31, 1999 compared to the six months ended December 31, 1998 due to
higher payroll tax accruals, commissions and vendor accruals of our European
subsidiaries.
At December 31, 1999, Ansell Group had total borrowings of $440.4 million
and cash and cash equivalents of $65.6 million, representing net borrowings of
$374.8 million. Over 90% of the borrowings at December 31, 1999 were operating
advances from the Pacific Dunlop Group. Included in total borrowings is $9.5
million owing to the seller of the Golden Needles business, which was acquired
in 1997 for $81.2 million. $9.5 million, which bears interest at prime rate, is
payable on April 23, 2000. Also included in total borrowings is a Belgian
revolving line of credit of $15.4 million payable through December 31, 1999 at
an interest rate of 3.75%. The Belgian revolving line of credit has been renewed
on similar terms through December 31, 2000. For fiscal 1997, 1998, 1999 and the
six months ended December 31, 1999, Ansell Group's weighted average rates of
interest on borrowings were 8.9%, 7.5%, 7.4% and 7.0%, respectively.
As part of our reorganization, certain members of the Pacific Dunlop Group
will be issued shares of our common stock in consideration for Ansell Group
businesses and to repay borrowings. Therefore, immediately following the
reorganization, after taking into account the $97.6 million capital contribution
by Pacific Dunlop Group to acquire the medical gloves business of Johnson &
Johnson, we expect to have total borrowings of $210 million, including the $9.5
million of debt payable to the seller of the Golden Needles business, and cash
and cash equivalents of $10 million.
Following our reorganization we intend to continue to source our borrowings
primarily from Pacific Dunlop Holdings Inc. (an indirect subsidiary of Pacific
Dunlop Limited) through a new $200 million revolving credit facility. We
estimate $179.1 million of the borrowings referred to above will be drawn from
this facility and $30.9 million will continue to be borrowed from third party
sources. Outstanding amounts under the revolving credit facility bear interest
at the 30-day LIBOR rate plus 0.95% and can be prepaid at any time. We can
borrow in currencies other than U.S. dollars and the interest rates will be
determined by Pacific Dunlop Holdings Inc. in good faith at rates equivalent to
the 30-day LIBOR rate plus 0.95% for the currency that we are borrowing. In
addition, without the prior consent of Pacific Dunlop Holdings Inc., we cannot
incur additional indebtedness with third parties. The interest rate may be
revised by Pacific Dunlop Holdings Inc., no more frequently than annually, upon
thirty days prior notice to us of the new rate. If we are not satisfied with the
new rate, we would need the consent of Pacific Dunlop Holdings Inc. to seek
financing from other sources.
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Changes in exchange rates between the currencies in which we generate cash
flow and the currencies in which our borrowings are denominated will affect our
liquidity. We will seek to denominate the non-U.S. dollar denominated borrowings
under the credit facility in currencies in which we generate cash flow or
conduct significant operations to lessen the effect of currency exchange rates
on our liquidity and net income.
IMPACT OF ACCOUNTING STANDARDS ISSUED BUT NOT YET ADOPTED
In June 1999, the Statement of Financial Accounting Standards No. 137
("SFAS No. 137"), "Accounting for Derivative Instruments and Hedging
Activities -- Deferral of Effective Date of FASB Statement No. 133", was issued.
This statement amended the effective date of the application of Statement for
"Derivative Instruments and Hedging Activities" to all fiscal quarters of all
fiscal years beginning after June 15, 2000. SFAS No. 133 revises the accounting
for derivative instruments. We have not yet analyzed the impact of this
pronouncement on the combined financial statements.
YEAR 2000
We established teams to identify and correct Year 2000 issues. Information
technology systems with non-compliant code have been modified or replaced with
systems that are Year 2000 compliant. Similar actions were taken with respect to
systems embedded in manufacturing and other facilities. The teams are also
charged with investigating the Year 2000 readiness of suppliers, customers and
other third parties and with developing contingency plans where necessary.
Key information technology systems and systems embedded in manufacturing
and other facilities have been inventoried and assessed for compliance, and
detailed plans are in place for required system modifications or replacements.
Remediation and testing activities are substantially complete with more than 98%
of the systems already compliant. Independent consultants are monitoring
progress against remediation programs and performing tests at certain key
locations. In addition, the progress of the programs is also monitored by senior
management and the board of directors of Pacific Dunlop Limited.
Our most significant exposure arises from our dependence on high volume
transaction processing systems, particularly for production scheduling,
inventory cost accounting, purchasing, customer billing and collection, and
payroll. Corrective actions to these applications have been completed.
We identified critical suppliers, customers and other third parties and
have surveyed their Year 2000 remediation programs. Risk assessments and
contingency plans, where necessary have been developed.
Incremental costs directly related to Year 2000 issues are estimated to be
$1.2 million, of which $1.1 million was spent during fiscal 1999. Approximately
75% of the total estimated spending represents costs to modify existing systems.
This estimate assumes that we will not incur any costs on behalf of our
suppliers, customers or other third parties. These costs will not necessarily
increase our normal level of spending on information technology due to the
deferral of other projects to enable us to focus on Year 2000 remediation.
Contingency plans for Year 2000 related interruptions have been developed
and include, but are not be limited to, emergency backup and recovery
procedures, replacement of electronic applications with manual processes,
identification of alternate suppliers and an increase in raw material and
finished goods inventory levels.
Our most likely potential risk is a temporary inability of suppliers to
provide supplies or raw materials or of customers to pay on a timely basis.
Our Year 2000 efforts are ongoing and our overall plan, as well as the
consideration of contingency plans, will continue to evolve as new information
becomes available. While we anticipate no major interruption to our business
activities, that will depend, in part, on the ability of third parties to be
Year 2000 compliant. Although we have implemented the actions described above to
address third party issues, we have no direct ability to ensure compliance
action by such parties. Accordingly, while we believe
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<PAGE> 36
our actions in this regard should have the effect of lessening Year 2000 risks,
we are unable to eliminate such risks or to estimate the ultimate effect of Year
2000 risks on our operating results.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our primary market risks are for foreign currency exchange rates and
commodity prices. See Note 5 to the Combined Financial Statements regarding
"Financial Instruments with Off-Balance Sheet Risks."
FOREIGN CURRENCY EXCHANGE RATE RISK
We use a variety of strategies, including foreign currency forward
contracts, to minimize or eliminate foreign currency exchange rate risk
associated with contracting in a currency other than the currency in which we or
any of our subsidiaries reports financial results. Each of our subsidiaries
reports its financial results to us in its local currency. Accordingly, if we or
one of our subsidiaries issues an invoice or a purchase commitment in a currency
other than the applicable reporting currency, we enter into a hedging
transaction, typically a forward contract, in an amount and with a delivery date
that corresponds with the amount and expected date the receivable will be
collected or the payable will be paid. The purpose of this policy is to
eliminate currency fluctuations from the transaction date until the date the
foreign currency is paid or received. We anticipate this policy to continue in
the foreseeable future.
Since our foreign subsidiaries report to us in their local currencies, we
have foreign currency exposure in translating those currencies to our reporting
currency which historically was the Australian dollar but after this offering
will be the U.S. dollar. Periodically, we assess whether there may be potential
unfavorable currency movements and, if so, may lock in exchange rate stability
for periods up to 18 months using forward currency hedge positions to cover
these translation exposures.
We use sensitivity analysis to assess the market risk associated with our
foreign currency transactions. Market risk is defined here as the potential
change in fair value resulting from an adverse movement in foreign currency
exchange rates. A 10% adverse movement in foreign currency rates would result in
a net loss of $19.8 million in fiscal 1999 compared with $2.6 million in fiscal
1998 on our foreign currency forward contracts. Due to net investment in
manufacturing assets in Asia, predominantly funded by equity, variations in the
exchange rates from year to year may result in changes in the value of net
assets, which is reflected as a component of other comprehensive income.
COMMODITY PRICE RISK
We are subject to market risks with respect to commodities because our
ability to recover increased costs through higher pricing may be limited by the
competitive environment in which we operate.
The two commodities which historically represent our largest raw material
component of cost of goods sold (excluding outsourced commodity products which
we package and resell) are latex and yarn. Latex, including both natural latex
and synthetic latex, and yarn represented approximately 7% and 5%, respectively,
of our cost of goods sold in fiscal 1999.
When we consider it advantageous to do so, we purchase latex in the forward
market by entering fixed price contracts for future supply with growers. The
growers contracts are typically for physical delivery 6 to 12 months from the
date of entering into the contract. We entered into a forward fixed price
contract in the quarter ended September 30, 1999 for the period through
September 2000. Periodically, we assess whether there may be future unfavorable
latex price movements and, if so, may lock in price stability for periods up to
18 months using latex futures contracts traded on an organized futures exchange
in Singapore.
MINORITY INTERESTS
We wholly own all of our worldwide operations with the exception of
operations in India and some of our operations in Malaysia. Listed below are our
subsidiaries where we own less than 100% of the
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<PAGE> 37
outstanding shares. The other shareholder in our Malaysian subsidiaries is
Permodalan Nasional Berhad, which is a Malaysian government investment body.
<TABLE>
<CAPTION>
ANSELL THIRD PARTY
OWNERSHIP OWNERSHIP THIRD PARTY SHAREHOLDERS
--------- ----------- --------------------------
<S> <C> <C> <C>
INDIA
Kemwell International Limited............. 74.8% 25.2% Bagaria Group/Bansal Group
J.K. Ansell Ltd........................... 50.0 50.0 Raymond Limited
MALAYSIA
Ansell Malaysia Sdn Bhd................... 75.0 25.0 Permodalan Nasional Berhad
Ansell Medical Sdn Bhd.................... 75.0 25.0 Permodalan Nasional Berhad
Ansell N.P. Sdn Bhd....................... 75.0 25.0 Permodalan Nasional Berhad
</TABLE>
Minority interests' share of the net income of Ansell Group in fiscal 1997,
1998 and 1999 and the six months ended December 31, 1999 was $3.1 million, $4.3
million, $3.5 million and $1.3 million, respectively.
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BUSINESS
OVERVIEW
We are a global leader in the design, development, manufacture and
marketing of protective gloves and condoms. Our operations are organized into
three business segments:
- Professional Healthcare (medical examination and surgical gloves),
- Occupational Healthcare (industrial and consumer gloves), and
- Personal Healthcare (condoms marketed in both retail and public health
channels).
We manufacture our products in Asia, North America and the United Kingdom
and market these products worldwide. In fiscal 1999, we sold products in more
than 100 countries. The Americas, Europe and Asia Pacific accounted for
approximately 56%, 32% and 12%, respectively, of our net sales in fiscal 1999.
We were founded in 1905 by Eric Ansell in Melbourne, Australia and acquired
by Dunlop Australia Limited (now Pacific Dunlop Limited) in 1969. Pacific Dunlop
Limited is a diversified multinational marketer and manufacturer of consumer and
industrial products, based in Australia. In 1997, we relocated our executive
offices from Melbourne, Australia to Red Bank, New Jersey. Prior to this
offering, Pacific Dunlop Limited indirectly owned 100% of our common stock.
We compete in the medical glove, the industrial and consumer glove and the
condom markets which we estimated to be approximately $1.5 billion, $3.6 billion
and $750 million on a global basis, respectively, in 1998. See Note 12 to the
Combined Financial Statements regarding "Segment Data." We believe that we have
the leading global market share position in, and the broadest product range of,
protective gloves serving the healthcare and occupational sectors of the barrier
protective market. We also believe that we are one of the world's largest
manufacturers and marketers of condoms. In fiscal 1999, our net sales in the
Professional Healthcare, Occupational Healthcare and Personal Healthcare
divisions were 36%, 51% and 13%, respectively.
Our products are made predominantly of natural and synthetic latex that
share common manufacturing processes and polymer dipping technologies. We have
developed proprietary formulations and related manufacturing processes that
enable us to produce many different types and styles of high quality gloves and
condoms. We maintain a flexible supply and logistics infrastructure in order to
switch production between various products based on market demand.
We are an innovator in the design and manufacture of protective gloves and
condoms. In each of the past three years more than 15% of our net sales have
come from products that have been on the market for three years or less and that
we developed internally. We believe that we are well positioned to capitalize on
the technology transfer opportunities that exist among our three business
segments, our recent acquisitions and our manufacturing facilities.
In addition to our success with new product development, we have been an
active acquiror of businesses within the protective barrier products industry.
We have pursued acquisitions in order to expand and augment our main product
lines, provide additional distribution channels, add new technologies to enhance
our manufacturing capabilities and to enter new geographic markets.
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<PAGE> 39
The following table highlights our strategic acquisitions over the last
three years:
<TABLE>
<CAPTION>
BUSINESS ACQUIRED PRIMARY
(DATE) BUSINESS SEGMENT/ MANUFACTURING PRIMARY SALES
(TRANSACTION COST) PRODUCT REGIONS REGIONS TRANSACTION BENEFITS
- ---------------------- ------------------- ------------------- ------------------- -------------------------------
<S> <C> <C> <C> <C>
Medical glove business Professional Malaysia United States - Brand and product expansion
of Johnson & Johnson Healthcare/ Europe - Expanded science and
(expected early 2000) Surgical and Latin America technology capability
($97.6 million) examination gloves - Modern manufacturing facility
Suretex Limited Personal Thailand Developing - Modern manufacturing
(November 1998) Healthcare/ India countries facilities
($26.4 million) Condoms - Low cost export capacity
- Expansion capability for
global production
- Established access to public
sector bid/tender market
Kemwell International Professional India Africa - Low cost export capacity
Limited -- 74.8% Healthcare/ South America - Expansion capability for
(September 1998) Low-cost surgical Europe global production
($7.6 million) gloves Asia - Platform to access the Indian
domestic surgical glove
market
JK Chemicals, Personal India India - Brand expansion with the
Limited -- 50% Healthcare/ addition of KamaSutra
(September 1997) Condoms - Low cost export capacity
($2.7 million) - Established access to Indian
government bid/tender market
Golden Needles Occupational United States United States - Integration of automated
Knitting, Inc. Healthcare/ Europe knitting technology with our
(April 1997) Automated seamless latex dipping technology for
($81.2 million) knitted industrial ergonomic new products
gloves using - U.S. market leading position
engineered yarns in knitted, cut-resistant
gloves
- Platform to expand product
offerings
</TABLE>
STRATEGY
We intend to be the leading designer, developer, manufacturer and marketer
of protective gloves, condoms and other healthcare barrier protective products
worldwide. In order to achieve our objective, we will continue to:
- Offer a Broad Range of Products and Brands. We intend to continue to
expand our product lines and brands across all three of the market
segments in which we operate. We will look for opportunities that will
enable us to leverage our existing manufacturing, technology and
marketing capabilities as we develop new products or acquire new
businesses. We believe that our ability to offer a broad spectrum of
products to our customers affords us a competitive advantage.
- Focus on Value Added, Higher Margin Branded Products. We will continue to
design, develop, manufacture and market higher margin products that
emphasize comfort, quality and brand recognition. In the Professional
Healthcare glove market we will focus on enhanced feature, form-fitting,
powder-free examination and surgical gloves. In the Occupational
Healthcare glove market we will focus on enhanced feature products for
the high specification clean room environment, the food and service
industry and the general manufacturing industry. In the Personal
Healthcare market we will focus on expanding the Discs packaging with
different condom styles and enhanced pleasure and branded products.
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<PAGE> 40
- Leverage Research and Development. We intend to continue to invest in
research and development, which we call science and technology, in order
to augment our product offerings. We have a history of new product
development and innovation. We are currently focusing our product
innovation on developing gloves using non-latex materials for both
medical and critical environment (sterile or clean room) applications,
ergonomically designed polymer coated seamless liner industrial gloves,
chlorine and powder-free, low allergenic coated medical gloves, as well
as food-safe gloves. We intend to use our research and development
platform to design and manufacture products that, with limited
modifications, will have application in both our Professional Healthcare
segment and Occupational Healthcare segment and share common materials
and manufacturing technologies.
- Augment Internal Growth with Acquisitions. We intend to continue to
pursue acquisitions in order to expand into related product areas and new
markets. Optimal acquisition candidates would also provide synergy with
our manufacturing, marketing, sales and science and technology
capabilities. We believe that our debt level, as reflected in our pro
forma balance sheet, together with substantial positive cash flow,
provides substantial borrowing capacity that would allow us to grow
through acquisitions.
- Leverage Manufacturing Where We Have a Technological Advantage. We intend
to continue to develop innovative manufacturing processes and facilities
that will improve quality while maintaining and improving efficiency and
safety. We plan to remain flexible in our ability to manufacture multiple
products in the same facilities and selectively outsource certain
products where we can do so more cost effectively than manufacturing them
ourselves or where we have a temporary lack of capacity.
- Focus on Customer Service. We will continue to enhance customer
satisfaction by focusing on and improving customer service. We will
continue to emphasize educational programs and services designed to
assist customers and end users in effective and efficient product
selection. We will continue to work with customers to identify
opportunities for product design improvements and to respond in a timely
manner to customer needs.
INDUSTRY OVERVIEW
We estimate that the aggregate market size for the three business segments
in which we compete was $5.8 billion in 1998. Historically, these business
segments have been characterized by moderate growth, but we believe that there
is higher growth potential in several niche areas and geographic markets. We
believe that we are well positioned to take advantage of these niche
opportunities while remaining competitive in our more mature product lines and
markets.
PROFESSIONAL HEALTHCARE SEGMENT
Based on our estimates, we believe that in 1998 the total global market was
approximately $1 billion for medical examination gloves and $500 million for
surgical gloves. We estimate that in 1998 the total U.S. market was $700 million
for medical examination gloves and $210 million for surgical gloves. Sales in
the U.S. market of medical examination gloves are divided between the hospital
and alternate care markets, which we estimate to be approximately 55% and 45%,
respectively.
The growth in these markets is largely attributable to ongoing concerns
among the general public and healthcare professionals regarding the increased
risk from the transmission of infectious diseases, particularly the human
immunodeficiency virus, or HIV, and the hepatitis B virus. In 1987, the Centers
for Disease Control issued U.S. guidelines that anyone coming into contact with
bodily fluids should use universal precautions, including wearing protective
gloves. Furthermore, since 1991 Occupational Safety and Health Administration
U.S. regulations have required that protective gloves be worn when it can be
reasonably anticipated that an employee will have contact with blood, saliva or
other potentially infectious substances. These workers include hospital, clinic
and dental office employees, persons engaged in
36
<PAGE> 41
paramedic services and those who work in nursing homes, drug and alcohol
treatment facilities and funeral homes. Healthcare professionals routinely wear
and frequently replace protective gloves throughout the day. The growth in this
market has also resulted from general public awareness of such infectious
diseases, population growth, as well as more stringent regulatory requirements
and regulations in the medical field. The increased use of protective gloves has
led to greater demand for more comfortable and higher quality gloves.
The Professional Healthcare market is subject to pricing pressures and the
continual need to innovate and produce higher quality, more comfortable products
in order to maintain market share. Although product volumes in the Professional
Healthcare market have been increasing overall, prices of less
technologically-advanced gloves have been falling, creating modest overall
growth in this market. Pricing of medical examination and surgical gloves may
also be influenced by reimbursement policies and regulations of government
health administration authorities, private health insurers and other
organizations. Such third-party payors are increasingly challenging the price of
medical products and services.
OCCUPATIONAL HEALTHCARE SEGMENT
We estimate that in 1998 the total global industrial and consumer glove
market was approximately $3.6 billion. Although we do not participate in the
cotton and leather segment of the global industrial and consumer protective
glove market, many cotton and leather protective gloves are being replaced with
higher value, ergonomically superior industrial and consumer gloves utilizing
synthetic dipped and coated design materials. We have focused our resources on
converting traditional cotton and leather glove users to our line of efficient,
synthetic general purpose gloves. This focus has resulted in:
- our Hynit glove being purchased by customers as an alternative to light
cotton canvas, jersey, and string knit gloves used in light fabrication,
assembly and other materials handling applications,
- our Hycron, Hylite and Edge gloves being purchased by customers as
alternatives for leather products and 18-24 ounce cotton gloves in medium
to heavy duty applications requiring increased worker protection from
abrasions, cuts, and punctures, and
- our HyFlex glove being recently introduced into the general purpose
market to replace conventional cotton string, canvas, jersey and nylon
gloves used in auto and electronic assembly, light fabrication and other
small parts handling applications.
We estimate that in 1998 the total U.S. industrial and consumer glove
market was approximately $1.3 billion, of which we believe that the synthetic
and seamless knitted segment accounted for $800 million or approximately 60% of
that market.
Significant growth opportunities exist in the critical environment market
sector and food and food service industry. The growth in these markets is
expected to result from increased regulatory legislation around the world
designed to protect workers against occupational hazards and increased concern
for protecting products from contamination by workers and the environment. This
market remains highly fragmented with many suppliers. We believe that many of
these suppliers will be candidates for consolidation in the future.
We estimate the worldwide critical environment market grew at approximately
10% per year between 1996 and 1998, based on units sold, due to growing demand
for improved synthetic dipped gloves among users in the:
- semiconductor,
- electronics,
- biotechnology,
- pharmaceutical,
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<PAGE> 42
- research segments of the high technology and scientific markets, and
- specific clean room environments within general industrial manufacturing.
Increasingly, the manufacturing process in these industries takes place in
clean rooms and requires gloves that minimize the amount of particles on their
surfaces to prevent the gloves from contaminating the product, or the worker
from contaminating the work environment. The increasing demand for micro-
electronic components that require extremely clean manufacturing conditions is
expected to continue to drive this growth.
Like critical environment gloves, products for the food and food service
market are designed to protect both the worker from the product and the product
from worker contamination. Stringent new regulatory requirements in this
industry, particularly in Europe, together with heightened awareness of
contamination of food products by workers, are expected to continue to drive the
growth of this industry and demand for our products.
The growth in demand in the Occupational Healthcare market is expected to
be partially offset by a number of factors such as:
- increased automation, which decreases the employed workforce and,
therefore, the number of gloves required,
- multiple re-use and washing of gloves, which decreases the purchase of
new gloves, and
- increased globalization of buyers and large specialized buying groups,
which results in price compression.
PERSONAL HEALTHCARE SEGMENT
We estimate that in 1998 the total global condom market (excluding the
Peoples Republic of China) was approximately $750 million with the U.S. market
accounting for approximately $170 million. We believe that growth in this market
will continue due to ongoing concerns regarding HIV and other sexually
transmitted diseases, unwanted pregnancies and global population control. In
addition, the shift in distribution channels from traditional outlets, such as
pharmacies, to mass merchandisers and convenience stores, as well as marketing
efforts emphasizing packaging improvements, the pleasure aspects of sex and
increased brand awareness, are expected to contribute to growth in this market.
PRODUCTS
We believe our broad portfolio of products, geographic diversity and
product development strategy, make us well positioned to address current
industry dynamics. We design, develop, manufacture and market products through
our Professional Healthcare division (medical examination and surgical gloves),
Occupational Healthcare division (industrial and consumer gloves and, to a
limited degree, protective clothing) and Personal Healthcare division (condoms).
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<PAGE> 43
The following charts show the relative allocation of net sales and
operating income (calculated as earnings before interest and taxes) for fiscal
1999 from each of our three business segments:
Net Sales and Operating Income In Fiscal 1999 by Business Segment
[EDGAR REPRESENTATION OF PIE CHARTS]
<TABLE>
<S> <C>
Total Net Sales............................................. $738.4 million
Occupational Healthcare................................ $377.5 million(51.1%)
Professional Healthcare................................ $264.2 million(35.8%)
Personal Healthcare.................................... $ 96.6 million(13.1%)
Total Income from Operations................................ $ 86.9 million
Professional Healthcare................................ $ 46.9 million(53.9%)
Occupational Healthcare................................ $ 34.6 million(39.8%)
Personal Healthcare.................................... $ 5.4 million(6.2%)
</TABLE>
PROFESSIONAL HEALTHCARE SEGMENT
Net sales in fiscal 1999 of our medical examination gloves accounted for
$124 million of the global medical examination glove market and sales of our
surgical gloves accounted for $140 million of the global surgical glove market.
Based on our estimates, the size of such markets in 1998 were approximately $1
billion and $500 million, respectively. Our sales of medical examination gloves
reflects limited penetration of the alternate care sector of that market.
Historically, we have not focused on the alternate care sector, which we
estimate represents approximately 45% of the total U.S. medical examination
glove market. We are now pursuing a strategy to gain a greater share of the
alternate care market by leveraging our existing product base through additional
distribution channels.
The various styles of surgical gloves that we sell include standard lightly
powdered, latex powder-free, synthetic neoprene and polyurethane powder-free,
orthopedic and micro-optic surgical gloves. Surgical gloves are specifically
developed for use in the operating theater. Most of our surgical gloves are sold
in sterilized pairs that are opened immediately prior to use. Our various styles
of medical examination gloves include standard lightly powdered, latex
powder-free, synthetic vinyl, synthetic nitrile and sterile. Most of our
examination gloves are sold in boxes of large quantities of ambidextrous gloves.
Examination gloves are generally less expensive than surgical gloves which
require sterile packaging and have enhanced features. Physicians, dentists,
dental hygienists, nurses and other healthcare professionals typically use and
dispose of several examination gloves each work day to help reduce the risk of
cross-infection during the examination and treatment of patients.
We believe that we are one of the largest manufacturers and marketers of
medical examination and surgical gloves. Our medical examination and surgical
gloves are marketed under the brands of Ansell and Ansell Perry and under
specific product brands such as Gammex, Conform, Encore, NuTex, MicrOptic, X-AM,
Synsation, DermaClean and Nitra-Touch. Through the pending acquisition of the
medical glove business of Johnson & Johnson, we will add the following brand
names: Micro-Touch, Maxxus, Neutralon, Ultralon, Surgikos, Dispos-a-Glove and
Allergard.
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<PAGE> 44
We are a premium quality manufacturer and innovator in the medical glove
market with a long history of developing products that use advanced materials to
meet the needs of our customers. The following table illustrates selected
product innovations introduced over the last three years by our Professional
Healthcare segment:
<TABLE>
<CAPTION>
BRAND NAME PRODUCT INNOVATION
- ---------- ------- ----------
<S> <C> <C>
1999
Encore Acclaim Latex surgical glove Powder-free, damp-hand donnable, smooth
finish
Nitra-Tex EP Nitrile extra-protection First powder-free, extra long, added
exam glove protection nitrile exam glove
Sterile Synsation Vinyl exam glove Powder-free, sterile, high tensile
Sterile Nitra-Touch Nitrile exam glove Powder-free, sterile, nitrile exam glove
DermaClean PFC Latex exam glove Powder-free, no secondary chlorination,
improved grip
1998
Derma Prene PF Neoprene surgical glove Powder-free, damp-hand donnable
Elite Polyurethane surgical glove First powder-free, polyurethane surgical
glove
Encore MicrOptic Micro-thin surgical glove Powder-free, micro-thin surgical glove
Nitra-Tex Nitrile exam glove Powder-free, textured finish
1997
Encore Orthopedic Latex surgical glove First powder-free, orthopedic glove
Synsation Vinyl exam glove Powder-free, high tensile glove
Nitra-Touch Nitrile exam glove First powder-free, synthetic glove approved
for use with chemotherapy
</TABLE>
OCCUPATIONAL HEALTHCARE SEGMENT
As regulations and standards in the Occupational Healthcare segment
intensify, the manufacturing and technological experience and expertise we have
achieved in our Professional Healthcare segment can be employed in the design
and manufacture of products for the growth sectors of our Occupational
Healthcare segment. We believe that increased regulations and standards in the
Occupational Healthcare segment may pose additional technological barriers to
existing competitors and potential newcomers.
We estimate that in 1998 the total global industrial and consumer glove
market was approximately $3.6 billion. We believe we are the global market
leader in the manufacturing and marketing of synthetic and seamless knitted
gloves portion of the market, servicing the industrial and consumer protective
glove segment of the market in which we participate. Our net sales in this
market in fiscal 1999 accounted for $377.5 million. We also have a global
leadership position in the manufacturing and marketing of synthetic dipped and
coated protective gloves and seamless automatically knitted gloves using
engineered yarns for use in the industrial glove market. These gloves are
principally branded Ansell Edmont. We also manufacture consumer gloves for sale
primarily in Europe, the United States and Australia under the Ansell brand, as
well as various private labels. As a result of our automated knitting and
dipping processing technologies, we are one of only a few glove manufacturers
capable of developing various types of specialized light, cut-resistant and
ergonomically designed gloves using engineered yarns such as kevlar and spectra
for many kinds of industrial and commercial applications. Our proprietary
seamless knitting technology and engineered yarns know-how enables us to produce
finished high performance industrial gloves and liners for polymer coated
industrial gloves.
We are a premium quality manufacturer and innovator in the Occupational
Healthcare market with a long history of developing innovative products that use
advanced materials to meet the needs of our
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<PAGE> 45
customers. The following table illustrates selected product innovations
introduced over the last three years by our Occupational Healthcare segment:
<TABLE>
<CAPTION>
BRAND NAME INDUSTRY SECTOR INNOVATION
- ---------- --------------- ----------
<S> <C> <C>
1999
Nitrilite Silky Critical Environment Improved flexible formulation and ergonomic
shape to provide better dexterity and
electrostatic discharge properties
Foam Lined HHG Food and Food Service Foam lining technology provides improved
Consumer Market perspiration absorption and protection
against hot and cold in light duty
applications
ProFood Food and Food Service Range of food-safe gloves designed and
formulated to meet heightened food handling
and processing industry hygiene standards
1998
Hyflex General Manufacturing Light-duty seamless liner dipped in patented
Consumer Market nitrile foam formulation
Bull-hyd General Manufacturing Heavy-duty seamless liner dipped in patented
nitrile foam formulation
1997
Barrier General Manufacturing Highly chemical resistant glove (multi-layer
film with improved ergonomic properties)
that provides better comfort and fit
Thermaprene Food and Food Service Thermal liner, inside a neoprene shell with
heat and liquid-proof resistance
Touch n' Tuff Food and Food Service Thin nitrile technology that provides a
General Manufacturing superior fit for a non-latex glove
</TABLE>
Our protective gloves are sold to occupational safety supply companies,
large industrial supply companies and various governmental agencies principally
in the United States and Europe. The global market for occupational healthcare
gloves is highly fragmented and has many small local competitors. Given the
broad nature of the market, we have developed a focused strategy that
concentrates on the following specific market sectors: critical environment,
food and service, general manufacturing and the consumer market.
Critical Environment
The critical environment market sector includes semiconductor, electronics
and other high technology manufacturers who require a controlled atmosphere or
clean room environment. Our critical environment gloves protect the worker from
the manufacturing process and protect the manufactured product from
contamination by the worker or the environment. The rapid growth in demand for
micro-electronic components which require extremely clean manufacturing
conditions, as well as the need for non-shedding gloves, are expected to
continue to drive growth in this market. We intend to expand our efforts to
develop new gloves specifically designed for this market, such as our Nitrilite
and Accutech lines.
Food and Food Service
We offer a broad range of food-safe gloves developed exclusively for the
worldwide food processing and food service industries. Participants in this
industry are involved with the packing, processing, preparation and service of
various food products. The products that we market for this industry include the
following brands: ProFood, Duratouch, Versatouch, Conform and Food Mates.
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<PAGE> 46
General Manufacturing
The general manufacturing industry requires gloves designed to protect
workers from cuts, bruises, chemicals, temperature extremes and other
occupational hazards encountered in the work environment. The automotive and
durable goods industries are a large part of this market. We combine our
know-how in automatic seamless knitting of engineered yarns with our proprietary
polymer dipping technology to develop lighter, more comfortable and
task-specific gloves that address these industry needs. We manufacture and
market products under the following brand names for this industry: Hynit,
Hycron, Easyflex, Solvex, Bull-hyd and Hyflex.
Consumer Market
Light duty consumer application gloves are sold for both general household
tasks and the Do-It-Yourself market sectors. Gloves for household use are sold
to consumers primarily through traditional retail organizations, such as
supermarkets and drug stores. Gloves for the Do-It-Yourself market are sold
through specialist hardware and home improvement outlets. We view the consumer
glove market as a mature market having relatively low growth potential, with the
exception of the Do-It-Yourself market, which we expect will grow at a faster
rate. Our consumer gloves are sold under the Ansell and Ansell Edmont brands and
under private labels of various marketing organizations and retailers.
PERSONAL HEALTHCARE SEGMENT
We estimate that in 1998 the global condom market (excluding the Peoples
Republic of China) was approximately $750 million. Net sales of our condoms
accounted for $96 million of this market in fiscal 1999. We are a leading
manufacturer and marketer of branded condoms worldwide with significant presence
in the United States, Western Europe, India and Australia. We also sell branded
and unbranded condoms in the worldwide public sector bid/tender market, where
condoms are supplied for free or subsidized sale by population, health and
social welfare programs, mainly in developing countries. We also participate in
the contract market through sales of our branded condoms to government agencies
in the United States.
We have multiple condom lines in the Personal Healthcare segment, with
several different product variations in each line. We continue to add new
products to provide additional options for our customers. We also use innovative
marketing, merchandising and packaging to further differentiate our products
from the competition. We manufacture and market a variety of condoms with
different flavors, colors, lubricants and spermicides, as well as specialized
shapes and textured features. Packaging is another important element in
marketing condoms, which is why we recently introduced Discs for our LifeStyles
brand. Discs is a thermoformed plastic tray with a peel back lid that we call a
"butter-pack." This package is easy to open and also helps ensure that the
condom is put on correctly each time.
We manufacture and market branded condoms worldwide, and we offer different
brands in various markets including the following:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
MAIN MARKETS BRAND NAMES
------------ -----------
<S> <C> <C> <C>
United States and Canada.............................. LifeStyles, Contempo
Western Europe........................................ Benetton, LifeStyles, Manix, Primex
Eastern Europe........................................ LifeStyles, KamaSutra
United Kingdom........................................ Mates
Latin America......................................... Prime, Contempo, LifeStyles
Australia............................................. LifeStyles, Chekmate
India and Southeast Asia.............................. KamaSutra
- ----------------------------------------------------------------------------------------------------
</TABLE>
SALES AND MARKETING
Sales and marketing coverage in each of our business segments requires the
use of several channels in order to accommodate customer needs and effectively
cover the diverse industries and geographic regions
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<PAGE> 47
we serve. We market our products to wholesale distributors, medical buying
groups, governments, international aid agencies, institutions and retail chains
either through our over 400 person global direct sales force or, in some
countries, through agents and distributors.
Our sales and marketing strategy across all our business segments is to
market to end-users in targeted market segments, quickly respond to new
opportunities and achieve rapid new product implementation. Our direct,
specialized sales representatives cover key growth segments through consultative
selling. We also conduct comprehensive survey programs to gauge customer
response and reaction to our products.
We participate in various workshops and educational programs relating to
worker protection in order to promote our products and educate healthcare
professionals and counselors in the appropriate use of our products. In
addition, we have clinical consultants in the United States, Canada and
Australia who work with customers and other end-users to provide advice
regarding clinical barrier protection, allergy management, cost reduction and
risk management. Our goal is to educate and provide the most recent information
to consumers of our products.
PROFESSIONAL HEALTHCARE SEGMENT
Sales of Professional Healthcare products represented approximately 35.8%
of our net sales for fiscal 1999. Our marketing efforts in the Professional
Healthcare segment focus principally on the hospital, medical laboratory and
dental markets. Sales to hospitals represented approximately 80% of the net
sales of our Professional Healthcare division during fiscal 1999, while sales to
medical laboratories, dental offices, veterinary offices and other clinics
accounted for the balance.
Our direct sales forces in the major markets of the United States, Canada,
Germany, the United Kingdom, France and Australia are responsible for sales of
our Professional Healthcare products in those countries. We generally use
regional and local distributors for sales of our medical gloves in countries
where our presence is less significant.
A substantial portion of our U.S. sales of Professional Healthcare products
are made through contracts with GPOs. GPOs accounted for 12.4%, 24.8%, 23.5% and
24.2% of our net sales of the Professional Healthcare segment in fiscal 1997,
1998, and 1999 and the six months ended December 31, 1999, respectively. GPOs
evaluate and select suppliers based on several criteria, including price,
quality and consistent and reliable service. GPO contracts enable us to be
placed on a list of approved suppliers. Hospitals, clinical laboratories and
other facilities that are members of GPOs are required or, in some cases,
incentivized to purchase particular products from those approved suppliers.
Hospitals are incentivized to purchase from approved suppliers because they can
receive discounts and rebates from the supplier for purchasing larger volumes.
We also have contracts with hospital buying groups which are similar to GPOs in
that they seek to achieve economies of scale by aggregating multiple hospitals'
purchases from us.
On December 21, 1999, Novation, one of our top three GPOs in fiscal 1999
based on net sales, advised us that our contract for the supply of latex medical
exam gloves has been renewed. Moreover, we will be the only current latex exam
glove contract participant to have their status renewed, and there will be two
vendors on the new contract. The term of the contract is for three years with
two one-year renewal periods if both parties agree to renew.
Final purchasing decisions by individual hospitals are customarily made by
a hospital staff committee which evaluates products based on quality criteria,
such as effectiveness, durability, comfort and avoidance of allergies, as well
as price and value. Our sales representatives or distributors work with hospital
personnel to ensure that our products are considered in the process and that
their comparative advantages are known by the committee. Our sales staff also
participate in healthcare industry trade shows to introduce prospective
customers to our products and to generate sales orders for distributors. We also
participate in various workshops and educational programs relating to healthcare
worker protection and
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<PAGE> 48
skin disorders in order to promote our products and educate the hospital and
other personnel utilizing the products.
We plan to focus future marketing efforts on other healthcare professionals
in physicians' offices, nursing homes, outpatient clinics, surgical centers,
blood banks and other areas of the alternate-care market.
OCCUPATIONAL HEALTHCARE SEGMENT
Sales of our Occupational Healthcare products represented approximately
51.1% of our net sales during fiscal 1999. We use distributors for virtually all
of our Occupational Healthcare products in all of our markets. In our major
markets, the United States, Canada, Germany, the United Kingdom, France, Italy
and Spain, these distributors are supported by our direct, specialized sales
representatives who are responsible for sales to major end users. We intend to
continue to increase the number of specialized sales representatives serving key
end users in selected markets.
Our specialized sales representatives assist distributors by training and
educating the distributors' sales forces with respect to our Occupational
Healthcare products through specific and proprietary educational programs,
training aids and literature on our products. They also spend a considerable
amount of time helping key end users identify and resolve occupational hazard
problems by conducting plant hand safety surveys and making recommendations for
specific gloves in particular work situations. This consultative and educational
approach reinforces our image of expertise and leadership with key end users and
distributors.
Sales of our consumer and Do-It-Yourself gloves are made directly to
distributors who purchase and brand our products with either an Ansell brand or
their own labels. The distributors then resell to the consumers through
traditional retail organizations such as supermarkets and drug stores. Gloves
for the Do-It-Yourself market are also sold through specialist hardware and home
improvement outlets.
PERSONAL HEALTHCARE SEGMENT
Sales of our condoms represented approximately 13.1% of our net sales
during fiscal 1999. Sales of our retail branded condom products in North
America, the United Kingdom, France, Australia, India, Italy, Spain and Germany
are made primarily through our own sales force and, to a lesser extent, through
distributors and commissioned brokers. We use regional and local distributors
for sales of our retail branded condoms in other countries. In several European
countries and the United States, sales of our retail branded condoms are also
made in the public sector bid/tender market, where organizations, such as
Planned Parenthood and various government and non-government agencies, purchase
condoms for subsidized distribution to selected eligible groups within the
community.
We have had success in introducing our products into non-traditional retail
distribution channels, such as supermarkets, convenience stores, record stores,
vending machines, and through the internet. In the United States, sales of our
condoms are made directly to traditional and non-traditional retailers through
our own sales force, with support from commissioned brokers.
In certain markets where we do not have a leadership position for our
products, we rely on innovative brand strategies, such as the launch in 1998 of
our licensed Benetton brand condom in the European market, to achieve an initial
market position.
As part of our marketing program, we communicate at events throughout the
world with young consumers -- those people most at risk for sexually transmitted
diseases and unintended pregnancies. In the United States, we also offer free
product information and samples through our website at www.lifestyles.com. In
the United States and some other countries we have changed the advertising
emphasis of our branded products from the need for protection to the pleasure
aspects of sex. In many countries, we advertise on television, radio and print
media. We promote our products on college campuses and through educational and
event-type marketing. In Europe, Australia and Asia, we have several brands that
have been established over a number of years. Specific marketing strategies are
developed in other
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<PAGE> 49
countries, in conjunction with our distributors and the retail trade, aiming to
leverage the same themes and concepts worldwide.
Additional sales of our branded and unbranded condoms are made through
competitive tenders or bids issued by government agencies, multinational public
sector organizations (such as the World Health Organization) and by
non-governmental organizations. The condoms are supplied through population,
health and social welfare programs, mainly in developing countries, and after
being purchased from us are generally distributed free or through subsidized
sale, by the relevant organization.
RESEARCH AND DEVELOPMENT (WHICH WE CALL SCIENCE AND TECHNOLOGY)
Science and technology is a critical component of our focus on product
innovation and manufacturing optimization. Historically, we have spent
approximately 1.1-1.6% of our annual revenues on research and development,
investing $8.3 million in fiscal 1999, $8.8 million in fiscal 1998 and $10.4
million in fiscal 1997. These efforts have resulted in more than 15% of our
sales in each of the last three fiscal years coming from products that we have
developed and that have been on the market for three years or less. Our science
and technology efforts also focus on improving manufacturing techniques, which
have contributed to several major process improvements and automation
efficiencies in our plants. We intend to continue to invest in science and
technology activities to develop additional products that will complement our
glove and condom product lines and define new ways to streamline manufacturing.
We operate two major science and technology centers, one in Malaysia and
one in the United States. Our highly qualified and experienced research staff at
these centers develop new products and test existing products to determine
potential improvements in design and quality. In addition, technical and process
support exists in each of our main manufacturing locations worldwide.
The process of developing, testing and bringing new products to market may
be lengthy, particularly for products that are regulated as medical devices
(such as medical gloves and condoms) and may require notification to, and prior
approval by, the FDA and similar approvals from non-U.S. regulatory agencies.
Considering design control and other regulatory requirements, it can take twelve
months to more than two years to bring a product from design inception to
market. This process also depends on the complexity of the product or process.
We currently have a number of projects at varying stages of development. These
projects range from new product and material concepts to prototype products
undergoing extensive consumer acceptability studies, field trials and consumer
training.
Recent examples of successful products derived from our science and
technology function include the:
- Hyflex line of gloves that offer a superior combination of fit, comfort
and dexterity,
- critical environment nitrile glove which we believe is recognized as the
industry quality standard,
- first commercial surgical glove made from polyurethane,
- first commercial synthetic neoprene surgical glove, and
- first commercial chlorinated powder-free surgical glove.
We have established relationships with several medical research
institutions such as Georgetown University, Drexel University and Johns Hopkins
University and we have contributed on an annual basis to scientific research
programs at the University of Tampere in Finland and the Medical College of
Wisconsin. Our sponsored research includes, among other things, the
identification and isolation of natural rubber latex proteins which may
contribute to latex allergies in some people. We use the results of this
research to improve our product quality and we encourage the researchers to
publish their findings in scientific journals as part of the AnsellCares
program.
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<PAGE> 50
ANSELLCARES
The AnsellCares Scientific Advisory Board, established in 1992, is composed
of some of the leading latex allergy researchers worldwide. The Advisory Board's
charter is to direct research into critical hand barrier protection issues, such
as latex and chemical allergy, factors affecting glove barrier integrity and
development of synthetic glove polymers. Research groups on three continents,
with our support, are responsible for numerous scientific breakthroughs and have
presented their work at many national and international allergy conferences. The
output from our Advisory Board has paved the way for a greater understanding of
these complex issues and, through publication and dissemination, has provided
manufacturers with the tools necessary to reduce the allergenicity of their
products and clinicians with guidelines on how to manage affected healthcare
workers and patients and reduce the risk of sensitization for future
generations. The AnsellCares program includes accredited continuing medical
education programs, video presentations, technical bulletins, newsletters, as
well as periodic lectures and seminars.
We provide pertinent information on a variety of glove related issues to
healthcare professionals. In addition, we offer a number of literature
summaries, along with a complete library of clinical articles. One of our
newsletters, Source to Surgery, is a periodic publication edited by members of
the Advisory Board. The newsletter summarizes developments associated with hand
barrier protection, including natural rubber latex allergy. The newsletters also
offer brief synopses of recently published articles and details regulatory
efforts to address manufacturing and other relevant issues.
In addition, we have designed and implemented comprehensive educational
programs to inform healthcare workers of the latest advances in hand barrier
protection. For example, our Advanced Solutions programs include information
regarding:
<TABLE>
<S> <C>
- - product line selection - glove utilization & management
- - gloving techniques - hand barrier protection
- - latex allergy management - risk management
</TABLE>
MANUFACTURING
We currently manufacture our products at eighteen factories in seven
countries: Malaysia (premium surgical, powder-free examination and
latex-light-duty gloves), Sri Lanka (premium surgical gloves, powder-free
examination gloves and supported dipped synthetic gloves), Thailand (condoms,
powder-free examination gloves, latex light-duty gloves and critical environment
gloves), India (standard surgical gloves and condoms), the United Kingdom
(synthetic dipped gloves), the United States (synthetic dipped, seamless
knitted, premium surgical and critical environment gloves) and Mexico (synthetic
dipped gloves). In addition, we operate packaging and warehouse facilities in
Australia, South Africa, the United Kingdom, France, Belgium and Mexico. The
majority of our factories are located in Southeast Asia in order to be close to
the rubber tree plantations, which are our source of natural latex, as well as
for the favorable cost and availability of labor and favorable tax treatment in
certain countries.
During fiscal 1998 and 1999 and the six months ended December 31, 1999, we
invested $16 million, $30 million and $12 million, respectively, to increase and
convert production capacity in Thailand, Malaysia, Sri Lanka and the United
States. This is enabling us to expand production of powder-free and low
allergenic medical examination gloves in our Southeast Asia facilities, and to
relocate all of our condom manufacturing from Dothan, Alabama to Surat Thani,
Thailand. It also is enabling us to expand our Troy, Alabama critical
environment glove plant, and convert our Dothan, Alabama plant to a synthetic
nitrile glove facility capable of producing gloves for both our Professional and
Occupational Healthcare segments. We plan to continue installing proprietary
automation throughout our operations, including automation for testing,
processing and prepackaging of our products, in order to reduce manufacturing
lead time and costs, while at the same time increasing product quality and
efficiency.
The FDA's Quality System Regulation specifies good manufacturing practices
(known as QSR/GMP requirements) for medical devices. These requirements provide
that, from design to raw materials through to finished product, our
manufacturing process is designed to be carefully documented and validated,
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<PAGE> 51
conducted in accordance with standard operating procedures and routinely
assessed by a series of in-process tests and quality control procedures,
designed to help assure that the company consistently produces high quality
products. See "Government Regulation and Quality Control -- U.S. Government
Regulation" for a discussion regarding the most recent inspection of our
manufacturing facility in Dothan, Alabama. Our manufacturing technology is
designed to ensure that the products we produce provide effective protection and
are low in extractable proteins and chemicals. Our manufacturing capabilities
allow us to produce condoms, standard and premium surgical, medical examination
and commercial light and heavy duty gloves, as well as advanced polymer-coated
powder-free gloves, of complex design and construction.
We have an ongoing commitment to worker safety at our facilities. Over each
of the last three years, we have consistently reduced the number and severity of
work-related injuries. For example, days lost per 100 employees have decreased
from 21 days in fiscal 1997 to 6.2 in fiscal 1999, despite the addition of
several acquired facilities in less-developed countries.
Our major raw materials are natural and synthetic latex, chemicals,
plastics, cotton, synthetic yarns and packaging materials. Natural latex and
other raw materials are generally available from several sources and
distributors, with natural latex production confined largely to countries in
Southeast Asia. We have had no significant raw material supply problems to date.
Although latex is one of our primary raw materials, it only accounted for
approximately 7% of overall cost of goods sold in fiscal 1999.
In fiscal 1999, we outsourced approximately $80 million of finished goods
for resale. We have established accreditation procedures to ensure that the
manufacturing facilities and products that we outsource meet our standards and
those of applicable regulatory agencies. We look to outsource finished goods for
resale when we believe we can acquire the product more efficiently than
manufacturing the product ourselves. This occurs, for example, with products
that are not technologically advanced and that are readily available at a low
cost in the market, such as standard powdered latex examination gloves,
disposable vinyl gloves and lower sales volume products. We also outsource to
fill temporary imbalances between product demand and manufacturing capacity.
GOVERNMENT REGULATION AND QUALITY CONTROL
All of the countries in which we market our products have regulations of
varying degrees affecting our products. These regulations have been particularly
advanced in the United States by the Safe Medical Devices Act of 1990; and in
Europe, with the completion of the work required by the Single European Act of
1986 and its on-going implementation. In addition, harmonization of regulatory
requirements on an international basis has led to the adoption of an
international quality management system standard which is being implemented
progressively by various regulatory authorities including the FDA and the
Commission of the European Union.
U.S. GOVERNMENT REGULATION
In the United States, products offered through our Professional Healthcare
and Personal Healthcare segments are regulated as medical devices under the
Federal Food, Drug and Cosmetic Act (the FDC Act) by the FDA. We believe that
all of our products regulated by the FDC Act are in compliance in all material
respects with the relevant sections of the FDC Act and the advice and guidance
provided by the FDA.
Medical devices are regulated under the FDC Act in three separate classes
(Class I, Class II and Class III). Class I devices are those considered to
require the least regulation to assure their safety and effectiveness. They are
subject only to the FDC Act's "general controls" including, unless specifically
exempted, the QSR/GMP requirements. In addition, virtually all Class I devices
have been exempted from the Section 510(k) premarket notification requirements
(as described below), except those Class I devices deemed by the FDA to present
a potential unreasonable risk of illness or injury or intended for a use which
is of substantial importance in preventing impairment of human heath. Class II
devices are those for which the general controls alone are not sufficient to
ensure safety and effectiveness and for
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<PAGE> 52
which the FDA is authorized to impose "special controls" to provide such
assurance. Class III devices are those for which neither general controls nor
special controls, either alone or in combination, are adequate to ensure safety
and effectiveness and for which the FDA is authorized to require prior approval
of a premarket approval application. We do not currently manufacture or market
any Class III devices. Condoms are generally regulated by the FDA as Class II
devices. Medical examination and surgical gloves are currently regulated as
Class I devices that are not exempt from either the 510(k) premarket
notification or QSR/GMP requirements.
With the growing concerns the FDA has had with quality and allergy issues
with respect to all medical gloves, the FDA has proposed that both surgical
gloves and medical examination gloves be reclassified as Class II medical
devices which would be subject to new labeling requirements for powder and
protein levels. This reclassification, if it occurs, is expected to make entry
into this market more difficult as companies will be required to maintain a
suitable infrastructure to fully document, implement and audit the requirements
of the new regulations if and when they go into effect. The reclassification of
surgical and medical examination gloves from Class I to Class II would subject
glove manufacturers to additional requirements applicable to the manufacturing,
testing and labeling of their products.
Medical device manufacturers are subject to periodic inspection by the FDA
for compliance with the FDA's current QSR/GMP requirements. The FDA has a number
of compliance and enforcement procedures when deviations from QSR/GMP
requirements are observed during such inspections. Which procedures are used
depends upon the seriousness of the observations as well as the compliance
history of the facility inspected and the company owning it. As a general
matter, the FDA often seeks to resolve observed QSR/GMP deficiencies on a
voluntary basis without resorting to formal administrative enforcement action.
In many cases, the FDA and the affected company enter into an agreement whereby
the company retains one or more recognized, expert consultants to assist the
company in achieving substantial compliance with the relevant QSR/GMP
requirements and to certify that such efforts have been successful. When
observed QSR/GMP deficiencies cannot be resolved through voluntary action, the
FDA has the option of initiating further enforcement action as described below.
Failure to comply with applicable regulatory requirements can result in
administrative enforcement, such as:
- warning letters,
- import alerts,
- product bans,
- field corrections,
- seizures,
- recalls,
- injunctions,
- civil penalties,
- fines based on the equitable remedy of disgorgement,
- adverse publicity issued by the FDA and
- criminal prosecutions.
Each manufacturing operation of Ansell has a Quality Assurance/Quality
Control (QA/QC) department with its own budget. Also, we operate in a total
quality environment where all participants in the manufacturing process are
responsible for quality. It is the responsibility of the QA/QC department along
with manufacturing to maintain the quality systems and records.
The FDA has periodically inspected most of our manufacturing facilities,
including our overseas manufacturing facilities and has made observations on how
our manufacturing operations could be improved. In upgrading our manufacturing
facilities to address the FDA's observations and evolving technology and to
otherwise comply with QSR/GMP requirements, we have and will continue to expend
time, monies and efforts in the areas of product and quality control.
Our Dothan, Alabama manufacturing facility was inspected by the FDA in
August and September 1999 and a number of inspectional observations were made,
including observations with respect to QSR/ GMP requirements. We responded to
these observations and met with the FDA on November 10 and November 22, 1999. We
are continuing to operate the facility and retained a consulting firm to help us
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<PAGE> 53
upgrade manufacturing and quality control procedures with the objective of
satisfying the FDA and obtaining certification that the facility is in
compliance with QSR/GMP requirements. We anticipate having the Dothan plant
certified by December 2000.
The FDA currently requires manufacturers intending to market a new medical
examination glove, surgical glove or condom to obtain prior 510(k) clearance.
Although we typically have not experienced delays in obtaining 510(k) clearance
for new medical examination glove, surgical glove or condom products, there can
be no assurance that we will not experience such delays for future products. An
adverse determination by the FDA or a request for additional data or information
could have the effect of delaying or precluding 510(k) clearance and, at the
same time, could materially delay or block the commencement of marketing new
medical examination glove, surgical glove or condom products.
Changes in existing requirements or adoption of new requirements could
adversely affect our ability to comply with regulatory requirements. Failure to
comply with regulatory requirements could have a material adverse effect on our
business, financial condition and results of operations.
EUROPEAN GOVERNMENT REGULATION
As part of the process of unification in Europe, the European Community
through the European Committee for Standardization (CEN) has developed common
sets of standards for each of condoms and medical and industrial gloves.
The CEN standards are legally mandatory. Products that are sold in Europe
must be tested to these standards by an independent testing firm, and once
products pass these tests, such products are entitled to display the CE mark to
signify general compliance. There is also a series of standardized pictograms to
identify certain characteristics of the gloves, such as the glove's
effectiveness against physical hazards, chemical hazards, cold or heat
resistance and microorganisms. Gloves which pass the minimum qualifications in
the appropriate tests are entitled to have these pictograms displayed on their
labels.
All of our gloves and condoms sold in Europe now carry the CE mark.
Pictograms and levels of performance are included in our European catalog with
respect to our Occupational Healthcare gloves. We carried out a very extensive
testing program in order to achieve these goals.
The European Community is also having considerable influence on the rest of
the world with respect to standardization. The Vienna Agreement is a formal
statement of joint policy between the CEN and the ISO, the International
Standards Organization. Under this agreement, the two organizations will not
develop competing standards, and standards which are being developed within one
of these organizations will have a fast track for approval by the other.
In connection with the harmonization of market conditions in Europe, all of
the areas and product segments within Europe in which we currently operate are
subject to Directives issued by the European Commission. These are mandatory
safety requirements that must be verified by an independent testing firm before
products are sold in the European Economic Area (which are the fifteen states of
the European Union plus Iceland, Norway and Liechtenstein), and products or
their packaging must display a CE mark to show compliance with these
requirements. In addition, the effect of these legislative controls has been
extended into the wider area covered by the European Economic Area.
Condoms and medical gloves are regulated by Directive 93/42/EEC of the
European Commission on medical devices that came into effect on January 1, 1995.
This directive regulates the sale of all medical devices throughout the European
Union and the European Economic Area. Our condoms and medical gloves are in
compliance with the requirements of this directive and all relevant standards
(including rules for the affixing and use of CE conformity marking set forth by
Directive 93/465/EEC of the European Commission) allowing these products to
carry the CE mark and to be sold in all European countries without further
approval.
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OTHER GOVERNMENT REGULATION
Whether or not the FDA clearance is obtained for a new product, approval or
clearance of a product by regulatory authorities in foreign countries may be
required prior to the commencement of sales of the product in such countries.
The requirements governing product approvals or clearances vary widely from
country to country, and the time required for approval may be longer or shorter
than that required for FDA approval.
Additionally, we operate plants in the United Kingdom, Malaysia, Sri Lanka,
Thailand, Mexico and India. The occupational, health and safety laws and
regulations vary dramatically within these countries. Our policy is to comply
with all the prescribed regulations and to ensure that an internationally
acceptable work environment is provided for employees. We coordinate our
international occupational health and safety program through our Global Safety,
Health and Environment Director. All plants are required to report on all
occupational health and safety issues on a monthly basis to senior management.
ENVIRONMENTAL MATTERS
We are subject to regulations pertaining to factory discharges and
emissions promulgated by the respective environmental regulatory authorities in
the United States, the United Kingdom, Malaysia, Thailand, Sri Lanka, Mexico and
India, which have enforceable parameters for discharges to air, water and
landfills. Both U.S. and non-U.S. environmental regulatory authorities conduct
random inspections of our facilities for, among other things, compliance with
acceptable noise and dust levels and other environmental regulations.
We seek to ensure that we operate within the recognized international
standards for environmental protection by using water based systems in all of
our manufacturing operations in order to avoid the complication or potential
hazards associated with solvent based systems. We have also embarked on a
program of water and energy conservation by recycling water, installing thermal
insulation and operating energy efficient processes. In addition, we have a
Global Safety, Health and Environment Director whose responsibility is to ensure
that the necessary systems are in place to provide workers in our facilities
with a safe and healthy work environment. The performance of each of our plants
is monitored on a monthly basis by senior management.
While we believe that our operations comply, in all material respects, with
applicable environmental laws and regulations, we are presently undertaking, and
in the future may be required to undertake, work to correct instances of
noncompliance with environmental laws and regulations and to address
contamination at a number of our facilities. Although there can be no assurance
that the development or discovery of facts or conditions will not result in
environmental liabilities that have a material effect upon our capital
expenditures, earnings or competitive position, based on information currently
available, we do not expect our environmental liabilities to have such a
material effect.
COMPETITION
All of the markets in which we operate are competitive. We compete in the
overall medical gloves market on the basis of innovation, product quality, price
and service. The global industrial gloves market is largely fragmented with many
local manufacturers with product customization and customer service providing
the basis for competitive differentiation. Generally, competition in the condom
market is based on perceived brand quality, innovation and customer service, as
well as price in the public bid/tender market.
The failure to continue to distinguish our products on the basis of
quality, reliability and value could have a material adverse effect on our
business and results of operations. Further, we cannot assure you that our
competitors or others will not develop products, manufacturing processes or new
technologies which would be more cost effective or more efficient than ours.
Such competition could have a material adverse effect on our business, financial
condition and results of operations.
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We face competition with each of our products from a variety of sources,
including international and local producers. We have seven major international
competitors for our products. We are the largest marketer on a global basis in
protective gloves, but not necessarily in each individual country. Our major
international competitors are:
PROFESSIONAL HEALTHCARE
- SSL International plc (formed by a merger of London International Group
and Seton Scholl Healthcare International), which competes with us
globally.
- Cardinal Health Inc., which distributes and manufactures medical gloves
through Allegiance, and competes with us globally.
- Safeskin Corporation, a U.S. company (which has entered into an agreement
to be acquired by Kimberly Clark) competes with us in the United States
and Europe.
OCCUPATIONAL HEALTHCARE
- Mapa-Spontex, a French company which competes with us in Europe's
consumer sector and primarily produces household and light industrial
gloves.
- Best Gloves, a U.S. company that competes with us globally.
- SHOWA, our dominant competitor in Japan which competes with Ansell Golden
Needles gloves, primarily produces household and light industrial gloves.
PERSONAL HEALTHCARE
- Carter Wallace Inc., which is our major branded condom competitor in the
United States.
- SSL International which competes with us globally.
Factors that further our competitive position are:
- our in-house Science and Technology capabilities,
- our high quality manufacturing capabilities,
- our in-house direct sales force,
- our established brands and reputation,
- the quality of our products,
- the training of our customers in the use of our products,
- the global infrastructure that we have in place, and
- our history as an industry consolidator.
Factors that negatively affect our competitive position are:
- our competitors may have stronger financial and management resources, and
- the challenges we face in protecting our innovations from being
duplicated.
INTELLECTUAL PROPERTY
We rely upon a combination of patent, trade secret and trademark law to
protect our intellectual property. We currently hold over 140 patents in the
United States and in other countries on some of our significant products and
manufacturing processes. However, we consider that our technological skill, new
product development and frequent product enhancements are essential in
establishing a technological leadership position. Therefore, we believe that the
expiration or loss of any one of our patents would not have a material affect on
our operations.
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We rely on trade secrets and continuing technological advancement to
maintain our competitive position. We typically enter into confidentiality
agreements with our employees and consultants. That are involved in the
development of our new technologies and manufacturing processes which further
protect our proprietary rights. Nonetheless, unauthorized parties may obtain and
use our proprietary property or develop products with the same functionality as
our products. In addition, there can be no assurance that these measures will
prevent access, unauthorized disclosure or use of our trade secrets and
know-how. Further, we cannot be certain that we have taken all the steps to
prevent the misappropriation of our proprietary property, particularly in
foreign countries where the laws may not protect rights as fully as do the laws
in the United States.
Our principal trademarks, which are registered in the United States and
other countries, are Ansell, Ansell Edmont, Ansell Perry, Golden Needles,
LifeStyles and, after the completion of the pending acquisition of the medical
glove business of Johnson & Johnson, Micro-Touch. These trademarks are,
individually, of material importance to our business as they have the effect of
developing brand identification and maintaining customer loyalty.
We are not aware of any fact that would negatively impact the continuing
validity or enforceability of any of our patents or trademarks or that would
negatively impact the continuing use of our technology or trademarks. We cannot
guarantee that our patents will not be found invalid or that any issued patent
will provide protection that has commercial significance. Litigation may be
necessary to protect our patent position which can be costly and time consuming.
EMPLOYEES
As of June 30, 1999, we employed approximately 12,000 people worldwide, of
whom approximately 91% were employed in manufacturing operations (including
logistics and quality control), 7% in sales and marketing activity, 1% in
administration and 1% in science and technology. Approximately 17% of our
employees are members of recognized trade unions. The length of these union
contracts are typically three year terms. We believe that relations with our
employees are good.
PROPERTIES AND FACILITIES
Our principal executive offices are located in Red Bank, New Jersey, where
we lease 23,000 square feet of office space. In addition, we have sales,
distribution, research and manufacturing operations in various properties and
facilities that we own or lease throughout the world.
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The following table lists our principal facilities:
<TABLE>
<CAPTION>
TYPE OF FACILITY
----------------------------------------
OWNED DISTRIBUTION SALES & SQUARE FEET
OR LEASED MANUFACTURING PACKAGING MARKETING OF BUILDING
----------- ------------- ------------ --------- -----------
<S> <C> <C> <C> <C> <C>
Glen Waverley, Australia Leased X 13,000
Aalst, Belgium Leased X X 71,000
Cowansville, Canada Owned X X 50,000
Cergy, France Leased X X 27,000
Munich, Germany Leased X 8,000
Aurangabad, India Leased X 59,000
Bangalore, India Leased X 43,000
Bangalore, India Leased X 74,000
Melaka, Malaysia Owned X 277,000
Kedah, Malaysia Owned X 204,000
Juarez, Mexico Owned X 97,000
Juarez, Mexico Leased X 50,000
Pietermaritzburg, South
Africa Leased X 12,000
Colombo, Sri Lanka Owned X 430,000
Bangkok, Thailand Owned X 356,000
Surat Thani, Thailand Owned X 233,000
Newark, United Kingdom Leased X 12,000
Redditch, United Kingdom Owned X 30,000
Surbiton, United Kingdom Leased X 4,500
Tamworth, United Kingdom Leased X 25,000
Dothan, Alabama Owned X 141,000
Dothan, Alabama Leased X 102,000
Troy, Alabama Leased X 125,000
Tarboro, North Carolina Owned X 100,000
Thomasville, North Carolina Owned X 88,000
Wilkesboro, North Carolina Owned/Leased X 286,000
Coshocton, Ohio Owned X X X 375,000
Massillon, Ohio Owned X X X 192,000
<CAPTION>
BUSINESS SEGMENT
--------------------------------------
PROFESSIONAL OCCUPATIONAL PERSONAL
------------ ------------ --------
<S> <C> <C> <C>
Glen Waverley, Australia X X X
Aalst, Belgium X
Cowansville, Canada X X X
Cergy, France X X
Munich, Germany X
Aurangabad, India X
Bangalore, India X
Bangalore, India X
Melaka, Malaysia X
Kedah, Malaysia X X
Juarez, Mexico X
Juarez, Mexico X
Pietermaritzburg, South
Africa X
Colombo, Sri Lanka X X
Bangkok, Thailand X X
Surat Thani, Thailand X
Newark, United Kingdom X
Redditch, United Kingdom X
Surbiton, United Kingdom X X
Tamworth, United Kingdom X X
Dothan, Alabama X X X
Dothan, Alabama X
Troy, Alabama X
Tarboro, North Carolina X
Thomasville, North Carolina X
Wilkesboro, North Carolina X
Coshocton, Ohio X
Massillon, Ohio X
</TABLE>
We operate various of our manufacturing and distribution facilities under
long term leases, the majority of which expire at various dates beginning in
2004. The leases for our manufacturing facility in Wilkesboro, North Carolina
expire in April 2000 and the leases for our distribution and packaging
facilities in Dothan, Alabama and Juarez, Mexico will both expire in November
2000. In addition to these facilities, we rent public warehousing facilities in
the United States, France, Germany and Australia. Our science and technology
activities are principally conducted in our facilities located in Melaka,
Malaysia and Massillon, Ohio.
We consider all of our principal manufacturing facilities and other
principal properties to be in good condition and adequate to meet the current
needs of our operations. As described under "Manufacturing" above, we are
undergoing some facility conversions and moving production among different
manufacturing facilities.
We have a continuing global program for improving our properties, including
the retirement or improvement of older facilities and the construction of new
facilities in order to maintain and achieve world-class status facilities. This
program includes improvement and expansion of manufacturing facilities to enable
production and quality control programs to meet or exceed the current state of
technology and government regulations.
LEGAL PROCEEDINGS
As of January 31, 2000, we (along with a number of other manufacturers and
distributors of latex gloves) were defendants in 310 lawsuits in the U.S. and
two in Australia that have been filed since 1993 on behalf of individuals
alleging wrongful death, personal injuries and lost wages as a result of their
exposure to natural rubber latex gloves. The lawsuits claim among other things
that we and other manufacturers of latex gloves, were negligent in the design
and manufacture of the gloves and failed to give adequate warnings of the
possibility of allergic reactions. As of January 31, 2000, the 310 lawsuits
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pending against us in the United States represented approximately 50% of latex
related cases filed against all defendants in the United States. 195 of the U.S.
cases have been consolidated for discovery pursuant to the rules on
multi-district litigation before the U.S. District Court for the Eastern
District of Pennsylvania. The remaining 115 cases are spread through state
courts in 35 states, with the greatest concentration in California (18 cases).
In the United States, we had 167 and 257 latex allergy lawsuits pending against
us at June 30, 1998 and June 30, 1999, respectively. We are unable to anticipate
how many additional plaintiffs may file similar lawsuits or how many lawsuits
may be filed in other countries.
The latex gloves cases in which Ansell is a defendant are still in the
discovery phase of litigation. Because of the uncertainty as to the outcome of
these cases, created by the presence of multiple defendants in these cases, the
difficulty of establishing who manufactured the natural rubber latex gloves
which were used by particular plaintiffs and the need to determine whether latex
gloves were the cause of any particular injury, any liability that we may incur
in relation to these claims cannot be quantified.
We are a party to various other non-latex allergy proceedings, including
environmental matters, incidental to the normal course of business. We do not
expect that any of such proceedings will have a material adverse effect on our
financial position, results of operations or liquidity.
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MANAGEMENT
DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES
The following table contains information about our directors, executive
officers and certain key employees. In addition, after the completion of the
offering, we will add to our board of directors three independent directors, who
are unaffiliated with the Pacific Dunlop Group and us. The independent directors
will be the members of our audit committee.
<TABLE>
<CAPTION>
NAME AGE POSITION
- -------------------------------------------- --- -----------------------------------------------
<S> <C> <C>
Harry Boon(1)............................... 51 President, Chief Executive Officer and Director
Michael Breton.............................. 51 Senior Vice-President Global Sales and
Marketing, Occupational Healthcare
Dr. Paul Cacioli............................ 42 Senior Vice-President Science & Technology
Phil Corke.................................. 45 Senior Vice-President Human Resources
Jeffrey Cox................................. 42 Chief Financial Officer
John Gardner................................ 53 Senior Vice-President Global Operations
Roland Nonnenmacher......................... 56 President, Professional and Personal Healthcare
Peter Soszyn................................ 47 Chief Information Officer
Gwynne Woodward............................. 62 Senior Vice-President Mergers, Acquisitions and
Risk Management
Rodney Chadwick(1).......................... 54 Director and Chairman of the Board
Dr. John Eady............................... 54 Director
Philip Gay.................................. 48 Director
</TABLE>
- ---------------
(1) Member of Executive Committee
Harry Boon has been with Ansell since 1976, and has been our President,
Chief Executive Officer and Managing Director since February 1989 and one of our
directors since October, 1999. From 1987 until 1989, Mr. Boon was Ansell's
International Marketing Director based in Melbourne, Australia. From 1984 to
1987, Mr. Boon was Regional Director, Europe, based in Munich. From 1982 to
1984, Mr. Boon was Regional Director, Asia Pacific, and from 1980 to 1982 he was
General Manager of Australia and New Zealand. Prior to 1980, Mr. Boon was
located in Toronto, Canada and Bonn, Germany, where he was instrumental in
establishing Ansell's sales and marketing operations.
Michael Breton has been with Ansell since November 1999. Mr. Breton is
currently our Senior Vice-President Global Sales and Marketing, Occupational
Healthcare. Prior to joining Ansell, Mr. Breton was President and Chief
Executive Officer of MAPA USA, the glove division of Total Oil Corp. of France
from June 1994 to April 1999. Mr. Breton served as interim Chief Executive
Officer of the Canton Glove Company (manufacturer of hand protection products
for industrial applications) from October 1993 to June 1994. Mr. Breton has also
served as President of LRC Surety, a wholly owned subsidiary of London
International Group and Director of Sales and Marketing for Siebe North Inc.
Dr. Paul Cacioli has been with Ansell since November 1988, and was
appointed our Senior Vice-President Science & Technology in May 1999. He was
Vice President of Research & Development of the Ansell Healthcare segment from
1994 to 1999, based in Melaka, Malaysia. From 1992 to 1994, Dr. Cacioli served
as Director of Research & Development and Technical Affairs for the Healthcare
segment. Dr. Cacioli joined Ansell as Technical Services manager for Ansell
Melaka (Malaysia) in 1988.
Phil Corke has been with Ansell since April 1998 when he was appointed our
Senior Vice-President Human Resources. Prior to joining Ansell, Mr. Corke was
Vice-President Human Resources of Alpharma Inc. (generic pharmaceuticals) from
1996 to 1997 and was Director of Training & Development & International
Compensation for Textron Inc. from 1994 until 1996. He was hired by
Bristol-Myers in the United Kingdom in 1988 as Personnel Director and was
transferred to the United States in September 1990, as Human Resources Director,
Europe, for Bristol-Myers Squibb Pharmaceutical Group.
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<PAGE> 60
Jeffrey Cox has been with Pacific Dunlop Limited since 1984, and first
joined Ansell in 1991. Mr. Cox is currently our Chief Financial Officer, a
position he has held since 1995. Prior to his current position, Mr. Cox was
Chief Financial Officer for Pacific Dunlop Food Group and from 1991 to 1992 was
Vice-President of Finance for Ansell North America. Mr. Cox has held other
financial positions with different Pacific Dunlop Group companies.
John Gardner has been with Ansell since 1994, and in 1999 became our Senior
Vice-President Global Operations. Before his current position, he was Operations
Director of the Healthcare segment, based in Thailand and Sri Lanka. From 1960
through 1994, Mr. Gardner managed a number of manufacturing facilities with the
South Pacific Tyre Division of Pacific Dunlop Group.
Roland Nonnenmacher has been with Ansell since 1989, following our
acquisition of the Edmont Industrial gloves business from Becton Dickinson
Corporation. He has been our President of the Professional and Personal
Healthcare segment since 1995, and was previously Senior Vice-President of the
medical segment. From 1990 to 1992, Mr. Nonnenmacher served as International
Marketing Director based in Melbourne, Australia. From 1987 to 1990, Mr.
Nonnenmacher was President of Edmont Europe in Brussels, Belgium and had been
with the Becton Dickinson organization since 1979 as International Marketing
Director and Vice-President and General Manager of their drug delivery division.
Peter Soszyn has been with Ansell since 1995, when he was appointed our
Chief Information Officer. Prior to that, Mr. Soszyn was with the Pacific Dunlop
Group as Head of Corporate Information Systems for South Pacific Tyres from 1990
through 1995, and as Manager Information Manufacturing Systems from 1985 to
1996. Prior to joining Pacific Dunlop Limited, Mr. Soszyn served in a number of
manufacturing and systems positions with Leigh Mardon Pty., Ltd. (printing and
packaging), Amatil Pty. Ltd. (conglomerate), and the State Planning Authority of
New South Wales (government agency).
Gwynne Woodward has been with Ansell since 1978, and has been our Senior
Vice President, Mergers, Acquisitions and Risk Management since 1995. From 1994
to 1995, Mr. Woodward was General Manager with specific responsibility for
acquisitions. He was President of the industrial area between 1992 and 1994 and
headed up Ansell's manufacturing operations from 1989 until 1992. Mr. Woodward
joined Ansell as Chief Accountant in 1978.
Rodney Chadwick has been our Chairman of the Board and one of our directors
since December 1999. Mr. Chadwick joined the Pacific Dunlop Group in 1970 and is
now the Managing Director and Chief Executive Officer of Pacific Dunlop Limited.
He became an Executive Director of Pacific Dunlop Limited in 1990, and was
appointed Managing Director in 1996. After holding a series of senior
appointments, in 1987, he became the inaugural Chief Executive of South Pacific
Tyres (a partnership between Pacific Dunlop Limited and The Goodyear Tire &
Rubber Company).
Dr. John Eady has been one of our directors since December 1999. Dr. Eady
has been with Pacific Dunlop Limited since 1998 as Executive General Manager,
Manufacturing. Dr. Eady has extensive international experience in implementing
quality and continuous improvement practices. Prior to joining Pacific Dunlop
Limited in 1998, he held senior positions at CRA Limited (mining company) and
its related companies, including Vice-President, Continuous Improvement of CRA
Limited and President of Rio Tinto Japan (mining company).
Philip Gay has been one of our directors since October 1999. Mr. Gay has
been with Pacific Dunlop Limited since January 1970 and has been Chief Financial
Officer of Pacific Dunlop Limited since June 1996. Prior to 1996, Mr. Gay headed
up Pacific Dunlop Limited's Corporate Development Group. Mr. Gay was Managing
Director of Pacific Dunlop Limited's Industrial Foam and Fibre Group from 1992
to 1995. Mr. Gay was General Manager, Finance of South Pacific Tyres from 1987
to 1989, and from 1989 to 1992 was Chief Executive Officer of South Pacific
Tyres, New Zealand.
COMPOSITION OF BOARD OF DIRECTORS
Our board will consist of eight members. Our certificate of incorporation
provides that at least two directors may not be affiliated with Pacific Dunlop
Limited or us (other than as a director of Ansell) and
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one is to be an executive officer of Ansell. In addition, because our stock is
listed on the New York Stock Exchange, we are required to have at least three
"independent" directors. Accordingly, up to four directors may be selected by
the Pacific Dunlop Stockholders without restriction and may be executive
officers or employees of members of the Pacific Dunlop Group.
Each director is elected for a one year term or until his or her successor
is elected and qualified. Executive officers are appointed by and serve at the
discretion of the board of directors. There are no family relationships among
any of our directors or executive officers.
COMMITTEES OF THE BOARD OF DIRECTORS
After the offering, we will have two standing committees: an audit
committee and an executive committee.
The functions of the audit committee will include making recommendations to
the board of directors as to the selection of the firm of independent public
accountants to examine our financial statements and books and accounts for each
fiscal year, the proposed engagement arrangements for the independent public
accountants and the advisability of having the independent public accountants
make specified studies and reports regarding auditing matters, accounting
procedures, tax or other matters. The audit committee will also review the
results of the audit for each fiscal year. Furthermore, the audit committee will
be responsible for reviewing all related party transactions and for monitoring
corporate policies and procedures with respect to our ethics and compliance
program. Each member of the audit committee will be an independent director
within the meaning of the rules of the New York Stock Exchange.
The functions of the executive committee will include such functions as may
be delegated by the board of directors from time to time. The members of the
executive committee will be Rodney Chadwick and Harry Boon. Harry Boon will
chair the executive committee.
The board of directors may, from time to time, establish other committees
to facilitate its work.
With respect to material transactions between Pacific Dunlop Limited and us
after the offering is completed, our board of directors has a policy that all
such transactions will be submitted for review, approval and authorization to
our directors who are independent directors under the rules of the New York
Stock Exchange. This policy could be changed by the Pacific Dunlop Group in the
future.
COMPENSATION OF DIRECTORS
Our directors not otherwise affiliated with Pacific Dunlop Limited or us
will receive a fee of $[ ] for each board meeting that they attend and
$[ ] for each committee meeting they attend. We will also reimburse all
directors for their travel expenses incurred in connection with board and
committee meetings.
Directors are eligible to receive stock options under our stock incentive
plan. See "-- Executive Compensation -- Ansell Stock Incentive Plan."
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EXECUTIVE COMPENSATION
The following table summarizes the compensation for the named executive
officers for the fiscal year ended June 30, 1999. Named executive officers
include the Chief Executive Officer and the top four executive officers of
Ansell whose salary and bonus earned during fiscal year 1999 exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL CASH COMPENSATION
--------------------------------------
OTHER
ANNUAL TOTAL
NAME AND PRINCIPAL POSITION SALARY(1) BONUS COMPENSATION(2) COMPENSATION
- --------------------------- --------- -------- --------------- ------------
<S> <C> <C> <C> <C>
Harry Boon.................................. $460,000 $139,422 $ 34,054 $633,476
Chief Executive Officer
Yvan Beaudoin(3)............................ $154,777 $ 43,235 $141,060 $339,072
Senior Vice-President
Global Sales & Marketing,
Occupational Healthcare
Jeffrey Cox................................. $205,000 $ 69,906 $ 38,893 $313,799
Chief Financial Officer
Roland Nonnenmacher......................... $280,000 $ 95,535 $ 49,448 $424,983
President,
Professional and Personal Healthcare
Peter Soszyn................................ $175,000 $ 52,896 $ 36,788 $264,684
Chief Information Officer
</TABLE>
- ---------------
(1) Includes salary deferrals under our 401(k) Plan and the deferred
compensation plan.
(2) Includes auto allowance of $17,040 and employer contributions to the Ansell
non-qualified retirement plan of $13,139 for Mr. Boon, school fees of
$45,480 and housing of $49,315 for Mr. Beaudoin, auto allowance of $17,040
and employer contributions to the Ansell non-qualified retirement plan of
$17,978 for Mr. Cox, housing of $12,400, car lease of $12,640 and deferred
compensation match of $12,558 for Mr. Nonnenmacher and auto allowance of
$17,040 and employer contributions to the Ansell non-qualified retirement
plan of $15,123 for Mr. Soszyn.
(3) Mr. Beaudoin resigned from Ansell in January 2000 and is no longer with the
company.
ANSELL KEY EXECUTIVE INCENTIVE PLAN
The executives named above participate in our executive bonus plan. Amounts
granted under this plan are based on achievement of certain key financial goals
(such as cash value added, sales growth, expense to sales ratio, average working
capital and earnings before income taxes to sales ratio) and other non-
financial goals. Target incentives range between 45% and 50% of an executive's
base salary. Payments under the plan are phased over two years (first year
70%/second year 30%) with payments in the second year subject to additional
performance criteria.
ANSELL STOCK INCENTIVE PLAN
Our stock incentive plan allows our board of directors to grant incentive
and non-qualified stock options, stock appreciation rights, restricted stock,
performance stock and other stock-based awards to our employees and directors.
2,500,000 shares of our stock are reserved for issuance under our stock
incentive plan and any individual is limited to being granted 150,000 shares in
any calendar year. The exercise price of options and stock appreciation rights
is set on the date of grant and may not be less than the fair market value of
our common stock on that date.
Our stock incentive plan was adopted in February 2000, therefore none of
the named executive officers was granted options under the plan during the
fiscal year ended June 30, 1999. However, in connection with this offering,
options to acquire our common stock will be granted to several officers. The
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number of shares subject to such options will be determined by dividing
approximately 6,000,000 by the public offering price per share shown on the
cover page of this Prospectus (which we refer to as the "Public Offering
Price"). The exercise price for such options will be the Public Offering Price
per share.
PENSION PLANS
Ansell Pension Plan. Some of our executive officers participate in the
Ansell Cash Balance Pension Plan, known as the Ansell Pension Plan. The Ansell
Pension Plan is a defined benefit plan under which benefits are based on
Pay-Based Credits, Supplemental Pay-Based Credits and Interest Credits as
described below:
Pay-Based Credits. For each plan year, each participant's account is
credited with pay-based credits equal to a percentage of compensation for the
calendar year ending in that plan year, determined as follows:
- 5% of compensation for the year, plus
- 5% of compensation for the year in excess of the federal social
security taxable
wage base in effect that year.
Supplemental Pay-Based Credits. In addition, for each calendar year ending
in each plan year certain individuals who were participants in plans acquired
through some of our acquisitions are entitled to additional "supplemental"
pay-based credits.
For eligible participants, each year's supplemental pay-based credits are
determined as follows:
<TABLE>
<CAPTION>
AGE PLUS TWO TIMES
YEARS OF SERVICE AT EARLIER OF SUPPLEMENTAL PAY-BASED CREDIT
THE END OF A CALENDAR YEAR AS A PERCENTAGE OF COMPENSATION
OR AT TERMINATION FOR SUCH CALENDAR YEAR
------------------------------ -------------------------------
<S> <C>
0-59........................................ 0%
60-69....................................... 2.0%
70-79....................................... 3.0%
80-89....................................... 4.0%
90 or more.................................. 5.0%
</TABLE>
Interest Credits. Each participant's account is automatically increased by
crediting the balance of the account as of the last day of the preceding
calendar year with an interest credit. Interest credits are based on the
interest rate defined in the Ansell Pension Plan. Interest credits continue
after a participant ceases to be an eligible employee. Generally, interest
credits are not made after a participant begins receiving benefits.
As of June 30, 1999, the estimated annual benefits payable under the Ansell
Pension Plan (including amounts payable under the Ansell Cash Balance Pension
Restoration Plan, which is a nonqualified excess pension plan) to each executive
upon retirement at normal retirement age (age 65) is as follows:
<TABLE>
<S> <C>
Yvan Beaudoin............................................. $ 688
Roland Nonnenmacher....................................... $32,415
</TABLE>
Mr. Beaudoin has benefits under Canadian and Belgium government pension
plans.
Pacific Dunlop Executive Superannuation Fund. Messrs. Boon, Cox and Soszyn
are entitled to benefits under the Pacific Dunlop Executive Superannuation Fund.
This is a defined benefit fund under which benefits are determined using a
formula based on the executive's class, length of membership in the class and
final average salary. An executive's class is based on the scope of
responsibility and the level of and amount of benefits differs depending on
which class an executive falls in. Participants are not required to, but are
deemed to contribute 5% of their salary. We are required to contribute to the
fund on behalf of our executive officers who are participants.
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<PAGE> 64
As of June 30, 1999, the estimated lump sum benefit payable under the
Pacific Dunlop Executive Superannuation Fund upon retirement at normal
retirement age (age 65) are as follows:
<TABLE>
<S> <C>
Harry Boon............................ 7 times final average salary
Jeffrey Cox........................... 7 times final average salary
Peter Soszyn.......................... 6.335 times final average salary
</TABLE>
EMPLOYMENT CONTRACTS
Mr. Harry Boon has an employment agreement with Ansell covering the period
January 1, 2000 through June 30, 2003. The agreement provides for annual base
cash compensation of $525,752, (subject to annual adjustments in line with peer
groups, performance and cost of living adjustments) plus annual employer
contributions to the Ansell non-qualified retirement plan of $158,500 or such
other amount to be agreed upon and the right to receive bonus compensation
through participation in the Ansell Key Executive Incentive Plan. Mr. Boon is
also entitled to participate in various benefit plans available to Ansell
executives and in the Pacific Dunlop Executive Superannuation Fund. If Ansell
terminates Mr. Boon's employment without cause, he is entitled to six months
notice, payment of an additional six months of annual base cash compensation,
and reimbursement of repatriation costs for him and his family to Melbourne,
Australia. Mr. Boon may resign at any time on six months prior notice to Ansell.
If Mr. Boon resigns within three months of the diminution of his duties or
status, he will be entitled to the same benefits as if he were terminated
without cause. If he resigns for any other reason, he will be entitled to
accrued benefits, including total accrued compensation, bonus and other
incentive compensation and will be reimbursed for the cost of him and his family
returning to Australia.
Mr. Boon has been granted options to acquire shares of our common
stock at the price per share that our common stock is sold to the public
pursuant to this offering. The options will vest annually in equal amounts over
a three year period. In connection with this grant, Mr. Boon agreed to surrender
options to acquire 600,000 ordinary shares of Pacific Dunlop Limited.
Messrs. Jeffrey Cox and Peter Soszyn each have letter agreements with
Ansell that establish their salaries ($217,000 for Mr. Cox and $183,000 for Mr.
Soszyn) and set forth the various benefit plans in which they are entitled to
participate and other benefits they are entitled to receive, including employer
contributions to the Ansell non-qualified retirement plan not to exceed $35,000
per year (Mr. Cox) and $40,000 per year (Mr. Soszyn). If Ansell terminates the
agreement without cause, Ansell has agreed to pay the costs to return Mr. Cox
and Mr. Soszyn and their respective families to Melbourne, Australia and provide
twelve months employment with Ansell or Pacific Dunlop Group or twelve months
salary, subject to adjustments, in lieu of such employment.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our certificate of incorporation provides that each of our directors shall
be indemnified to the fullest extent permitted by Delaware law if they are a
party to any pending or threatened litigation, whether civil, criminal,
administrative or investigative, by reason of the fact that the director is or
was a director of Ansell. Our certificate of incorporation also provides that
the board of directors may indemnify an Ansell officer, employee and agent to
the extent that the board determines the indemnification is appropriate and
permitted under Delaware law.
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RELATIONSHIP AND AGREEMENTS WITH THE PACIFIC DUNLOP GROUP
INTERCOMPANY AGREEMENTS
After this offering, the Pacific Dunlop Stockholders will own at least 80%
of our common stock. Prior to consummation of this offering, we will enter into
a Services Agreement with Pacific Dunlop Limited, a Tax Sharing Agreement among
our company and the U.S.-domiciled members of the Pacific Dunlop Group, a
Registration Rights and Ownership Maintenance Agreement with the Pacific Dunlop
Stockholders and a credit facility with Pacific Dunlop Holdings Inc. We have
entered into these agreements for the purpose of defining our continuing
relationship with the Pacific Dunlop Group.
These agreements may be modified and additional agreements, arrangements
and transactions may be entered into with the members of the Pacific Dunlop
Group after this offering. However, we have a policy that requires that
amendments or modifications to existing agreements and arrangements with the
Pacific Dunlop Group and any new agreements and transactions between us and
members of the Pacific Dunlop Group to be submitted for review, approval and
authorization by our directors who are independent directors under the rules of
the New York Stock Exchange. This policy could be changed by the Pacific Dunlop
Group in the future.
The following is a summary of the material provisions of these agreements.
Each of these agreements has been filed as an exhibit to the registration
statement of which this prospectus is part.
Services Agreement
Pacific Dunlop Limited has agreed to provide corporate services to us under
the Services Agreement. The purpose of the Services Agreement is to ensure that
Pacific Dunlop Limited continues to provide services to us in the scope and
manner which are generally consistent with our current practices. The Services
Agreement will have an initial term that expires on June 30, 2001, subject to
automatic renewal for additional one year terms.
Services to be provided by Pacific Dunlop Limited to us include the
following:
- assistance, on an as requested basis, in planning, negotiating and
completing acquisitions,
- insurance services,
- assistance with media management and coordination of investor relations,
- treasury, including coordination and implementation of internal and
external borrowing, cash management, hedging currency and commodity
exposure and interest rate management,
- income tax return preparation and review and technical advice,
- assistance, on an as requested basis, in reviewing manufacturing
practices, costing systems, inventory management systems and site
location,
- legal services, including coordination of protection of trademark
portfolio, provision and maintenance of trademark management
infrastructure and assistance with litigation management, and
- information technology and telecommunication services in Australia and
New Zealand.
The annualized charges for these services in Australian dollars (or A$) are
A$632,000 plus charges for acquisition and manufacturing assistance ranging from
A$1,000 to A$2,700 per person per day, depending on the experience of
individuals involved (As of January 31, 2000 the noon buying rate published by
the Federal Reserve Bank of New York was U.S.$0.6382, equivalent to A$1.00.)
In connection with hedging currency and commodity transactions for us,
Pacific Dunlop Limited will act as a counterparty to us and set terms that it
believes are terms that would be available to us in the open market. As a
counterparty in hedging transactions, Pacific Dunlop Limited may enjoy better
terms in
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<PAGE> 66
offsetting transactions than the terms it gives us or may make money by not
engaging in offsetting transactions. We rely on Pacific Dunlop Limited to set
the terms, of these transactions and, therefore, we are subject to their
judgment as to what are market terms.
Registration Rights and Ownership Maintenance Agreement
Registration Rights. We will enter into a Registration Rights and Ownership
Maintenance Agreement with the Pacific Dunlop Stockholders, under which we will
grant them demand and "piggyback" registration rights for shares of our common
stock that they own. Under this agreement, the Pacific Dunlop Stockholders will
have the right to require us to file up to three registration statements under
the Securities Act, which may be increased by an unlimited number of
registration statements if effected on Form S-3, covering shares of our common
stock owned by them. The Pacific Dunlop Stockholders will also have the right,
if we file a registration statement, to require us to include their shares in
such registration statement.
Our obligations under the Registration Rights and Ownership Maintenance
Agreement will be subject to limitations relating to the minimum amount of
common stock to be included in a registration statement, the timing of the
exercise of registration rights and other similar matters. We will pay all costs
and expenses relating to the exercise of these registration rights, including
all costs associated with preparing and filing a registration statement,
printing fees, filing fees, listing costs and other similar costs and expenses.
The Pacific Dunlop Stockholders are responsible for their own expenses,
including underwriting fees, discounts or commissions and expenses of their
legal counsel.
We and each of the Pacific Dunlop Stockholders will indemnify the other
parties for liabilities under the Securities Act, in connection with any
registration under the Registration Rights and Ownership Maintenance Agreement.
The Registration Rights and Ownership Maintenance Agreement will terminate when
the Pacific Dunlop Stockholders own less than 5% of our outstanding common
stock. We, along with the Pacific Dunlop Stockholders, have agreed with the
underwriters, not to sell or otherwise dispose of any of our common stock for a
period of 180 days after the closing of this offering without the prior written
consent of Merrill Lynch & Co. See "Underwriting."
Ownership Maintenance. Our agreement with the Pacific Dunlop Stockholders
will also contain provisions that entitle the Pacific Dunlop Stockholders to
retain their percentage ownership interest in us if we issue additional shares
of common stock. Under these provisions, we will be required to establish a
program to repurchase shares of our common stock from our public stockholders to
satisfy our obligations under any stock option plans we adopt. Thus, we will be
required to repurchase a sufficient number of shares pursuant to this program to
ensure that, only with respect to the issuance of common stock by us in the
future upon exercise of stock options, the percentage of our common stock owned
by the Pacific Dunlop Stockholders immediately after such issuance will be no
lower than the Pacific Dunlop Stockholders' lowest percentage ownership of our
common stock at any time after the consummation of this offering and prior to
the time of such issuance. We will be required to provide information to the
Pacific Dunlop Stockholders each month, or more frequently if requested,
regarding the status of the repurchase program and previous and expected future
issuances of common stock. We will also be obligated to notify the Pacific
Dunlop Stockholders the day after the number of shares of common stock issued
(including options to purchase common stock granted otherwise than pursuant to
the Ansell Incentive Stock Plan or other similar compensation options plan) in a
month equals or exceeds 1% of the shares outstanding prior to such issuance. Our
obligations with respect to this stock repurchase program will terminate at such
time as Pacific Dunlop Stockholders own, collectively, less than 40% of our
common stock.
The agreement will also provide the Pacific Dunlop Stockholders with (1) a
continuing option to buy from us a sufficient amount of common stock to ensure
that the Pacific Dunlop Stockholders and their affiliates maintain the
percentage ownership of our common stock then owned by them prior to any event
that could result in a decrease in the percentage of common stock owned by them,
and (2) a continuing option to buy from us 80% of any class of stock issued by
us other than common stock. In the case where
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the event causing a decrease in ownership by the Pacific Dunlop Stockholders is
the sale of shares for cash, the purchase price per share under both the options
will be the price per share paid by a third party purchaser in connection with
such sale. In all other cases, the purchase price per share under each option
will be equal to either the average of the last sale price on each of the five
immediately preceding trading days on a U.S. national securities exchange on
which the shares are traded or, if the sale prices are unavailable, the value of
the shares determined in accordance with procedures reasonably satisfactory to
the Pacific Dunlop Stockholders and us. These options will terminate at such
time as the Pacific Dunlop Stockholders own, collectively, less than 40% of our
common stock.
These provisions of the Registration Rights and Ownership Maintenance
Agreement may have the effect of limiting our ability to use our capital stock
as consideration for acquisitions.
Loan Facility Agreement
We will have a revolving credit agreement with Pacific Dunlop Holdings Inc.
that will allow us to borrow up to $200 million for up to three years.
Outstanding amounts bear interest at rate of 30-day LIBOR plus 0.95% and can be
prepaid at any time. We can borrow in currencies other than U.S. dollars and
then the interest rates will be determined by Pacific Dunlop Holdings Inc. in
good faith at rates equivalent to 30-day LIBOR for the currency we are
borrowing. We will pay Pacific Dunlop Holdings Inc. a one time facility fee of
$200,000. During the term of the credit agreement, we may not sell or encumber
any of our or our subsidiaries' assets (other than in the ordinary course of
business) without Pacific Dunlop Holdings Inc.'s consent. Without the prior
consent of Pacific Dunlop Holdings Inc., we cannot incur additional indebtedness
with third parties. The interest rate may be revised by Pacific Dunlop Holdings
Inc., no more frequently than annually, upon thirty days prior notice to us of
the new rate. If we are not satisfied with the new rate, we would need the
consent of Pacific Dunlop Holdings Inc. to seek financing from other sources. We
expect to have borrowings of approximately $179.1 million under the credit
agreement at the time of the closing of this offering.
The credit agreement also permits us to maintain cash balances with Pacific
Dunlop Holdings Inc. on which it will pay us interest at the U.S. federal funds
rate or equivalent rate if the cash balances are in a different currency. The
credit agreement provides our surplus cash must be placed on deposit with
Pacific Dunlop Holdings Inc. or with a third party depositary approved by
Pacific Dunlop Holdings Inc. or be used to repay our borrowings under the
facility.
Tax Sharing Agreement
The Ansell Group has been and, after this offering expects to continue to
be, included in the U.S. consolidated federal income tax group of the Pacific
Dunlop Group's U.S. domiciled subsidiaries and our tax liability will therefore
be included in the consolidated federal income tax liability of the Pacific
Dunlop Group. We also will be included with the Pacific Dunlop Group in
consolidated or combined income tax filings for certain state and local tax
jurisdictions.
We and the U.S.-domiciled members of the Pacific Dunlop Group will enter
into a Tax Sharing Agreement. The Tax Sharing Agreement, which will be effective
for the fiscal year ended June 30, 2000, provides that we compute our U.S.
income tax liability as if we filed on a separate income tax return basis and
remit payment of such liability to the Pacific Dunlop Group, including making
appropriate estimated payments quarterly to the Pacific Dunlop Group.
The Tax Sharing Agreement will provide that in determining our future U.S.
tax liability, we cannot reduce our tax liability by using carryforward tax
benefits that were attributable to periods prior to our becoming less than 100%
owned by members of the Pacific Dunlop Group. Accordingly, under the Tax Sharing
Agreement, $87.8 million in U.S. federal tax net operating loss carryforwards
will not be available to us to reduce future U.S. income tax liabilities we
incur.
The amount of any carryforward tax benefits that we generate after this
offering will be available to us to reduce future tax liabilities we may have
under the Tax Sharing Agreement to the same extent such
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carryforward tax benefits would have been available to reduce our income tax
liabilities if we were computing and paying taxes on a separate return basis,
whether or not the Pacific Dunlop Group has otherwise used such carryforward tax
benefits to reduce its consolidated tax liability. We will not, however, be
compensated by the Pacific Dunlop Group for the Pacific Dunlop Group's use of
carryforward tax benefits. Under the Tax Sharing Agreement, we will be permitted
to carryback tax benefits to prior years during which we were not 100% owned by
members of the Pacific Dunlop Group.
In the event we are no longer eligible to be part of the Pacific Dunlop
Group's U.S. consolidated federal income tax group, during the fiscal year in
which that were to occur, all unexpired carryforward tax benefits attributable
to us under the Internal Revenue Code of 1986, as amended, and the Treasury
Regulations issued thereunder, and not already used by the Pacific Dunlop Group
to reduce the Pacific Dunlop Group's U.S. consolidated tax liability, would
revert to us, as provided by law, including any such carryforward tax benefits
that were attributable to us prior to this offering. Accordingly, as long as the
Pacific Dunlop Group continues to maintain unused carryforward tax benefits
attributable to us, the Pacific Dunlop Group has an incentive not to reduce its
ownership of Ansell below 80%, the percentage ownership necessary to retain us
as a member of the Pacific Dunlop Group's U.S. consolidated federal income tax
group, although there is no guarantee this will not occur.
The Tax Sharing Agreement will provide for substantially the same treatment
for computing and paying state income taxes in those states where consolidated
or unitary combined state income tax returns are required or elected as
described above for federal income tax.
It will also provide for the same treatment for all other members of the
consolidated group as described above with respect to Ansell.
Under applicable law and the Tax Sharing Agreement, the Pacific Dunlop
Group will continue to have all of the rights and obligations of a parent of a
consolidated income tax group (and similar rights provided for by applicable
state and local law with respect to a parent of a consolidated or combined
group), including: sole and exclusive responsibility for the preparation and
filing of consolidated federal and consolidated or combined state and local
income tax returns (or amended returns); the power, in the Pacific Dunlop
Group's sole discretion, to contest or compromise any asserted consolidated or
combined tax adjustment or deficiency and to file, litigate or compromise any
claim for refund of a consolidated or combined tax on behalf of us; and the
authority to act as the sole and exclusive agent, for us in any and all other
matters relating to consolidated or combined tax liabilities. However, the
Pacific Dunlop Group and Ansell will agree to cooperate under the Tax Sharing
Agreement to assist in the defense of claims relating to us.
In general, we will be included in the Pacific Dunlop Group's consolidated
group for federal income tax purposes for so long as the Pacific Dunlop Group
beneficially owns at least 80% of the total voting power and value of our
outstanding stock. Each member of a consolidated group is severally liable for
the federal and in certain instances, state income tax liability of the group.
Accordingly, although the Tax Sharing Agreement determines tax liabilities
between Ansell and the Pacific Dunlop Group, during the period in which we are
included in the Pacific Dunlop Group's consolidated federal and state income tax
group, we could be liable in the event that any federal or state tax liability
is incurred by the consolidated group but is not discharged by the Pacific
Dunlop Group. The Pacific Dunlop Group will be required, under the terms of the
Tax Sharing Agreement, to indemnify us for any consolidated or combined group
tax liability of the Pacific Dunlop Group that we must pay to a taxing authority
(including interest and penalties), except to the extent that such tax liability
is attributable (as determined under the principles described above relating to
the computation of tax sharing payments by us to the Pacific Dunlop Group) to us
and we have not yet made a corresponding tax sharing payment to the Pacific
Dunlop Group.
PACIFIC DUNLOP GROUP CREDIT AGREEMENTS
The Pacific Dunlop Group's credit agreements may limit our ability to
borrow money and restrict the way in which we structure our borrowings. Under
such agreements, Pacific Dunlop Limited is obligated to cause its principal
subsidiaries, including us, to comply with various covenants. These covenants
may not
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always be in our best interests and may limit our future growth prospects. For
example, these covenants limit our ability to sell our common stock and the
stock of our subsidiaries. Additionally (with some exceptions), we may not
borrow under a secured credit agreement without providing the same security
arrangement for borrowings by the Pacific Dunlop Group under its existing credit
agreements with third parties. The covenants may also restrict the ability of
the Pacific Dunlop Stockholders to sell additional shares of our common stock.
Pacific Dunlop Limited may enter into credit agreements in the future that would
impose similar or greater restrictions on us.
COMPOSITION OF BOARD OF DIRECTORS
Our board will consist of eight members. Our certificate of incorporation
provides that at least two directors may not be affiliated with Pacific Dunlop
Limited (other than as a director of Ansell) or us and that one director is to
be an executive officer of Ansell. In addition, because our stock is listed on
the New York Stock Exchange, we are required to have at least three independent
directors. Accordingly, up to four directors may be selected by the Pacific
Dunlop Stockholders without restriction and may be executive officers or
employees of, or members of, or otherwise affiliated with, the Pacific Dunlop
Group.
REORGANIZATION
In connection with the reorganization, we have agreed to indemnify the
members of the Pacific Dunlop Group that sold us operating assets for any
contingent liabilities arising out of, or relating to, the ownership of the
assets sold, the operation of the transferred business or our breach of the
terms of the agreement transferring such assets or business. See
"Reorganization" and "Index to Financial Statements -- Ansell Healthcare
Incorporated."
MAJORITY OWNERSHIP BY PACIFIC DUNLOP STOCKHOLDERS
After this offering is completed, the Pacific Dunlop Stockholders will own
at least 80% of our common stock. As majority stockholders, the Pacific Dunlop
Stockholders will be able to control our business and affairs, including:
- the election of our entire board of directors,
- determinations with respect to mergers, other business combinations or
the acquisition or disposition of material assets,
- the amendment of our certificate of incorporation,
- the power to determine all matters submitted to a vote of stockholders,
- the power to delay, defer or prevent a change in control, and
- the ability to take other actions that might be favorable to Pacific
Dunlop Stockholders but not to our stockholders generally.
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PRINCIPAL AND SELLING STOCKHOLDERS
All of the shares offered pursuant to this prospectus are being sold by
P.D. International Pty Ltd, a member of the Pacific Dunlop Group. Before the
offering, we were wholly owned by the Pacific Dunlop Stockholders, each of whom
is a member of the Pacific Dunlop Group. After the completion of the offering,
the Pacific Dunlop Stockholders will own, collectively, 82.6% of our outstanding
common stock and 80% if the underwriters exercise the over-allotment option in
full.
The principal executive office of the ultimate parent of the Pacific Dunlop
Stockholders, Pacific Dunlop Limited, is 101 Collins Street, Level 41,
Melbourne, Victoria Australia 3000. We are not aware of any person or group
other than the Pacific Dunlop Stockholders, that will beneficially own more than
5% of the outstanding shares of common stock after the offering.
DESCRIPTION OF CAPITAL STOCK
In this section, we summarize the material provisions of our certificate of
incorporation and bylaws, included as exhibits to our registration statement of
which this prospectus is a part, and filed with the SEC. Please refer to these
exhibits for additional details.
Our authorized capital stock consists of 150,000,000 shares of common
stock, $.01 par value per share, and 1,000,000 shares of preferred stock, $.01
par value per share. As of January 31, 2000, there were 1,000 shares of common
stock and no shares of preferred stock outstanding. As of the date of this
prospectus, there were three holders of record of common stock. All shares of
common stock are, and the common stock being sold in this offering will be, when
issued, fully paid and non-assessable.
COMMON STOCK
Holders of common stock are entitled to one vote for each share held on all
matters subject to a vote of stockholders, and will not have cumulative voting
rights. Accordingly, holders of a majority of the shares of common stock
entitled to vote in any election of directors may elect all of the directors
standing for election. Holders of common stock will be entitled to receive
ratably any dividends that the board of directors may declare out of funds
legally available therefor, subject to any preferred rights of any outstanding
preferred stock. Upon our liquidation, dissolution or winding up, the holders of
our common stock will be entitled to receive ratably our net assets available
after the payment of all debts and other liabilities subject to any prior
distribution rights and payment of any distributions to holders of outstanding
preferred stock. Holders of common stock will have no preemptive, subscription,
redemption or conversion rights. However, under the Registration Rights and
Ownership Maintenance Agreement that we have entered into with the Pacific
Dunlop Stockholders, the Pacific Dunlop Stockholders will have the right to
retain their percentage ownership of our common stock. See "Relationship and
Agreements with the Pacific Dunlop Group -- Intercompany
Agreements -- Registration Rights and Ownership Maintenance Agreement".
PREFERRED STOCK
The board of directors has the authority, without stockholder approval, to
issue preferred stock in one or more series and to fix the rights, designation,
preferences, privileges, limitations and restrictions thereof, including
dividend rights, conversion rights, terms and rights of redemption, liquidation
preferences and sinking fund terms, any or all of which may be greater than the
rights of the common stock.
Depending upon the rights of such preferred stock, the issuance of
preferred stock could have an adverse effect on holders of common stock by
delaying or preventing a change in control of our company making removal of our
present management more difficult or resulting in restrictions upon the payment
of dividends and other distributions to the holders of common stock.
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DELAWARE BUSINESS COMBINATION STATUTE
Section 203 of the Delaware General Corporation Law in general prohibits
transactions between a Delaware corporation and an "interested stockholder"
(defined as a person who, together with any affiliates or associates,
beneficially owns, directly or indirectly, 15% or more of the outstanding voting
shares of a Delaware corporation). In general, this provision prohibits business
combinations between an interested stockholder and a corporation for a period of
three years after the date the interested stockholder becomes an interested
stockholder, unless:
- the business combination is approved by the corporation's board of
directors prior to the date the interested stockholder becomes an
interested stockholder,
- the interested stockholder acquired at least 85% of the voting stock of
the corporation (other than stock held by directors who are also officers
or by certain employee stock plans) in the transaction in which it
becomes an interested stockholder, or
- the business combination is approved by a majority of the board of
directors and by the affirmative vote of 66 2/3% of the outstanding
voting stock that is not owned by the interested stockholder.
For this purpose, business combinations include mergers, consolidations,
sales or other dispositions of assets having an aggregate value in excess of 10%
of the consolidated assets of the corporation, and in general, transactions that
would increase the interested stockholders' proportionate share ownership in the
corporation. Pacific Dunlop Limited and its subsidiaries will not be deemed
interested stockholders for purposes of Section 203.
LIMITATION ON DIRECTORS' LIABILITIES
Section 102 of the Delaware General Corporation Law permits a Delaware
corporation to include in its certificate of incorporation a provision
eliminating or limiting a director's liability to a corporation or its
stockholders for monetary damages for breaches of fiduciary duty. Delaware
General Corporation Law Section 102 provides, however, that liability for
breaches of the duty of loyalty, acts or omissions not in good faith or
involving intentional misconduct, or knowing violation of the law, and the
unlawful purchase or redemption of stock or payment of unlawful dividends or the
receipt of improper personal benefits cannot be eliminated or limited in this
manner. Our certificate of incorporation includes a provision that eliminates,
to the fullest extent permitted, the personal liability of directors for
monetary damages for breaches of fiduciary duty.
SPECIAL MEETING OF STOCKHOLDERS
Our certificate of incorporation provides that special meetings of our
stockholders may be called only by a majority of the board of directors, the
Chairman or the President. In addition, the certificate of incorporation
provides that, after the date on which Pacific Dunlop Limited no longer owns,
directly or indirectly, at least 50% of our outstanding common stock, our
stockholders will not be allowed to take action by written consent.
ADVANCE NOTICE REQUIREMENTS FOR STOCKHOLDER PROPOSALS AND NOMINATION OF
DIRECTORS
Our bylaws provide that stockholders seeking to bring business before, or
nominate directors at, any annual meeting of stockholders, must provide timely
notice in writing. To be timely, a stockholder's notice must be given in writing
to the Secretary not less than 120 days prior to the anniversary date of the
annual meeting from the prior year. The bylaws also specify requirements for the
proper form of a stockholder's notice.
NUMBER OF DIRECTORS; REMOVAL; VACANCIES
We expect to have eight directors on our board. Vacancies on the board of
directors may be filled only by the affirmative vote of the remaining directors
then in office or by a majority of the outstanding stock entitled to vote for
directors. The Delaware General Corporation Law provides that directors may be
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removed with or without cause by the holders of a majority of the shares of
stock entitled to vote generally on the election of directors.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the common stock is Registrar and
Transfer Company, 10 Commerce Drive, Cranford, New Jersey 07016-3572.
SHARES ELIGIBLE FOR FUTURE SALE
We will have 50,000,000 shares of common stock outstanding after this
offering. The shares sold in this offering will be freely tradable without
restriction under the Securities Act.
SALE OF SHARES
The 41,300,000 million shares of common stock, (40,000,000 shares if the
over-allotment option is exercised in full) that will continue to be owned by
Pacific Dunlop Stockholders will be "restricted securities" within the meaning
of Rule 144, and may not be sold in the absence of registration under the
Securities Act or unless an exemption from registration is available, including
the exemptions contained in Rule 144 and Rule 144A Securities Act. We have an
agreement with the Pacific Dunlop Stockholders that entitles them to request us
to register the shares of our common stock that they hold. The sale of these
shares pursuant to a registration statement would result in the shares becoming
freely tradable. See "Relationship and Agreements with Pacific Dunlop
Group -- Intercompany Agreements -- Registration Rights and Ownership
Maintenance Agreement."
Currently under Rule 144, the Pacific Dunlop Stockholders may sell within
any three-month period a number of restricted shares that does not exceed the
greater of (1) 1% of our then outstanding shares of common stock or (2) the
average weekly trading volume of our common stock during the four calendar weeks
preceding the sale, subject to the filing of a Form 144 with respect to the
sale. Sales under Rule 144 are also subject to requirements concerning manner of
sale, notice and availability of public information about us.
The Pacific Dunlop Stockholders have agreed to a "lock up" at the request
of the underwriters. Under the lock up, with exceptions, they cannot sell or
otherwise dispose of any of our common stock in the public market for a period
of 180 days after the date of this prospectus without first obtaining the
written consent of Merrill Lynch & Co. on behalf of the underwriters. See
"Underwriting -- No Sales of Similar Securities."
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CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS FOR
NON-UNITED STATES HOLDERS
GENERAL
The following is a general discussion of the principal U.S. federal income
and estate tax consequences of the ownership and disposition of our common stock
that may be relevant to you if you are a non-U.S. Holder. For purposes of this
discussion, a non-U.S. Holder is a beneficial owner of common stock that is any
of the following for U.S. federal income tax purposes:
- a nonresident alien individual,
- a foreign corporation,
- a foreign estate or trust, and
- a foreign partnership.
This discussion does not address all aspects of U.S. federal income and
estate taxation that may be relevant to you in light of your particular
circumstances, and does not address any foreign, state or local tax
consequences. Furthermore, this discussion is based on provisions of the
Internal Revenue Code. Treasury regulations and administrative and judicial
interpretations as of the date of this prospectus. All of these are subject to
change, possibly with retroactive effect, or different interpretations. If you
are considering buying common stock you should consult your own tax advisor
about current and possible future tax consequences of holding and disposing of
common stock in your particular situation.
DISTRIBUTIONS
If distributions are paid on the shares of our common stock, these
distributions generally will constitute dividends for U.S. federal income tax
purposes to the extent paid from our current or accumulated earnings and
profits, as determined under U.S. federal income tax principles, and then will
constitute return of capital that is applied against your basis in the common
stock to the extent these distributions exceed those earnings and profits. Any
distributions in excess of tax basis will be treated as if there was a sale or
other disposition of our common stock. See "--Gain on Disposition of Common
Stock."
Dividends paid to a non-U.S. holder that are not effectively connected with
a U.S. trade or business of the non-U.S. holder will be subject to United States
withholding tax at a 30% rate or, if a tax treaty applies, a lower rate
specified by the treaty. To receive a reduced treaty rate, a non-U.S. holder
must furnish to us or our paying agent a duly completed Form W-8BEN or
substitute form certifying to his qualification for the reduced rate.
Currently, withholding is generally imposed on the gross amount of a
distribution, regardless of whether we have sufficient earnings and profits to
cause the distribution to be a dividend for U.S. federal income tax purposes.
However, withholding on distributions made after December 31, 2000 may be on a
less than the gross amount of the distribution if the distribution exceeds a
reasonable estimate made by us of our accumulated and current earnings and
profits.
Dividends that are effectively connected with the conduct of a trade or
business within the U.S. and, if a tax treaty applies, are attributable to a
U.S. permanent establishment of the non-U.S. holder, are exempt from U.S.
federal withholding tax, provided that the non-U.S. holder furnishes to us or
our paying agent a duly completed Form W-8ECI or substitute form certifying the
exemption. However, dividends exempt from U.S. withholding tax because they are
effectively connected with or they are attributable to a U.S. permanent
establishment are subject to U.S. federal income tax on a net income basis at
the regular graduated U.S. federal income tax rates. Any such effectively
connected dividends received by a foreign corporation may, under certain
circumstances, be subject to an additional "branch profits tax" at a 30% rate or
a lower rate specified by an applicable income tax treaty.
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Under certain U.S. Treasury regulations, dividends paid before January 1,
2001 to an address outside the United States are presumed to be paid to a
resident of the country of address for purposes of the withholding discussed
above and for purposes of determining and applicability of a tax treaty rate.
However, U.S. Treasury regulations applicable to dividends paid after December
31, 2000 eliminate this presumption, subject to transition rules and a non-U.S.
holder who wishes to claim the benefit of an applicable treaty rate, and avoid
back-up withholding, as discussed below, would be required to satisfy applicable
certification and other requirements.
For dividends paid after December 31, 2000, a non-U.S. holder generally
will be subject to U.S. backup withholding tax at a 31% rate under the backup
withholding rules described below, rather than a 30% rate or a reduced rate
under an income tax treaty, as described above, unless the non-U.S. holder
complies with Internal Revenue Service certification procedures or, in the case
of payments made outside the U.S. with respect to an offshore account,
documentary evidence procedures. Further, to claim the benefit of a reduced rate
of withholding under a tax treaty for dividends paid after December 31, 2000, a
non-U.S. holder must comply with modified IRS certification requirements.
Special rules also apply to dividend payments made after December 31, 2000 to
foreign intermediaries. U.S. or foreign wholly owned entities that are
disregarded for U.S. federal income tax purposes and entities that are treated
as fiscally transparent in the U.S., the applicable income tax treaty
jurisdiction, or both. You should consult your own tax advisor concerning the
effect, if any, of the rules affecting post-December 31, 2000 dividends on your
possible investment in common stock.
A non-U.S. holder eligible for a reduced rate of U.S. withholding tax under
an income tax treaty may obtain a refund of any excess amounts withheld by
filing an appropriate claim for refund along with the required information with
the IRS.
GAIN ON DISPOSITION OF COMMON STOCK
A non-U.S. holder generally will not be subject to U.S. federal income tax
with respect to gain recognized on a sale or other disposition of our common
stock unless one of the following applies:
- If the gain is effectively connected with a trade or business of the
non-U.S. holder in the United States and, if a tax treaty applies, the
gain is attributable to a U.S. permanent establishment maintained by the
non-U.S. holder. The non-U.S. holder will, unless an applicable treaty
provides otherwise, be taxed on its net gain derived from the sale under
regular graduated U.S. federal income tax rates. If the non-U.S. holder
is a foreign corporation, it may be subject to an additional branch
profits tax equal to 30% of its effectively connected earnings and
profits within the meaning of the Internal Revenue Code for the taxable
year, as adjusted for specified items, unless it qualifies for a lower
rate under an applicable income tax treaty and duly demonstrates that it
qualifies.
- If a non-U.S. holder who is an individual and holds our common stock as a
capital asset is present in the United States for 183 or more days in the
taxable year of the sale or other disposition, and specified other
conditions are met, the non-U.S. holder will be subject to a flat 30% tax
on the gain derived from the sale, which may be offset by certain U.S.
capital losses, despite the fact that the individual is not considered a
resident of the United States.
- If we are or have been a "U.S. real property holding corporation" for
U.S. federal income tax purposes at any time during the shorter of the
five-year period ending on the date of the disposition or the period
during which the non-U.S. holder held the common stock. We believe that
we never have been and are not currently a U.S. real property holding
corporation for U.S. federal income tax purposes. Although we consider it
unlikely based on our current business plans and operations, we may
become a U.S. real property holding corporation in the future. Even if we
were to become a U.S. real property holding corporation, any gain
recognized by a non-U.S. holder still would not be subject to U.S. tax if
the shares were considered to be "regularly traded on an established
securities market" (publicly traded) and the non-U.S. holder did not own,
actually or constructively, at any time during the shorter of the periods
described above, more than 5% of our common stock. If the stock is not
publicly traded or if you own more than 5% of the common stock
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and you are disposing of stock, you may request a statement from the
company as to its status as a U.S. real property holding corporation.
FEDERAL ESTATE TAX
Common stock owned by an individual who is not a citizen or resident, as
defined for U.S. estate tax purposes, of the United States at the time of death
will be included in that individual's gross estate for U.S. federal estate tax
purposes, unless an applicable estate tax treaty provides otherwise.
INFORMATION REPORTING AND BACKUP WITHHOLDING TAX
Under U.S. Treasury regulations, we must report annually to the IRS and to
each non-U.S. holder the amount of dividends paid to that holder and the tax
withheld with respect to those dividends. These information reporting
requirements apply even if withholding was not required because the dividends
were effectively connected dividends or withholding was reduced or eliminated by
an applicable income tax treaty. Pursuant to an applicable tax treaty, that
information may also be made available to the tax authorities in the country in
which the non-U.S. holder resides.
United States federal backup withholding generally is a withholding tax
imposed at the rate of 31% on specified payments to persons that fail to furnish
required information under the U.S. information reporting requirements. See the
discussion under "Distributions" above for rules regarding backup withholding on
dividends paid to non-U.S. holders after December 31, 2000.
As a general matter, information reporting and backup withholding will not
apply to a payment by or through a foreign office of a foreign broker of the
proceeds of a sale of our common stock effected outside the U.S. However,
information reporting requirements, but not backup withholding, will apply to a
payment by or through a foreign office of a broker of the proceeds of a sale of
our common stock effected outside the U.S. if that broker:
- is a U.S. person,
- is a foreign person that derives 50% or more of its gross income for
specified periods from the conduct of a trade or business in the United
States,
- is a "controlled foreign corporation" as defined in the formal Internal
Revenue Code, or
- is a foreign partnership with specified U.S. connections for payments
made after December 31, 2000.
Information reporting requirements will not apply in the above cases if the
broker has documentary evidence in its records that the beneficial owner is a
non-U.S. holder and specified conditions are met or the beneficial owner
otherwise establishes an exemption.
Payment by or through a U.S. office of a broker of the proceeds of a sale
of our common stock is subject to both backup withholding and information
reporting unless the holder certifies to the payor in the manner required as to
its non-U.S. status under penalties of perjury or otherwise establishes an
exemption.
Amounts withheld under the backup withholding rules do not constitute a
separate U.S. federal income tax. Rather, any amounts withheld under the backup
withholding rules will be refunded or allowed as a credit against the holder's
U.S. federal income tax liability, if any, provided the required information or
appropriate claim for refund is filed with the IRS.
THE FOREGOING DISCUSSION IS A SUMMARY OF THE PRINCIPAL TAX CONSEQUENCES OF
THE OWNERSHIP, SALE OR OTHER DISPOSITION OF OUR COMMON STOCK BY NON-U.S. HOLDERS
FOR U.S. FEDERAL INCOME AND ESTATE TAX PURPOSES. YOU ARE URGED TO CONSULT YOUR
OWN TAX ADVISOR WITH RESPECT TO THE PARTICULAR TAX CONSEQUENCES TO YOU OF
OWNERSHIP AND DISPOSITION OF OUR COMMON STOCK, INCLUDING THE EFFECT OF ANY
STATE, LOCAL, FOREIGN OR OTHER TAX LAWS.
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UNDERWRITING
GENERAL
Our common stock will be offered by our selling stockholder through Merrill
Lynch, Pierce, Fenner & Smith Incorporated, Bear, Stearns & Co. Inc. and J.P.
Morgan Securities Inc., as underwriters. Subject to the terms and conditions
described in a purchase agreement among us, the selling stockholder and the
underwriters, the selling stockholder has agreed to sell to the underwriters,
and the underwriters severally have agreed to purchase from the selling
stockholder, the number of shares listed opposite their names below.
<TABLE>
<CAPTION>
NUMBER
UNDERWRITERS OF SHARES
- --------------------------------------------------------- ---------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................
Bear, Stearns & Co. Inc. ................................
J.P. Morgan Securities Inc. .............................
---------
Total..........................................
=========
</TABLE>
The underwriters have agreed to purchase all of the shares sold under the
purchase agreement if any of the shares are purchased. If an underwriter
defaults, the purchase agreement provides that the purchase commitments of the
nondefaulting underwriters may be increased or the purchase agreement may be
terminated.
We and the selling stockholder have agreed to indemnify the underwriters
against liabilities under the Securities Act and to contribute to payments the
underwriters may be required to make in respect of those liabilities. Pacific
Dunlop Limited has guaranteed the payment by us and the selling stockholder of
these indemnification obligations.
The underwriters are offering the shares, subject to prior sale, when, as
and if issued to and accepted by them, subject to approval of legal matters by
their counsel, including the validity of the shares, and other conditions
contained in the purchase agreement, such as the receipt by the underwriters of
officer's certificates and legal opinions. The underwriters reserve the right to
withdraw, cancel or modify offers to the public and to reject orders in whole or
in part.
COMMISSIONS AND DISCOUNTS
The underwriters have advised us and the selling stockholder that they
propose initially to offer the shares to the public at the initial public
offering price on the cover page of this prospectus and to dealers at that price
less a concession of not in excess of $ per share. The underwriters may allow,
and the dealers may reallow, a discount of $ per share on sales to certain
dealers to other dealers. After the initial public offering, the public offering
price, concession and discount may be changed.
The following table shows the per share and total initial public offering
price, underwriting discount to be paid for entirely by the selling stockholder
to the underwriters and the proceeds before expenses to the selling stockholder.
This information assumes either no exercise or full exercise by the underwriters
of their over-allotment option.
<TABLE>
<CAPTION>
PER SHARE WITHOUT OPTION WITH OPTION
--------- -------------- -----------
<S> <C> <C> <C>
Public offering price.................................... $ $ $
Underwriting discount.................................... $ $ $
Proceeds to the selling stockholder...................... $ $ $
</TABLE>
The expenses of the offering, not including the underwriting discount, are
estimated at $ and are payable entirely by the selling stockholder.
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The shares of common stock are being offered by the several underwriters,
subject to prior sale, when, as and if issued to and accepted by them, subject
to approval of certain legal matters by counsel for the underwriters and other
conditions. The underwriters reserve the right to withdraw, cancel or modify
such offer and to reject orders in whole or in part.
OVER-ALLOTMENT OPTION
The selling stockholder has granted an option to the underwriters to
purchase up to 1,300,000 additional shares of common stock at the initial public
offering price, less the underwriting discount. The underwriters may exercise
these options for 30 days from the date of this prospectus solely to cover over-
allotments. If the underwriters exercise this option, each will be obligated,
subject to conditions contained in the purchase agreement, to purchase a number
of additional shares of common stock proportionate to that underwriter's initial
amount reflected in the above table.
NO SALES OF SIMILAR SECURITIES
The Pacific Dunlop Stockholders have agreed, with exceptions, not to sell
or transfer any common stock for 180 days after the date of this prospectus
without first obtaining the written consent of Merrill Lynch & Co. Specifically,
the Pacific Dunlop Stockholders have agreed not to directly or indirectly:
- offer, pledge, sell or contract to sell any common stock,
- sell any option or contract to purchase any common stock,
- purchase any option or contract to sell any common stock,
- grant any option, right or warrant for the sale of any common stock,
- lend or otherwise dispose of or transfer any common stock,
- request or demand that we file a registration statement related to the
common stock, or
- enter into any swap or other agreement that transfers, in whole or in
part, the economic consequence of ownership of any common stock whether
any such swap or transaction is to be settled by delivery of our common
stock or other securities, in cash or otherwise.
This lockup provision applies to common stock and to securities convertible
into or exchangeable or exercisable for or repayable with common stock. It also
applies to common stock owned now or acquired later by the person executing the
agreement or for which the person executing the agreement later acquires the
power of disposition.
NEW YORK STOCK EXCHANGE LISTING
We expect the shares to be approved for listing on the New York Stock
Exchange under the symbol "AHX". In order to meet the requirements for listing
our common stock on that exchange, the underwriters have undertaken to sell
round lots of 100 shares or more to a minimum of 2,000 beneficial owners. In
addition, the underwriters have undertaken to sell the shares to ensure that the
New York Stock Exchange distribution standards are met.
Before this offering, there has been no public market for our common stock.
The initial public offering price will be determined through negotiations among
us, the selling stockholder and the underwriters. The factors considered in
determining the initial public offering price, in addition to prevailing market
conditions, are
- the valuation multiples of publicly traded companies that the
underwriters believe to be comparable to us,
- our financial information,
- the history of, and the prospects for, our company and the industry in
which we compete,
73
<PAGE> 78
- an assessment of our management, our past and present operations, the
prospects for, and timing of, our future revenues,
- our present state of development, and
- the above factors in relation to market values and various valuation
measures of other companies engaged in activities similar to our company.
An active trading market for the shares may not develop. It is also
possible that after the offering the shares will not trade in the public market
at or above the initial public offering price.
The underwriters do not expect to sell more than 5% of the shares in the
aggregate to accounts over which they exercise discretionary authority.
PRICE STABILIZATION, SHORT POSITIONS AND PENALTY BIDS
Until the distribution of our common stock is completed, SEC rules may
limit underwriters and selling group members from bidding for and purchasing our
common stock. However, the underwriters may engage in bids or purchases that
stabilize the price of our common stock, to peg, fix or maintain that price.
If the underwriters create a short position in the common stock in
connection with the offering, i.e., if they sell more shares than are listed on
the cover of this prospectus, the underwriters may reduce that short position by
purchasing shares in the open market. The underwriters may also elect to reduce
any short position by exercising all or part of the over-allotment option
described above. Purchases of the common stock to stabilize its price or to
reduce a short position may cause the price of the common stock to be higher
than it might be in the absence of such purchases.
The underwriters may also impose a penalty bid on certain underwriters and
selling group members. This means that if the underwriters purchase shares of
our common stock in the open market to reduce the underwriters' short position
or to stabilize the price of our common stock, they may reclaim the amount of
the selling concession from the underwriters and selling group members who sold
those shares. The imposition of a penalty bid may also affect the price of the
shares in that it discourages resales of those shares.
Neither we nor any of the underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of our common stock. In addition, neither
we nor any of the underwriters makes any representation that the underwriters
will engage in the transactions described above or that these transactions, once
commenced, will not be discontinued without notice.
RELATIONSHIPS WITH UNDERWRITERS
Some of the underwriters or their affiliates have engaged in, and may in
the future engage in, investment banking and other commercial dealings in the
ordinary course of business with us and members of the Pacific Dunlop Group.
They have received customary fees and commissions for these transactions.
74
<PAGE> 79
LEGAL MATTERS
Gardner, Carton & Douglas, Chicago, Illinois, will pass upon the validity
of the common stock offered by this prospectus. Shearman & Sterling, New York,
New York has acted as counsel to the underwriters in connection with legal
matters relating to the common stock offered by this prospectus.
EXPERTS
The combined financial statements and related combined financial statement
schedule of the Ansell Group as of June 30, 1998 and 1999 and for each of the
years in the three-year period ended June 30, 1999 and the balance sheet of
Ansell Healthcare Incorporated as of December 15, 1999, included in this
prospectus, have been included herein in reliance on the report of KPMG LLP,
independent certified public accountants, appearing elsewhere herein, and upon
the authority of said firm as experts in auditing and accounting.
WHERE TO FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form S-1 under the
Securities Act with respect to the common stock offered by this prospectus. This
prospectus does not contain all of the information that is in the registration
statement and the related exhibits and schedules. For further information with
respect to us and the common stock, you should refer to the registration
statement, including the related exhibits and schedules. The statements
contained in this prospectus as to the contents of any document filed as an
exhibit are of necessity brief descriptions and are not necessarily complete;
each of these statements is qualified in its entirety by reference to the
document.
You may read and copy this registration statement, including the exhibits,
without charge and obtain copies at prescribed rates at the Public Reference
Room of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
regional offices of the SEC located at Seven World Trade Center, Suite 1300, New
York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. You can obtain electronically filed documents,
including registration statements, reports and proxy statements and other
information, from the SEC's Web site at www.sec.gov. In addition, you can obtain
information on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330.
As a result of the offering, we will be subject to the requirements of the
Exchange Act, which means that we will file reports, proxy statements and other
information with the SEC on a periodic basis. You can read and copy these
reports, proxy statements and other information we file with the SEC at the
offices of the SEC and at the website listed above.
We intend to furnish our stockholders with annual reports containing
audited financial statements examined by our independent accountants for each
fiscal year.
75
<PAGE> 80
INDEX TO FINANCIAL STATEMENTS
ANSELL GROUP AND ANSELL HEALTHCARE INCORPORATED
<TABLE>
<S> <C>
Ansell Group Combined Financial Statements:
Independent Auditors' Report.............................. F-2
Combined Statements of Net Assets as of June 30, 1998 and
1999 and as of December 31, 1999 (unaudited)........... F-3
Combined Statements of Operations for the years ended June
30, 1997, 1998 and 1999 and for the six months ended
December 31, 1998 and 1999 (unaudited)................. F-4
Combined Statements of Changes in Net Assets and Other
Comprehensive Income for the years ended June 30, 1997,
1998 and 1999 and for the six months ended December 31,
1999 (unaudited)....................................... F-5
Combined Statements of Cash Flows for the years ended June
30, 1997, 1998 and 1999 and for the six months ended
December 31, 1998 and 1999 (unaudited)................. F-6
Notes to the Combined Financial Statements for the years
ended June 30, 1997, 1998 and 1999 and for the six
months ended December 31, 1998 and 1999 (unaudited).... F-7
Ansell Healthcare Incorporated:
Independent Auditors' Report.............................. F-28
Balance Sheet as of December 15, 1999..................... F-29
Notes to the Balance Sheet as of December 15, 1999........ F-30
</TABLE>
F-1
<PAGE> 81
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Pacific Dunlop Limited:
We have audited the accompanying combined statements of net assets of
Ansell Group (as defined in Note 1) as of June 30, 1998 and 1999, and the
related combined statements of operations, changes in net assets and other
comprehensive income and cash flows for each of the years in the three-year
period ended June 30, 1999. These combined financial statements are the
responsibility of Ansell Group's management. Our responsibility is to express an
opinion on these combined financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatements. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the combined financial position of Ansell
Group as of June 30, 1998 and 1999, and the combined results of their operations
and their cash flows for each of the fiscal years in the three-year period ended
June 30, 1999 in conformity with generally accepted accounting principles.
/s/ KPMG LLP
Columbus, Ohio
September 10, 1999
F-2
<PAGE> 82
ANSELL GROUP
COMBINED STATEMENTS OF NET ASSETS
(IN THOUSANDS, UNLESS OTHERWISE STATED)
<TABLE>
<CAPTION>
JUNE 30,
------------------- DECEMBER 31
1998 1999 1999
-------- -------- ------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................ $53,668 $59,132 $65,564
Trade accounts receivable, net........................... 133,578 133,351 130,751
Inventories.............................................. 121,254 130,089 143,095
Deferred taxes........................................... 7,203 6,924 7,417
Other current assets..................................... 14,553 20,272 25,268
-------- -------- --------
Total current assets............................. 330,256 349,768 372,095
Property, plant and equipment, net......................... 158,441 211,809 217,482
Intangibles, net........................................... 257,396 265,580 262,321
Deferred taxes............................................. 4,185 -- --
Other assets............................................... 5,645 9,237 8,857
-------- -------- --------
Total assets..................................... $755,923 $836,394 $860,755
======== ======== ========
LIABILITIES AND NET ASSETS
Current liabilities:
Trade accounts payable................................... $63,352 $65,375 $59,991
Accrued and other liabilities............................ 22,943 22,167 19,767
Taxes payable............................................ 4,578 1,760 8,905
Revolving lines of credit due to affiliates.............. 336,301 379,402 409,475
Current portion of long-term debt........................ 3,109 27,458 29,249
-------- -------- --------
Total current liabilities........................ 430,283 496,162 527,387
Long-term debt, net of current portion..................... 10,475 1,811 1,697
Deferred taxes............................................. -- 4,063 2,899
Other long-term liabilities................................ 20,078 23,704 26,123
-------- -------- --------
Total liabilities................................ 460,836 525,740 558,106
-------- -------- --------
Minority interest.......................................... 7,308 9,124 10,457
-------- -------- --------
Net assets:
Capital employed......................................... 358,964 366,278 354,089
Accumulated other comprehensive income -- foreign
currency translation adjustment....................... (71,185) (64,748) (61,897)
-------- -------- --------
Total net assets................................. 287,779 301,530 292,192
-------- -------- --------
Commitments and contingencies
Total liabilities and net assets................. $755,923 $836,394 $860,755
======== ======== ========
</TABLE>
See the accompanying notes to the combined financial statements.
F-3
<PAGE> 83
ANSELL GROUP
COMBINED STATEMENTS OF OPERATIONS
(IN THOUSANDS, UNLESS OTHERWISE STATED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED JUNE 30, DECEMBER 31,
-------------------------------- --------------------
1997 1998 1999 1998 1999
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net sales........................... $669,749 $735,263 $738,382 $358,708 $354,747
Cost of goods sold.................. 452,529 487,785 483,464 233,792 228,481
-------- -------- -------- -------- --------
Gross profit...................... 217,220 247,478 254,918 124,916 126,266
Selling, general and administrative
expenses.......................... 125,760 138,501 149,621 72,524 79,621
Research and development expenses... 10,435 8,824 8,315 4,176 4,488
Restructuring charges............... -- -- 1,298 1,046 --
Amortization of intangibles......... 5,877 7,127 8,786 4,432 4,461
-------- -------- -------- -------- --------
Income from operations............ 75,148 93,026 86,898 42,738 37,696
Other (income) expense:
Interest expense, net............. 25,055 21,054 21,128 10,062 12,548
Foreign currency transactions,
net............................ 1,696 (4,438) (2,044) 479 (919)
Other............................. (480) (3) 760 19 88
-------- -------- -------- -------- --------
26,271 16,613 19,844 10,560 11,717
-------- -------- -------- -------- --------
Income before taxes and minority
interests...................... 48,877 76,413 67,054 32,178 25,979
Income taxes........................ 10,026 9,202 10,967 4,588 4,971
Minority interests.................. 3,085 4,343 3,468 2,214 1,275
-------- -------- -------- -------- --------
Net income................ $35,766 $62,868 $52,619 $25,376 $19,733
======== ======== ======== ======== ========
</TABLE>
See the accompanying notes to the combined financial statements.
F-4
<PAGE> 84
ANSELL GROUP
COMBINED STATEMENTS OF CHANGES IN NET ASSETS AND
OTHER COMPREHENSIVE INCOME
(IN THOUSANDS, UNLESS OTHERWISE STATED)
<TABLE>
<CAPTION>
ACCUMULATED
OTHER
CAPITAL COMPREHENSIVE
EMPLOYED INCOME TOTAL
-------- ------------- --------
<S> <C> <C> <C>
NET ASSETS AT JULY 1, 1996............................... $252,973 $(34,844) $218,129
Capital transactions with affiliates..................... 20,429 -- 20,429
Comprehensive income:
Net income............................................. 35,766 -- 35,766
Foreign currency translation adjustment................ -- 1,205 1,205
--------
Total comprehensive income..................... 36,971
-------- -------- --------
NET ASSETS AT JUNE 30, 1997.............................. 309,168 (33,639) 275,529
Capital transactions with affiliates..................... (13,072) -- (13,072)
Comprehensive income:
Net income............................................. 62,868 -- 62,868
Foreign currency translation adjustment................ -- (37,546) (37,546)
--------
Total comprehensive income..................... 25,322
-------- -------- --------
NET ASSETS AT JUNE 30, 1998.............................. 358,964 (71,185) 287,779
Capital transactions with affiliates..................... (45,305) -- (45,305)
Comprehensive income:
Net income............................................. 52,619 -- 52,619
Foreign currency translation adjustment................ -- 6,437 6,437
--------
Total comprehensive income..................... 59,056
-------- -------- --------
NET ASSETS AT JUNE 30, 1999.............................. 366,278 (64,748) 301,530
Capital transactions with affiliates (unaudited)......... (31,922) -- (31,922)
Comprehensive income:
Net income (unaudited)................................. 19,733 -- 19,733
Foreign currency translation adjustment (unaudited).... -- 2,851 2,851
--------
Total comprehensive income (unaudited)......... 22,584
-------- -------- --------
NET ASSETS AT DECEMBER 31, 1999 (UNAUDITED).............. $354,089 $(61,897) $292,192
======== ======== ========
</TABLE>
See the accompanying notes to the combined financial statements.
F-5
<PAGE> 85
ANSELL GROUP
COMBINED STATEMENTS OF CASH FLOWS
(IN THOUSANDS, UNLESS OTHERWISE STATED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED JUNE 30, DECEMBER 31,
------------------------------ --------------------
1997 1998 1999 1998 1999
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income....................................... $35,766 $62,868 $52,619 $ 25,376 $ 19,733
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation................................. 19,804 19,002 21,728 10,284 11,785
Amortization of intangibles.................. 5,877 7,127 8,786 4,432 4,461
Deferred income taxes........................ (2,639) 5,024 3,375 979 (1,657)
Loss (gain) on sales of property, plant &
equipment................................. 101 2,119 385 19 88
Minority interest............................ 3,085 4,343 3,468 2,214 1,275
Changes in assets and liabilities, net of
effects of acquisitions:
Trade accounts receivable, net............... (7,074) (18,443) 12,648 4,876 512
Inventories.................................. 13,328 (5,957) (380) (22,926) (14,959)
Other current assets......................... 3,465 826 (3,523) (3,783) (5,285)
Trade accounts payable....................... 9,896 1,924 (3,317) (5,538) (4,339)
Accrued and other liabilities................ 2,995 (2,971) (1,571) 6,074 (2,042)
Taxes payable................................ 2,407 (1,634) (3,190) (527) 7,135
Other long-term assets and liabilities....... 4,919 11,633 (3,599) 65 3,032
-------- -------- -------- -------- --------
Net cash provided by operating
activities.............................. 91,930 85,861 87,429 21,545 19,739
-------- -------- -------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property, plant and
equipment...................................... 491 4,838 1,122 -- 509
Purchase of property, plant and equipment........ (31,272) (34,049) (57,926) (23,703) (19,026)
Payments for acquisitions, net of cash
acquired....................................... (59,243) (13,083) (33,360) (33,360) --
-------- -------- -------- -------- --------
Net cash used in investing activities..... (90,024) (42,294) (90,164) (57,063) (18,517)
-------- -------- -------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings (repayments) of third party debt...... (15,746) 5,176 10,718 1,828 2,130
Affiliates borrowings (repayments)............... (406) (5,852) 39,003 26,613 24,830
Capital contributions from affiliates............ 29,975 1,931 22,935 17,280 5,365
Dividends paid to affiliates..................... (9,546) (15,003) (68,240) (25,122) (26,223)
-------- -------- -------- -------- --------
Net cash provided by (used in) financing
activities.............................. 4,277 (13,748) 4,416 20,599 6,102
Effect of exchange rate changes on cash and cash
equivalents...................................... (1,138) (4,393) 3,783 (1,281) (892)
-------- -------- -------- -------- --------
Net increase (decrease) in cash and cash
equivalents...................................... 5,045 25,426 5,464 (16,200) 6,432
Cash and cash equivalents:
Beginning of period.............................. 23,197 28,242 53,668 53,668 59,132
-------- -------- -------- -------- --------
End of period.................................... $28,242 $53,668 $59,132 $ 37,468 $ 65,564
======== ======== ======== ======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest, net of amounts capitalized........... $27,027 $23,443 $23,883 $ 12,279 $ 13,740
Income taxes................................... 10,764 5,417 4,268 249 5,791
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Payable to seller for acquisition................ $9,500 -- -- -- --
Reduction in affiliate debt due to transfer of PD
Asia -- AIT to Pacific Dunlop Group............ -- -- -- -- $(11,064)
</TABLE>
See the accompanying notes to the combined financial statements.
F-6
<PAGE> 86
ANSELL GROUP
NOTES TO THE COMBINED FINANCIAL STATEMENTS
(IN THOUSANDS, UNLESS OTHERWISE STATED)
(1) BASIS OF PRESENTATION
The accompanying combined financial statements have been prepared in
accordance with generally accepted accounting principles ("GAAP") on a basis
which reflects the combined assets and liabilities ("net assets") and sales,
costs of sales and other income and expenses ("operations") and cash flows of
the companies constituting Ansell Group ("Ansell Group"). Ansell Group consists
of the entities set forth below and their respective subsidiaries directly or
indirectly owned by Pacific Dunlop Limited ("PDL" which, together with its
subsidiaries, are referred to as the Pacific Dunlop Group)assuming that Ansell
Group was organized as a separate legal entity for all periods presented.
(Ownership percentage is 100% unless otherwise indicated):
<TABLE>
<CAPTION>
JURISDICTION OF
ENTITY ORGANIZATION
- ------ ----------------
<S> <C>
North American companies:
Ansell Services Inc. ..................................... United States
Ansell Protective Products Inc. .......................... United States
Ansell Healthcare Products Inc............................ United States
Ansell Edmont Industrial de Mexico S.A. de C.V............ Mexico
Ansell Perry de Mexico S.A. de C.V........................ Mexico
Ansell Canada Inc. ....................................... Canada
Comercializadona GNK S.A. de C.V.......................... Mexico
Golden Needles de Mexico S.A. de C.V...................... Mexico
European companies:
Ansell GmbH............................................... Germany
Ansell S.A................................................ France
Laboratories Degan S.A................................. France
Ansell UK Ltd............................................. United Kingdom
Mates Vending Ltd...................................... United Kingdom
Ansell Glove Company Ltd.................................. United Kingdom
Golden Needles Knitting and Glove Company Ltd.......... United Kingdom
Ansell Protective Products Europe NV...................... Belgium
Asian and Pacific companies:
Ansell Australian Division................................ Australia
Ansell New Zealand Division............................... New Zealand
Ansell (Thailand) Ltd..................................... Thailand
Suretex Limited........................................... Thailand
STX Prophylactics S.A. (Proprietary) Ltd............... South Africa
Latex Investments Ltd.................................. Mauritius
Suretex Prophylactics India Ltd...................... India
Ansell Lanka (Pvt) Ltd.................................... Sri Lanka
PDOCB Pty Ltd............................................. Australia
Ansell Medical Product Pvt Ltd......................... India
Kemwell International Limited (74.8% owned by Ansell India
Group).................................................
J.K. Ansell Ltd (50% owned by Ansell Group)............... India
Pacific Dunlop Japan KK................................... Japan
Ansell Malaysia Sdn Bhd (75% owned by Ansell Group)....... Malaysia
</TABLE>
F-7
<PAGE> 87
ANSELL GROUP
NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, UNLESS OTHERWISE STATED)
<TABLE>
<CAPTION>
JURISDICTION OF
ENTITY ORGANIZATION
- ------ ----------------
<S> <C>
Ansell Medical Sdn Bhd (75% owned by Ansell Group)........ Malaysia
Ansell NP Sdn Bhd (75% owned by Ansell Group)............. Malaysia
Ansell (Kedah) Sdn Bhd.................................... Malaysia
Ansell Ambi Sdn Bhd....................................... Malaysia
Ansell (Kulim) Sdn Bhd.................................... Malaysia
</TABLE>
PDL has reorganized Ansell Group into Ansell Healthcare Incorporated
("Ansell Healthcare") as more fully described in Note 13 (Subsequent Events). In
the opinion of Ansell Group's management, the accompanying combined financial
statements include all material expenses that Ansell Group would have incurred
had it been operating as an independent entity for all periods presented.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Business
Ansell Group is a designer, developer, manufacturer and marketer of
protective gloves and condoms for use in professional, occupational and personal
healthcare applications. Ansell Group also manufactures and sells certain
related products. Ansell Group's manufacturing facilities are located in the
United States, Malaysia, Thailand, Sri Lanka, India, Mexico and the United
Kingdom. Its principal executive offices are located in Red Bank, New Jersey, in
the United States.
(b) Principles of Combination
The combined financial statements include the entities listed in Note 1.
All transactions and balances between the companies listed in Note 1 have been
eliminated.
(c) Unaudited Interim Financial Information
The interim combined statement of net assets of Ansell Group as of December
31, 1999, the statements of operations, changes in net assets and other
comprehensive income, and cash flows for the six months ended December 31, 1998
and 1999 are unaudited. Certain information and note disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. In the opinion of
management, all adjustments, consisting only of normal recurring adjustments,
necessary for the fair presentation of the financial position, results of
operations and cash flows, have been included in such unaudited financial
statements. The result of operations for the six months ended December 31, 1999
are not necessarily indicative of the results to be expected for the entire
year.
(d) Cash and Cash Equivalents
Cash and cash equivalents include highly liquid investments with original
maturity dates of three months or less.
(e) Inventories
Inventories are valued at the lower of cost or market. Cost, which includes
direct materials, labor and overhead plus indirect overhead, is determined using
the first in, first out (FIFO) method.
F-8
<PAGE> 88
ANSELL GROUP
NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, UNLESS OTHERWISE STATED)
(f) Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated
depreciation. Ansell Group capitalized interest of approximately $540, $602 and
$1,009 for the fiscal years ended June 30, 1997, 1998 and 1999, respectively.
Depreciation is charged on a straight-line basis over the estimated useful lives
of the assets as follows:
<TABLE>
<S> <C>
Buildings............................... 40 years
Plant and equipment..................... 5 to 10 years
Leasehold improvements.................. Shorter of useful life or lease term
</TABLE>
(g) Goodwill and Brand Names
Goodwill, which represents the excess of purchase price over the fair value
of net assets acquired, is amortized on a straight-line basis over estimated
periods to be benefited (not exceeding 40 years). Brand names are recorded at
cost and are amortized over 40 years, the estimated useful life.
Ansell Group assesses the recoverability of goodwill and brand names by
determining whether the amortization of the respective goodwill and brand names
balance over its remaining life can be recovered from undiscounted future
operating cash flows. The amount of impairment, if any, is measured based on
projected discounted future operating cash flows using a discount rate
reflecting Ansell Group's average cost of funds. The assessment of the
recoverability of goodwill and brand names will be impacted if estimated
undiscounted future operating cash flows are not achieved.
(h) Taxation
Ansell Group files its own tax returns in each jurisdiction in which it
operates, except in certain jurisdictions where it files jointly with other PDL
subsidiaries. Ansell Group has a tax sharing arrangement with those PDL
subsidiaries in these countries to share the tax burden or benefits based upon
each company's results.
Taxes are accounted for under the asset and liability method. Deferred tax
assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases, operating losses
and tax credit carryforwards. Deferred tax assets and liabilities are measured
using enacted tax rates in the respective jurisdictions in which Ansell Group
operates that are expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. The effect
on deferred income tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.
(i) Advertising
Advertising costs are expensed as incurred. Advertising costs are
classified as selling, general and administrative expenses in the combined
statements of operations and amounted to approximately $13,116, $12,889 and
$12,686 during the fiscal years ended June 30, 1997, 1998 and 1999,
respectively.
(j) Currency Translation and Transactions
The reporting currency for the combined financial statements of Ansell
Group is the U.S. dollar. The functional currency for each member of Ansell
Group's operations is generally the applicable local currency. Accordingly, the
assets and liabilities of companies whose functional currency is other than the
U.S. dollar are included in the combination by translating the assets and
liabilities into the reporting
F-9
<PAGE> 89
ANSELL GROUP
NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, UNLESS OTHERWISE STATED)
currency at the exchange rates applicable at the end of the reporting year. The
statements of operations and cash flows of such non-U.S. dollar functional
currency operations are translated at the monthly average exchange rates during
the year. Translation gains or losses are accumulated as other comprehensive
income which is a separate component of net assets. Currency transaction gains
or losses arising from transactions of Ansell Group's companies in currencies
other than the functional currency are included in operations at each reporting
period.
(k) Pension and Other Post-Retirement Plans
Ansell Group has defined benefit pension plans covering its U.S.
subsidiaries' employees. The benefits are based either on years of service or
the employee's average compensation during their employment. The cost of these
plans is being funded currently.
Ansell Group also sponsors two defined benefit health care plans which
cover certain retirees and current employees of two U.S. operating units. Ansell
Group pays benefits under the plans when due and does not fund its plan
obligations as they accrue. The net periodic costs are recognized as employees
render the services necessary to earn the post-retirement benefits.
Certain Ansell Group companies sponsor defined contribution plans. Benefits
are determined and funded annually based upon the terms of the plans.
Contributions under these plans amounted to $2,935, $3,353, and $3,166, for the
fiscal years ended June 30, 1997, 1998 and 1999, respectively.
(l) Derivative Financial Instruments
Ansell Group has only limited involvement with derivative financial
instruments and does not use them for trading purposes. These instruments are in
the form of currency and commodity forward/futures contracts and are used as a
hedge against anticipated currency and commodity price exposures. The
transactions which may be covered are future profits on specific sales of
overseas controlled entities and future foreign exchange and commodity
requirements. The transactions do not exceed 18 months duration and hedge future
transactions that will occur within Ansell Group during this time frame. Gains
and losses on derivatives used as hedges are accounted for on the same basis as
the underlying physical exposure they hedge. Accordingly, hedge gains and losses
are included in the combined statement of operations when the gain or loss
arising on the related physical exposures are recognized.
(m) Fair Value of Financial Instruments
The carrying amount of cash and cash equivalents, trade accounts
receivable, other current assets and current liabilities approximates fair
market value because of the short-term maturity of these financial instruments.
It is not practical to determine the fair value of balances with PDL due to the
related party nature of these financial instruments. The carrying of debt
payable to third parties approximates fair value, as the debt was recently
issued. The other financial instruments are not significant to the combined
financial statements.
(n) Concentration of Credit Risk and Commodity Risk
Ansell Group's revenue base is widely diversified by geographic region and
by individual customer. Ansell Group's products are utilized in many different
industries. Ansell Group performs ongoing credit evaluations of its customers'
financial condition and, generally, requires no collateral from its customers.
Ansell Group is subject to risk associated with the consistent availability
of raw rubber harvested from independent growers and processed into latex
concentrate by plant operators in Malaysia and Thailand. Ansell Group enters
into commodity forward contracts to offset Ansell Group's exposure to the
potential
F-10
<PAGE> 90
ANSELL GROUP
NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, UNLESS OTHERWISE STATED)
change in prices mainly for raw rubber and latex concentrate used in the
manufacturing of Ansell Group's gloves and condoms.
(o) Revenue Recognition
Revenue is recognized when title to a product has transferred from us to
our customer, which generally occurs when the product has been shipped.
(p) Impairment of Long-Lived Assets
Ansell Group accounts for long-lived assets and certain identifiable
intangibles by reviewing for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future net undiscounted cash
flows expected to be generated by the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which the
carrying amount of the assets exceed the fair value of the assets. Assets to be
disposed of are reported at the lower of the carrying amount or fair value less
costs to sell.
(q) Comprehensive Income
Comprehensive income consists of net income and foreign currency
translation adjustments and is presented in the combined statements of changes
in net assets.
(r) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principals requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, as well
as disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results may differ from those estimates.
(s) Recent Accounting Pronouncements
In June 1999, SFAS No. 137, Accounting for Derivative Instruments and
Hedging Activities -- Deferral of Effective Date of FASB Statement No. 133, was
issued. This Statement amended the effective date of the application of the SFAS
No. 133, Accounting for Derivatives Instruments and Hedging Activities. SFAS No.
133 establishes accounting and reporting standards for derivative instruments,
including derivative instruments embedded in other contracts, and for hedging
activities. SFAS No. 133 is effective for all fiscal quarters or years beginning
after June 15, 2000. Ansell Group has not yet analyzed the impact of this
pronouncement on its combined financial statements.
(3) ACQUISITIONS
Ansell Group acquired four businesses during the fiscal years ended June
30, 1997, 1998 and 1999. All of these transactions were accounted for under the
purchase method of accounting and the funds for these transactions were provided
by the Pacific Dunlop Group. The following paragraphs summarize these
transactions.
In April 1997, Ansell Group acquired the assets of Golden Needles Knitting,
Inc. (GNK). GNK principally manufactures protective gloves in North Carolina.
The purchase price of $81.2 million of which $71.7 million was paid in cash,
$61.3 million and $10.4 million during the fiscal years ended June 30, 1997 and
1998, respectively, and $9.5 million is a note payable due April 23, 2000. The
purchase price exceeded
F-11
<PAGE> 91
ANSELL GROUP
NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, UNLESS OTHERWISE STATED)
the fair value of the net assets acquired by approximately $61.4 million, which
was allocated between goodwill and intangibles. Goodwill and intangibles are
being amortized on a straight-line basis over 40 years.
In September 1997, Ansell Group entered into a joint venture to acquire 50%
of JK Chemicals Limited for $2.7 million in cash. Now known as J.K. Ansell Ltd.,
it manufactures and markets condoms in India and other geographical areas. The
purchase price exceeded the fair value of the net assets acquired by
approximately $1.6 million, which is being amortized on a straight-line basis
over 20 years.
In September 1998, Ansell Group acquired 74.8% of Kemwell International
Limited (Kemwell) for $7.6 million in cash. Kemwell is a manufacturer of latex
gloves located in India. The purchase price exceeded the fair value of assets
acquired by approximately $5.1 million, which is being amortized on a
straight-line basis over 20 years.
In November 1998, Ansell Group acquired Suretex Limited (Suretex), a
condom, glove and rubber band manufacturer for $26.4 million in cash. Suretex
has manufacturing facilities in Thailand and India, as well as packaging
facilities in South Africa. The purchase price exceeded the fair value of assets
acquired by approximately $11.6 million, which is being amortized on a
straight-line basis over 20 years.
The results of the above mentioned acquired businesses have been included
in the combined financial statements since the acquisition date.
The following unaudited pro forma information presents a summary of
combined results of operations including the Suretex and Kemwell acquisitions
mentioned above as if the acquisitions had occurred on the first day of the
fiscal year prior to the fiscal year in which the acquisitions had occurred:
<TABLE>
<CAPTION>
1998 1999
-------- --------
(UNAUDITED)
<S> <C> <C>
Net sales................................................... $766,345 $740,822
Net income.................................................. $56,643 $52,388
</TABLE>
These unaudited pro forma results have been prepared for comparative
purposes only and include certain adjustments, such as additional amortization
expense as a result of goodwill and an increased interest expense on acquisition
debt. They do not purport to be indicative of the results of operations that
actually would have resulted had the acquisition occurred on the first day of
the fiscal year prior to the fiscal year in which the acquisitions occurred, or
of future results of operations of the combined entities.
(4) BALANCE SHEET COMPONENTS
(a) Trade Accounts Receivable, Net
Trade accounts receivable, net, consisted of the following at June 30:
<TABLE>
<CAPTION>
1998 1999
-------- --------
<S> <C> <C>
Trade accounts receivable................................... $142,377 $144,084
Allowance for doubtful accounts............................. (2,745) (4,318)
Allowance for rebates and other claims...................... (6,054) (6,415)
-------- --------
$133,578 $133,351
======== ========
</TABLE>
F-12
<PAGE> 92
ANSELL GROUP
NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, UNLESS OTHERWISE STATED)
(b) Inventories
Inventories consisted of the following at June 30:
<TABLE>
<CAPTION>
1998 1999
-------- --------
<S> <C> <C>
Raw materials and other..................................... $24,745 $18,619
Work in progress............................................ 14,669 20,204
Finished goods.............................................. 81,840 91,266
-------- --------
$121,254 $130,089
======== ========
</TABLE>
The unaudited December 31, 1999 inventories consisted of: raw materials and
other $21,931, work in progress $20,379, and finished goods $100,785.
(c) Other Current Assets
Other current assets consisted of the following at June 30:
<TABLE>
<CAPTION>
1998 1999
------- -------
<S> <C> <C>
Prepaid expenses............................................ $2,420 $3,806
Other current assets........................................ 12,133 16,466
------- -------
$14,553 $20,272
======= =======
</TABLE>
(d) Other Assets
Other assets consisted of the following at June 30:
<TABLE>
<CAPTION>
1998 1999
------ ------
<S> <C> <C>
Cash surrender value of life insurance...................... $4,689 $5,484
Other....................................................... 956 3,753
------ ------
$5,645 $9,237
====== ======
</TABLE>
(e) Property, Plant and Equipment, Net
Property, plant and equipment, net, consisted of the following at June 30:
<TABLE>
<CAPTION>
1998 1999
-------- --------
<S> <C> <C>
Land........................................................ $214 $1,635
Buildings and leasehold improvements........................ 40,346 48,759
Plant and equipment......................................... 205,814 249,235
Construction in progress.................................... 19,465 43,621
-------- --------
265,839 343,250
Less accumulated depreciation............................... (107,398) (131,441)
-------- --------
$158,441 $211,809
======== ========
</TABLE>
F-13
<PAGE> 93
ANSELL GROUP
NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, UNLESS OTHERWISE STATED)
(f) Intangibles, Net
Intangibles, net, consisted of the following at June 30:
<TABLE>
<CAPTION>
1998 1999
-------- --------
<S> <C> <C>
Goodwill, less accumulated amortization of $50,918 and
$59,845 in 1998 and 1999, respectively.................... $203,578 $214,934
Brand names, less accumulated amortization of $7,161 and
$8,763 in 1998 and 1999, respectively..................... 53,818 50,646
-------- --------
$257,396 $265,580
======== ========
</TABLE>
(g) Accrued and Other Liabilities
Accrued and other liabilities consisted of the following at June 30:
<TABLE>
<CAPTION>
1998 1999
------- -------
<S> <C> <C>
Employee compensation and benefits.......................... $9,540 $7,193
Other....................................................... 13,403 14,974
------- -------
$22,943 $22,167
======= =======
</TABLE>
(h) Other Long-term Liabilities
Other long-term liabilities consisted of the following at June 30:
<TABLE>
<CAPTION>
1998 1999
------- -------
<S> <C> <C>
Employee compensation and benefits.......................... $3,218 $5,142
Pension and other post-retirement benefits.................. 10,299 15,808
Other....................................................... 6,561 2,754
------- -------
$20,078 $23,704
======= =======
</TABLE>
(5) FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISKS
Credit risk on off-balance sheet derivative contracts is minimized as
counterparties to the transactions arranged through PDL are recognized financial
intermediaries with acceptable credit ratings determined by a recognized rating
agency. Ansell Group management believes that exposure to any single
counterparty or group of counterparties is not material. Ansell Group exposure
is first with PDL who initiated the transactions. The table below displays the
face value, credit risk and net fair value of off-balance sheet financial
instruments outstanding at June 30, 1997, 1998 and 1999.
Face Value
This is the contract's value upon which a market rate is applied to produce
a gain or loss that becomes the settlement value of the derivative financial
instrument.
Credit Risk
This is the maximum exposure to Ansell Group in the event that all
counterparties who have amounts outstanding to Ansell Group under derivative
financial instruments, fail to honor their side of the contracts. Ansell Group's
exposure is entirely to Pacific Dunlop Limited. Amounts owed by Ansell Group
under derivative financial instruments are not included.
F-14
<PAGE> 94
ANSELL GROUP
NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, UNLESS OTHERWISE STATED)
Net Fair Value
This is the amount at which the instrument could be extinguished between
willing parties in a normal market in other than a liquidation or forced sale
environment. The net amount owed (to)/from financial institutions under all
derivative financial instruments would have been $15.1 million, $(1.5) million
and $(8.7) million if all contracts were closed out on June 30, 1997, 1998 and
1999, respectively.
<TABLE>
<CAPTION>
FACE VALUE CREDIT RISK NET FAIR VALUE
----------------------- ------------------- ---------------------
1997 1998 1999 1997 1998 1999 1997 1998 1999
------ ----- ------ ----- ---- ---- ----- ----- -----
(MILLIONS) (MILLIONS) (MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FOREIGN EXCHANGE
CONTRACTS
Purchase/Sales Contracts
-- U.S. dollars........ $95.7 $2.0 $14.1 $4.0 $0.1 -- $4.0 $0.1 $(1.1)
-- Australian
dollars............. 257.6 3.5 11.3 -- -- -- -- -- --
-- Malaysian
ringgits............ 51.1 1.9 -- 2.1 -- -- 2.1 (0.1) --
-- Belgian francs...... 17.6 -- 4.9 0.1 -- -- 0.3 -- (0.8)
-- Canadian dollars.... 22.9 -- 1.4 1.0 -- -- 1.0 -- --
-- Deutsche marks...... 42.3 -- 4.1 0.7 -- -- 0.8 -- (0.3)
-- French francs....... 31.6 -- 4.1 0.5 -- -- 0.6 -- (0.4)
-- British pounds...... 43.7 -- 44.6 2.6 -- -- 2.6 -- (1.5)
-- Sri Lanka rupees.... -- 15.8 14.7 -- -- -- -- -- (1.7)
-- Euros............... -- -- 95.5 -- -- -- -- -- (2.8)
-- Other currencies.... 41.7 2.3 3.0 4.2 0.1 -- 3.5 (1.5) (0.1)
COMMODITY CONTRACTS
Commodity Futures
-- U.S. dollars........ -- -- -- -- -- -- -- -- --
-- Other currencies.... 4.2 -- -- 0.2 -- -- 0.2 -- --
------ ----- ------ ----- ---- -- ----- ----- -----
Total.......... $608.4 $25.5 $197.7 $15.4 $0.2 -- $15.1 $(1.5) $(8.7)
====== ===== ====== ===== ==== == ===== ===== =====
</TABLE>
Credit Risk by Maturity
The following table indicates the value of amounts owed by counterparties
with maturity ranges. Based on Ansell Group policy of not having overnight
exposures to an entity rated lower than A- by Standard & Poor's or A3 by Moody's
Investors Service, it is felt the risk to Ansell Group of the counterparty
default loss is not material.
<TABLE>
<CAPTION>
FOREIGN EXCHANGE
RELATED CONTRACTS COMMODITY CONTRACTS TOTAL
-------------------- --------------------- -------------------
1997 1998 1999 1997 1998 1999 1997 1998 1999
----- ---- ----- ----- ----- ----- ----- ---- ----
(MILLIONS) (MILLIONS) (MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
TERM
0 to 6 months.................. $8.7 $0.2 -- $0.2 -- -- $8.9 $0.2 --
6 to 12 months................. 6.5 -- -- -- -- -- 6.5 -- --
1 to 2 years................... -- -- -- -- -- -- -- -- --
----- ---- ----- ---- ---- --- ----- ---- ----
Total................ $15.2 $0.2 -- $0.2 -- -- $15.4 $0.2 --
===== ==== ===== ==== ==== === ===== ==== ====
</TABLE>
F-15
<PAGE> 95
ANSELL GROUP
NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, UNLESS OTHERWISE STATED)
Market or Liquidity Risk
Ansell Group seeks to reduce the risk of being forced to exit derivative
financial instrument positions at below their real worth or of finding it cannot
exit the position at all, due to lack of liquidity in the market. This is
accomplished by dealing only in liquid contracts dealt by many counterparties;
and by dealing only in large and highly liquid and stable international markets.
Hedges and Anticipated Future Transactions
Ansell Group enters into certain foreign exchange derivative transactions
to hedge anticipated future transactions. At the end of the year, the
transaction gains and (losses), both realized and unrealized, are calculated and
if the future transaction remains assured they are deferred in the statement of
net assets. At June 30, 1997, 1998 and 1999, Ansell Group had deferred gains of
$1.4 million, $0.3 million and $3.5 million, respectively. Terms of anticipated
transaction exposure are less than one year.
(6) REVOLVING LINES OF CREDIT DUE TO AFFILIATES
Certain Ansell Group entities maintain revolving credit agreements with PDL
affiliated entities that are not part of Ansell Group. Interest rates on these
revolving credit agreements due to affiliates varied from 0% to 7.75% in fiscal
1999. Amounts outstanding under these revolving lines of credit due to
affiliates are payable on demand and totaled $336,301 and $379,402 at June 30,
1998 and 1999, respectively.
$40 million of non-interest bearing payables to affiliates are included in
the revolving lines of credit due to affiliate balance at June 30, 1998 and
1999. In addition, for those entities which are divisions, effective July 1,
1997, Pacific Dunlop Group determined that a portion of the debt outstanding
would be treated as permanently invested and bear no interest charge. If all
debt outstanding were interest bearing, such interest (using the weighted
average interest rate charged by PDL during the period) would have increased by
$7.8 million, and $7.5 million during 1998 and 1999, respectively.
(7) DEBT
Long-term debt at June 30, 1998 and 1999 was $10,475 and $1,811,
respectively. Long-term debt consisted of the following at June 30:
<TABLE>
<CAPTION>
DESCRIPTION INTEREST RATE MATURITIES 1998 1999
- -------------------- ------------------------------ ------------------------------- ------- -------
<S> <C> <C> <C> <C>
Bank and other loans Varying interest rates between Varies between October 15, 1999
-- secured 4.22% and 20.00% and July 2, 2002 $1,411 $3,218
Bank and other loans Varying interest rates between Varies between October 15, 1999
-- unsecured 4.22% and 20.00% and July 2, 2002 142 1,166
Trade bills payable Varies Varies 2,531 --
Belgian revolving
line of credit Interest rate of 3.75% December 31, 1999 -- 15,385
Note payable Interest rate of 7.75% and April 23, 2000 9,500 9,500
8.50% at June 30, 1998 and
1999, respectively.
------- -------
13,584 29,269
Less: current portion (3,109) (27,458)
------- -------
Total long-term debt $10,475 $1,811
======= =======
</TABLE>
F-16
<PAGE> 96
ANSELL GROUP
NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, UNLESS OTHERWISE STATED)
Certain borrowings are secured by cash deposits and plant and equipment.
Ansell Protective Products Europe NV maintains a line of credit with
borrowings up to 810 million Belgian francs ($20.8 million). Total borrowings
under this line of credit were 600 million Belgian francs ($15.4 million) at
June 30, 1999.
A portion of the 1997 acquisition of the assets of Golden Needles Knitting,
Inc. was financed through a $9.5 million note payable to the sellers, which
bears interest equal to the prime rate and is due on April 23, 2000.
Debt maturities for each of the next five years are $27,458 in 2000, $571
in 2001, $1,083 in 2002, $157 in 2003 and $0 in 2004.
Interest expense on the revolving lines of credit due to affiliates and
debt consisted of the following for the years ended June 30:
<TABLE>
<CAPTION>
1997 1998 1999
------- ------- -------
<S> <C> <C> <C>
Affiliates............................................ $24,241 $19,382 $19,854
Third-parties......................................... 2,786 4,061 4,029
------- ------- -------
Total interest expense...................... 27,027 23,443 23,883
Interest income....................................... (1,972) (2,389) (2,755)
------- ------- -------
Interest expense, net....................... $25,055 $21,054 $21,128
======= ======= =======
</TABLE>
F-17
<PAGE> 97
ANSELL GROUP
NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, UNLESS OTHERWISE STATED)
(8) BENEFIT PLANS
The following table sets forth the funded status and amounts recognized in
the combined financial statements for Ansell Group's defined benefit plans as of
March 31, adjusted for fourth quarter contributions:
<TABLE>
<CAPTION>
1998 1999
------------------------------ ------------------------------
ASSETS EXCEED ACCUMULATED ASSETS EXCEED ACCUMULATED
ACCUMULATED BENEFITS ACCUMULATED BENEFITS
BENEFITS EXCEED ASSETS BENEFITS EXCEED ASSETS
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Change in benefit obligation:
Benefit obligation at beginning
of year..................... $1,833 $35,143 $2,194 $46,647
Service cost................... 19 2,045 19 2,349
Interest cost.................. 148 3,180 152 2,974
Plan amendments................ -- 2,122 -- (3,694)
Actuarial (gain) loss.......... 326 7,294 19 (1,982)
Benefits paid.................. (132) (3,137) (163) (4,988)
------ ------- ------ -------
Benefit obligation at end of
year........................ 2,194 46,647 2,221 41,306
------ ------- ------ -------
Change in plan assets:
Fair value of plan assets at
beginning of year........... 2,134 29,464 2,680 37,888
Actual return on assets........ 676 8,208 277 2,612
Employer contribution.......... -- 3,353 -- 3,166
Benefits paid.................. (130) (3,137) (163) (4,988)
------ ------- ------ -------
Fair value of plan assets at
end of year................. 2,680 37,888 2,794 38,678
------ ------- ------ -------
Funded status.................... 486 (8,759) 573 (2,628)
Unrecognized net actuarial (gain)
loss........................... (426) (756) (481) (2,431)
Unrecognized prior service
cost........................... 95 1,808 88 (1,755)
Unrecognized net transition
obligation..................... -- 40 -- 35
Fourth quarter contributions..... -- 361 -- --
------ ------- ------ -------
Accrued benefit cost........... $155 $(7,306) $180 $(6,779)
====== ======= ====== =======
Amounts recognized in the
statements of net assets
consist of:
Prepaid benefit cost........... $155 -- $180 --
Accrued benefit liability...... -- (7,306) -- (6,779)
------ ------- ------ -------
Net amount
recognized........... $155 $(7,306) $180 $(6,779)
====== ======= ====== =======
</TABLE>
F-18
<PAGE> 98
ANSELL GROUP
NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, UNLESS OTHERWISE STATED)
The components of pension cost consisted of the following for the fiscal
years ended June 30:
<TABLE>
<CAPTION>
1997 1998 1999
------ ------ ------
<S> <C> <C> <C>
Service cost............................................. $1,952 $2,064 $2,368
Interest cost............................................ 2,935 3,328 3,126
Estimated return on plan assets.......................... (2,347) (2,561) (3,136)
Amortization of prior service cost....................... 25 125 (123)
Recognized net actuarial loss............................ 62 11 19
------ ------ ------
Net pension cost............................... $2,627 $2,967 $2,254
====== ====== ======
</TABLE>
The following are the actuarial assumptions used in accounting for these
defined benefit plans:
<TABLE>
<CAPTION>
1998 1999
---- ----
<S> <C> <C>
Discount rates.............................................. 7% 7%
Rates of increase in compensation levels.................... 5% 5%
Expected long-term rate of return on plan assets............ 9% 9%
</TABLE>
Effective July 1, 1998, Ansell Group amended its cash balance defined
benefit plan to change the method of applying the projected unit credit
actuarial cost method. Previously the projected unit credit method was applied
by allocating a participant's entire benefit, including transition benefits,
over the participant's entire career. Under the new method the service prior to
the change to a cash balance plan is attributed to the opening cash balance with
all future pay-based credits attributed to service cost after the change. The
plan amendment resulted in a decrease for the fiscal year ended June 30, 1999 in
projected benefit obligation of $3.7 million and a decrease in pension cost of
$0.5 million.
POST-RETIREMENT BENEFITS, OTHER THAN PENSIONS
The following table sets forth the funded status and other amounts
recognized in the combined financial statements for Ansell Group's
post-retirement healthcare plans as of March 31, adjusted for fourth quarter
contributions:
<TABLE>
<CAPTION>
1998 1999
-------- --------
<S> <C> <C>
Change in benefit obligation:
Benefit obligation at beginning of year................... $8,596 $8,980
Service cost.............................................. 133 140
Interest cost............................................. 676 661
Actuarial gain............................................ 243 3
Benefits paid............................................. (668) (701)
-------- --------
Benefit obligation at end of year........................... $8,980 $9,083
======== ========
Funded status............................................... $(8,980) $(9,083)
Unrecognized net actuarial gain............................. (1,731) (1,664)
Fourth quarter contributions................................ 178 174
-------- --------
Accrued benefit cost.............................. $(10,533) $(10,573)
======== ========
</TABLE>
F-19
<PAGE> 99
ANSELL GROUP
NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, UNLESS OTHERWISE STATED)
The components of net periodic post-retirement benefit cost consisted of
the following for the fiscal years ended June 30:
<TABLE>
<CAPTION>
1997 1998 1999
---- ---- ----
<S> <C> <C> <C>
Service cost................................................ $133 $133 $140
Interest cost............................................... 690 676 661
Recognized net actuarial gain............................... (45) (93) (64)
---- ---- ----
$778 $716 $737
==== ==== ====
</TABLE>
At June 30, 1998 and 1999, the weighted-average discount rate used in
determining the accumulated post-retirement benefit obligation was 7%. The
recorded healthcare cost trend rate assumed in measuring the accumulated
post-retirement benefit obligation was 6% in 1999, declining to an ultimate rate
of 5% in 2001 and thereafter. Assumed healthcare cost trend rates have a
significant effect on the amounts reported for the healthcare plan. A
one-percentage point change in assumed healthcare cost trend rates in 1999 would
have the following effects:
<TABLE>
<CAPTION>
1-PERCENTAGE 1-PERCENTAGE
POINT INCREASE POINT DECREASE
-------------- --------------
<S> <C> <C>
Effect on total of service and interest cost
components............................................. $17 $(14)
Effect on post-retirement benefit obligation............. $359 $(322)
</TABLE>
(9) INCOME TAXES
The sources of Ansell Group's income (loss) before taxes and minority
interest were as follows:
<TABLE>
<CAPTION>
1997 1998 1999
------- ------- -------
<S> <C> <C> <C>
United States......................................... $(7,966) $13,134 $7,283
Non-United States..................................... 56,843 63,279 59,771
------- ------- -------
$48,877 $76,413 $67,054
======= ======= =======
</TABLE>
The provision (benefit) for income taxes consisted of:
<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
------- -------- -------
<S> <C> <C> <C>
Year ended June 30, 1997
United States....................................... -- $(3,321) $(3,321)
Non-United States................................... $12,665 682 13,347
------- ------- -------
$12,665 $(2,639) $10,026
======= ======= =======
Year ended June 30, 1998
United States....................................... $276 $4,679 $4,955
Non-United States................................... 3,902 345 4,247
------- ------- -------
$4,178 $5,024 $9,202
======= ======= =======
Year ended June 30, 1999
United States....................................... $169 $3,104 $3,273
Non-United States................................... 7,423 271 7,694
------- ------- -------
$7,592 $3,375 $10,967
======= ======= =======
</TABLE>
F-20
<PAGE> 100
ANSELL GROUP
NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, UNLESS OTHERWISE STATED)
The provision for tax expense (benefit) for the fiscal years ended June 30,
1997, 1998 and 1999 differed from the amounts computed by applying the United
States federal income tax rate of 35% to income before taxes and minority
interest as a result of the following:
<TABLE>
<CAPTION>
1997 1998 1999
----- ----- -----
<S> <C> <C> <C>
Expected tax................................................ 35.0% 35.0% 35.0%
Non-United States income taxes
Including tax holidays and incentives..................... (23.4) (21.5) (21.9)
Amortization of intangibles................................. 0.4 0.2 0.3
Write-off (recovery) of tax losses.......................... 8.3 (0.2) 3.5
Adjustment to estimated income tax accruals................. 0.3 (0.7) (0.1)
Other, net.................................................. (0.1) (0.8) (0.4)
----- ----- -----
20.5% 12.0% 16.4%
===== ===== =====
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities consisted of
the following at June 30:
<TABLE>
<CAPTION>
1998 1999
------- -------
<S> <C> <C>
Deferred tax assets:
Trade accounts receivable................................. $1,483 $1,806
Accrued and other liabilities............................. 1,356 188
Inventory................................................. 2,800 3,063
Accrued payroll and benefits.............................. 2,151 1,835
Accrued post-retirement benefit costs..................... 6,933 7,813
Net operating loss carryforwards.......................... 42,628 45,582
Property, plant and equipment............................. 202 234
Other..................................................... 1,663 233
------- -------
Total gross deferred tax assets........................ 59,216 60,754
Less valuation allowance............................... (21,341) (30,403)
------- -------
Gross deferred tax assets less valuation allowance.......... 37,875 30,351
------- -------
Deferred tax liabilities:
Goodwill and brand names amortization..................... (24,746) (27,469)
Property, plant and equipment............................. (1,741) --
Other..................................................... -- (21)
------- -------
Total gross deferred tax liabilities........................ (26,487) (27,490)
------- -------
Net deferred tax asset...................................... $11,388 $2,861
======= =======
</TABLE>
The net change in the total valuation allowance, including changes
resulting from translation of such amounts from the local functional currencies
to the reporting currency for the fiscal years ended June 30, 1997, 1998 and
1999 was an increase of $0, $1,341 and $9,062, respectively. The increases
resulted from foreign tax operating losses and currency adjustments.
At June 30, 1999, Ansell Group had net operating loss carryforwards in the
United States for federal income tax purposes of $87.8 million expiring in
varying amounts through 2019. See the subsequent events Note 13(b) for a
discussion of the new tax sharing agreement effective July 1, 1999 which would
preclude
F-21
<PAGE> 101
ANSELL GROUP
NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, UNLESS OTHERWISE STATED)
Ansell Group from utilizing all of such federal U.S. losses if Ansell Healthcare
is less than 100% owned by PDL.
At June 30, 1999, Ansell Group had net operating loss carryforwards in
various countries other than United States for income tax purposes of $28.4
million. Of this amount, $16.1 million had no expiration date, and $12.3 million
expire in varying amounts through 2007.
In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax
assets will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in
which those temporary differences become deductible. Management considered the
scheduled reversal of deferred tax liabilities, projected future taxable income,
and tax planning strategies in making the assessment that it is more likely than
not that the deferred tax asset will be realized.
In Malaysia, various members of Ansell Group have been granted pioneer
status under that country's Promotion of Investment Act of 1986. As a result of
the pioneer status, these members were exempt from paying tax on profit earned
from products manufactured through June 30, 1998. Tax exempt status on corporate
profits earned in Malaysia were further extended through June 30, 1999 and
expired on that date. In accordance with India's Income Tax Act of 1961, Ansell
Group's export business income is tax-exempt. In Sri Lanka, a member of Ansell
Group has been granted exempt status with respect to profit earned from products
manufactured through June 30, 2019. Under Thailand's Investment Promotion Act,
members of Ansell Group have been granted exempt status with respect to profit
earned on various production lines through June 30, 2007, and these members have
also been granted a reduced tax rate through June 30, 2012. Ansell Group is
building new production facilities in Thailand and has received similar tax-free
status for these operations.
(10) RESTRUCTURING
In fiscal 1999, Ansell Group incurred charges for severance expenses
totaling approximately $1.1 million related to reorganizations of two
occupational healthcare manufacturing facilities and certain administrative
functions. Additionally, a charge of approximately $0.2 million was incurred for
write downs to the net realizable value of machinery and equipment not needed in
the restructured manufacturing operations.
(11) COMMITMENTS AND CONTINGENCIES
(a) Operating Leases
Ansell Group leases certain of its buildings and equipment under operating
leases. The future minimum lease payments under non-cancelable operating leases
consisted of the following at June 30:
<TABLE>
<S> <C>
2000....................................................... $2,457
2001....................................................... 1,936
2002....................................................... 1,736
2003....................................................... 1,598
2004....................................................... 1,165
Thereafter................................................. 7,175
-------
Total...................................................... $16,067
=======
</TABLE>
Rent expense for operating leases amounted to $2,516, $2,830 and $3,239 for
the fiscal years ended June 30, 1997, 1998 and 1999, respectively.
F-22
<PAGE> 102
ANSELL GROUP
NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, UNLESS OTHERWISE STATED)
(b) Legal-Latex Allergy Litigation
As of June 30, 1999, certain members of Ansell Group were defendants in 257
lawsuits (302 lawsuits in the United States and two in Australia at December 31,
1999 -- unaudited) in the U.S. that have been filed since 1993 on behalf of
individuals alleging wrongful death, personal injuries and lost wages as a
result of their exposure to natural rubber latex gloves. The lawsuits claim
among other things that the named defendants, were negligent in the design and
manufacture of the gloves and failed to give adequate warnings of the
possibility of allergic reactions.
The latex glove cases in which Ansell is a defendant are in the discovery
phase of litigation. Because of the uncertainty created by the multiple
defendants in these cases, the difficulty of establishing whose natural rubber
latex gloves were used by particular plaintiffs and the need to determine
whether latex gloves were the cause of any particular injury, any liability the
Ansell Group defendants may incur in relation to these claims cannot be
quantified. The aggregate costs of administering and litigating latex allergy
litigation claims for the fiscal years ended June 30, 1998 and 1999 was $1,534
and $2,530, respectively. For the six month period ended December 31, 1999
(unaudited), these costs were $3,277.
(c) Legal-Other
Ansell Group is party to various other non-latex allergy legal proceedings,
including certain environmental matters, incidental to the normal course of
business. Management does not expect that any of such proceedings will have a
material adverse effect on Ansell Group's financial position, results of
operations or liquidity.
(12) SEGMENT DATA
(a) Description of Segments
Ansell Group provides a broad spectrum of barrier protection products
through three business segments: Professional Healthcare, Occupational
Healthcare and Personal Healthcare.
Ansell Group's Professional Healthcare segment provides a broad range of
surgical and medical examination glove products in the powder, powder-free and
synthetic markets. These products are provided to distributors, group purchasing
organizations and end-users. The products include Nitra-Touch, Derma Prene and
Elite.
The Occupational Healthcare segment provides synthetic and seamless knitted
industrial and consumer gloves and certain related products to semiconductor,
electronic industrial supply and automotive manufacturers, food processors, and
chemical and food service manufacturers and suppliers. These products include
Hynit, Hylite, Hycron, Hyflex, Golden Needles, Polar Bear, Sol-vex, Scorpio and
SolKnit. Products are sold primarily through distributors in each of the
occupational market sectors with no significant percentage of sales going to an
individual customer for the three fiscal years ended June 30, 1997, 1998 and
1999.
The Personal Healthcare segment provides primarily condom products to the
retail and public health markets. The products include LifeStyles, Contempo,
Mates, Primex, KamaSutra, Prime and Manix.
(b) Measurement of Segment Profit or Loss and Segment Assets
Ansell Group evaluates the performance of its operating segments based on
profit or loss from operations before amortization expense, interest and income
taxes. The accounting policies of the reportable segments are substantially
similar to those described in Note 2, "Significant Accounting Policies," except
that the disaggregated financial information has been prepared using certain
management
F-23
<PAGE> 103
ANSELL GROUP
NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, UNLESS OTHERWISE STATED)
reports, which by their very nature require estimates. Ansell Group has
intra-segment sales and transfers, which are recorded at cost or, if agreed
upon, a price comparable to unaffiliated customer sales. These intra-segment
sales and related profits are eliminated in consolidation and are not presented
in the segment disclosure. Identifiable assets are those used by each segment in
its operations.
(c) Factors Used to Identify the Enterprise's Reportable Segments
Ansell Group's reportable segments are business units that offer different
products. The reportable segments are each managed separately because they
manufacture and distribute distinct products. Reportable segments were
determined by using a management approach and are consistent with the basis and
manner in which Ansell Group's management internally disaggregates financial
information for the purposes of assisting in making internal operating
decisions.
Operations within segments have been aggregated on the basis of similar
economic characteristics, products or services, purposes or end uses, production
processes, geographic marketing areas, and distribution methods. Due to the
diverse nature of Ansell Group's products, consideration has been given to
ensure that the aggregation of Ansell Group's operations helps users better
understand Ansell Group's performance and assess its future cash flows.
F-24
<PAGE> 104
ANSELL GROUP
NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, UNLESS OTHERWISE STATED)
Following is a summary of financial information by business segment for the
fiscal years ended June 30:
<TABLE>
<CAPTION>
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
Net sales:
Professional Healthcare.......................... $255,747 $257,114 $264,237
Occupational Healthcare.......................... 342,049 401,765 377,549
Personal Healthcare.............................. 71,953 76,384 96,596
-------- -------- --------
$669,749 $735,263 $738,382
======== ======== ========
Income from operations:
Professional Healthcare.......................... $41,986 $48,336 $48,242
Occupational Healthcare.......................... 28,117 43,330 40,950
Personal Healthcare.............................. 10,922 8,487 6,492
-------- -------- --------
81,025 100,153 95,684
Less: Amortization expense....................... (5,877) (7,127) (8,786)
-------- -------- --------
$75,148 $93,026 $86,898
======== ======== ========
Depreciation expense:
Professional Healthcare.......................... $8,465 $8,247 $9,347
Occupational Healthcare.......................... 9,224 8,591 10,024
Personal Healthcare.............................. 2,115 2,164 2,357
-------- -------- --------
$19,804 $19,002 $21,728
======== ======== ========
Amortization expense:
Professional Healthcare.......................... $852 $1,034 $1,367
Occupational Healthcare.......................... 4,529 5,492 6,333
Personal Healthcare.............................. 496 601 1,086
-------- -------- --------
$5,877 $7,127 $8,786
======== ======== ========
Capital expenditures:
Professional Healthcare.......................... $18,810 $17,421 $15,542
Occupational Healthcare.......................... 10,829 14,313 32,171
Personal Healthcare.............................. 1,633 2,315 10,213
-------- -------- --------
$31,272 $34,049 $57,926
======== ======== ========
</TABLE>
A summary of identifiable assets by segment at June 30:
<TABLE>
<CAPTION>
1998 1999
-------- --------
<S> <C> <C>
Professional Healthcare..................................... $235,828 $259,299
Occupational Healthcare..................................... 468,207 474,863
Personal Healthcare......................................... 51,888 102,232
-------- --------
$755,923 $836,394
======== ========
</TABLE>
F-25
<PAGE> 105
ANSELL GROUP
NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, UNLESS OTHERWISE STATED)
Net sales are attributed to countries based on the location of customers.
Sales by geographic region consisted of the following for the fiscal years ended
June 30:
<TABLE>
<CAPTION>
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
United States...................................... $308,357 $369,701 $360,640
Europe............................................. 236,686 240,753 239,940
Asia............................................... 78,726 74,555 88,489
Other Americas..................................... 45,980 50,254 49,313
-------- -------- --------
$669,749 $735,263 $738,382
======== ======== ========
</TABLE>
(d) Major Customers
Revenues from three of the major professional healthcare products
distributors accounted for approximately 7.7%, 10.4%, and 10.5% of Ansell
Group's combined net sales for 1997, 1998, and 1999, respectively.
(13) SUBSEQUENT EVENTS (UNAUDITED)
(a) Reorganization and Initial Public Offering
On December 22, 1999, Ansell Healthcare, the successor to the assets,
liabilities and operations of Ansell Group filed a Registration Statement on
Form S-1 with the Securities and Exchange Commission for an initial public
offering ("IPO") of its common stock. After completion of the IPO, companies in
the Pacific Dunlop Group, which currently own 100% of Ansell Group, will own at
least 80% of Ansell Healthcare.
Before the IPO, Ansell Group businesses were owned and conducted by various
Pacific Dunlop Group companies. Prior to the closing of the IPO, the ownership
of the Ansell Group will be reorganized, and companies' assets, liabilities and
related operations will be transferred to Ansell Healthcare so that all of the
assets and liabilities related to Ansell Group business operations will be owned
or leased by companies directly or indirectly owned by Ansell Healthcare.
In connection with the reorganization, Ansell Healthcare has agreed to
indemnify the members of the Pacific Dunlop Group that sold Ansell Healthcare
operating assets of Ansell Group to Ansell Healthcare for any contingent
liabilities arising out of, or relating to, the ownership of the assets sold,
the operation of the transferred business or Ansell Healthcare's breach of the
terms of the agreement transferring such assets or business. In the opinion of
management, this indemnification will not have an adverse effect on Ansell
Healthcare's financial position or results of operations.
(b) Tax Sharing Agreement
Ansell Group has been and, after the proposed IPO, Ansell Healthcare
expects to continue to be, included in the U.S. consolidated federal income tax
return of Pacific Dunlop Group's U.S. domiciled subsidiaries. Additionally,
Ansell Group has been and, after the proposed IPO, Ansell Healthcare expects to
continue to be included in the combined income tax filings of the U.S. domiciled
subsidiaries of the Pacific Dunlop Group for certain state and local tax
jurisdictions. Ansell Healthcare expects to enter into a Tax Sharing Agreement,
which will be effective beginning the fiscal year ending June 30, 2000. The
terms of the proposed Tax Sharing Agreement provide that Ansell Healthcare will
compute its income tax liability as if Ansell Healthcare was filing on a
separate income tax return basis and remit payment of such liability to U.S.
domiciled subsidiaries of the Pacific Dunlop Group.
F-26
<PAGE> 106
ANSELL GROUP
NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, UNLESS OTHERWISE STATED)
In general, Ansell Healthcare will continue to be included in the Pacific
Dunlop Group's consolidated group for U.S. federal income tax purposes for as
long as the Pacific Dunlop Group beneficially owns at least 80% of the value and
voting stock of Ansell Healthcare. The U.S. domiciled subsidiaries of the
Pacific Dunlop Group are required, under the terms of the Tax Sharing Agreement,
to indemnify Ansell Healthcare for any tax liability of such subsidiaries that
Ansell Healthcare must pay to a taxing authority, except to the extent that the
liability is attributable to Ansell Healthcare.
The Tax Sharing Agreement provides that Ansell Healthcare will not be
permitted to reduce future U.S. tax liability by using a U.S. net operating tax
loss carryforward from a period prior to the IPO. Accordingly, upon completion
of the proposed IPO, $87.8 million federal U.S. net operating tax loss
carryforward at June 30, 1999, will not be available to reduce future U.S.
income tax liabilities incurred by Ansell Healthcare. However, in the event
Ansell Healthcare is no longer eligible to be part of the Pacific Dunlop Group's
U.S. consolidated federal income tax group, all unexpired federal U.S. net
operating tax loss carryforwards attributable to Ansell Healthcare, and not
already used by the U.S. domiciled subsidiaries of the Pacific Dunlop Group
would revert back to Ansell Healthcare, including any tax losses attributable to
Ansell Healthcare for periods prior to the IPO. The Tax Sharing Agreement does
not impact Ansell Healthcare's ability to utilize available state and foreign
tax carryforwards, with a recorded amount of $2,452 at June 30, 1999.
(c) Acquisition
On October 1, 1999, Ansell Group signed a definitive agreement to acquire
the medical glove business of Johnson & Johnson for approximately $97.6 million.
The transaction will be accounted for using the purchase method of accounting.
The excess of purchase price over the estimated fair value of net assets
acquired is expected to be approximately $41 million, which will be allocated to
brand names and goodwill and amortized over 40 and 20 years, respectively. The
transaction is subject to regulatory approvals and customary closing conditions.
F-27
<PAGE> 107
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Ansell Healthcare Incorporated:
We have audited the accompanying balance sheet of Ansell Healthcare
Incorporated as of December 15, 1999. The balance sheet is the responsibility of
the Company's management. Our responsibility is to express an opinion on this
balance sheet based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the balance sheet is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheet. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall balance sheet presentation. We
believe that our audit provides a reasonable basis for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of Ansell Healthcare Incorporated as
of December 15, 1999, in conformity with generally accepted accounting
principles.
/s/ KPMG LLP
Columbus, Ohio
December 15, 1999
F-28
<PAGE> 108
ANSELL HEALTHCARE INCORPORATED
BALANCE SHEET
(IN THOUSANDS, UNLESS OTHERWISE STATED)
<TABLE>
<CAPTION>
DECEMBER 15, 1999
-----------------
<S> <C>
ASSETS
Cash and cash equivalents................................... $1,000
------
Total assets...................................... $1,000
======
STOCKHOLDER'S EQUITY
Common Stock, $.01 par value; 150,000,000 shares authorized;
1,000 shares, issued and outstanding...................... $10
Preferred Stock, $.01 par value; 1,000,000 shares
authorized; no shares issued and outstanding.............. --
Additional paid-in capital.................................. 990
------
Total stockholder's equity........................ $1,000
======
</TABLE>
See the accompanying notes to the balance sheet.
F-29
<PAGE> 109
ANSELL HEALTHCARE INCORPORATED
NOTES TO BALANCE SHEET
(1) BASIS OF PRESENTATION
Ansell Healthcare Incorporated ("Ansell Healthcare") was incorporated under
the laws of the State of Delaware on October 5, 1999 for the purpose of
effecting the acquisition of Ansell Group from the Pacific Dunlop Group. Pacific
Dunlop Group refers to Pacific Dunlop Limited and its direct and indirect
subsidiaries. On October 22, 1999, Ansell Healthcare Incorporated sold 1,000
shares of its common stock to Pacific Dunlop Holdings (USA) Inc. for $1,000. As
of December 15, 1999, Ansell Healthcare has not conducted any operations.
Ansell Healthcare's amended certificate of incorporation provides for
authorized capital of 50,000,000 shares of common stock, par value $0.01 per
share and 1,000,000 shares of preferred stock, par value $0.01 per share. See
Note 3 -- "Subsequent Event." Pacific Dunlop Group intends to retain ownership
of at least 80% of the common stock to allow Ansell Healthcare to remain
included in the U.S. federal income tax consolidated group. None of the
preferred shares are issued or outstanding.
(2) REORGANIZATION AND INITIAL PUBLIC OFFERING
In December 1999, Ansell Healthcare expects to file a Registration
Statement on Form S-1 with the Securities and Exchange Commission for an initial
public offering ("IPO") of its common stock. After completion of the IPO, the
Pacific Dunlop Group, which currently indirectly owns 100% of Ansell Healthcare,
will own at least 80%.
Before the IPO, the Ansell Group was owned by various Pacific Dunlop Group
companies. Prior to the closing of the IPO, the ownership will be reorganized,
and companies, assets, liabilities and related operations will be transferred to
Ansell Healthcare so that all of the assets and liabilities related to Ansell
Group business operations are owned or leased by companies that are directly or
indirectly owned by Ansell Healthcare.
The reorganization is expected to be effected as follows: (i) the existing
U.S. companies through which Ansell conducts its U.S. business will be
transferred to Ansell Healthcare and will be directly held wholly owned
subsidiaries of Ansell Healthcare, and (ii) a newly incorporated wholly owned
U.S. subsidiary of Ansell Healthcare, Ansell International Holdings Inc.
("Ansell International") will acquire directly or indirectly the non-U.S. Ansell
companies of the Pacific Dunlop Group through: (a) the direct acquisition of the
companies conducting the Mexican and Canadian Ansell businesses and (b) the
establishment of a newly incorporated wholly owned Luxembourg holding company
which will acquire directly the companies conducting the Ansell businesses in
the United Kingdom, France, Belgium, Germany and Japan and will acquire
indirectly (through two newly incorporated wholly owned Netherlands holding
companies) the companies conducting the Ansell businesses in Malaysia, Thailand,
Australia and New Zealand, India and Sri Lanka. In those countries where the
Ansell companies or assets were owned by Pacific Dunlop Group companies which
also held substantial assets or subsidiaries involved in other businesses, the
relevant Ansell companies or assets will first be transferred to newly
incorporated holding companies established by the Luxembourg or Netherlands
holding companies referred to above. Where an Ansell subsidiary is not wholly
owned by the Pacific Dunlop Group, all of the shares in the relevant subsidiary
which were held by the Pacific Dunlop Group will be held directly or indirectly
by Ansell International with the minority shareholdings in the subsidiary
remaining unchanged. In each case the consideration will consist of loans
payable, cash and/or shares of common stock in Ansell Healthcare.
F-30
<PAGE> 110
ANSELL HEALTHCARE INCORPORATED
NOTES TO BALANCE SHEET -- (CONTINUED)
Members of the Pacific Dunlop Group and Ansell Healthcare will enter into
agreements providing for the separation of the companies and governing various
relationships, including a services agreement, registration rights and ownership
maintenance agreement, tax sharing agreement and credit agreement.
(3) SUBSEQUENT EVENT (UNAUDITED)
In February 2000, Ansell Healthcare increased the number of authorized
common stock with a par value of $0.01 per share to 150,000,000 shares.
F-31
<PAGE> 111
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma condensed combined financial statements
of Ansell Group have been prepared to give effect to (1) the reorganization of
Ansell Group into Ansell Healthcare Incorporated, including the elimination of a
substantial portion of debt owed to affiliates and cash, and (2) the sale of
common stock of Ansell Healthcare by P.D. International Pty Ltd pursuant to this
offering which results in the transfer of Ansell Group's U.S. tax net operating
loss carry forwards to other members of the Pacific Dunlop Group. The
accompanying Unaudited Pro Forma Condensed Combined Statement of Net Assets at
December 31, 1999 has been prepared as if the reorganization and this offering
were consummated as of that date. The accompanying Unaudited Pro Forma Condensed
Combined Statements of Operations for the year ended June 30, 1999 and the six
months ended December 31, 1999 give effect to the reorganization and this
offering as if they occurred at July 1, 1998 and 1999, respectively.
The pro forma condensed combined financial statements have been prepared
based upon the Combined Financial Statements of Ansell Group, included elsewhere
herein and should be read in conjunction with the Combined Financial Statements,
'Management's Discussion and Analysis of Financial Condition and Results of
Operations' and other financial information included elsewhere in this
prospectus. These unaudited pro forma condensed combined financial statements
and related notes are provided for informational purposes only and do not
purport to be indicative of the results that would have actually been obtained
had the reorganization and this offering been completed on the dates indicated
or that may be expected to occur in the future. Ansell Group's historical net
income and cash flows as a wholly owned operation of Pacific Dunlop Group are
not necessarily indicative of the net income and cash flows it might have
realized as an independent entity.
P-1
<PAGE> 112
ANSELL GROUP
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF NET ASSETS
AS OF DECEMBER 31, 1999
(IN THOUSANDS, UNLESS OTHERWISE STATED)
<TABLE>
<CAPTION>
ACTUAL ADJUSTMENTS PRO FORMA
-------- ----------- -----------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents......................... $ 65,564 $ (55,564)(1b) $ 10,000
Trade accounts receivable, net.................... 130,751 130,751
Inventories....................................... 143,095 143,095
Deferred taxes.................................... 7,417 7,417
Other current assets.............................. 25,268 25,268
-------- --------- --------
Total current assets...................... 372,095 (55,564) 316,531
Property, plant and equipment, net.................. 217,482 217,482
Intangibles, net.................................... 262,321 262,321
Other assets........................................ 8,857 8,857
-------- --------- --------
Total assets.............................. $860,755 $ (55,564) $805,191
======== ========= ========
LIABILITIES AND NET ASSETS
Current liabilities:
Trade accounts payable............................ $ 59,991 $ 59,991
Accrued and other liabilities..................... 19,767 19,767
Taxes payable..................................... 8,905 8,905
Revolving lines of credit due to affiliates....... 409,475 $(230,421)(1b) 179,054
Current portion of long-term debt................. 29,249 29,249
-------- --------- --------
Total current liabilities................. 527,387 (230,421) 296,966
Long-term debt, net of current portion.............. 1,697 1,697
Deferred taxes...................................... 2,899 12,700(1c) 15,599
Other long-term liabilities......................... 26,123 26,123
-------- --------- --------
Total liabilities......................... 558,106 (217,721) 340,385
-------- --------- --------
Minority interest................................... 10,457 10,457
Net assets:
Common stock...................................... -- 500(1a,b) 500
Preferred stock................................... -- -- --
Additional paid-in-capital........................ -- 515,746(1a,b,c) 515,746
Capital employed.................................. 354,089 (354,089)(1a) --
Accumulated other comprehensive income -- foreign
currency translation adjustment................ (61,897) (61,897)
-------- --------- --------
Total net assets.......................... 292,192 162,157 454,349
-------- --------- --------
Commitments and contingencies
Total liabilities and net assets.......... $860,755 $ (55,564) $805,191
======== ========= ========
</TABLE>
See the accompanying notes to the unaudited pro forma condensed combined
financial statements.
P-2
<PAGE> 113
ANSELL GROUP
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1999
(IN THOUSANDS, UNLESS OTHERWISE STATED)
<TABLE>
<CAPTION>
ACTUAL ADJUSTMENTS PRO FORMA
-------- ----------- ---------
<S> <C> <C> <C>
Net sales............................................... $738,382 $738,382
Cost of goods sold...................................... 483,464 483,464
-------- --------
Gross profit.......................................... 254,918 254,918
Selling, general and administrative expenses............ 149,621 $1,000(2a) 150,621
Research and development expenses....................... 8,315 8,315
Restructuring charges................................... 1,298 1,298
Amortization of intangibles............................. 8,786 8,786
-------- ------- --------
Income from operations................................ 86,898 (1,000) 85,898
Other (income) expense:
Interest expense, net................................. 21,128 (4,994)(2b) 16,134
Foreign currency transactions, net.................... (2,044) (2,044)
Other................................................. 760 760
-------- ------- --------
19,844 (4,994) 14,850
-------- ------- --------
Income before taxes and minority interests.... 67,054 3,994 71,048
Income taxes............................................ 10,967 1,518(2c) 12,485
Minority interests...................................... 3,468 3,468
-------- ------- --------
Net income.................................... $52,619 $2,476 $55,095
======== ======= ========
Pro forma basic and fully diluted net income per
share................................................. $1.10
========
Pro forma weighted average number of shares
outstanding........................................... 50,000
========
</TABLE>
See accompanying notes to unaudited pro forma condensed combined financial
statements.
P-3
<PAGE> 114
ANSELL GROUP
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999
(IN THOUSANDS, UNLESS OTHERWISE STATED)
<TABLE>
<CAPTION>
ACTUAL ADJUSTMENTS PRO FORMA
-------- ----------- ---------
<S> <C> <C> <C>
Net sales................................................ $354,747 $354,747
Cost of goods sold....................................... 228,481 228,481
-------- --------
Gross profit........................................... 126,266 126,266
Selling, general and administrative expenses............. 79,621 $500(2a) 80,121
Research and development expenses........................ 4,488 4,488
Amortization of intangibles.............................. 4,461 4,461
-------- ------- --------
Income from operations................................. 37,696 (500) 37,196
Other (income) expense:..................................
Interest expense, net.................................. 12,548 (4,481)(2b) 8,067
Foreign currency transactions, net..................... (919) (919)
Other.................................................. 88 88
-------- ------- --------
11,717 (4,481) 7,236
-------- ------- --------
Income before taxes and minority interests..... 25,979 3,981 29,960
Income taxes............................................. 4,971 1,513(2c) 6,484
Minority interests....................................... 1,275 1,275
-------- ------- --------
Net income..................................... $ 19,733 $ 2,468 $ 22,201
======== ======= ========
Pro forma basic and fully diluted net income per share... $ 0.44
========
Pro forma weighted average number of shares
outstanding............................................ 50,000
========
</TABLE>
See accompanying notes to unaudited pro forma condensed combined financial
statements.
P-4
<PAGE> 115
ANSELL GROUP
NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS
(1) PRO FORMA ADJUSTMENTS FOR THE CONDENSED COMBINED STATEMENT OF NET ASSETS
(a) In connection with the formation of Ansell Healthcare Incorporated,
Pacific Dunlop Group contributed the Ansell Group businesses to Ansell
Healthcare Incorporated. In exchange for the contribution of Ansell Group
businesses, members of the Pacific Dunlop Group were issued 50 million shares of
common stock, with a par value of $.01 per share. Additionally, one million
shares of preferred stock were authorized, however, no shares were issued.
(b) Reflects the issuance of 50 million shares of common stock, the payment
of all cash in excess of $10 million and the reduction of debt owed to
affiliates by $230.4 million in exchange for Ansell Group businesses. Upon
completion of the reorganization, Ansell Healthcare will have cash of $10
million, indebtedness of $210 million and 50 million shares of common stock
outstanding. Of the $210 million of indebtedness, $179.1 million will be
borrowed pursuant to a three year revolving credit agreement with Pacific Dunlop
Holdings Inc.
(c) Reflects the transfer to Pacific Dunlop Group of $87.8 million in
federal U.S. tax net operating loss carryforwards, ($12.7 million, net of
valuation allowance of $18 million), which will no longer be available to us as
a result of being less than 100% owned by PDL.
(2) PRO FORMA ADJUSTMENTS FOR THE CONDENSED COMBINED STATEMENTS OF OPERATIONS
(a) Reflects the estimated additional general and administrative expenses
of $1 million annually, which would have been incurred if the reorganization had
been consummated at the beginning of the period presented. These costs include
additional treasury, reporting and filing fees, legal, finance and accounting,
Directors and Investor Relation costs.
(b) Reflects a reduction in interest resulting from the net effect of
eliminating the historical interest expense paid to affiliates (resulting from
the reduction of debt due to affiliates of $230.4 million in exchange for the
issuance of shares of common stock to Pacific Dunlop Group) and recording
interest expense on $179.1 million of affiliate debt to be issued and
outstanding following the reorganization under a revolving credit agreement with
Pacific Dunlop Holdings Inc., assuming an interest rate of 7.04%. The revolving
credit agreement with Pacific Dunlop Holdings Inc. will bear interest at 30-day
LIBOR plus 0.95%. For each 0.125% change in the assumed average interest rate,
interest expense would change by approximately $224,000 for the year ended June
30, 1999 and $112,000 for the six months ended December 31, 1999. Also reflects
a reduction in interest income as all cash in excess of $10 million will be
distributed to the Pacific Dunlop Group as a dividend prior to the offering.
Interest income is included at 5% on the $10 million of cash on hand and is
netted against interest expense.
(c) Reflects the estimated tax impact of the pro forma adjustments using an
effective tax rate of 38% for the Ansell Group, which assumes the debt owed to
affiliates that was eliminated in connection with the reorganization was held by
members of the Ansell Group domiciled in the United States.
(d) For purposes of the pro forma net income per share, the weighted
average shares outstanding are assumed to be the outstanding for the entire
period.
P-5
<PAGE> 116
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THROUGH AND INCLUDING [ ] (THE 25TH DAY AFTER THE DATE OF
THIS PROSPECTUS), ALL DEALERS EFFECTING TRANSACTIONS IN THESE SECURITIES,
WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A
PROSPECTUS. THIS IS IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
SHARES
ANSELL HEALTHCARE INCORPORATED
COMMON STOCK
[LOGO]
----------------------
PROSPECTUS
----------------------
MERRILL LYNCH & CO.
BEAR, STEARNS & CO. INC.
J.P. MORGAN & CO.
, 2000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 117
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
P.D. International Pty Ltd will bear the expenses relating to the
registration of the common stock of Ansell Healthcare Incorporated. The
following expenses, except the Securities and Exchange Commission registration
fee, the National Association of Securities Dealers, Inc. filing fee and the New
York Stock Exchange listing fee, are estimates:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee...... $ 46,200
National Association of Securities Dealers, Inc. filing
fee.................................................... $ 18,000
New York Stock Exchange listing fee...................... $242,100
Blue Sky fees and expenses (including fees of counsel)... $ 10,000
Legal fees and expenses.................................. $700,000
Accountants' fees........................................ $ *
Printing fees............................................ $500,000
Transfer agent fees...................................... $ 500
Miscellaneous............................................ $ 10,000
--------
Total.......................................... $ *
========
</TABLE>
- ---------------
* To be completed by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our Certificate of Incorporation and bylaws provide that we shall, with
some exceptions, indemnify our directors and officers against expenses
(including attorneys' fees, judgments, fines and certain settlements) actually
and reasonably incurred by them in connection with any suit or proceeding to
which they are a party so long as they acted in good faith and in a manner
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to a criminal action or proceeding, so long as
they had no reasonable cause to believe their conduct to have been unlawful.
Section 102 of the Delaware General Corporation Law permits a Delaware
corporation to include in its certificate of incorporation a provision
eliminating or limiting a director's liability to a corporation or its
stockholders for monetary damages for breaches of fiduciary duty. The enabling
statute provides, however, that liability for breaches of the duty of loyalty,
acts or omissions not in good faith or involving intentional misconduct, or
knowing violation of the law, and the unlawful purchase or redemption of stock
or payment of unlawful dividends or the receipt of improper personal benefits
cannot be eliminated or limited in this manner. Our Certificate of Incorporation
includes a provision that eliminates, to the fullest extent permitted, director
liability for monetary damages for breaches of fiduciary duty.
We have directors and officers liability insurance, which provides coverage
against certain liabilities.
In addition, some of our directors are indemnified against liabilities that
they may incur in their capacities as directors by third parties with which they
are affiliated.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
On October 22, 1999, Ansell Healthcare Incorporated sold 1,000 shares of
its common stock to Pacific Dunlop Holdings (USA) Inc. for $1,000. This
transaction was exempt from the registration requirements of the Securities Act
of 1933, as amended, pursuant to Section 4(2) thereof.
II-1
<PAGE> 118
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits -- See Index to Exhibits.
(b) Financial Statement Schedules
Not Applicable
ITEM 17. UNDERTAKINGS
The undersigned hereby undertakes to provide to the underwriter at the
closing specified in the underwriting agreements, certificates in such
denominations and registered in such names as required by the underwriter to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-2
<PAGE> 119
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Red Bank,
State of New Jersey on the 10th day of February, 2000.
ANSELL HEALTHCARE INCORPORATED
/s/ HARRY BOON
------------------------------------
President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on the 10th day of February, 2000.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<C> <S> <C>
/s/ HARRY BOON President (Principal Executive
- ------------------------------------------ Officer) and Director
Harry Boon February 10, 2000
/s/ JEFFREY COX Treasurer (Principal Financial and
- ------------------------------------------ Accounting Officer)
Jeffrey Cox February 10, 2000
* /s/ RODNEY L. CHADWICK Director
- ------------------------------------------
Rodney L. Chadwick February 10, 2000
* /s/ JOHN A. EADY Director
- ------------------------------------------
John A. Eady February 10, 2000
* /s/ PHILIP R. GAY Director
- ------------------------------------------
Philip R. Gay February 10, 2000
</TABLE>
* Harry Boon signs this document pursuant to powers of attorney.
/s/ HARRY BOON
--------------------------------------
Harry Boon
II-3
<PAGE> 120
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION
-------- -----------
<S> <C>
1.1* Form of Underwriting Agreement
3.1 Amended and Restated Certificate of Incorporation
3.2 Amended and Restated Bylaws
4.1 Specimen Common Stock Certificate
5.1* Opinion of Gardner, Carton & Douglas
10.1 Compensation plans
10.1.1 Amended and Restated 1998 Deferred Compensation Plan
10.1.2 Amended and Restated 1998 Cash Balance Pension Restoration
Plan
10.1.3 1997 Non-Qualified U.S. Pension Plan
10.2 1999 Stock Incentive Plan
10.3 Services Agreement
10.4 Registration Rights and Ownership Maintenance Agreement
10.5 Tax Sharing Agreement
10.6 Loan Facility Agreements
10.6.1 Loan Facility Agreement between the Registrant and Pacific
Dunlop Holdings Inc.
10.6.2 Form of Loan Agreement relating to Loan Facility Agreement
10.7 Employment Agreements
10.7.1* Employment Agreement for Harry Boon
10.7.2 Employment Agreement for Jeffrey Cox
10.7.3 Employment Agreement for Peter Soszyn
10.8 Material leases
10.8.1 Dothan, Alabama lease
10.8.2 Wilkesboro, North Carolina lease for Plant 7
10.8.3 Wilkesboro, North Carolina lease for Plant 9
10.10 Reorganization Documents
10.10.1* Stock purchase agreement between Pacific Dunlop Investments
(USA) Inc. and Ansell Overseas Inc. in relation to Ansell
Perry de Mexico SA de CV, Ansell Edmont Industrial de Mexico
SA de CV, Golden Needles de Mexico SA de CV and
Comercializadora GNK SA de CV
10.10.2* Stock purchase agreement between Pacific Dunlop Holdings
(USA) Inc. and Ansell Healthcare Incorporated in relation to
Ansell Protective Products Inc., Ansell Healthcare Products
Incorporated and Ansell Services Inc.
10.10.3* Share sale agreement between P.D. Holdings (Malaysia) Sdn
Bhd and P.D. International Pty Ltd in relation to the shares
of the Malaysian Ansell operating subsidiaries
10.10.4* Share sale agreement between Pacific Dunlop Holdings
(Europe) Ltd and Ansell (UK) Ltd in relation to Ansell Glove
Company Limited
10.10.5* Share sale agreement between Pacific Dunlop Holdings
(Europe) Ltd, Pacific Dunlop Limited, Michael Flather and
P.D. International Pty Ltd in relation to Ansell (UK)
Limited
10.10.6* Share sale agreement between P.D. International Pty Ltd and
Ansell UK Holdings Ltd in relation to Ansell (UK) Limited
</TABLE>
<PAGE> 121
<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION
-------- -----------
<S> <C>
10.10.7* Agreement between Ansell Healthcare Incorporated and Ansell
UK Holdings Ltd in relation to the terms upon which Ansell
Healthcare Incorporated will satisfy certain obligations of
Ansell UK Holdings Ltd under its Share sale agreement with
P.D. International Pty Ltd
10.10.8* Share sale agreement between P.D. International Pty Ltd,
Pacific Dunlop Limited and Ansell France Holdings SA in
relation to Ansell S.A.
10.10.9* Share sale agreement between P.D. International Pty Ltd and
Ansell Canada Holdings Inc. in relation to Ansell Canada
Inc.
Share sale agreement between P.D. International Pty Ltd,
10.10.10* Pacific Dunlop Netherlands BV and Ansell Belgium Holdings NV
in relation to Ansell Protective Products Europe NV
Share sale agreement between P.D. International Pty Ltd and
10.10.11* Ansell Holdings (BV) Inc. in relation to Ansell Lanka (Pvt)
Ltd
Agreement between Ansell Healthcare Incorporated and Ansell
10.10.12* Holdings (BV) Incorporated in relation to the terms upon
which Ansell Healthcare Incorporated will satisfy certain
obligations of Ansell Holdings (BV) Inc. under its Share
sale agreement with P.D. International Pty Ltd
Share sale agreement between P.D. International Pty Ltd and
10.10.13* Pacific Dunlop Investments (USA) Inc. in relation to Ansell
(Thailand) Limited
Share sale agreement between Pacific Dunlop Investments
10.10.14* (USA) Inc. and Ansell International Holdings Inc. in
relation to Ansell (Thailand) Limited
Share sale agreement between Pacific Dunlop Investments
10.10.15* (USA) Inc. and Pacific Dunlop Capital Inc. in relation to
Ansell International Holdings Inc.
Share sale agreement between Pacific Dunlop Capital Inc. and
10.10.16* Pacific Dunlop Holdings (USA) Inc. in relation to Ansell
International Holdings Inc.
Share sale agreement between Pacific Dunlop Holdings (USA)
10.10.17* Inc. and Ansell Healthcare Incorporated in relation to
Ansell International Holdings Inc.
Share sale agreement between Ansell Healthcare Incorporated
10.10.18* and Ansell Overseas Inc. in relation to Ansell International
Holdings Inc.
Share sale agreement between Ansell International Holdings
10.10.19* Inc. and Ansell MAT Holdings BV in relation to Ansell
(Thailand) Limited
Share sale agreement between P.D. International Pty Ltd and
10.10.20* Ansell Holdings (BV) Inc. in relation to Suretex Limited
Share sale agreement between P.D. International Pty Ltd and
10.10.21* Ansell Holdings (BV) Inc. in relation to 75% interest in
Ansell Kemwell Limited
Share sale agreement between PDOCB Pty Ltd and Ansell
10.10.22* Holdings (BV) Inc. in relation to Ansell Medical Products
Pvt Ltd
Share sale agreement between Pacific Dunlop Holdings
10.10.23* (Singapore) Pte Ltd and Ansell Holdings (BV) Inc. in
relation to 50% interest in JK Ansell Ltd
Share sale agreement between Pacific Dunlop Limited and
10.10.24* Ansell Overseas Inc. in relation to Ansell GmbH
Agreement between Ansell Healthcare Incorporated and Ansell
10.10.25* Overseas Inc. in relation to the terms upon which Ansell
Healthcare Incorporated will satisfy certain obligations of
Ansell Overseas Inc. under its Share sale agreement with
Pacific Dunlop Limited
Agreement between Ansell Healthcare Incorporated and Ansell
10.10.26* Healthcare Pty Ltd in relation to the terms upon which
Ansell Healthcare Incorporated will satisfy certain
obligations of Ansell Healthcare Pty Ltd under its Business
Sale Agreement with Pacific Dunlop Limited
</TABLE>
<PAGE> 122
<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION
-------- -----------
<S> <C>
Share sale agreement between Pacific Dunlop Limited and
10.10.27* Ansell LUX Holdings SA in relation to Pacific Dunlop Japan
KK
Business sale agreement between Pacific Dunlop Limited and
10.10.28* Ansell Healthcare Pty Ltd in relation to the Ansell
Australia division
Business sale agreement between Pacific Dunlop Holdings (NZ)
10.10.29* Ltd and Ansell Healthcare Pty Ltd in relation to the Ansell
New Zealand division
Share sale agreement between Ansell International Holdings
10.10.30* Inc. and Ansell MAT Holdings BV in relation to Ansell
Healthcare Pty Ltd
Share sale agreement between Pacific Dunlop Limited and P.D.
10.10.31* International Pty Ltd in relation to Ansell Healthcare
Incorporated
Share sale agreement between P.D. International Pty Ltd and
10.10.32* Ansell Healthcare Holdings Sdn Bhd in relation to the shares
in the subsidiaries
Agreement between Ansell Healthcare Incorporated and Ansell
10.10.33* Healthcare Holdings Sdn Bhd in relation to the terms upon
which Ansell Healthcare Incorporated will satisfy certain
obligations of Ansell Healthcare Holdings Sdn Bhd under its
Share Sale Agreement with P.D. International Pty Ltd
Share sale agreement between Ansell Holdings (BV) Inc. and
10.10.34* Ansell JKLS Holdings BV in relation to Ansell Lanka (Pvt)
Ltd
Share sale agreement between Ansell Holdings (BV) Inc. and
10.10.35* Ansell JKLS Holdings BV in relation to Suretex Limited
Share sale agreement between Ansell Holdings (BV) Inc. and
10.10.36* Ansell International JKLS Holdings BV in relation to 50% JK
Ansell Ltd, 75% Ansell Kemwell Ltd and Ansell Medical
Products Pvt Ltd
Share sale agreement between Ansell Overseas Inc. and Ansell
10.10.37* LUX Holdings SA in relation to Ansell UK Holdings Ltd
Share sale agreement between Ansell Overseas Inc. and Ansell
10.10.38* LUX Holdings SA in relation to Ansell France Holdings SA
Share sale agreement between Ansell Overseas Inc. and Ansell
10.10.39* LUX Holdings SA in relation to Ansell Belgium Holdings NV
Share sale agreement between Ansell Overseas Inc. and Ansell
10.10.40* LUX Holdings SA in relation to Ansell GmbH
Share sale agreement between Ansell Holdings (BV) Inc. and
10.10.41* Ansell LUX Holdings SA in relation to Ansell JKLS Holdings
BV
Share sale agreement between Ansell International Holdings
10.10.42* Inc. and Ansell LUX Holdings SA in relation to Ansell MAT
Holdings BV
Stock purchase agreement between Ansell Healthcare
10.10.43* Incorporated and Pacific Dunlop Holdings Inc. and Exhibit A
thereto, Assignment Agreement between Pacific Dunlop
Holdings Inc. and Ansell Healthcare Incorporated
Stock purchase agreement between P.D. International Pty Ltd
10.10.44* and Pacific Dunlop Investments (USA) Inc.
Stock purchase agreement between Pacific Dunlop Investments
10.10.45* (USA) Inc. and Pacific Dunlop Capital Inc.
Stock purchase agreement between Pacific Dunlop Capital Inc.
10.10.46* and Ansell Healthcare Incorporated
Stock purchase agreement between Ansell Healthcare
10.10.47* Incorporated and Ansell Overseas Inc.
Stock purchase agreement between Ansell Overseas Inc. and
10.10.48* Ansell Holdings (BV) Inc.
</TABLE>
<PAGE> 123
<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION
-------- -----------
<S> <C>
Stock purchase agreement between Ansell Overseas Inc. and
10.10.49* Ansell International Holdings Inc.
21.1 Subsidiaries of the Company
23.1 Consent of KPMG LLP
23.2 Consent of KPMG LLP
23.3* Consent of Gardner, Carton & Douglas (included in Exhibit
5.1)
24.1 Powers of Attorney(1)
27.1 Financial Data Schedule
</TABLE>
- ---------------
(1) Incorporated herein by reference to Registrant's Registration Statement on
Form S-1 (File No. 333-93333) filed on December 22, 1999.
* To be filed by amendment.
<PAGE> 1
Exhibit 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
ANSELL HEALTHCARE INCORPORATED
* * * * * * * * * * * * *
Ansell Healthcare Incorporated (the "Corporation"), a corporation
organized and existing under and by virtue of the General Corporation Law of the
State of Delaware, does hereby amend the Certificate of Incorporation of the
Corporation, which was originally filed on October 5, 1999 under the name of
"Ansell Holdings Inc." and subsequently amended.
The Certificate of Incorporation of the Corporation is hereby restated
and amended to read in its entirety as follows:
ARTICLE 1.
NAME OF CORPORATION
The name of the Corporation is ANSELL HEALTHCARE INCORPORATED.
ARTICLE 2.
OFFICES
The address of its registered office in the State of Delaware is 1209
Orange Street, in the City of Wilmington, County of New Castle, Delaware 19801.
The name of its registered agent at such address is The Corporation Trust
Company.
ARTICLE 3.
PURPOSE
The nature of the business or purposes to be conducted or promoted is
to engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware as the same exists or
may hereafter be amended ("Delaware Law").
<PAGE> 2
ARTICLE 4.
CAPITAL STOCK
SECTION 4.01. Authorized Shares. The total number of shares of stock of
all classes which the Corporation shall have authority to issue is one hundred
fifty-one million (151,000,000), of which one million (1,000,000) shall be
shares of Preferred Stock with a par value of $0.01 per share ("Preferred
Stock"), and one hundred fifty million (150,000,000) shall be shares of common
stock with a par value of $0.01 per share ("Common Stock").
SECTION 4.02. Preferred Stock.
(a) The Preferred Stock shall be issuable in series, and in
connection with the issuance of any series of Preferred Stock and to the extent
now or hereafter permitted by the laws of the State of Delaware, the Board of
Directors is authorized to fix by resolution the designation of each series, the
stated value of the shares of each series, the dividend rate or rates of each
series (which rate or rates may be expressed in terms of a formula or other
method by which such rate or rates shall be calculated from time to time) and
the date or dates and other provisions respecting the payment of dividends, the
provisions, if any, for a sinking fund for the shares of each series, the
preferences of the shares of each series in the event of the liquidation or
dissolution of the Corporation, the provisions, if any, respecting the
redemption of the shares of each series and, subject to requirements of the laws
of the State of Delaware, the voting rights (except that such shares shall not
have more than one vote per share), the terms, if any, upon which the shares of
each series shall be convertible into or exchangeable for any other shares of
stock of the Corporation and any other relative, participating, optional or
other special rights, and qualifications, limitations or restrictions thereof,
of the shares of each series.
(b) Preferred Stock of any series redeemed, converted,
exchanged, purchased, or otherwise acquired by the Corporation shall constitute
authorized but unissued Preferred Stock.
(c) All shares of any series of Preferred Stock, as between
themselves, shall rank equally and be identical (except that such shares may
have different dividend provisions); and all series of Preferred Stock, as
between themselves, shall rank equally and be identical except as set forth in
resolutions of the Board of Directors authorizing the issuance of such series.
SECTION 4.03. Common Stock.
(a) After dividends to which the holders of Preferred Stock
may then be entitled under the resolutions creating any series thereof have been
declared and after the Corporation shall have set apart the amounts required
pursuant to such resolutions for the purchase or redemption of any series of
Preferred Stock, the holders of Common Stock shall be entitled to have dividends
declared in cash, property, or other securities of the Corporation out of any
net profits or net assets of the Corporation legally available therefor, if, as
and when such dividends are declared by the Corporation's Board of Directors.
<PAGE> 3
(b) In the event of the liquidation or dissolution of the
Corporation's business and after the holders of Preferred Stock shall have
received amounts to which they are entitled under the resolutions creating such
series, the holders of Common Stock shall be entitled to receive ratably the
balance of the Corporation's net assets available for distribution.
(c) Each share of Common Stock shall be entitled to one vote
upon all matters upon which stockholders have the right to vote, but shall not
be entitled to vote for the election of any directors who may be elected by vote
of the Preferred Stock voting as a class if so provided in the resolution
creating such Preferred Stock pursuant to this Article 4.
ARTICLE 5.
DURATION
The Corporation is to have perpetual existence.
ARTICLE 6.
AMENDMENT OF BYLAWS
The Bylaws of the Corporation may be altered, amended or repealed at
any meeting of the Board of Directors or of the stockholders.
ARTICLE 7.
DIRECTORS
SECTION 7.01. Number of Directors; Composition; and Tenure. The Board
of Directors of the Corporation shall consist of such number of directors as
determined by the Bylaws. As long as Pacific Dunlop Limited owns, directly or
indirectly, fifty percent (50%) or more of the outstanding voting stock, voting
power or similar voting interests of the Corporation, the Board of Directors of
the Corporation shall include at least two Unaffiliated Directors and one
executive officer of the Corporation. For purposes of this Article 7, the term
"Unaffiliated Director" means a director of the Corporation who is not (i) an
employee or officer of the Corporation, (ii) an employee, officer or director of
Pacific Dunlop Limited or of any direct or indirect subsidiary of Pacific Dunlop
Limited, or (iii) an employee, director, "Principal Stockholder" or general
partner of an entity that had a "Material Business Relationship" with Pacific
Dunlop Limited in any of such entity's three fiscal years immediately prior to
<PAGE> 4
such director's election to the Board of Directors of the Corporation. For
purposes of this Article 7, an entity will be deemed to have a "Material
Business Relationship" with Pacific Dunlop Limited only if such entity derived
10% or more of its revenue in any fiscal year from transactions with Pacific
Dunlop Limited and any of its direct or indirect subsidiaries in the aggregate.
For purposes of this Article 7, the term "Principal Stockholder" of an entity
means an individual, directly or indirectly, owning beneficially 10% or more of
the outstanding voting securities or equity interest of another entity.
A director shall hold office until the next annual meeting and until
his successor shall be duly elected and shall qualify, subject, however, to his
prior death, resignation or removal from office. Any vacancy on the Board of
Directors, however caused, including, without limitation, any vacancy resulting
from an increase in the number of directors, shall be filled by a vote of a
majority of the directors then in office, although less than a quorum, or by the
sole remaining director.
SECTION 7.02. Elimination of Certain Personal Liability of Directors;
Indemnification.
(a) No director of the Corporation shall be liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for breach of the director's duty
of loyalty to the Corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 of the Delaware Law, or (iv) for any transaction
from which the director derived an improper personal benefit. If the Delaware
Law hereafter is amended to further eliminate or limit the liability of
directors, then the liability of a director of the Corporation, in addition to
the limitation of personal liability provided herein, shall be limited to the
fullest extent permitted by the amended Delaware Law. Any repeal or modification
of this Section 7.02 by the stockholders of the Corporation shall be prospective
only, and shall not adversely affect any limitation on the personal liability of
a director of the Corporation existing at the time of such repeal or
modification.
(b) Each person (and the heirs, executors or administrators of
such person) who was or is a party or is threatened to be made a party to, or is
involved in any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that such person is or was a director of the Corporation or is or was serving at
the request of the Corporation as a director of another corporation,
partnership, joint venture, trust or other enterprise, shall be indemnified and
held harmless by the Corporation to the fullest extent permitted by Delaware
Law. The right to indemnification conferred in this Section 7.02 shall also
include the right to be paid by the Corporation the expenses incurred in
connection with any such proceeding in advance of its final disposition to the
fullest extent authorized by Delaware Law. The right to indemnification
conferred in this Section 7.02 shall be a contract right.
(c) The Corporation may, by action of its Board of Directors,
provide indemnification to such of the officers, employees and agents of the
Corporation to such extent and to such effect as the Board of Directors shall
determine to be appropriate and authorized by Delaware Law.
<PAGE> 5
(d) The Corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any expense, liability or loss
incurred by such person in any such capacity or arising out of his status as
such, whether or not the Corporation would have the power to indemnify such
person against such liability under Delaware Law.
(e) The rights and authority conferred in this Section 7.02
shall not be exclusive of any other right which any person may otherwise have or
hereafter acquire.
(f) Neither the alteration, amendment, repeal or rescission of
this Section 7.02, nor the adoption of any provision of this Certificate of
Incorporation or the Bylaws of the Corporation, nor, to the fullest extent
permitted by Delaware Law, any modification of law, shall eliminate or reduce
the effect of this Section 7.02 in respect of any acts or omissions occurring
prior to such alteration, amendment, repeal, rescission, adoption or
modification.
ARTICLE 8.
MEETINGS
SECTION 8.01. Location of Meetings and Corporate Records. Meetings of
stockholders may be held within or without the State of Delaware, as the Bylaws
may provide. The books of the Corporation may be kept (subject to any provision
contained in the Bylaws) outside the State of Delaware at such place or places
as may be designated from time to time by the Board of Directors or in the
Bylaws of the Corporation. Elections of directors need not be by written ballot
unless the Bylaws of the Corporation shall so provide.
SECTION 8.02. Special Meetings of Stockholders. Special meetings of
stockholders may be called by the Chairman of the Board of Directors, the
President of the Corporation or by a majority of the Board of Directors.
SECTION 8.03 Consent of Stockholders in Lieu of a Meeting. Any action
required to be taken at any annual or special meeting of stockholders of the
Corporation, or any action which may be taken at any annual or special meeting
of such stockholders, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted. After the date on which Pacific Dunlop Limited no longer owns, directly
or indirectly, 50% or more of the Common Stock of the Corporation, stockholders
of the Corporation shall not take action by written consent.
<PAGE> 6
ARTICLE 9.
AMENDMENTS
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by law, and all rights conferred upon the stockholders
herein are granted subject to this reservation.
IN WITNESS WHEREOF, this Amended and Restated Certificate of
Incorporation, having been duly adopted by the Corporation by written consent of
the Board of Directors in accordance with Sections 141(f), 242 and 245 of the
General Corporation Law of the State of Delaware and by written consent of the
sole stockholder of the Corporation in accordance with Section 228 of the
General Corporation Law of the State of Delaware, has been executed this 2nd day
of February, 2000.
ANSELL HEALTHCARE INCORPORATED
By: /s/ Harry Boon
------------------------------
Name: Harry Boon
Title: President and Chief
Executive Officer
<PAGE> 1
Exhibit 3.2
AMENDED AND RESTATED BYLAWS
OF
ANSELL HEALTHCARE INCORPORATED
ARTICLE 1.
AMENDMENTS
Section 1.1 Amendment of Bylaws. These bylaws may be altered, amended or
repealed, and new bylaws may be adopted by the stockholders or, to the extent
set forth in the certificate of incorporation or otherwise allowed by law, by
the board of directors.
ARTICLE 2.
OFFICES
Section 2.1 Registered Office. The corporation shall continuously maintain
in the State of Delaware a registered office which may, but need not be, the
same as its place of business, and a registered agent whose business office is
identical with such registered office.
Section 2.2 Other Offices. The corporation may also have offices at such
other places both within and without the State of Delaware as the board of
directors may from time to time determine or the business of the corporation may
require.
ARTICLE 3.
STOCK
Section 3.1 Form of Stock Certificates. Stock shall be represented by
certificates or shall be uncertificated stock.
3.1.1 Signing of Certificates. Certificates representing stock of
the corporation shall be signed by the appropriate officers and may be
sealed with the seal or a facsimile of the seal of the corporation. If a
certificate is countersigned by a transfer agent or registrar, other than
an employee of the corporation, any other signature may be facsimile. Each
certificate representing stock shall be consecutively numbered or
otherwise identified, and shall also state the name of the person to whom
issued, the number and class of stock (with designation of series, if
any), the date of issue, and that the corporation is organized under
Delaware law. If the corporation is authorized to issue stock of more than
one class or of a series within a class, the certificate shall also
contain such information or statement as may be required by law.
<PAGE> 2
3.1.2. Uncertificated Stock. The board of directors may provide by
resolution that some or all of any class or series of stock shall be
uncertificated stock. Any such resolution shall not apply to stock
represented by a certificate until the certificate has been surrendered to
the corporation. Within a reasonable time after the issuance or transfer
of uncertificated stock, the corporation shall send the registered owner
thereof a written notice of all information that would appear on a
certificate. Except as otherwise expressly provided by law, the rights and
obligations of the holders of uncertificated stock shall be identical to
those of the holders of certificates representing stock of the same class
and series.
3.1.3 Identification of Stockholders. The name and address of each
stockholder, the number and class of stock held and the date on which the
stock was issued shall be entered on the books of the corporation. The
person in whose name stock stands on the books of the corporation shall be
deemed the owner thereof for all purposes as regards the corporation.
Section 3.2 Lost, Stolen or Destroyed Certificates. If a certificate
representing stock has allegedly been lost, stolen or destroyed, the board of
directors may in its discretion, except as may be required by law, direct that a
new certificate be issued upon such indemnification and other reasonable
requirements as it may impose.
Section 3.3 Transfers of Stock. Transfers of stock of the corporation
shall be recorded on the books of the corporation. Transfer of stock represented
by a certificate, except in the case of a lost, stolen or destroyed certificate,
shall be made on surrender for cancellation of the certificate for such stock. A
certificate presented for transfer must be duly endorsed and accompanied by
proper guaranty of signature or other appropriate assurances that the
endorsement is effective. Transfer of an uncertificated stock shall be made on
receipt by the corporation of an instruction from the registered owner or other
appropriate person. The instruction shall be in writing or a communication in
such form as may be agreed upon in writing by the corporation.
ARTICLE 4.
STOCKHOLDERS
Section 4.1 Annual Meeting. The annual meeting of the stockholders for the
election of directors and the transaction of any other proper business shall be
held at such date and time within a reasonable period of time after the annual
audit report for the previous fiscal year has become available, as the board of
directors shall determine.
Section 4.2 Special Meetings. Special meetings of the stockholders may be
called by the Chairman of the board of directors, the President of the
corporation or by a majority of the board of directors.
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Section 4.3 Place of Meeting. The board of directors may designate the
place of meeting for any annual or special meeting of stockholders. In the
absence of any such designation, the place of meeting shall be the principal
place of business of the corporation.
Section 4.4 Notice of Meetings. For all meetings of stockholders, a
written or printed notice of the meeting shall be delivered, personally or by
mail, to each stockholder of record entitled to vote at such meeting, which
notice shall state the place, date and hour of the meeting. For all special
meetings and when and as otherwise required by law, the notice shall state the
purpose or purposes of the meeting. The notice of the meeting shall be given not
less than 10 nor more than 60 days before the date of the meeting or, in the
case of a meeting involving a merger, consolidation or sale, lease or an
exchange of all or substantially all, of the property or assets of the
corporation, not less than 20 nor more than 60 days before the date of such
meeting. If mailed, such notice shall be deemed to have been delivered when
deposited in the United States mail, postage prepaid, directed to the
stockholder at his or her address as it appears in the records of the
corporation. When a meeting is adjourned to another time or place, notice need
not be given of the adjourned meeting if the time and place thereof are
announced at the meeting at which the adjournment is taken unless otherwise
required by law.
Section 4.5 Quorum of Stockholders. The holders of a majority of the
outstanding stock of the corporation entitled to vote on a matter shall
constitute a quorum for consideration of such matter at any meeting of
stockholders unless a greater or lesser number is required by the certificate of
incorporation. Stockholders present in person or by proxy at a meeting shall be
included in a determination of whether a quorum exists. At any adjourned meeting
at which a quorum is present or represented, any business may be transacted
which might have been transacted at the original meeting, unless otherwise
required by law. Withdrawal of stockholders from any meeting shall not cause
failure of a duly constituted quorum at the meeting, unless otherwise required
by law.
Section 4.6 Manner of Acting. The affirmative vote of a majority of the
stock represented at a meeting and entitled to vote on a matter at which a
quorum is present shall be the act of the stockholders, unless the vote of a
greater number or voting by class is required by law or the certificate of
incorporation.
Section 4.7 Fixing of Record Date. If no record date is fixed for the
determination of stockholders entitled to notice of or to vote at a meeting of
stockholders, or stockholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the close of business on the
day before the date on which the resolution of the board of directors declaring
such dividend is adopted, as the case may be, shall be the record date for such
determination of stockholders. If a record date is specifically set for the
purpose of determining stockholders entitled to notice of or to vote at any
meeting of stockholders, or stockholders entitled to receive payment of any
dividend, or in order to make a determination of stockholders for any other
proper purpose, the board of directors may fix in advance a date as the record
date for any such determination of stockholders, such date in any case to be not
more than 60 days for a meeting of stockholders, not less than 10 days, or in
the case of a merger, consolidation, sale, lease or exchange of assets, and not
less than 20 days, immediately preceding such meeting. When a
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determination of stockholders entitled to vote at any meeting of stockholders
has been made as provided in this Section, such determination shall apply to any
adjournment thereof.
Section 4.8 Voting Lists. The officer or agent having charge of the
transfer book for stock of the corporation shall make, at least 10 days before
such meeting, a complete list of the stockholders entitled to vote at such
meeting, arranged in alphabetical order, with the address of and the number of
shares held by each. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least 10 days prior to the meeting, either at a place
within the city where the meeting is to be held, which place shall be specified
in the notice of the meeting, or, if not so specified, at the place where the
meeting is to be held. The list shall also be produced and kept at the time and
place of the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
Section 4.9 Proxies. A stockholder may appoint a proxy to vote or
otherwise act for him or her by signing an appointment form and delivering it to
the person so appointed. No proxy shall be valid after the expiration of three
years from the date thereof unless otherwise provided in the proxy. An
appointment of a proxy is revocable by the stockholder unless the appointment
form states that it is irrevocable and if, and only so long as, it is coupled
with an interest sufficient in law to support an irrevocable power.
Section 4.10 Voting of Shares by Certain Holders. Persons holding stock in
a fiduciary capacity shall be entitled to vote the shares so held. Persons whose
stock is pledged shall be entitled to vote, unless in the transfer by the
pledgor on the books of the corporation he has expressly empowered the pledgee
to vote thereon, in which case only the pledgee, or his proxy, may represent
such stock and vote thereon.
Section 4.11 Inspectors. At any meeting of stockholders, the chairman of
the meeting may, or upon the request of any stockholder shall, appoint one or
more persons as inspectors for such meeting. Inspectors shall:
4.11.1. Vote Count and Report. Ascertain and report the number of
shares of stock entitled to vote represented at the meeting, based upon
their determination of the validity and effect of proxies; count all votes
and report the results; and do such other acts as are proper to conduct
the election and voting with impartiality and fairness to the
stockholders.
4.11.2. Written Reports. Report in a document signed by the
inspector or by a majority of them if there be more than one inspector
acting at such meeting. If there is more than one inspector, the report of
a majority shall be the report of the inspectors. The report of the
inspector or inspectors on the number of shares represented at the meeting
and the results of the voting shall be prima facia evidence thereof.
Section 4.12 Consent of Stockholders in Lieu of a Meeting. Any action
required to be taken at any annual or special meeting of stockholders of the
corporation, or any action which
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may be taken at any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice and without a vote, if a consent in
writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. After the date on which Pacific
Dunlop Limited no longer owns, directly or indirectly, 50% or more of the common
stock of the corporation, stockholders of the corporation shall not take action
by written consent.
Section 4.13 Stockholder Proposals and Nomination of Directors.
Stockholders seeking to bring business before, or nominate directors at, any
annual meeting of stockholders must provide timely notice in writing. To be
timely, a stockholder's notice must be given in writing to the Secretary of the
corporation at least 120 days prior to the anniversary date of the annual
meeting of stockholders in the immediately preceding year.
4.13.1 Form of Written Notice. Any written notice required to be
delivered by a stockholder to the corporation pursuant to Section 4.13
must be given, either by personal delivery or by registered or certified
mail, postage prepaid, to the Secretary at the corporation's executive
offices. Any such stockholder notice shall set forth (i) the name and
address of the stockholder proposing such business; (ii) a representation
that the stockholder is entitled to vote at such meeting and a statement
of the number of shares of the corporation that are beneficially owned by
the stockholder; (iii) a representation that the stockholder intends to
appear in person or by proxy at the meeting to propose such business; and
(iv) as to each matter the stockholder proposes to bring before the
meeting, a brief description of the business desired to be brought before
the meeting, the reasons for conducting such business at the meeting, and
any material interest of the stockholder in such business.
Section 4.14 Notice to Stockholders Not Consenting. Prompt notice of the
taking of corporate action without a meeting by less than unanimous consent
shall be given in writing to those stockholders who have not consented in
writing. In the event that the action which is consented to is such as would
have required the filing of a certificate under any Section of the General
Corporation Law if such action had been voted on by the stockholders at a
meeting thereof, the certificate filed under such other Section shall state, in
lieu of any statement required by such Section concerning any vote of
stockholders, that written consent has been given in accordance with the
provisions of said Section and that written notice to non-consenting
stockholders has been given as provided in this by-law.
ARTICLE 5.
DIRECTORS
Section 5.1 General Powers. The business and affairs of the corporation
shall be managed by or under the direction of its board of directors.
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Section 5.2 Number, Tenure and Resignation. The number of directors of the
corporation shall be at least four, with the exact number fixed by the board of
directors. The number of directors may be increased or decreased (but shall not
be less than four) from time to time by the board of directors without further
amendment to the bylaws; provided, however, that no decrease in the number of
directors shall have the effect of shortening the term of any incumbent
director. A director shall hold office until the next annual meeting and until
his successor shall be duly elected and shall qualify, subject, however, to his
prior death, resignation or removal from office. A director of the corporation
may resign at any time by giving written notice to the Chairman of the Board of
Directors, or to the President or Secretary of the corporation. The resignation
of any director shall take effect at the date of receipt of such notice or at a
later date specified therein; and unless otherwise specified therein, the
acceptance of such resignation by the board of directors shall not be necessary
to make it effective
Section 5.3 Quorum of Directors. A majority of the number of directors
then in office shall constitute a quorum for the transaction of business at any
meeting of the board of directors; provided, however, that if less than a
majority of the number of directors then in office is present at a meeting, a
majority of the directors present may adjourn the meeting at any time without
further notice, unless otherwise required by law.
Section 5.4 Manner of Acting. The act of a majority of the directors
present at a meeting at which a quorum is present shall be the act of the board
of directors, unless the act of a greater number is required by law or these
bylaws.
Section 5.5 Vacancies. Any vacancy occurring in the board of directors and
any directorship to be filled by reason of an increase in the number of
directors may be filled by a vote of the directors remaining in office or by the
affirmative vote of the holders of a majority of the outstanding stock then
entitled to vote at an election of directors. A director elected to fill a
vacancy shall hold office for the balance of the term for which he or she was
elected.
Section 5.6 Removal of Directors. One or more of the directors may be
removed, with or without cause, at a meeting of stockholders, by the affirmative
vote of the holders of a majority of the outstanding stock then entitled to vote
at an election of directors.
Section 5.7 Regular Meetings. A regular meeting of the board of directors
shall be held without other notice than this by-law, immediately after, and, at
the same place as, the annual meeting of stockholders. The board of directors
may provide, by resolution, the place, date and hour for the holding of
additional regular meetings of the board of directors, without other notice than
such resolution.
Section 5.8 Special Meetings. Special meetings of the board of directors
may be called by or at the request of the Chairman of the Board, the President
or any two directors. The person or persons authorized to call special meetings
of the board of directors may fix the place for holding any special meeting of
the board of directors called by them.
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Section 5.9 Notice. Notice of any special meeting of the board of
directors shall be given at least 24 hours prior to the meeting by written
notice delivered personally, by mail, telegram, telex, facsimile or other
electronic transmission to each director at his or her business address. If
mailed, such notice shall be deemed to have been delivered when deposited in the
United States mail in a sealed envelope so addressed, with postage paid thereon.
If notice is given by telegram, such notice shall be deemed to have been
delivered when the telegram is delivered to the telegraph company. If notice is
given by telex, such notice shall be deemed to have been delivered when the
telex message is delivered to the telex operator. If sent by facsimile or other
electronic transmission, such notice shall be deemed to have been delivered when
transmitted. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the board of directors need be specified in the
notice or waiver of notice of such meeting. The attendance of a director at any
meeting shall constitute a waiver of notice of such meeting, except where a
director attends a meeting for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully called or
convened.
Section 5.10 Presumption of Assent. A director of the corporation who is
present at a meeting of the board of directors at which action on any corporate
matter is taken shall be conclusively presumed to have assented to the action
taken, unless his or her dissent shall be entered in the minutes of the meeting
or unless he or she shall file his or her written dissent to such action with
the person acting as the secretary of the meeting before the adjournment
thereof, or shall forward such dissent by registered mail to the secretary of
the corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to a director who voted in favor of such action.
Section 5.11 Committees. A majority of the directors may, by resolution
passed by a majority of the number of directors fixed by the stockholders under
Section 5.2 of this Article create one or more committees and appoint members of
the board to serve on the committee or committees. Each committee shall have one
or more members, who serve at the pleasure of the board.
5.11.1. Quorum. A majority of any committee shall constitute a
quorum and a majority of a quorum is necessary for committee action. A
committee may act by unanimous consent in writing without a meeting and,
subject to the provisions of the bylaws or action by the board of
directors, the committee by majority vote of its numbers shall fix the
time and place of meetings and the notice required therefor.
5.11.2. Power and Authority. To the extent specified by the board of
directors, each committee may exercise the authority of the board of
directors, provided, however, a committee may not exercise the power or
authority with reference to:
5.11.2.1. Amendment of Certificate of Incorporation. Amending
the certificate of incorporation (except that a committee may
exercise the power pursuant to Section 151(a) of the General
Corporation Law);
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5.11.2.2. Merger and Consolidation. Adopting a plan of merger
or consolidation;
5.11.2.3. Sale, Lease or Exchange of Assets. Recommending to
the stockholders the sale, lease or exchange of all or substantially
all of the corporation's property and assets;
5.11.2.4. Dissolution. Recommending to stockholders a
dissolution of the corporation or a revocation of a dissolution;
5.11.2.5. Bylaws. Amending the bylaws of corporation;
5.11.2.6. Dividends. Declaring a dividend;
5.11.2.7. Issuance of Stock. Authorizing the issuance of
stock; or
5.11.2.8. Merger with Subsidiary. Adopting a certificate of
ownership and merger pursuant to Section 253 of the General
Corporation Law authorizing the issuance of stock.
Section 5.12 Informal Action by Directors. Unless otherwise restricted by
the certificate of incorporation or these bylaws, any action required by the
General Corporation Law to be taken at a meeting of the board of directors of
the corporation, or any other action which may be taken at a meeting of the
board of directors or a committee thereof, may be taken without a meeting if a
consent in writing, setting forth the action so taken, shall be signed by all
the directors entitled to vote with respect to the subject matter thereof, or by
all members of such committee, as the case may be.
The consent shall be evidenced by one or more written approvals, each of
which sets forth the action taken and bears the signature of one or more
directors. All the approvals evidencing the consent shall be delivered to the
secretary to be filed in the corporate records. The action taken shall be
effective when all the directors have approved the consent unless the consent
specifies a different effective date.
Section 5.13 Meeting by Conference Telephone. Members of the board of
directors or of any committee of the board of directors may, and at the request
of any director shall be entitled to, participate in and act at any meeting of
the board or committee by means of conference telephone or other similar
communications equipment by means of which all persons participating in the
meeting can hear each other. Participation in such a meeting shall constitute
attendance and presence in person at such meeting.
Section 5.14 Compensation. The board of directors, by the affirmative vote
of a majority of the directors then in office, and irrespective of any personal
interest of any of its members, shall have authority to establish reasonable
compensation of all directors for services to the corporation as directors,
officers or otherwise.
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ARTICLE 6.
OFFICERS
Section 6.1 Number. The officers of the corporation may be a president,
one or more vice presidents, a treasurer, one or more assistant treasurers (if
elected by the board of directors), a secretary, one or more assistant
secretaries (if elected by the board of directors), and such other officers as
may be elected in accordance with the provisions of this Article. Any two or
more offices may be held by the same person.
Section 6.2 Election and Term of Office. The officers of the corporation
shall be elected annually by the board of directors at the first meeting of the
board of directors held after each annual meeting of stockholders. If the
election of officers shall not be held at such meeting, such election shall be
held as soon thereafter as reasonably practicable. Subject to the provisions of
Section 6.3 hereof, each officer shall hold office until the last to occur of
the next annual meeting of the board of directors or until his successor is duly
elected and has qualified. Election of an officer shall not of itself create
contract rights.
Section 6.3 Removal. Any officer elected or appointed by the board of
directors may be removed by the board of directors whenever in its judgment the
best interests of the corporation would be served thereby, but such removal
shall be without prejudice to the contract rights, if any, of the person so
removed.
Section 6.4 Vacancies; New Offices. A vacancy occurring in any office may
be filled and new offices may be created and filled, at any time, by the board
of directors.
Section 6.5 President. The president shall be the chief executive officer
of the corporation. He or she shall be in charge of the day-to-day business and
affairs of the corporation, subject to the direction and control of the board of
directors. He or she shall preside at all meetings of the board of directors. He
or she shall have the power to appoint such agents and employees as in his or
her judgment may be necessary or proper for the transaction of the business of
the corporation. He or she may sign, with the secretary or other proper officer
of the corporation thereunto authorized by the board of directors, stock
certificates, deeds, mortgages, bonds, contracts, or other instruments which the
board of directors has authorized to be executed. He or she may vote on behalf
of the corporation, by proxy or otherwise, all securities which the corporation
is entitled to vote, and, in general, shall perform all duties incident to the
office of president and such other duties as from time to time may be prescribed
by the board of directors.
Section 6.6 Vice President(s). The vice president (or in the event more
than one vice president is elected, each of the vice presidents) shall assist
the president in the discharge of his or her duties as the president may direct,
and shall perform such other duties as from time to time may be assigned to him
or her (them) by the president or the board of directors. In the absence
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of the president, the vice president, if one is elected (or vice presidents, in
the order of their election), shall perform the duties and exercise the
authority of the president.
Section 6.7 The Treasurer. The treasurer shall have charge and custody of
and be responsible for all funds and securities of the corporation; receive and
give receipts for monies due and payable to the corporation from any source
whatsoever, and deposit all such monies in the name of the corporation in such
banks, trust companies or other depositories as shall be selected in accordance
with the provisions of Article 8 of these bylaws; have charge of and be
responsible for the maintenance of adequate books of account for the
corporation; and, in general perform all duties incident to the office of
treasurer and such other duties not inconsistent with these bylaws as from time
to time may be assigned to him by the president, or the board of directors.
Section 6.8 The Secretary. The secretary shall keep the minutes of the
stockholders' and the board of directors' meetings; see that all notices are
duly given in accordance with the provisions of these bylaws or as required by
law; have general charge of the corporate records and for the seal of the
corporation; have general charge of the stock transfer books of the corporation;
keep a register of the post office address of each stockholder which shall be
furnished to the secretary by such stockholder; sign with the president, or any
other officer thereunto authorized by the board of directors, stock certificates
of the corporation, the issuance of which shall have been authorized by
resolution of the board of directors, and any contracts, deeds, mortgages, bonds
or other instruments which the board of directors has authorized to be executed,
according to the requirements of the form of the instrument; and, in general
perform all duties incident to the office of secretary and such other duties not
inconsistent with these bylaws as from time to time may be assigned to him by
the president or the board of directors.
Section 6.9 Assistant Treasurers and Assistant Secretaries. The board of
directors may elect one or more assistant treasurers and assistant secretaries.
In the absence of the treasurer, or in the event of his inability or refusal to
act, the assistant treasurer(s), in the order of their election, shall perform
the duties and exercise the authority of the treasurer. In the absence of the
secretary, or in the event of his inability or refusal to act, the assistant
secretary(ies), in the order of their election, shall perform the duties and
exercise the authority of the secretary. The assistant treasurer(s) and
assistant secretary(ies), in general, shall perform such other duties not
inconsistent with these bylaws as shall be assigned to them by the treasurer or
the secretary, respectively, or by the president or the board of directors.
Section 6.10 Compensation. The compensation of the officers shall be fixed
from time to time by the board of directors. No officers shall be prevented from
receiving such compensation by reason of the fact that he is also a director of
the corporation. All compensation shall be reasonable and solely for services
rendered to the corporation.
10
<PAGE> 11
ARTICLE 7.
FISCAL MATTERS
Section 7.1 Fiscal Year. The fiscal year of the corporation shall be fixed
by resolution of the board of directors.
Section 7.2 Contracts. The board of directors may authorize any officer or
officers, and/or agent or agents, to enter into any contract or execute and
deliver any instrument, in the name and on behalf of the corporation, and such
authority may be general or confined to specific instances.
Section 7.3 Loans and Indebtedness. No substantial or material loans shall
be contracted on behalf of the corporation and no evidences of indebtedness
shall be issued in its name unless authorized by a resolution of the board of
directors. Such authority may be general or confined to specific instances.
Section 7.4 Checks, Drafts, etc. All checks, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the corporation, shall be signed by such officer or officers, and/or
agent or agents, of the corporation as the board of directors shall from time to
time designate.
Section 7.5 Deposits. All funds of the corporation not otherwise employed
shall be deposited from time to time to the credit of the corporation in such
banks, trust companies or other depositories as the board of directors may
select.
ARTICLE 8.
GENERAL
Section 8.1 Dividends and Distributions. The board of directors may from
time to time declare or otherwise authorize, and the corporation may pay,
dividends or other distributions on its outstanding stock in the manner and upon
the terms, conditions and limitations provided by law or the Certificate of
Incorporation.
Section 8.2 Corporate Seal. The board of directors may provide a corporate
seal which shall be in the form of a circle and shall have inscribed thereon the
name of the corporation and the words "Corporate Seal, Delaware." The seal may
be used by causing it or a facsimile thereof to be impressed or affixed or in
any manner reproduced.
Section 8.3 Waiver of Notice. Whenever any notice is required to be given
by law, the Certificate of Incorporation or under the provisions of these
bylaws, a waiver thereof in writing, signed by the person or persons entitled to
such notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice.
11
<PAGE> 12
Section 8.4 Headings. Section or paragraph headings are inserted herein
only for convenience of reference and shall not be considered in the
construction of any provision hereof.
12
<PAGE> 1
EXHIBIT 4.1
<TABLE>
<S> <C> <C>
[ A PICTURE ] COMMON STOCK
PAR VALUE $.01
- --------------- ---------------
NUMBER SHARES
THIS CERTIFICATE IS TRANSFERABLE
AH IN NEW YORK, NEW YORK OR IN
- --------------- THE STATE OF NEW JERSEY ---------------
CUSIP
SEE REVERSE FOR CERTAIN DEFINITIONS
ANSELL HEALTHCARE INCORPORATED
------------------------------------------------------------------------------------------
This Certifies that
in the record holder of
------------------------------------------------------------------------------------------
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK OF
Ansell Healthcare Incorporated transferable only on the books of the Corporation by the
holder hereof in person or by duly authorized attorney, upon the surrender of this
certificate properly endorsed or assigned. This certificate is not valid unless
countersigned and registered by the Transfer Agent and Registrar.
Witness the facsimile seal of the Corporation and the facsimile signatures of its
duly authorized officers.
Dated:
COUNTERSIGNED AND REGISTERED /s/
REGISTRAR AND TRANSFER COMPANY [A SEAL] PRESIDENT
TRANSFER AGENT
REGISTRAR /s/
SECRETARY
</TABLE>
<PAGE> 2
The following abbreviations, when used in the inscription on the face of
this Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations.
<TABLE>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT-____________ Custodian __________
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act _______________________
in common (State)
Additional abbreviations may also be used though not in the above list.
</TABLE>
For value received, _____________________ hereby sell, assign and transfer unto
<TABLE>
<S> <C>
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
[ ]
_____________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE
_____________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________
______________________________________________________________________________________________________________ Shares
represented by the within Certificate, and do hereby irrevocably constitute and appoint______________________________
_____________________________________________________________________________________________________________________
Attorney to transfer the said shares on the books of the within-named Corporation with full power of substitution in
the premises.
Dated, ___________________________________
X ___________________________________________________________________
(SIGNATURE)
X ___________________________________________________________________
(SIGNATURE)
___________________________________________________________________
ABOVE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE
NAME(S) AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT, OR ANY CHANGE
WHATEVER.
THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR
INSTITUTION SUCH AS A SECURITIES BROKER/DEALER, COMMERCIAL BANK &
TRUST COMPANY, SAVINGS AND LOAN ASSOCIATION OR A CREDIT UNION
PARTICIPATING IN A MEDALLION PROGRAM APPROVED BY THE SECURITIES
TRANSFER ASSOCIATION, INC.
</TABLE>
<PAGE> 1
Exhibit 10.1.1
ANSELL DEFERRED COMPENSATION PLAN
(Amended and Restated effective January 1, 1998)
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE 1. ESTABLISHMENT OF PLAN......................................................................1
1.1. Establishment of Plan......................................................................1
1.2. Purpose of Plan............................................................................1
ARTICLE 2. DEFINITIONS................................................................................1
2.1. Accounts...................................................................................1
2.2. Bankruptcy or Insolvency Event.............................................................1
2.3. Basic Compensation.........................................................................2
2.4. Change in Control Event....................................................................2
2.5. Code.......................................................................................2
2.6. Companies..................................................................................2
2.7. Company Contribution Account...............................................................3
2.8. Compensation...............................................................................3
2.9. Crediting Date.............................................................................3
2.10. Deferral Account...........................................................................3
2.11. Deferral Agreement.........................................................................3
2.12. Disability.................................................................................3
2.13. Effective Date.............................................................................3
2.14. Employer ..................................................................................3
2.15. Equity Subaccount..........................................................................4
2.16. Financial Hardship.........................................................................4
2.17. Group......................................................................................4
2.18. Guaranteed Subaccount......................................................................4
2.19. Incentive Contribution.....................................................................4
2.20. Matching Contribution......................................................................4
2.21. Participant................................................................................4
2.22. Participation Date.........................................................................4
2.23. Plan Committee.............................................................................4
2.24. Plan Year..................................................................................4
2.25. Retirement Age.............................................................................4
ARTICLE 3. DEFERRAL OF COMPENSATION...................................................................5
3.1. Amount and Manner of Deferral of Basic Compensation........................................5
3.2. Amount and Manner of Deferral of Bonuses...................................................5
3.3. Change or Revocation of Deferral...........................................................5
3.4. Deferral Account...........................................................................6
ARTICLE 4. COMPANY CONTRIBUTION CREDIT................................................................6
4.1. Amount of Company Matching Contribution Credit.............................................6
4.2. Amount of Company Incentive Contribution Credit............................................6
4.3. Company Contribution Account...............................................................7
</TABLE>
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<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE 5. INVESTMENT CREDITING METHODS...............................................................7
5.1. Investment Crediting Methods...............................................................7
5.2. Guaranteed Subaccount Interest Crediting...................................................7
5.3. Equity Subaccount Investment Crediting.....................................................8
ARTICLE 6. VESTING....................................................................................8
6.1. Deferral Account...........................................................................8
6.2. Company Contribution Account...............................................................8
6.3. Full Vesting...............................................................................8
ARTICLE 7. BENEFITS...................................................................................9
7.1. Retirement Benefit.........................................................................9
7.2. Survivor Benefit...........................................................................9
7.3. Disability Benefit........................................................................10
7.4. Vested Benefit............................................................................10
7.5. Withdrawals...............................................................................10
ARTICLE 8. PAYMENT OF BENEFITS.......................................................................11
8.1. Retirement Benefit........................................................................11
8.2. Survivor Benefit..........................................................................11
8.3. Vested Benefit............................................................................12
8.4. Acceleration of Payment Events............................................................12
8.5. Domestic Relations Orders.................................................................12
8.6. Payments to Incompetents/Minors...........................................................12
8.7. Missing Participants or Beneficiaries.....................................................12
ARTICLE 9. MISCELLANEOUS.............................................................................13
9.1. Rights of Participant.....................................................................13
9.2. Assignment................................................................................13
9.3. Employment................................................................................13
9.4. Administration............................................................................13
9.5. Liability of the Plan Committee...........................................................14
9.6. Indemnification...........................................................................14
9.7. Termination and Amendment.................................................................14
9.8. Beneficiary Designation...................................................................14
9.9. Claims Procedure..........................................................................14
9.10. Notice .................................................................................15
9.11. Headings and Gender.......................................................................15
9.12. Not Current Compensation..................................................................15
9.13. Rights to Other Benefits..................................................................15
9.14. Governing Law.............................................................................15
9.15. Binding Effect............................................................................15
</TABLE>
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<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
9.16. Severability..............................................................................16
9.17. Status of Certain Ansell Incorporated Employees...........................................16
</TABLE>
APPENDIX A
APPENDIX B
APPENDIX C
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<PAGE> 5
ANSELL DEFERRED COMPENSATION PLAN
ARTICLE 1.
ESTABLISHMENT OF PLAN
1.1. Establishment of Plan. Prior to January 1, 1998, Ansell Edmont
Industrial Inc. has maintained the Ansell Edmont Industrial Inc. Key Employee
Deferred Compensation Plan, Ansell Perry Inc. has maintained the Ansell Perry
Inc. Key Employee Deferred Compensation Plan, and Ansell Incorporated has
maintained the Ansell Incorporated Deferred Compensation Plan. Effective January
1, 1998, Ansell Edmont Industrial Inc., Ansell Perry Inc. and Ansell
Incorporated have combined the aforementioned plans into the Ansell Deferred
Compensation Plan (the "Plan") for the benefit of the key employees of Ansell
Edmont Industrial Inc., Ansell Perry Inc. and Ansell Incorporated.
1.2. Purpose of Plan. The Plan shall permit Participants (as defined
herein) to enhance the security of themselves and their beneficiaries following
the termination of their employment with the Group (as defined herein) or their
death or Disability by deferring until that time a portion of their Compensation
(as defined herein) which may otherwise be payable to them at an earlier date.
By allowing key management employees to participate in the Plan, the Company
expects to benefit by attracting and retaining the best available talent. The
Plan is intended to be an unfunded plan maintained primarily for the purpose of
providing deferred compensation for a select group of management or highly
compensated employees within the meaning of Sections 201(2), 301(a)(3) and
401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended.
ARTICLE 2.
DEFINITIONS
As used herein, the following words shall have the following meanings:
2.1. Accounts. "Accounts" shall mean the Participant's Deferral Account
and Company Contribution Account.
2.2. Bankruptcy or Insolvency Event. "Bankruptcy or Insolvency Event"
shall mean, with respect to each Employer, the occurrence of any of the
following events:
(a) The filing of any petition in bankruptcy or insolvency by the
applicable Employer;
(b) The passage of 60 days after the filing of any petition in
bankruptcy or insolvency against the applicable Employer if
such petition is not dismissed within such 60-day period;
(c) The applicable Employer's adjudication as bankrupt or
insolvent;
<PAGE> 6
(d) The appointment of a receiver for the applicable Employer by
any court of competent jurisdiction; or
(e) A general assignment by the applicable Employer for the
benefit of its creditors.
2.3. Basic Compensation. "Basic Compensation" shall mean the
Participant's salary, including any salary increases paid during the Plan Year
and elective contributions or deferrals under this Plan or a plan described
under Section 125 or Section 401(k) of the Code. Basic Compensation shall not
include any bonuses, workers' compensation, non-elective contributions to any
tax-qualified retirement plan or any life insurance or employee health and
welfare benefits.
2.4. Change in Control Event. "Change in Control Event" shall mean, with
respect to each Employer, the occurrence of any of the following events:
(a) Sale of a majority of the shares of voting stock of the
applicable Employer to an unrelated third party or parties;
(b) Sale of the stock of the applicable Employer in a public
offering but only if the members of the Board of Directors of
the applicable Employer immediately prior to such sale do not
constitute a majority of the Board of Directors of the
applicable Employer after such public offering;
(c) Reorganization, reclassification, merger or consolidation with
another corporation in which the applicable Employer is not
the surviving corporation; or
(d) Sale of all or substantially all of the operating assets of
the applicable Employer to an unrelated third party or
parties.
For purposes of this Section 2.4, the terms Employer and Board of
Directors shall refer separately to each participating Employer that adopts the
Plan for the benefit of its Participants and to the Board of Directors thereof.
Where a Change in Control Event occurs with respect to a participating Employer,
the provisions of the Plan and any Rabbi Trust created pursuant to Section 9.4
of the Plan shall apply only with respect to such Employer and its Participants.
Notwithstanding the foregoing, no Change in Control Event shall be deemed to
have occurred hereunder as a result of any sale, reorganization,
reclassification, merger or consolidation after which Pacific Dunlop Limited
continues to control ultimately at least a majority interest in the surviving
entity.
2.5. Code. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
2.6. Companies. "Companies" shall mean, collectively, Ansell Edmont
Industrial Inc., Ansell Perry Inc., and Ansell Incorporated, corporations
existing under the laws of the State of Delaware. To the extent any of these
entities ceases to exist as a separate legal entity, the "Companies" shall mean
only the remaining legal entities.
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<PAGE> 7
2.7. Company Contribution Account. "Company Contribution Account" shall
mean the account maintained for each Participant pursuant to Section 4.3.
2.8. Compensation. "Compensation" shall mean the Participant's Basic
Compensation paid during the Plan Year and any bonuses paid during the Plan
Year.
2.9. Crediting Date. "Crediting Date" shall mean March 31, June 30,
September 30 and December 31 or such other dates for purposes of crediting
Participants' accounts with earnings and losses in accordance with Section 5.3.
2.10. Deferral Account. "Deferral Account" shall mean the account
maintained for each Participant pursuant to Section 3.4.
2.11. Deferral Agreement. "Deferral Agreement" shall mean a written
agreement between the Participant and his Employer whereby the Participant
agrees to defer a certain portion of his Basic Compensation and/or bonuses
pursuant to the terms of the Plan.
2.12. Disability. "Disability" or "Disabled" shall mean the inability of
the Participant, due to bodily injury or disease, to perform substantially all
of the duties of an occupation for pay or profit.
(a) During the first full 24 months of Disability, total
Disability means the Participant is not able to perform
substantially all of the duties of his regular occupation at
the time Disability begins.
(b) After the first 24 months of Disability, total Disability
means the Participant is not able to perform substantially all
of the duties of his occupation or any other occupation for
which he is or becomes fitted by education, training or
experience.
(c) Until the Participant attains age 25, occupation includes
attending school full-time outside the home.
(d) The Participant shall automatically be considered totally
disabled upon the entire and irrecoverable loss of sight in
both eyes or loss by severance through or above the wrist or
ankle joints of both hands, both feet, or one hand and one
foot.
The Plan Committee shall in its sole discretion make the determination of
Disability under this Plan.
2.13. Effective Date. "Effective Date" shall mean January 1, 1998, the
effective date of this amendment and restatement of the Plan.
2.14. Employer. "Employer" shall mean each participating employer under
the Plan. As of the Effective Date, the participating Employers are: Ansell
Edmont Industrial Inc., Ansell Perry Inc. and Ansell Incorporated. To the extent
any of these entities ceases to exist as a
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<PAGE> 8
separate legal entity, such entity shall cease to be an Employer, and such
entity's employees shall remain Participants under the Plan only to the extent
they are employed by an Employer and are selected for participation in
accordance with Section 2.19.
2.15. Equity Subaccount. "Equity Subaccount" shall mean the portion of a
Participant's Accounts credited with earnings and/or losses in accordance with
Section 5.3.
2.16. Financial Hardship. "Financial Hardship" shall mean an unforeseen
emergency that is caused by an event beyond the control of the Participant or
beneficiary and that would result in severe financial hardship to the individual
if early withdrawal were not permitted. The Committee, in its sole discretion,
shall determine whether a Financial Hardship exists.
2.17. Group. "Group" shall mean the Companies and all commonly-owned
affiliates of the Companies.
2.18. Guaranteed Subaccount. "Guaranteed Subaccount" shall mean the
portion of a Participant's Accounts credited with interest in accordance with
Section 5.2.
2.19. Incentive Contribution. "Incentive Contribution" shall mean the
credits, if any, made to a Participant's Company Contribution Account pursuant
to Section 4.2.
2.20. Matching Contribution. "Matching Contribution" shall mean the
credits made to a Participant's Company Contribution Account pursuant to Section
4.1.
2.21. Participant. "Participant" shall mean an employee who is designated
by the Plan Committee (subject to the approval of the management of the
Companies) to be eligible to participate in the Plan. No employee shall be
required to elect to defer hereunder any amount of his Compensation at any time
or from time to time because of his designation as eligible to participate in
the Plan. Upon the direction of the Plan Committee, an employee may be removed
from participating in the Plan on a prospective basis for any reason.
2.22. Participation Date. "Participation Date" shall mean the date on
which a Participant is first eligible to participate in the Plan.
2.23. Plan Committee. "Plan Committee" shall mean such persons designated
by the Boards of Directors of the Companies from time to time to be responsible
for the administration of the Plan.
2.24. Plan Year. "Plan Year" shall mean the 12-month period on which the
records of the Plan are maintained, which shall be the period beginning January
1 and ending December 31.
2.25. Retirement Age. "Retirement Age" shall mean the Participant's
attainment of age 65.
ARTICLE 3.
DEFERRAL OF COMPENSATION
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<PAGE> 9
3.1. Amount and Manner of Deferral of Basic Compensation. A Participant
may elect to defer a portion of his Basic Compensation by executing an
appropriate Deferral Agreement provided by the Plan Committee. A Deferral
Agreement between the Participant and his Employer may be entered into effective
on the Effective Date, his Participation Date and each January 1, provided such
Deferral Agreement is executed prior to the effective date thereof and applies
only with respect to Basic Compensation not currently available to the
Participant as of such effective date. Each Participant may defer an amount
equal to a whole percentage of his Basic Compensation, which percentage shall
not be greater than 30%. Any amount deferred by the Participant under this
Section shall reduce the Basic Compensation otherwise payable to the Participant
and shall be made by his Employer through regular payroll deductions.
3.2. Amount and Manner of Deferral of Bonuses. A Participant may elect to
defer a portion of his bonuses, if any, by executing an appropriate Deferral
Agreement provided by the Plan Committee. A Deferral Agreement between the
Participant and his Employer may be entered into effective on the Effective
Date, his Participation Date and each January 1, provided such Deferral
Agreement is executed prior to the effective date thereof and applies only with
respect to bonuses relating to services performed during the fiscal year of his
Employer beginning after the election. Notwithstanding the foregoing, a
Participant may elect to defer a specified portion of any bonus payable with
respect to the Companies' fiscal year ending June 30, 1998, by entering into a
Deferral Agreement on or prior to the Effective Date; provided that such bonus
is to be earned substantially by virtue of services to be performed after the
Effective Date. Each Participant may defer an amount equal to a whole percentage
of his bonus, which percentage shall not be greater than 100%. Any amount
deferred by the Participant under this Section shall reduce the bonus otherwise
payable to the Participant and shall be made by the Employer through regular
payroll deductions.
3.3. Change or Revocation of Deferral. A Deferral Agreement shall remain
in effect until changed or revoked as provided for in the Plan. A Participant
who desires to change the amount of his deferrals may do so effective as of each
January 1, provided the Deferral Agreement specifying the new amount of
deferrals is executed prior to the effective date thereof and applies only with
respect to Basic Compensation not currently available to the Participant as of
such effective date and to bonuses relating to services performed during the
fiscal year of his Employer beginning after the effective date. A Participant
may revoke a prior Deferral Agreement effective prospectively on the first day
of any calendar month. A Participant desiring to revoke a prior Deferral
Agreement shall submit a written request to the Plan Committee stating the
proposed effective date of the revocation and the reason for the revocation.
Subject to the final sentence of this paragraph, a Participant may revoke a
prior Deferral Agreement for reason of severe Financial Hardship as determined
by the Plan Committee in its sole discretion. A Participant revoking a prior
Deferral Agreement as to bonuses for reasons of severe Financial Hardship shall
not be eligible to make bonus deferrals under the Plan for the fiscal year to
which that bonus relates. A Participant revoking a prior Deferral Agreement as
to Basic Compensation for reason of severe Financial Hardship shall not be
eligible to make Basic Compensation deferrals under the Plan until the beginning
of the Plan Year commencing after the date of the revocation.
-5-
<PAGE> 10
A Participant may also revoke a prior Deferral Agreement as to Basic
Compensation other than for reasons of severe Financial Hardship; provided that
the Participant shall not be eligible to resume Basic Compensation Deferrals
until the beginning of the Plan Year commencing on or after the six-month
anniversary of the date of the revocation. Notwithstanding anything contained
herein to the contrary, a Participant may revoke a prior Deferral Agreement
effective prospectively on the first day of any calendar month after the
occurrence of a Change in Control Event or a Bankruptcy or Insolvency Event
affecting his Employer.
Any deferrals by a Participant shall automatically terminate upon termination of
employment with all Employers. If a Participant transfers from one participating
Employer to another participating Employer, his deferrals shall continue, and
his Deferral Agreement shall provide as such.
3.4. Deferral Account. Only for the purpose of measuring payments due to
Participants hereunder, the Employers shall maintain on behalf of each
Participant a Deferral Account to which the Employers shall credit the amounts
described in Section 3.1 and Section 3.2. As of each payroll date, the Employers
shall credit to the Deferral Account of each Participant the amount of
Compensation deferred by the Participant since the last payroll date. As soon as
administratively possible following the end of each Plan Year, the Plan
Committee shall provide each Participant (or his beneficiaries, in the event of
his death) a statement indicating the balance of his Deferral Account, including
principal, interest, earnings and losses as of the last day of the Plan Year.
ARTICLE 4.
COMPANY CONTRIBUTION CREDIT
4.1. Amount of Company Matching Contribution Credit. No later than each
Crediting Date, the Employers shall credit to the Company Contribution Account
of each Participant a Matching Contribution equal to 50% of the Basic
Compensation deferrals made and credited to a Participant's Deferral Account
since the last Crediting Date (subject to the 6% limitation described below).
The Employers also shall credit to the Company Contribution Account of each
Participant a Matching Contribution equal to 50% of the bonus deferrals made and
credited to a Participant's Deferral Account since the last Crediting Date
(subject to the 6% limitation described below). Notwithstanding the foregoing,
no Matching Contribution shall be made for deferrals of Basic Compensation or
bonuses in excess of 6% of the Participant's Basic Compensation or bonuses,
respectively. No Matching Contribution credits shall be made for a Participant
who is not employed by an Employer on the actual date the credit is to be made,
unless such Participant dies, becomes Disabled or attains Retirement Age during
the period between the last Matching Contribution crediting date and the current
crediting date.
4.2. Amount of Company Incentive Contribution Credit. As of the last day
of each Plan Year, the Employers may credit to the Company Contribution Account
of each Participant an Incentive Contribution for each Plan Year equal to an
amount, if any, determined by the Boards of Directors of the Companies in their
sole discretion. The Incentive Contribution credits for a Plan Year may differ
for each Participant under this Plan.
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<PAGE> 11
4.3. Company Contribution Account. Only for purposes of measuring
payments due Participants hereunder, the Employers shall maintain on behalf of
each Participant a Company Contribution Account to which the Employers shall
credit the amounts described in Sections 4.1 and 4.2. No later than each
Crediting Date, the Employers shall credit to the Company Contribution Account
of each Participant the amount of his Matching Contribution, if any, for the
period since the last Matching Contribution crediting date. As of the last day
of each Plan Year, the Employers shall credit to the Company Contribution
Account of each Participant the amount of his Incentive Contribution, if any,
for the period since the last day of the prior Plan Year. As soon as
administratively possible following the end of each Plan Year, the Plan
Committee shall provide each Participant (or his beneficiaries, in the event of
his death) a statement indicating the balance of his Company Contribution
Account, including principal, interest, earnings and losses as of the last day
of the Plan Year.
ARTICLE 5.
INVESTMENT CREDITING METHODS
5.1. Investment Crediting Methods. On and after the Effective Date, each
Plan Year a Participant may elect to receive a fixed rate of return on all or a
designated portion of his Accounts (with such portion hereinafter referred to as
the "Guaranteed Subaccount"), as described in Section 5.2; or, subject to the
approval of the Plan Committee, he may elect to have all or a designated portion
of his Accounts credited with gains and losses in accordance with the
performance of one or more investment alternatives (with such portion
hereinafter referred to as the "Equity Subaccount"), as described in Section
5.3. The manner and frequency of such investment elections shall be subject to
the discretion of the Plan Committee.
5.2. Guaranteed Subaccount Interest Crediting. With respect to the entire
balance in a Participant's Accounts as of the Effective Date and the portion of
such post-Effective Date Basic Compensation Deferral Account credits and
corresponding Company Contribution Account credits to which the Participant
elects to apply the Guaranteed Subaccount fixed rate of return investment
crediting approach, the Plan Committee shall credit interest to such amounts.
Interest shall be credited as of each Crediting Date based on the applicable
amounts (both vested and nonvested) on the day immediately preceding such
Crediting Date less any withdrawals received by the Participant since the prior
Crediting Date. For this purpose, subject to future interest crediting rate
adjustments by the Plan Committee, interest shall accrue at a rate equal to the
greater of:
(a) ten percent (10%) per annum; or
(b) a rate equal to two percent (2%) in excess of the prior
12-month average of the prime interest rate as published in
the Wall Street Journal on the first business day of each
month.
5.3. Equity Subaccount Investment Crediting. With respect to all
post-Effective Date bonus Deferral Account credits (and corresponding Company
Contribution Account credits), and with respect to those post-Effective Date
Basic Compensation Deferral Account credits (and
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<PAGE> 12
corresponding Company Contribution Account credits) to which the Participant
elects to apply the Equity Subaccount investment crediting approach, such
amounts shall be credited as of each Crediting Date with gains and losses in
accordance with the performance of one or more investment alternatives to be
selected from time to time and made available by the Plan Committee. In making
the choice of which investment alternative or alternatives will be used to
determine the investment performance of a Participant's Accounts, the Plan
Committee may in its discretion take into account the investment
recommendations, if any, made by the Participant. Title to and beneficial
ownership of any actual investments of the Employers (whether or not held in
trust and whether or not invested in one or more of the above-described
investment alternatives) shall at all times remain in the Employers and shall
constitute general assets of the Employers, subject only to claims of their
general creditors. A Participant or his beneficiary shall not under any
circumstances acquire any property or beneficial interest in any asset of any
Employer by virtue of such Participant's participation in the Plan.
ARTICLE 6.
VESTING
6.1. Deferral Account. The balance of a Participant's Deferral Account
(including any interest, gains or losses credited thereto) shall be fully vested
and nonforfeitable at all times.
6.2. Company Contribution Account. The balance of a Participant's Company
Contribution Account (including any interest, gains or losses credited thereto)
shall vest according to the following schedule:
Full Months of Vested
Plan Participation Percentage
------------------ ----------
Less than 24 0%
24 but less than 36 50%
36 but less than 48 75%
48 or more 100%
A Participant's "participation" shall commence upon his commencement of
deferrals under the Plan and shall cease upon his termination of employment with
the Employers. In addition, a Participant shall be 100% vested in his Company
Contribution Account upon attaining five Years of Service. Years of Service
shall mean all full calendar years of employment with the Group, whether or not
such years of employment occur before or after the Effective Date.
6.3. Full Vesting. Notwithstanding the provisions of Section 6.2, the
balance of a Participant's Company Contribution Account (including any interest,
gains or losses credited thereto) shall become fully vested and nonforfeitable
upon the Participant's death, Disability or attainment of Retirement Age;
provided the Participant is employed by the Group at the time of his death,
Disability or attainment of Retirement Age. Notwithstanding anything contained
herein to the contrary, the balance of a Participant's Company Contribution
Account shall become fully
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<PAGE> 13
vested and nonforfeitable upon the occurrence of a Change in Control Event or
Bankruptcy or Insolvency Event affecting his Employer.
ARTICLE 7.
BENEFITS
7.1. Retirement Benefit. Upon a Participant's termination of employment
with the Group on or after attainment of Retirement Age, the Participant's
Employer shall pay to the Participant a retirement benefit equal to the balance
of his Accounts as of the Crediting Date prior to the date the Participant
begins receiving payments of retirement benefits under the Plan.
7.2. Survivor Benefit. In the event of a Participant's death prior to the
commencement of the payment of his benefits under the Plan (i.e., while employed
by the Group), the Participant's Employer shall pay to the designated
beneficiary or beneficiaries of the Participant a survivor benefit equal to the
balance of the Participant's Equity Subaccount as of the day after the Crediting
Date immediately prior to the date the Participant's beneficiaries begin
receiving payments of survivor benefits under the Plan plus the greater of the
following:
(a) The present value of 120 monthly installments of the minimum
monthly survivor amount (as defined below) commencing as of
the day after the Crediting Date immediately prior to the date
the Participant's beneficiaries begin receiving payments of
survivor benefits under the Plan; or
(b) The balance of the Participant's Guaranteed Subaccount as of
the day after the Crediting Date immediately prior to the date
the Participant's beneficiaries begin receiving payments of
survivor benefits under the Plan.
For purposes of this Section, the "minimum monthly survivor amount" shall be the
amount credited with interest in accordance with Section 5.2 of (i) the
Participant's monthly deferral of Basic Compensation (in dollars) plus (ii) the
Company Matching Contribution credit made with respect to such monthly deferral
of Basic Compensation at the time of the Participant's death multiplied by four.
The minimum monthly survivor amount shall be zero in the case of a Participant
who is not currently deferring any Basic Compensation under the Plan that is
credited with interest in accordance with Section 5.2 at the time of his death.
Notwithstanding the foregoing, if a Participant commits suicide before the
second anniversary of his Participation Date, then his designated beneficiary or
beneficiaries shall only be entitled to receive the survivor benefit described
in (b) above. Also notwithstanding the foregoing, if in accordance with Section
3.3, a Participant executes a revised Deferral Agreement resulting in an
increase in the percentage of his deferrals under the Plan, and such Participant
commits suicide within two years of the effective date of this increase in his
deferral percentage, the minimum monthly survivor amount with respect to such
Participant shall be computed using the deferral percentage elected by and
applicable to such Participant immediately prior to his execution of the revised
Deferral Agreement.
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<PAGE> 14
7.3. Disability Benefit. In the event a Participant becomes Disabled
while employed by an Employer prior to Retirement Age, the Disabled
Participant's Employer shall pay to the Disabled Participant a monthly
disability benefit equal to the lesser of (1) the Participant's monthly Basic
Compensation deferral (in dollars) that is credited with interest in accordance
with Section 5.2 at the time the Participant first makes a Deferral Agreement
under this Plan or (2) the Participant's monthly Basic Compensation deferral (in
dollars) that is credited with interest in accordance with Section 5.2 at the
time the Participant becomes Disabled. The disability benefit under this Section
shall be payable to a Disabled Participant commencing on the first day of the
calendar month immediately following six consecutive months of continuous
Disability. The disability benefit payable under this Section shall terminate
upon the earlier of the cessation of the Participant's Disability, his death or
his attainment of Retirement Age. A Disabled Participant (or his beneficiaries)
shall in addition be entitled to the retirement benefit under Section 7.1 upon
attaining Retirement Age or the survivor benefit under Section 7.2 upon his
death prior to Retirement Age.
7.4. Vested Benefit. In the event a Participant terminates employment
with the Group prior to Retirement Age for any reason other than death or
Disability, the Participant's Employer shall pay to the Participant a vested
benefit equal to the vested balance of his Accounts as of the day after the
Crediting Date immediately prior to the date the Participant begins receiving
payments of retirement or vested benefits under the Plan.
7.5. Withdrawals. Subject to the limitations and restrictions contained
in this paragraph, a Participant may withdraw all or a portion of his vested
Accounts on account of Financial Hardship as determined by the Plan Committee in
its sole discretion. A Participant desiring a hardship withdrawal shall submit a
written request to the Plan Committee specifying the amount of the requested
hardship withdrawal and the reason for the Financial Hardship. Only one written
request for a hardship withdrawal under this Section shall be made by the
Participant each Plan Year. Notwithstanding anything contained herein to the
contrary, the minimum hardship withdrawal shall be $2,500 and the maximum amount
of any hardship withdrawal shall be the amount necessary to satisfy the
Financial Hardship. A Participant receiving a hardship withdrawal during the
Plan Year shall not be eligible to make Basic Compensation or bonus deferrals
until the beginning of the Plan Year commencing on or after the six-month
anniversary of the date of the hardship withdrawal.
A Participant may also withdraw all or a portion of his vested Accounts for
reasons other than Financial Hardship; provided that the amount withdrawn from
the Participant's Accounts shall first be reduced by 6%. A Participant desiring
a non-hardship withdrawal shall submit a written request to the Plan Committee
specifying the amount of the requested withdrawal. Only one written request for
a non-hardship withdrawal under this Section shall be made by the Participant
each Plan Year. Notwithstanding anything contained herein to the contrary, the
minimum non-hardship withdrawal shall be $2,500. A Participant receiving a
non-hardship withdrawal during the Plan Year shall not be eligible to make Basic
Compensation or bonus deferrals until the beginning of the Plan Year commencing
on or after the six-month anniversary of the date of the non-hardship
withdrawal.
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<PAGE> 15
ARTICLE 8.
PAYMENT OF BENEFITS
8.1. Retirement Benefit. Payment of the retirement benefit specified
under Section 7.1 shall be made to a Participant in 120 equal monthly
installments commencing as soon as administratively possible after the Crediting
Date immediately following the Participant's termination of employment with the
Group. The monthly retirement benefit payable under this Section shall be
computed so that the present value of such monthly installment payments, as of
the Crediting Date immediately preceding the commencement of such benefit,
discounted at 10% per annum, shall equal the retirement benefit specified under
Section 7.1.
Notwithstanding the above, a Participant may file a written election with the
Plan Committee, at the time he completes a Deferral Agreement, to receive his
retirement benefit specified under Section 7.1 in the form of a lump-sum cash
payment. The Participant either may revoke a prior election as to the form of
payment or make such an election one time each calendar year. The Participant
shall receive his retirement benefit in the form of payment that would have
applied on the December 31 of the year prior to his last full calendar year of
employment with the Group. Notwithstanding the preceding sentence, if the
Participant has not completed a full calendar year of employment at the time
when he terminates his employment with the Group, he shall receive his
retirement benefit in the form of payment that would have applied pursuant to
his most current election.
8.2. Survivor Benefit. Payment of the survivor benefit specified under
Section 7.2 shall be made to the designated beneficiary or beneficiaries of the
Participant in 120 equal monthly installments commencing as soon as
administratively possible after the Crediting Date immediately following the
Participant's death. The monthly survivor benefit payable under this Section
shall be computed so that the present value of such monthly installment
payments, as of the Crediting Date immediately following the Participant's
death, discounted at 10% per annum, shall equal the survivor benefit specified
under Section 7.2. Notwithstanding the above, if the Participant has filed a
written election to receive his retirement benefit in a lump-sum cash payment
(as provided in Section 8.1), then the survivor benefit specified under Section
7.2 shall be paid in a lump-sum cash payment to be paid as soon as
administratively possible after the Crediting Date immediately following the
Participant's death. The Participant either may revoke a prior election to
receive his retirement benefit as a lump sum or elect to receive his retirement
benefit as a lump sum one time each calendar year. In the event a Participant
dies while receiving installment distributions in accordance with Section 7.1 or
Section 7.4, such Participant's beneficiary or beneficiaries shall receive the
remainder of such installment payments; provided, however, that the Plan
Committee, in its sole discretion, may instead decide to pay the present value
of such remaining installments in one lump sum to the Participant's beneficiary
or beneficiaries as soon as practicable following the Participant's death.
8.3. Vested Benefit. Payment of the vested benefit specified under
Section 7.4 shall be made to a Participant in 120 equal monthly installments
commencing as soon as administratively possible after the Crediting Date
immediately following the Participant's termination of employment with the
Group. The monthly vested benefit payable under this Section shall be
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<PAGE> 16
computed so that the present value of such monthly installment payments, as of
the Crediting Date immediately preceding the commencement of such benefit,
discounted at 10% per annum, shall equal the vested benefit specified under
Section 7.4. Notwithstanding the above, a Participant may file a written
election with the Plan Committee, at the time he completes a Deferral Agreement,
to receive his vested benefit specified under Section 7.4 in the form of a
lump-sum cash payment to be paid as soon as administratively possible after the
Crediting Date immediately following the Participant's termination of employment
with the Group. The Participant either may revoke a prior election to receive
his retirement benefit as a lump sum or elect to receive his retirement benefit
as a lump sum one time each calendar year. The Participant shall receive his
vested benefit in the form of payment that would have applied on the December 31
of the year prior to his last full calendar year of employment with the Group.
Notwithstanding the preceding sentence, if the Participant has not completed a
full calendar year of employment with the Group, he shall receive his retirement
benefit in the form of payment that would have applied pursuant to his most
current election.
8.4. Acceleration of Payment Events. A Participant's vested balance of
his Accounts (or any remaining installments in the event payment of benefits has
already commenced) shall become payable in a lump-sum cash payment as soon as
administratively possible following his termination of employment with the Group
within 180 days before or after a Change in Control Event, if his employment
terminates as a result of the Change in Control Event.
8.5. Domestic Relations Orders. If a domestic relations order issued by
any court of proper authority (not limited to courts located in the United
States) directs assignment of a portion of a Participant's vested Plan benefit
to the Participant's spouse or former spouse as part of a divorce settlement,
such benefit may be paid in a lump-sum cash payment at the request of the
Participant's spouse or former spouse as soon as administratively possible after
the Crediting Date immediately following the Plan Committee's receipt of the
order, so long as the order (or the parties' mutual written direction to the
Plan Committee of how to interpret the order) clearly specifies the amount of
the Participant's vested Plan benefit assigned and the timing of distribution to
the Participant's spouse or former spouse.
8.6. Payments to Incompetents/Minors. If the Plan Committee shall find
that a Participant, former Participant or beneficiary is unable to care for his
affairs because of illness or accident, or if the Participant or beneficiary is
a minor, the Plan Committee may direct that any payment due him, unless claim
therefor shall have been made by a duly appointed legal representative, shall be
paid to his spouse, a child, a parent or other blood relative or to a person
with whom he resides, and any such payment so made shall be in complete
discharge of the liabilities of the Plan therefor.
8.7. Missing Participants or Beneficiaries. Subject to all applicable
laws relating to unclaimed property, if the Plan Committee or its delegate mails
by registered or certified mail, postage prepaid, to the last known address of a
Participant or beneficiary, a notification that he is entitled to a distribution
hereunder, and if the notification is returned by the United States Postal
Service as being undeliverable because the addressee cannot be located at the
address indicated and if the Plan Committee and its delegate have no knowledge
of such Participant's beneficiary's whereabouts within three years from the date
the notification was mailed, or if within three years
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<PAGE> 17
from the date the notification was mailed to such Participant or beneficiary he
does not respond thereto by informing the Plan Committee or its delegate of his
whereabouts, then, in either of said events, upon the December 31 coincident
with or next succeeding the third anniversary of the mailing of such
notification, the then undistributed amount in the vested Accounts of such
Participant or beneficiary shall be paid to the person or persons who would have
been entitled to take such share in the event of the death of the Participant or
beneficiary whose whereabouts are unknown, assuming that such death occurred as
of the December 31 coincident with or next succeeding the third anniversary of
the mailing of such notification.
ARTICLE 9.
MISCELLANEOUS
9.1. Rights of Participant. The Accounts shall not constitute or be
treated for any reason as trust for, property of or security interest for the
benefit of any Participant, his beneficiaries or any other person. Such Accounts
shall not represent specific investments or assets of the Employers even if the
Employers purchase life insurance or accumulate funds for the purpose of paying
a Participant or his beneficiaries hereunder. Each Participant and each Employer
acknowledge that the Participant's and beneficiaries' rights hereunder are
limited to those of unsecured general creditors of the applicable Employer and
that the creation of the Accounts does not prevent any property of such Employer
from being subject to the rights of its general creditors.
9.2. Assignment. Except to the extent provided in Section 8.5 and for any
death benefits payable under the terms of the Plan, no Participant or
beneficiary may sell, assign, transfer, encumber, or otherwise dispose of the
right to receive payments hereunder.
9.3. Employment. Nothing contained in this Plan shall confer upon a
Participant the right to continue in the employ of his Employer as an executive
or in any other capacity.
9.4. Administration. The Boards of Directors of the Companies shall
designate the persons to serve on the Plan Committee to administer the Plan. The
Plan Committee shall have full power, authority, and discretion to interpret,
construe, and administer the Plan, and the Plan Committee's interpretations and
construction thereof, and actions thereunder, including the amount or recipient
of any payment to be made therefrom, shall be final, binding and conclusive on
all parties for all purposes to the maximum extent permitted by law. The Plan
shall be administered as an unfunded plan which is not intended to meet the
qualification requirements of Section 401(a) of the Code. However, any Employer
may establish one or more grantor trusts of the type referred to as a "Rabbi
Trust" in respect of its obligations under the Plan. No current or former
Participant, beneficiary or other person, individually or as a member of a
group, shall have any right, title or interest in any Account, any fund, any
specific sum of money, any grantor trust or in any asset which may be acquired
by any Employer in respect of its obligations under this Plan (other than as a
general creditor of such Employer with an unsecured claim against its general
assets).
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<PAGE> 18
9.5. Liability of the Plan Committee. No member of the Plan Committee
shall be liable for any loss unless resulting from his own fraud or willful
misconduct, and no member shall be personally liable upon or with respect to any
agreement, act, transaction or omission executed, committed or suffered to be
committed by himself as a member of the Plan Committee or by any other member,
agent, representative or employee of the Plan Committee. The Plan Committee and
any individual member thereof and any agent thereof shall be fully protected in
relying upon the advice of the following professional consultants or advisors
employed by the Companies or the Plan Committee: any attorney insofar as legal
matters are concerned, any accountant insofar as accounting matters are
concerned, and any actuary insofar as actuarial matters are concerned.
9.6. Indemnification. The Employers hereby indemnify and agree to hold
harmless the members of the Plan Committee and all directors, officers, and
employees of each Employer against any and all parties whomsoever, and all
losses therefrom, including without limitation, costs of defense, attorneys'
fees and reasonable costs of settlement, based upon or arising out of any act or
omission relating to, or in connection with this Plan other than losses
resulting from such person's fraud or willful misconduct.
9.7. Termination and Amendment. The Companies, by action of their Boards
of Directors, may at any time and from time to time terminate, suspend, alter or
amend this Plan, and no Participant or any other person shall have any right,
title, interest or claim against any Employer, its directors, officers or
employees for any amounts, except that each Participant or his beneficiaries
shall be entitled to payment of all benefits accrued through the date of
amendment or termination. Upon termination of the Plan by the Companies, all
deferrals by Participants under Section 3.1 shall cease, a Participant's Company
Contribution Account shall continue to vest in the manner provided in Article 6
hereof and interest, gains and losses on Participant Accounts shall continue to
accrue and be credited as provided in Article 5. Notwithstanding the foregoing,
the Companies, in their sole discretion, may make payment of each Participant's
benefits accrued through the date of termination in a lump sum as soon as
practicable after such date of termination.
9.8. Beneficiary Designation. Each Participant shall have the right to
designate one or more beneficiaries to receive all or any part of the benefits
to which the Participant may be entitled under the Plan and which may remain
unpaid at the time of the Participant's death. Such designation shall be
effective by filing a written beneficiary designation form with the Plan
Committee, and may be changed from time to time by similar action. If no such
designation of beneficiary is made by the Participant, remaining benefits
payable under the Plan shall be paid to his estate.
9.9. Claims Procedure. If the Participant or the Participant's
beneficiary (hereinafter referred to as a "Claimant") is denied all or a portion
of an expected benefit under this Plan for any reason, he or she may file a
claim with the Plan Committee. The Plan Committee shall notify the Claimant
within 90 days of allowance or denial of the claim, unless the Claimant receives
written notice from the Plan Committee prior to the end of the 90-day period
stating that special circumstances require an extension (of up to 90 additional
days) of the time for decision. The notice of the Plan Committee's decision
shall be in writing, sent by mail to Claimant's last known address, and if a
denial of the claim, shall contain the following information: (a) the specific
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<PAGE> 19
reasons for the denial; (b) specific reference to pertinent provisions of the
Plan on which the denial is based; and (c) if applicable, a description of any
additional information or material necessary to perfect the claim, an
explanation of why such information or material is necessary, and an explanation
of the claims review procedure. A Claimant is entitled to request a review of
any denial of his claim by the Plan Committee. The request for review must be
submitted within 60 days of mailing of notice of the denial. Absent a request
for review within the 60-day period, the claim shall be deemed to be
conclusively denied. The Claimant or his representatives shall be entitled to
review all pertinent documents, and to submit issues and comments orally and in
writing. The Plan Committee shall render a review decision in writing within 60
days after receipt of a request for a review, provided that, in special
circumstances the Plan Committee may extend the time for decision by not more
than 60 days upon written notice to the Claimant. The Claimant shall receive
written notice of the Plan Committee's review decision, together with specific
reasons for the decision and reference to the pertinent provisions of the Plan.
9.10. Notice. Any and all notices, designations or reports shall be in
writing and delivered personally or by registered or certified mail, return
receipt requested, addressed, in the case of the Plan Committee, to the
principal office of Ansell Edmont Industrial Inc. and, in the case of a
Participant or Participant's beneficiary, to such person's home address as last
shown on the records of the applicable Employer.
9.11. Headings and Gender. All articles and section headings in this Plan
are used for convenience and not for construction of this Plan. Any reference to
a gender extends to other genders.
9.12. Not Current Compensation. Except as provided in the Ansell Edmont
Industrial Inc. Restoration of Retirement Income Plan or the Restoration of
Ansell Cash Balance Retirement Plan (or in any successor plan or plans thereto),
no deferred compensation under the Plan shall be deemed salary or other
compensation to the Participant for the purpose of computing benefits to which
he may be entitled under any retirement plan or other arrangement of any
Employer for the benefit of its employees.
9.13. Rights to Other Benefits. Nothing contained herein shall affect or
interfere with the right of the Participant to share or participate in any
retirement plan of his Employer in which the Participant may otherwise be
entitled to share or participate.
9.14. Governing Law. The Plan has been made and executed in the State of
Ohio and the validity, enforceability, interpretation and effect hereof shall be
governed by the laws of the State of Ohio, except as preempted by Federal law.
9.15. Binding Effect. The Plan shall be binding upon and inure to the
benefit of the Companies, the Employers, including their successors and assigns,
and the Participants, their heirs and personal representatives.
9.16. Severability. If any provision of the Plan shall be found to be
invalid or unenforceable by a court of competent jurisdiction, the validity or
enforceability of the remaining provisions of the Plan shall remain in full
force and effect.
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<PAGE> 20
9.17. Status of Certain Ansell Incorporated Employees. Effective July 1,
1995, the Ansell Incorporated Deferred Compensation Plan was amended and
restated. At that time, several employees of Ansell Incorporated ceased to be
eligible to participate generally in that restated plan. However, certain of
these employees have remained eligible to participate in that plan on a limited
"grandfathered" basis, and such employees have been notified by Ansell
Incorporated as to their status under that plan. Notwithstanding anything in the
Plan to the contrary, as of the Effective Date, these "grandfathered" Ansell
Incorporated employees shall continue to be eligible to participate in the Plan
only on this limited basis. As such, their participation shall be limited to the
opportunity to make Basic Compensation and bonus deferrals, investment crediting
in accordance with Section 5.2, and frozen Disability and survivor benefits.
IN WITNESS WHEREOF, the Companies have adopted the Plan effective as of
January 1, 1998.
By: /s/ Richard K. Davis
------------------------------------
Richard K. Davis
Director of Human Resources,
Ansell Edmont Industrial Inc.
By: /s/ Roger K. Williams
------------------------------------
Roger K. Williams
Director of Human Resources,
Ansell Healthcare Division
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<PAGE> 21
APPENDIX A
ANSELL DEFERRED COMPENSATION PLAN
DEFERRAL AGREEMENT
Employee: __________________________ Social Security Number: _________________
As an eligible participant under the Ansell Deferred Compensation Plan (the
"Plan"), you may choose to defer Basic Compensation and/or bonuses. Basic
Compensation means your current salary, including any salary increases paid
during the Plan Year (which is the calendar year). Bonuses include any bonuses
paid with respect to services which you will perform during the fiscal year of
your Employer beginning after this election. Notwithstanding the foregoing, your
election to defer a specified portion of your bonuses will apply to any bonus
payable with respect to your Employer's fiscal year ending June 30, 1998;
provided that such bonus is earned substantially by virtue of services to be
performed by you after January 1, 1998.
I. Participant Deferrals. I elect to defer the receipt of a portion of my
compensation beginning on the date specified above, as follows (select and
complete one or more of the following):
|_| ____% of Basic Compensation (specific percentage of Basic
Compensation. Minimum deferral = 1% of Basic Compensation; maximum
deferral = 30% of Basic Compensation).
|_| ____% of bonuses (specific percentage of bonuses, if any, up to
100%).
|_| I do not wish to make deferrals under the Plan at this time.
II. Change in Deferral Election. I understand that this Deferral Agreement
shall remain in effect until changed or revoked as permitted under the
Plan. I may change the amount of my deferrals effective January 1 of each
year, provided a new Deferral Agreement is received by the Plan Committee
prior to the effective date of the new agreement. I may revoke a prior
Deferral Agreement effective prospectively on the first day of any
calendar month, provided I show evidence of financial hardship (as defined
in the Plan and as determined by the Plan Committee), and I agree to
suspend my deferrals for a certain period of time. I may also revoke a
prior Deferral Agreement as to Basic Compensation for reasons other than
financial hardship, provided that the period of suspension of my Basic
Compensation deferrals may be longer in that event. Absent any change or
revocation, this Deferral Agreement shall remain in effect as long as I am
employed by Ansell Perry Inc., Ansell Incorporated or Ansell Edmont
Industrial Inc. (the "Ansell Companies") and shall automatically terminate
upon my termination of employment with the Ansell Companies or upon the
termination of the Plan.
<PAGE> 22
III. Investment Crediting Methods. I understand that I have the option of
receiving a fixed rate of return on all or a portion of my Basic
Compensation deferrals and related Company Contribution Account credits by
allocating such amounts to the "Guaranteed Subaccount." I also have the
option of having all or a portion of my Basic Compensation deferrals and
related Company Contribution credits credited with gains and losses in
accordance with the performance of one or more investment alternatives
chosen by me in Part IV below. I understand that all of my bonus deferrals
and related Company Contribution Account credits will be credited with
gains and losses under the "Equity Subaccount" in accordance with the
performance of the investment alternatives chosen by me in Part V below.
IV. Investment Recommendation for Basic Compensation Deferrals. I recommend
that my Basic Compensation deferrals and corresponding Company
Contribution Account credits be credited with interest, earnings and/or
losses in accordance with the fixed rate of return of the Guaranteed
Subaccount and/or the investment performance (within the Equity
Subaccount) of the below-listed indices with the following percentage
allocations:
Index Percentage Allocated
----- --------------------
(in 10% increments)
Guaranteed Subaccount _____%
Fidelity VIP Fund II Investment Grade Bond Portfolio _____%
Janus Aspen Series Worldwide Growth Portfolio _____%
CIGNA Variable Products S&P 500 Index Portfolio _____%
CIGNA Variable Products Money Market Portfolio _____%
Alger American Growth Portfolio _____%
Alger American MidCap Growth Portfolio _____%
Fidelity VIP Equity-Income Portfolio _____%
MFS Emerging Growth Series _____%
MFS Total Return Series _____%
OPCAP Advisors OCC Trust Managed Portfolio _____%
OPCAP Advisors OCC Trust Small Cap Portfolio _____%
Templeton International Fund - Class 1 _____%
Total 100%
I UNDERSTAND THAT THE ABOVE REQUEST SHALL BE FORWARDED TO THE PLAN
COMMITTEE. THE PLAN COMMITTEE, IN ITS SOLE DISCRETION, MAY CHOOSE TO
FOLLOW MY REQUEST OR MAY SELECT A DIFFERENT MIX OF INDICES.
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<PAGE> 23
V. Investment Recommendations for Bonus Deferrals. I recommend that my bonus
deferrals and corresponding Company Contribution Account credits be
credited with earnings and losses in accordance with the investment
performance (within the Equity Subaccount) of the below-listed indices
with the following percentage allocations:
Index Percentage Allocated
----- --------------------
(in 10% increments)
Fidelity VIP Fund II Investment Grade Bond Portfolio _____%
Janus Aspen Series Worldwide Growth Portfolio _____%
CIGNA Variable Products S&P 500 Index Portfolio _____%
CIGNA Variable Products Money Market Portfolio _____%
Alger American Growth Portfolio _____%
Alger American MidCap Growth Portfolio _____%
Fidelity VIP Equity-Income Portfolio _____%
MFS Emerging Growth Series _____%
MFS Total Return Series _____%
OPCAP Advisors OCC Trust Managed Portfolio _____%
OPCAP Advisors OCC Trust Small Cap Portfolio _____%
Templeton International Fund - Class 1 _____%
Total 100%
I UNDERSTAND THAT THE ABOVE REQUEST SHALL BE FORWARDED TO THE PLAN
COMMITTEE. THE PLAN COMMITTEE, IN ITS SOLE DISCRETION, MAY CHOOSE TO
FOLLOW MY REQUEST OR MAY SELECT A DIFFERENT MIX OF INDICES.
VI. Change in Crediting Index Requests. I understand that I may request to
revoke my existing investment requests under Parts IV and V above either
by submitting a new Deferral Agreement form to the Plan Committee or using
a form approved for use by the Plan Committee for reallocating investment
requests or via touch-tone telephone in the manner established for this
purpose by the Plan Committee; provided that I may not change my crediting
index requests more than once per month. I further understand that I may
not revoke existing investment requests between the Guaranteed and Equity
Subaccounts on Account balances existing as of the date of the revocation.
VII. No Guaranty of Employment. I understand that nothing in the Plan or this
form shall be considered to be a contract of employment between me and my
Employer. I also understand that nothing contained in the Plan or this
form shall give me the right to be retained in the employ of my Employer
or to interfere with the right of my Employer to discharge me or any other
employee at any time, nor shall it give my Employer the right to require
me or any employee to remain in its employ or to interfere with my or any
employee's right to terminate employment at any time.
-3-
<PAGE> 24
VIII. Miscellaneous. I understand that this Deferral Agreement supersedes and
nullifies any prior Deferral Agreement and that the execution of this
Deferral Agreement shall not be construed as giving me any right to
receive any bonus from my Employer. I ACKNOWLEDGE THAT MY EMPLOYER AND THE
PLAN COMMITTEE SHALL NOT BE RESPONSIBLE OR LIABLE TO ME IN ANY WAY FOR THE
MIX OF INVESTMENTS RECOMMENDED BY ME UNDER PARTS IV AND V ABOVE OR FOR THE
PERFORMANCE OF SUCH INVESTMENTS. I further acknowledge that I have
received a copy of the summary of the Plan and have reviewed this document
and understand and agree that my participation in the Plan will be subject
to the terms and conditions contained in the Plan. I acknowledge that I
should consult my own tax advisors before making this Deferral Agreement
in order to determine the tax effect of my participation in the Plan and
its effects in conjunction with other benefits provided by my Employer to
which I may be entitled.
- ------------------------------------- -------------------------
Signature of Participant Date
- ------------------------------------- -------------------------
On behalf of Employer Date
-4-
<PAGE> 25
APPENDIX B
ANSELL DEFERRED COMPENSATION PLAN
DISTRIBUTION ELECTION
Under the Ansell Deferred Compensation Plan (the "Plan"), you may elect, once in
each calendar year, to receive all of your accumulated benefits under the Plan
in either a lump sum or in 120 equal monthly installments. The election that you
have in effect on the December 31 of the year prior to your last full calendar
year of employment will apply. However, if you have not yet completed a full
calendar year of employment when you terminate employment or if you die, your
last effective election will control the form of your or your beneficiary's
distribution.
I. Distribution Election.*
[ ] I hereby elect to receive my benefits in a lump sum.
[ ] I hereby elect to receive my benefits in 120 equal monthly installments.
* YOUR BENEFITS WILL BE PAID IN 120 EQUAL MONTHLY INSTALLMENTS IF YOU FAIL
TO MAKE AN ELECTION.
II. No Guaranty of Employment. I understand that nothing in the Plan or this
form shall be considered to be a contract of employment between me and my
Employer. I also understand that nothing contained in the Plan or this
form shall give me the right to be retained in the employ of my Employer
or to interfere with the right of my Employer to discharge me or any other
employee at any time, nor shall it give my Employer the right to require
me or any employee to remain in its employ or to interfere with my or any
employee's right to terminate employment at any time.
III. Miscellaneous. I understand that this Distribution Election supersedes and
nullifies any prior Distribution Election. I further acknowledge that I
have received a copy of the summary of the Plan and have reviewed this
document and understand and agree that my participation in the Plan will
be subject to the terms and conditions contained in the Plan. I
acknowledge that I have been advised to consult my own tax advisors before
making this Distribution Election in order to determine the tax effect of
my participation in the Plan and its effects in conjunction with other
benefits provided by my Employer to which I may be entitled.
- -------------------------- ------------------------------------------
Date Participant's Signature
<PAGE> 26
APPENDIX C
ANSELL DEFERRED COMPENSATION PLAN
BENEFICIARY DESIGNATION
I, _________________________, am a Participant under the Ansell Deferred
Compensation Plan (the "Plan"). I designate the following as my primary
beneficiary(ies) to receive any benefits payable under the Plan by reason of my
death (attach additional pages if more space is needed):
Name(s), Address(es) and Social
Security Number(s) of Primary Relationship and Portion of
Beneficiary(ies): Benefit Payable to Each:
------------------------- ---------------------------
If no primary beneficiary is living or is in existence on the date of my
death, the following shall be my successor beneficiary(ies) under the Plan
(attach additional pages if more space is needed):
Name(s), Address(es) and Social
Security Number(s) of Successor Relationship and Portion of
Beneficiary(ies): Benefit Payable to Each:
------------------------- ---------------------------
I revoke any beneficiary designation previously made by me with respect to
the Plan. I understand that I may change the designations above at any time by
filing a new designation form with the Plan Committee, and that such designation
shall be effective upon receipt by the Plan Committee.
I understand that, where I have designated more than one primary and/or
successor beneficiary, if a primary (or successor, if applicable) beneficiary
dies (or, if a trust, goes out of existence) before my benefits are to be
distributed among all designated beneficiaries, the predeceased beneficiary's
share shall be distributed among the remaining primary (or successor)
beneficiaries in proportion to their respective shares. My Employer may
distribute Plan benefits to any trustee named as a beneficiary in this form
without inquiring into, or otherwise being responsible for, the application of
such distribution. I further understand that, if no primary or
<PAGE> 27
successor beneficiary is living when my benefits are to be distributed among all
beneficiaries, the entire benefit will be paid to my estate.
Dated: __________________ __________________________________
Signature of Participant
__________________________________
Social Security Number
Received this _____ day of _______________, 19___.
__________________________________
on behalf of the Employer
-2-
<PAGE> 1
EXHIBIT 10.1.2
ANSELL CASH BALANCE PENSION RESTORATION PLAN
Amended and Restated Effective June 30, 1998
<PAGE> 2
<TABLE>
TABLE OF CONTENTS
<C> <C>
1. Introduction........................................................1
2. Definitions.........................................................1
3. Administration......................................................2
4. Eligibility.........................................................2
5. Amount of Benefits..................................................2
6. Payment of Benefits.................................................4
7. Participant's Rights................................................4
8. Actuarial Equivalents...............................................5
9. Amendment and Discontinuance........................................6
10. Restriction on Assignment...........................................6
11. Continued Employment................................................6
12. Liability of Pension Committee......................................7
13. Indemnification.....................................................7
14. Termination of Service for Dishonesty...............................7
15. Binding on Employers, Participants and Their Successors.............7
16. Rights of Affiliates to Participate.................................8
17. Law Governing.......................................................8
</TABLE>
<PAGE> 3
ANSELL CASH BALANCE PENSION RESTORATION PLAN
Amended and Restated Effective June 30, 1998
1. Introduction
The Ansell Edmont Industrial Inc. Restoration of Retirement Income Plan
(hereinafter referred to as the "Restoration Plan") was established effective
May 1, 1991 by Ansell Edmont Industrial Inc. (which was renamed Ansell
Protective Products Inc. effective July 1, 1998) to provide pension and
pension-related benefits to certain employees of Ansell Edmont Industrial Inc.
who were participants in the Ansell Edmont Industrial Inc. Retirement Plan (the
"Retirement Plan") and whose benefits under the Retirement Plan were limited due
to certain restrictions in the Internal Revenue Code of 1986, as amended (the
"Code"). The Retirement Plan was amended and restated effective July 1, 1997 to
be a cash balance pension plan, and the name of the Retirement Plan was changed
to the Ansell Edmont Industrial Inc. Cash Balance Pension Plan (the "Edmont Cash
Balance Plan") as of that date.
Effective June 30, 1998, the Ansell Cash Balance Retirement Plan (which
was maintained by Ansell Perry Inc. for its employees and the employees of
Ansell Incorporated) was merged into the Edmont Cash Balance Plan, and the name
of the Edmont Cash Balance Plan was changed to the Ansell Cash Balance Pension
Plan (hereinafter referred to as the "Basic Plan"). In connection with that
merger, effective June 30, 1998, the Restoration of Ansell Cash Balance
Retirement Plan is hereby merged into the Restoration Plan, and the name of the
Restoration Plan is hereby changed to the ANSELL CASH BALANCE PENSION
RESTORATION PLAN.
This Restoration Plan is maintained by Ansell Protective Products Inc.
to provide pension and pension-related benefits to certain employees of Ansell
Protective Products Inc. and Ansell Healthcare Products Inc. (which was created
as the result of the merger of Ansell Perry Inc. and Ansell Incorporated on July
1, 1998) who are Participants in the Basic Plan and whose benefits under the
Basic Plan are restricted by the fact that the term "Compensation" in the Basic
Plan excludes amounts deferred under the Deferred Compensation Plan (as defined
below) and/or by the restrictions of Sections 401(a)(17) and 415 of the Code, so
that the total pension and pension-related benefits of such Participants can be
determined on the same basis as all other Participants in the Basic Plan. Ansell
Protective Products Inc. and Ansell Healthcare Products Inc. shall hereinafter
be referred to collectively as the "Companies."
2. Definitions
Capitalized terms used in this Restoration Plan shall have the meanings
assigned to such terms in the Basic Plan. In addition, the following terms, when
used in this Restoration Plan, shall be defined as follows:
(a) "Deferred Compensation Plan" means the non-qualified deferred
compensation plan maintained by Ansell Protective Products
Inc. for the benefit of certain executives and other
management level employees of the Companies. As of the
<PAGE> 4
Effective Date, the "Deferred Compensation Plan" means the
Ansell Deferred Compensation Plan and any successors to such
plan.
(b) "Effective Date" means June 30, 1998 with respect to this
amendment and restatement.
(c) "Employers" means the Companies and any other affiliates or
subsidiaries of the Companies that adopt this Restoration Plan
for the benefit of their eligible employees by approval of
their boards of directors and the Boards of Directors of the
Companies. As of the Effective Date, the Companies are the only
participating Employers hereunder.
3. Administration
Ansell Protective Products Inc. is the sponsor of this Restoration
Plan. This Restoration Plan shall be administered by a committee (the "Pension
Committee"), which shall, unless the Companies' Boards of Directors appoint
different members, consist of the same members as the committee that administers
the Basic Plan. The Pension Committee shall administer this Restoration Plan in
a manner consistent with the administration of the Basic Plan, as from time to
time amended and in effect, except that this Restoration Plan shall be
administered as an unfunded plan which is not intended to meet the qualification
requirements of Section 401(a) of the Internal Revenue Code of 1986, as amended.
The Pension Committee shall have full power and authority to interpret, construe
and administer this Restoration Plan and the Pension Committee's interpretations
and constructions thereof, and all actions hereunder, including the amount or
recipient of the payments to be made therefrom, shall be binding and conclusive
on all persons for all purposes.
4. Eligibility
Participants in the Basic Plan whose pension or pension-related
benefits under the Basic Plan are limited by (i) the provisions thereof relating
to the maximum benefit limitations of Section 415 of the Code (the "415 Limit"),
(ii) the limitation on includible Compensation under Section 401(a)(17) of the
Code as adjusted and/or amended from time to time (the "401(a)(17) Limit")
and/or (iii) the definition of the term "Compensation" in the Basic Plan
excluding amounts deferred under the Deferred Compensation Plan shall, if
selected for participation by the Pension Committee, be eligible for benefits
under this Restoration Plan. In no event shall a Participant who is not entitled
to benefits under the Basic Plan be eligible for benefits under this Restoration
Plan. Notwithstanding any provision in the Restoration Plan to the contrary, the
eligibility of all Participants in the Restoration Plan is subject to the
discretion of the Pension Committee.
5. Amount of Benefits
The benefits payable to a Participant or his or her Beneficiary or
Beneficiaries under this Restoration Plan shall be equal to the excess, if any,
of:
(a) The benefits that would have been paid on or after the
Effective Date to such Participant, or on his or her behalf to
his or her Beneficiary or Beneficiaries, under the Basic Plan,
if the provisions of the Basic Plan were administered: (i) by
-2-
<PAGE> 5
including amounts deferred under the Deferred Compensation Plan
in the term "Compensation" in the Basic Plan and (ii) without
regard to the 415 Limit or the 401(a)(17) Limit; over
(b) The benefits that are payable to such Participant, or on his or
her behalf to his or her Beneficiary or Beneficiaries, under
the Basic Plan.
In making this computation, it is intended that the recipient should
receive approximately an amount from this Restoration Plan which would enable
him or her to purchase an individual annuity that would produce a monthly
benefit, after payment of applicable Federal, state and local income taxes on
the distribution from this Restoration Plan assuming a 25% tax rate, equal to
the monthly benefit, after payment of such income taxes, that the recipient
would have received under the Basic Plan (i) had the definition of the term
"Compensation" in the Basic Plan included amounts deferred under the Deferred
Compensation Plan and (ii) had Sections 415 and 401(a)(17) of the Code not been
applicable thereto, less the benefits which are payable under the Basic Plan.
For these purposes, 125% of the benefit will be payed, regardless of the
participant's actual taxes.
Benefits payable under this Restoration Plan to any recipient shall be
computed in accordance with the foregoing and with the objective that such
recipient should receive under this Restoration Plan and the Basic Plan that
total amount which would have been payable to that recipient solely under the
Basic Plan (i) had the definition of the term "Compensation" in the Basic Plan
included amounts deferred under the Deferred Compensation Plan and (ii) had the
415 Limit and the 401(a)(17) Limit not been applicable thereto. In the event
that the maximum amount of retirement income limitation of Section 401(a)(17) or
Section 415 of the Code as set forth in the Basic Plan is increased after the
date of commencement of the Participant's retirement income under the Basic Plan
due to any cost-of-living adjustment announced by the Internal Revenue Service
pursuant to the provisions of Section 401(a)(17) or Section 415(d) of the Code
and if, as a result of such increase, the amount of retirement income or other
benefit payable under the Basic Plan is increased, the amount of the retirement
income or other benefit payable to or on behalf of the Participant under this
Restoration Plan will be correspondingly reduced. If, because the date that the
amount of such cost-of-living adjustment announced by the Internal Revenue
Service is after the effective date of such adjustment, or because of any other
reason the Participant or his or her Beneficiary has received a retroactive
increase in the amount of the benefit payable on his or her behalf under the
Basic Plan that causes the benefits that he or she receives under this
Restoration Plan to be in excess of the amounts that are due under this
Restoration Plan, the excess of the benefits that have actually been paid to or
on behalf of the Participant under this Restoration Plan over the amounts that
are due under this Restoration Plan shall be forfeited and must be refunded to
the respective Company or other Employer by the Participant or, if applicable,
his or her Beneficiary or Beneficiaries, in a manner suitable to the Pension
Committee.
6. Payment of Benefits
Payment of benefits under this Restoration Plan shall be made only when
the Participant, or his or her Beneficiary or Beneficiaries, begins to receive
distribution of the Participant's benefits under the Basic Plan or as soon as
practicable thereafter. Payments shall be made in the
-3-
<PAGE> 6
same manner as the Participant's benefits under the Deferred Compensation Plan
are paid, or if the Participant does not have a benefit under the Deferred
Compensation Plan, in one lump-sum payment or, at the election of the
Participant, in either 60 or 120 equal monthly installments. The Pension
Committee, in its full discretion, shall utilize reasonable actuarial
assumptions in converting the Participant's Restoration Plan benefit to the
applicable form of payment. The applicable Employer shall withhold from any
payment hereunder all amounts of Federal and state taxes (including FICA and
Medicare taxes) required by law to be withheld.
7. Participant's Rights
A Participant or Beneficiary who feels he or she is being denied any
benefit or right provided under this Restoration Plan must file a written claim
with the Pension Committee. All such claims shall be submitted on a form
provided by the Pension Committee which shall be signed by the claimant and
shall be considered filed on the date the claim is received by the Pension
Committee.
Upon the receipt of such a claim and in the event the claim is denied,
the Pension Committee shall, within 90 days after its receipt of such claim,
provide such claimant a written statement which shall be delivered or mailed to
the claimant by certified or registered mail to his or her last known address,
which statement shall contain the following:
(a) the specific reason or reasons for the denial of benefits;
(b) a specific reference to the pertinent provisions of this
Restoration Plan or the Basic Plan upon which the denial is
based;
(c) a description of any additional material or information which
is necessary; and
(d) an explanation of the review procedure provided below;
provided, however, in the event that special circumstances require an extension
of time for processing the claim, the Pension Committee shall provide such
claimant with such written statement described above not later than 180 days
after receipt of the claimant's claim. In such event, the Pension Committee
shall furnish the claimant, within 90 days after its receipt of such claim,
written notification of the extension explaining the circumstances requiring
such extension and the date that it is anticipated that such written statement
will be furnished.
Within 60 days after receipt of a notice of a denial of benefits as
provided above, if the claimant disagrees with the denial of benefits, the
claimant or his or her authorized representative must request, in writing, that
the Pension Committee review his or her claim and may request to appear before
the Pension Committee for such review. In conducting its review, the Pension
Committee shall consider any written statement or other evidence presented by
the claimant or his or her authorized representative in support of his or her
claim. The Pension Committee shall give the claimant and his or her authorized
representative reasonable access to all pertinent documents necessary for the
preparation of his or her claim.
-4-
<PAGE> 7
Within 60 days after receipt by the Pension Committee of a written
application for review of his or her claim, the Pension Committee shall notify
the claimant of its decision by personal delivery or by certified or registered
mail to his or her last known address; provided, however, in the event that
special circumstances require an extension of time for processing such
application, the Pension Committee shall so notify the claimant of its decision
not later than 120 days after receipt of such application, but, in such event,
the Pension Committee shall furnish the claimant, within 60 days after its
receipt of such application, written notification of the extension explaining
the circumstances requiring such extension and the date that it is anticipated
that its decision will be furnished. The decision of the Pension Committee shall
be in writing and shall include the specific reasons for the decision presented
in a manner calculated to be understood by the claimant and shall contain
reference to all relevant Restoration Plan provisions on which the decision was
based. The decision of the Pension Committee shall be final and conclusive.
A Participant shall not be entitled to any payment from the trust fund
maintained under the Basic Plan on the basis of any benefits to which he or she
may be entitled under this Restoration Plan. All benefits payable under this
Restoration Plan to or on behalf of any Participant who was employed by either
of the Companies shall be paid from the general assets of the respective Company
and all benefits payable to or on behalf of any Participant who was employed by
any other Employer that has adopted this Restoration Plan with the consent of
the Companies shall be paid from the general assets of such Employer. Either
Company or any other Employer may, in its sole discretion, establish a separate
fund or account to make payment of benefits to a Participant or his or her
Beneficiary or Beneficiaries hereunder. Whether or not either Company or such
other Employer, in its sole discretion, does establish such a fund or account,
no Participant, his or her Beneficiary or Beneficiaries or any other person
shall have, under any circumstances, any interest whatever in any particular
property or assets of the Companies or of any other Employer by virtue of this
Restoration Plan, and the rights of the Participant, his or her Beneficiary or
Beneficiaries or any other person who may claim a right to receive benefits
under this Restoration Plan shall be no greater than the rights of a general
unsecured creditor of the Participant's respective Employer.
8. Actuarial Equivalents
In determining actuarially equivalent values for purposes of this
Restoration Plan, such actuarial assumptions (including assumptions as to
mortality and interest rates) as are adopted by the Pension Committee for the
purposes of this Restoration Plan shall be used. Such assumptions may, but need
not, be the same as the corresponding assumptions used under the Basic Plan.
-5-
<PAGE> 8
9. Amendment and Discontinuance
This Restoration Plan may be amended or discontinued at any time with
the approval of the Boards of Directors of the Companies. The Board of Directors
of either Company may amend this Restoration Plan at any time with respect to
Participants who are employees of such Company without the approval of the Board
of Directors of the other Company. However, if this Restoration Plan should be
amended or discontinued, the Companies or any other Employers which have adopted
this Restoration Plan, as the case may be, shall be liable for any benefits
accrued under this Restoration Plan as of the date of such action for
Participants who are or have been employed by the Companies, or such other
Employers, where such accrued benefits shall be the actuarially determined
benefits as of such date of amendment or discontinuance that each Participant or
his or her Beneficiary or Beneficiaries is receiving under this Restoration Plan
or, with respect to Participants who are in the employment of the Companies or
any other Employers that have adopted this Restoration Plan on such date, that
each such Participant would have received as of such date under this Restoration
Plan if his or her employment had terminated as of the date of amendment or
discontinuance.
10. Restriction on Assignment
The benefits provided hereunder are intended for the personal security
of persons entitled to payment under this Restoration Plan and are not subject
in any manner to the debts or other obligations of the persons to whom they are
payable. The interest of any Participant or his or her Beneficiary or
Beneficiaries may not be sold, transferred, assigned, or encumbered in any
manner, either voluntarily or involuntarily, and any attempt so to anticipate,
alienate, sell, transfer, assign, pledge, encumber, or charge the same shall be
null and void; neither shall the benefits hereunder be liable for or subject to
the debts, contracts, liabilities, engagements, or torts of any person to whom
such benefits or funds are payable, nor shall they be subject to garnishment,
attachment, or other legal or equitable process nor shall they be an asset in
bankruptcy.
If a Participant or any other person entitled to a benefit under this
Restoration Plan becomes bankrupt or makes an assignment for the benefit of
creditors or in any way suffers a lien or judgment against his or her personal
assets, or in any way attempts to anticipate, alienate, sell, assign, pledge,
encumber or charge a benefit, right or account, then such benefit, right or
account in the discretion of the Pension Committee may cease and terminate.
11. Continued Employment
Nothing contained in this Restoration Plan shall be construed as
conferring upon an employee the right to continue in the employment of either
Company or any other Employer in any capacity or as otherwise affecting the
employment relationship.
-6-
<PAGE> 9
12. Liability of Pension Committee
No member of the Pension Committee shall be liable for any loss unless
resulting from his or her own fraud or willful misconduct, and no member shall
be personally liable upon or with respect to any agreement, act, transaction or
omission executed, committed or suffered to be committed by himself as a member
of the Pension Committee or by any other member, agent, representative or
employee of the Pension Committee. The Pension Committee and any individual
member of the Pension Committee and any agent thereof shall be fully protected
in relying upon the advice of the following professional consultants or advisors
employed by the Companies or the Pension Committee: any attorney insofar as
legal matters are concerned, any accountant insofar as accounting matters are
concerned and any actuary insofar as actuarial matters are concerned.
13. Indemnification
The Companies hereby indemnify and agree to hold harmless the current
and former members of the Pension Committee and all directors, officers, and
employees of the Companies and of any other Employers which have adopted this
Restoration Plan against any and all parties whomsoever, and all losses
therefrom, including without limitation, costs of defense, attorneys' fees and
reasonable costs of settlement, based upon or arising out of any act or omission
relating to, or in connection with this Restoration Plan other than losses
resulting from such person's fraud or willful misconduct.
14. Termination of Service for Dishonesty
If a Participant's service with either Company or any other Employer
participating in this Restoration Plan is terminated because of dishonest
conduct injurious to the Company or such other Employer, or if dishonest conduct
injurious to either Company or any other Employer committed by a Participant is
determined by the Pension Committee to exist during the lifetime of the
Participant and within one year after his or her service with the Company or
such other Employer is terminated, the Pension Committee may terminate such a
Participant's interest and benefits under this Restoration Plan.
The dishonest conduct injurious to either Company or any other Employer
participating in this Restoration Plan committed by a Participant shall be
determined and decided by the Pension Committee only after a full investigation
of such alleged dishonest conduct and an opportunity has been given the
Participant to appear before the Pension Committee to present his or her case.
The decision made by the Pension Committee in such cases shall be final and
binding on all Participants and other persons affected by such decision.
15. Binding on Employers, Participants and Their Successors
This Restoration Plan shall be binding upon and inure of the benefit of
the Companies and to any other Employers participating in this Restoration Plan,
their successors and assigns and to each Participant and his or her heirs,
executors, administrators and duly appointed legal representatives.
-7-
<PAGE> 10
16. Rights of Affiliates to Participate
Any Employers participating in the Basic Plan may, in the future, adopt
this Restoration Plan with the consent of the Companies provided the proper
action is taken by the board of directors of such Employer. The administrative
powers and control of the Companies, as provided in this Restoration Plan, shall
not be deemed diminished under this Restoration Plan by reason of the
participation of any other Employers, and the administrative powers and control
granted hereunder to the Pension Committee shall be binding upon any Employer
adopting this Restoration Plan. Each Employer adopting this Restoration Plan
shall have the obligation to pay the benefits to its Participants who were in
its employment hereunder and no other Employers shall have such obligation, and
any failure by a particular Employer to live up to its obligations under this
Restoration Plan shall have no effect on any other Employers. The Companies may
discontinue this Restoration Plan at any time by proper action of their Boards
of Directors subject to the provisions of Section 9.
17. Law Governing
This Restoration Plan shall be construed in accordance with and
governed by the laws of the State of Ohio.
IN WITNESS WHEREOF, the undersigned duly authorized officers of
Ansell Protective Products Inc. and Ansell Healthcare Products Inc. have
executed this Plan.
ANSELL PROTECTIVE PRODUCTS INC.
By: /s/ Jeffrey Cox
---------------------------
Jeffrey Cox
Secretary and Treasurer
ANSELL HEALTHCARE
PRODUCTS INC.
By: /s/ Jeffrey Cox
---------------------------
Jeffrey Cox
Secretary and Treasurer
-8-
<PAGE> 1
Exhibit 10.1.3
ANSELL INCORPORATED
NON-QUALIFIED U.S. PENSION PLAN
EFFECTIVE AS OF JULY 1, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE 1. ESTABLISHMENT AND PURPOSE................................................................1
SECTION 1.1. ESTABLISHMENT...................................................................1
SECTION 1.2. PURPOSE.........................................................................1
ARTICLE 2. DEFINITIONS..............................................................................1
SECTION 2.1. DEFINITIONS.....................................................................1
SECTION 2.2. GENDER AND NUMBER...............................................................3
ARTICLE 3. ELIGIBILITY AND PARTICIPATION............................................................3
SECTION 3.1. ELIGIBLE EMPLOYEE...............................................................3
SECTION 3.2. LIMITATION ON ELIGIBLE EMPLOYEES................................................3
SECTION 3.3. REMOVAL FROM PARTICIPATION AS AN ELIGIBLE EMPLOYEE..............................3
ARTICLE 4. DEFERRAL ELECTIONS.......................................................................3
SECTION 4.1. ELIGIBLE EMPLOYEE CONTRIBUTIONS.................................................3
SECTION 4.2. SUBMISSION OF DEFERRAL ELECTION FORMS...........................................4
SECTION 4.3. DEFERRAL PERIOD.................................................................4
SECTION 4.4. CHANGE OR REVOCATION OF ELECTION................................................4
SECTION 4.5. NULLIFICATION OF DEFERRAL ELECTIONS.............................................5
ARTICLE 5. EMPLOYER CONTRIBUTIONS...................................................................5
ARTICLE 6. STATUS OF DEFERRED AMOUNTS...............................................................5
SECTION 6.1. ACCOUNT.........................................................................5
SECTION 6.2. INTEREST CREDITING..............................................................5
SECTION 6.3. TREATMENT UNDER OTHER EMPLOYEE BENEFIT PLANS....................................6
ARTICLE 7. DISTRIBUTIONS............................................................................6
SECTION 7.1. FORM OF DISTRIBUTION............................................................6
SECTION 7.2. DESIGNATION OF BENEFICIARY......................................................6
SECTION 7.3. CLAIMS PROCEDURE................................................................6
ARTICLE 8. PROVISIONS RELATING TO PARTICIPATION.....................................................7
SECTION 8.1. EXTENT OF RIGHTS UNDER PLAN.....................................................7
SECTION 8.2. FUNDING.........................................................................7
SECTION 8.3. EXTENT TO WHICH OTHER PARTIES ARE BOUND BY PLAN.................................7
SECTION 8.4. PAYMENT OF TAXES................................................................8
ARTICLE 9. ADMINISTRATION AND FINANCES..............................................................8
SECTION 9.1. ADMINISTRATION..................................................................8
SECTION 9.2. POWERS OF COMMITTEE.............................................................8
SECTION 9.3. ACTIONS OF THE COMMITTEE........................................................8
</TABLE>
<PAGE> 3
-i-
<TABLE>
<S> <C> <C>
SECTION 9.4. DELEGATION......................................................................8
SECTION 9.5. INDEMNIFICATION.................................................................8
SECTION 9.6. REPORTS AND RECORDS.............................................................8
SECTION 9.7. INFORMATION TO BE FURNISHED TO COMMITTEE........................................8
ARTICLE 10. AMENDMENTS AND TERMINATION...............................................................9
SECTION 10.1. AMENDMENTS......................................................................9
SECTION 10.2. TERMINATION.....................................................................9
ARTICLE 11. MISCELLANEOUS............................................................................9
SECTION 11.1. NO GUARANTY OF EMPLOYMENT.......................................................9
SECTION 11.2. NON-ALIENATION..................................................................9
SECTION 11.3. SEVERABILITY....................................................................9
SECTION 11.4. APPLICABLE LAW..................................................................9
</TABLE>
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<PAGE> 4
ANSELL INCORPORATED
NON-QUALIFIED U.S. PENSION PLAN
ARTICLE 1. ESTABLISHMENT AND PURPOSE
SECTION 1.1. ESTABLISHMENT. Ansell Incorporated (the "Employer")
establishes, effective as of July 1, 1997, a deferred compensation plan for the
benefit of a select group of its management or highly compensated employees. The
plan is known as the Ansell Incorporated Non-Qualified U.S. Pension Plan (the
"Plan").
SECTION 1.2. PURPOSE. The purpose of the Plan is to attract qualified
management personnel by providing Eligible Employees with the opportunity to
defer a portion of their Compensation and with additional retirement income by
means of Employer Contributions. The Plan is intended to be treated for all
purposes of Federal income tax law as an unfunded and nonqualified deferred
compensation plan.
ARTICLE 2. DEFINITIONS
SECTION 2.1. DEFINITIONS. Whenever used in this Plan, the
following words and phrases shall have the meanings set forth below unless the
context plainly requires a different meaning. When the defined meaning is
intended, the term is capitalized.
(a) "Account" means the deferred compensation account for each
Eligible Employee established pursuant to Section 6.1.
(b) "Accrued Balance" means the amount of each Eligible
Employee's Deferred Compensation that is credited to his or her
Account, after adjustment under Article 6 for interest credits.
(c) "Board of Directors" means the Board of Directors of
Ansell Incorporated.
(d) "Bonus" means any annual bonus paid by the Employer to an
Eligible Employee.
(e) "Change of Control" with respect to the Employer means the
occurrence of one of the following events:
(1) Sale of a majority of the shares of voting stock of
the Employer to an unrelated third party or parties;
(2) Sale of the stock of the Employer in a public offering
but only if the members of the board of directors immediately
prior to such sale do not constitute a majority of the board
of directors after such public offering;
<PAGE> 5
(3) Reorganization, reclassification, merger or
consolidation with another corporation in which the Employer
is not the surviving corporation; or
(4) Sale of all or substantially all of the operating
assets of the Employer to an unrelated third party or parties.
For purposes of this subsection (e), the terms Employer and
board of directors shall refer separately to each individual entity
that adopts this Plan for the benefit of its Eligible Employees and to
the board of directors thereof. Where a Change of Control occurs with
respect to an individual Employer, the provisions of the Plan and any
Rabbi Trust created pursuant to Section 8.2 of the Plan regarding
Changes of Control shall apply only with respect to such Employer and
its Eligible Employees. Notwithstanding the foregoing, no Change of
Control shall be deemed to have occurred hereunder as a result of any
sale, reorganization, reclassification, merger or consolidation after
which Pacific Dunlop Limited continues to control ultimately at least a
majority interest in the surviving entity.
(f) "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
(g) "Committee" means that Committee designated by the Board
of Directors to administer the Plan. If no such Committee is appointed,
the Board of Directors shall serve as the Committee.
(h) "Compensation" means the total base salary and Bonus of an
Eligible Employee reported on the Internal Revenue Service Form W-2
filed by the Employer with respect to the portions of the calendar
years included in a Plan Year.
(i) "Deferral Election" means the form designated by the
Committee for use by Eligible Employees to make annual deferrals of
Compensation under Article 4. This form is attached as Appendix A to
the Plan. This form may be changed at any time by the Committee.
(j) "Deferred Compensation" means the amount of Compensation
not yet earned, as designated in the Deferral Election, which the
Eligible Employee and the Employer mutually agree shall be deferred in
accordance with the provisions of the Plan, and which may be provided
either by the Eligible Employee through salary reduction or by the
Employer in accordance with the terms of the Plan.
(k) "Effective Date" means July 1, 1997.
(l) "Eligible Employee" means any executive or other key
employee of the Employer who is chosen to participate in the Plan, as
determined under Section 3.1.
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<PAGE> 6
(m) "Employer" means Ansell Incorporated and any affiliates of
Ansell Incorporated that adopt this Plan by action of the Committee and
the governing board of such affiliate.
(n) "Employer Contributions" means the Employer contributions
described in Article 5.
(o) "Plan" means this Ansell Incorporated Non-Qualified U.S.
Pension Plan.
(p) "Plan Year" means each 12-month period beginning July 1
and ending June 30.
SECTION 2.2. GENDER AND NUMBER. Except as otherwise indicated by
context, masculine terminology also includes the feminine, and terms used in the
singular may also include the plural.
ARTICLE 3. ELIGIBILITY AND PARTICIPATION
SECTION 3.1. ELIGIBLE EMPLOYEE. Participation in the Plan shall be
limited to executives and other key employees of the Employer who are designated
to be Eligible Employees by the Committee; provided that no employee of the
Employer has a right to be selected as an Eligible Employee under this Plan.
Employees designated under this Section shall collectively comprise a "select
group of management or highly compensated employees" (as that phrase is used
under Department of Labor Regulation Section 2520.104-23).
SECTION 3.2. LIMITATION ON ELIGIBLE EMPLOYEES. The Committee, in its
sole discretion, may change the definition of who qualifies as an Eligible
Employee. Any such change shall be effective for the following Plan Year, as
designated by the Committee.
SECTION 3.3. REMOVAL FROM PARTICIPATION AS AN ELIGIBLE EMPLOYEE. Upon
the direction of the Committee, an Eligible Employee may be removed from
participating in this Plan on a prospective basis for any reason.
ARTICLE 4. DEFERRAL ELECTIONS
SECTION 4.1. ELIGIBLE EMPLOYEE CONTRIBUTIONS. Prior to the beginning of
any Plan Year, each Eligible Employee may elect to reduce the amount of his or
her Compensation which would otherwise be earned and payable in the following
Plan Year. The election may be amended at any time, but any election as in
effect on the last business day before the first day of the Plan Year with
respect to which the election is made shall govern. Separate Deferral Elections
shall be made with respect to base salary and Bonuses. Each Eligible Employee
who wishes to defer a portion of his or her base salary may elect to defer not
less than 1% nor more than 30% of such Eligible Employee's base salary. Each
Eligible Employee may also elect to defer up to 100% of his or her Bonus in
increments of 10%. Each Deferral Election shall apply only to Compensation
earned on or after the effective date of such Deferral Election. Accordingly, a
Deferral Election
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<PAGE> 7
may apply only with respect to Bonuses relating to services performed during the
Plan Year beginning on or after the effective date of such Deferral Election;
provided however, that any initial Deferral Election made by an Eligible
Employee for the first Plan Year of the Plan may apply to Bonuses payable with
respect to services performed during such first Plan Year, provided the Deferral
Election is executed within 30 days of the Effective Date.
SECTION 4.2. SUBMISSION OF DEFERRAL ELECTION FORMS. Each Eligible
Employee who wishes to participate in the Plan must submit the appropriate
Deferral Election to the Committee no later than the last business day of the
Plan Year preceding the Plan Year with respect to which the Eligible Employee
wishes to defer amounts under Section 4.1. For the first year this Plan is
effective or for the first year an employee becomes an Eligible Employee under
Article 3, the election may be made within 30 days of the adoption of this Plan
or within 30 days of the date the employee becomes an Eligible Employee,
whichever is applicable. However, such elections shall be prospective and shall
apply only to Compensation earned after the election is made, subject to the
special rules for Bonuses earned in the initial Plan Year, as provided in
Section 4.1.
SECTION 4.3. DEFERRAL PERIOD. The deferral period shall begin on the
first day of the Plan Year with respect to which the Deferral Election is filed
(or the first day of the month following the filing of a Deferral Election which
may be filed during a Plan Year under Section 4.2). The deferral period for a
particular Deferral Election shall end on the date the Eligible Employee's
employment with the Employer is terminated for any reason, including death or
disability, or upon the earlier termination of the Plan.
SECTION 4.4. CHANGE OR REVOCATION OF ELECTION. A Deferral Election
shall remain in effect until changed or revoked as provided below, or until the
end of the applicable deferral period described in Section 4.3. An Eligible
Employee who desires to change the amount of his or her deferrals may do so
effective as of each July 1, provided the Deferral Election specifying the new
amount of deferrals is executed prior to the effective date thereof and applies
only with respect to base salary not currently available to the Eligible
Employee as of such effective date and, except for the initial Plan Year, as
provided in Section 4.1, with respect to Bonuses relating to services performed
during the Plan Year beginning on or after the effective date of the Deferral
Election. An Eligible Employee may revoke a prior Deferral Election effective
prospectively on the first day of any calendar month. An Eligible Employee
desiring to revoke a prior Deferral Election shall submit a written request to
the Committee stating the proposed effective date of the revocation and the
reason for the revocation.
With respect to Bonus deferrals, an Eligible Employee may revoke a
prior Deferral Election only for reasons of severe financial hardship as
determined by the Committee in its sole discretion. An Eligible Employee
revoking a prior Deferral Election on account of severe financial hardship shall
not be eligible to make Bonus deferrals under the Plan for the Plan Year to
which that Bonus relates or the next Plan Year.
With respect to base salary deferrals, an Eligible Employee may revoke
a prior Deferral Election for reasons of severe financial hardship as determined
by the Committee in its sole discretion. An Eligible Employee revoking a prior
Deferral Election on account of severe
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<PAGE> 8
financial hardship shall not be eligible to make base salary deferrals under the
Plan until the beginning of the next Plan Year. Also with respect to base salary
deferrals, an Eligible Employee may revoke a prior Deferral Election for reasons
other than severe financial hardship. An Eligible Employee revoking a prior
Deferral Election for reasons other than severe financial hardship shall not be
eligible to make base salary deferrals under the Plan until the beginning of the
next Plan Year, or if the beginning of the next Plan Year is less than six
months from the effective date of such revocation, until the beginning of the
Plan Year following the next Plan Year.
Notwithstanding anything contained herein to the contrary, an Eligible
Employee may revoke a prior Deferral Election effective prospectively on the
first day of any calendar month after the occurrence of a Change of Control or
the bankruptcy or insolvency of the Employer.
SECTION 4.5. NULLIFICATION OF DEFERRAL ELECTIONS. Notwithstanding the
submission of Deferral Elections pursuant to this Article, the Committee may
nullify such elections to alleviate demonstrated financial hardship, or because
of changes in tax laws. The Committee shall determine, in its sole discretion
and on a uniform and nondiscriminatory basis, whether a financial hardship
exists.
ARTICLE 5. EMPLOYER CONTRIBUTIONS
The Employer may make annual contributions to the Account of each
Eligible Employee. The amount of this annual contribution for each Eligible
Employee, if any, shall be determined by the Committee in its sole discretion.
ARTICLE 6. STATUS OF DEFERRED AMOUNTS
SECTION 6.1. ACCOUNT. The Committee shall establish an Account for each
Eligible Employee's Deferred Compensation to reflect accurately the interest of
the Eligible Employee under this Plan. Amounts deferred under Article 4 and
amounts contributed under Article 5 shall be credited to the Account of the
Eligible Employee on the date on which such amounts would have been payable to
the Eligible Employee if he or she had not made the Deferral Election.
SECTION 6.2. INTEREST CREDITING. Amounts credited to an Eligible
Employee's Account under the Plan shall be credited with interest until such
Eligible Employee or his beneficiary receives payments of his benefits under the
Plan. Interest shall be credited to the respective Accounts of Eligible
Employees as each crediting date (as defined below) based on the balance of the
applicable portion of such Accounts on the day immediately preceding such
crediting date. Interest on amounts credited to an Eligible Employee's Account
pursuant to Article 4 shall accrue at a rate equal to 10% per annum, and the
crediting date for interest on such amounts shall be each June 30 and the date
of the Eligible Employee's termination of employment with the Employer. Interest
on amounts credited to an Eligible Employee's Account pursuant to Article 5
shall accrue at annual rate to be determined by the Committee from time to time,
and the crediting date for interest on such amounts shall be the last day of
each calendar quarter. As of the Effective Date, the annual rate of return used
to credit interest on amounts credited pursuant to Article 5 shall be equal to
1% in excess of the prime interest rate, as published in the Wall Street Journal
on the applicable crediting date. Title to and beneficial ownership of any
actual
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<PAGE> 9
investments of Employer (whether or not held in trust) shall at all times remain
in the Employer and shall constitute general assets of the Employer, subject
only to claims of its general creditors. An Eligible Employee or his or her
beneficiary shall not under any circumstances acquire any property or beneficial
interest in any asset of the Employer by virtue of such Eligible Employee's
participation in this Plan.
SECTION 6.3. TREATMENT UNDER OTHER EMPLOYEE BENEFIT PLANS. It is
intended that the amounts deferred by an Eligible Employee under Section 4.1
shall at the earliest time permitted by applicable law be includible in
determining benefits under any pay-related employee benefit plans of the
Employer as well as under any tax-qualified retirement plans (to the extent
permitted in such plans), except to the extent that such inclusion in any such
pay-related or tax-qualified plan would adversely affect the tax-favored status
of that plan or the tax-deferred status of Compensation deferred under this
Plan.
ARTICLE 7. DISTRIBUTIONS
SECTION 7.1. FORM OF DISTRIBUTION. As soon as administratively
practicable after the expiration of the deferral period described in Section
4.3, the Employer shall make payment to the Eligible Employee (or, in the event
of his or her death, to his or her designated beneficiary) of his or her Accrued
Balance in one lump sum. In no event shall such payment be made later than six
months after the Eligible Employee's termination of employment with the
Employer.
SECTION 7.2. DESIGNATION OF BENEFICIARY. Each Eligible Employee shall
have the right to designate one or more individuals or entities as beneficiaries
in the event of the Eligible Employee's death. The Eligible Employee may also
designate one or more contingent beneficiaries. To become effective, these
designations must be made on the appropriate beneficiary designation form
(attached to the Plan as Appendix B) and must be filed with the Committee. If no
designated beneficiary survives the Eligible Employee, then the beneficiary
shall be the Eligible Employee's estate.
SECTION 7.3. CLAIMS PROCEDURE. If an Eligible Employee or his or her
beneficiary (hereinafter referred to as a "Claimant") is denied all or a portion
of an expected benefit under the Plan for any reason, he or she may file a claim
with the Committee. The Committee shall notify the Claimant within 90 days after
receipt of the claim (or within 180 days if special circumstances apply) of
allowance or denial of the claim. If the claim for benefits is denied, in whole
or in part, the Claimant will receive a written explanation of:
(a) The specific reasons for the denial;
(b) The specific references to provisions of the Plan document
that support those reasons;
(c) Any additional information that must be provided to
improve the claim and the reasons why that information is necessary;
and
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<PAGE> 10
(d) The procedures that are available for a further review of
the claim.
A Claimant is entitled to request a review of any denial of his or her claim by
the Committee. The request for review must be submitted within 60 days of
receipt of the denial. Absent a request for review within the 60-day period, the
claim shall be deemed to be conclusively denied. The Claimant or his or her
representatives shall be entitled to review all pertinent documents and to
submit issues and comments in writing as part of any request for review. The
Committee will conduct a full and fair review of the claim and will notify the
Claimant of the decision within 60 days (or 120 days if special circumstances
apply). The decision must be in writing and will include the specific reasons
and references to Plan provisions on which the decision is based. The Committee
has the exclusive right and discretion to interpret the provisions of the Plan,
and the entitlement to benefits, and its decision is conclusive and final and
not subject to further review.
ARTICLE 8. PROVISIONS RELATING TO PARTICIPATION
SECTION 8.1. EXTENT OF RIGHTS UNDER PLAN. Except as to amounts
actually distributed under the Plan, no Eligible Employee and no person claiming
under or through an Eligible Employee shall have any right or interest in this
Plan, in any Account (whether with respect to assets set aside in trust or
otherwise) or in the continuance of the Plan.
SECTION 8.2. FUNDING. No funds shall be segregated or earmarked for any
current or former Eligible Employee, beneficiary or other person. However, the
Employer may establish one or more grantor trusts of the type referred to as a
"Rabbi Trust" in respect of its obligations under this Plan. No current or
former Eligible Employee, beneficiary or other person, individually or as a
member of a group, shall have any right, title or interest in any Account, any
fund, any specific sum of money, any grantor trust or in any asset which may be
acquired by the Employer in respect of its obligations under this Plan (other
than as a general creditor of the Employer with an unsecured claim against the
Employer's general assets).
SECTION 8.3. EXTENT TO WHICH OTHER PARTIES ARE BOUND BY PLAN. The Plan
shall be binding upon and shall inure to the benefit of the Employer, including
its successors and assigns, and the participating Eligible Employees and their
heirs, administrators and personal representatives.
SECTION 8.4. PAYMENT OF TAXES. The Employer shall to the extent
required by law withhold Federal, state and local taxes (including but not
limited to income taxes and taxes under the Federal Insurance Contributions Act)
with respect to any distribution from the Plan to an Eligible Employee or
beneficiary.
ARTICLE 9. ADMINISTRATION AND FINANCES
SECTION 9.1. ADMINISTRATION. The Plan shall be administered by the
Committee.
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<PAGE> 11
SECTION 9.2. POWERS OF COMMITTEE. The Committee shall have all powers
necessary to administer the Plan, including, without limitation, the power to
interpret the provisions of the Plan, to decide all questions of eligibility, to
establish rules and forms for the administration of the Plan and to appoint
individuals to assist in the administration of the Plan and any other agents it
deems advisable.
SECTION 9.3. ACTIONS OF THE COMMITTEE. All determinations,
interpretations, rules and decisions of the Committee shall be conclusive and
binding upon all persons having or claiming to have any interest or right under
the Plan.
SECTION 9.4. DELEGATION. The Committee shall have the power to delegate
specific duties and responsibilities to officers or other employees of the
Employer or to other individuals or entities. Any delegation may be rescinded by
the Committee at any time. Except as otherwise required by law, each person or
entity to whom a duty or responsibility has been delegated shall be responsible
for the exercise of such duty or responsibility and shall not be responsible for
any act or failure to act of any other person or entity.
SECTION 9.5. INDEMNIFICATION. The members of the Committee and the
other members of the Board of Directors shall be indemnified by the Employer
against any and all liabilities arising by reason of any act or failure to act
made in good faith in accordance with the provisions of the Plan. For this
purpose, liabilities include expenses reasonably incurred in the defense of any
claim relating to the Plan.
SECTION 9.6. REPORTS AND RECORDS. The Committee and those to whom the
Committee has delegated duties under the Plan shall keep records of all their
proceedings and actions and shall maintain books of account, records and other
data as shall be necessary for the proper administration of the Plan and for
compliance with applicable law.
SECTION 9.7. INFORMATION TO BE FURNISHED TO COMMITTEE. The Employer
shall furnish the Committee such data and information as it may require. The
records of the Employer shall be determinative of each Eligible Employee's
period of employment, termination of employment and the reason therefor, leave
of absence, reemployment, personal data and deferrals. Eligible Employees and
their beneficiaries shall furnish to the Committee such evidence, data or
information, and shall execute such documents, as the Committee requests.
ARTICLE 10. AMENDMENTS AND TERMINATION
SECTION 10.1. AMENDMENTS. The Board of Directors may amend the Plan, in
full or in part, at any time.
SECTION 10.2. TERMINATION. The Employer expects the Plan to be
permanent, but it necessarily must and does reserve the right to modify, revise
or terminate the Plan at any time by action of the Board of Directors. Subject
to the final sentence of this Section 10.2, in the event the Plan is terminated,
benefits will be paid at the same time and in the same manner as would have
occurred absent such termination, and the Committee shall continue to administer
the
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<PAGE> 12
terminated Plan for such purposes. Notwithstanding the preceding sentence, the
Committee, in its sole discretion, may make payment of Plan benefits to Eligible
Employees any time after the Plan is terminated (even if the scheduled deferral
periods of such individuals has not yet ended).
ARTICLE 11. MISCELLANEOUS
SECTION 11.1. NO GUARANTY OF EMPLOYMENT. The adoption and maintenance
of the Plan shall not be deemed to be a contract of employment between the
Employer and any employee. Nothing contained in the Plan shall give any Eligible
Employee or other employee the right to be retained in the employ of the
Employer or to interfere with the right of the Employer to discharge any
employee at any time, nor shall it give the Employer the right to require any
Eligible Employee or other employee to remain in its employ or to interfere with
any Eligible Employee's or other employee's right to terminate his or her
employment at any time.
SECTION 11.2. NON-ALIENATION. No benefit payable at any time under this
Plan shall be subject in any manner to alienation, sale, transfer, assignment,
pledge, attachment or encumbrance of any kind.
SECTION 11.3. SEVERABILITY. If any provision of the Plan shall be found
to be invalid or unenforceable by a court of competent jurisdiction, the
validity or enforceability of the remaining provisions of the Plan shall remain
in full force and effect.
SECTION 11.4. APPLICABLE LAW. The Plan and all rights under the Plan
shall be governed by and construed according to the laws of the State of New
Jersey, except to the extent preempted by Federal law.
IN WITNESS WHEREOF, the Employer has caused this Plan to be executed by
its duly authorized officer on this day of __________, 1997.
ADOPTED BY UNANIMOUS WRITTEN CONSENT OF
THE BOARD OF DIRECTORS OF ANSELL INCORPORATED
ON JULY 28, 1997
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APPENDIX A
ANSELL INCORPORATED
NON-QUALIFIED U.S. PENSION PLAN
DEFERRAL ELECTION
Employee:__________________________________ Social Security Number:__________
This election form applies to the period beginning on __________, 199 (July 1
or, if the employee becomes an Eligible Employee other than on the first day of
the Plan Year, the first day of such eligibility) and ending on the earlier of
the ending date of the deferral period or the effective date of any change or
revocation of this Deferral Election, pursuant to the terms of the Ansell
Incorporated Non-Qualified U.S. Pension Plan (the "Plan").
I. EMPLOYEE DEFERRALS. I elect to defer the receipt of a portion of my
Compensation beginning on the date specified above, as follows (select and
complete one or more of the following):
[ ] $ or % (specific dollar amount or specific percentage of my base
salary. Minimum deferral = 1% of base salary; maximum deferral = 30%
of base salary).
[ ] $ or % (specific dollar amount or specific percentage of my annual
incentive Bonus, if any, in 10% increments up to 100%).
[ ] I do not wish to make deferrals under the Plan at this time.
II. CHANGE IN DEFERRAL ELECTION. I understand that the above deferral election
shall remain in effect until changed or revoked as permitted under the
Plan. I may change the amount of my deferral election effective July 1 of
each year, provided a new deferral election is received by the Committee
that administers the Plan prior to the effective date of the new election.
I may revoke a prior deferral election effective prospectively on the first
day of any calendar month, provided I show evidence of financial hardship
(as defined in the Plan and as determined by the Committee administering
the Plan) and I agree to suspend my deferrals for a certain period of time.
In certain cases, evidence of financial hardship will not be required, but
the period of suspension of my deferrals may be increased in such cases.
(Please review the Plan for more details.) This deferral election shall
automatically terminate upon my termination of employment with Ansell
Incorporated (the "Employer") or upon the termination of the Plan.
III. NO GUARANTY OF EMPLOYMENT. I understand that nothing in the Plan or this
form shall be considered to be a contract of employment between me and the
Employer. I also understand that nothing contained in the Plan or this form
shall give me the right to be retained in the employ of the Employer or to
interfere with the right of the Employer to
<PAGE> 14
discharge me or any other employee at any time, nor shall it give the
Employer the right to require me or any employee to remain in its employ or
to interfere with my or any employee's right to terminate employment at any
time.
IV. MISCELLANEOUS. I understand that this Deferral Election supersedes and
nullifies any prior Deferral Election and that the execution of this
Deferral Election shall not be construed as giving me any right to receive
any bonus from the Employer. I further acknowledge that I have received a
copy of the Plan and have reviewed this document and understand and agree
that my participation in the Plan will be subject to the terms and
conditions contained in the Plan. I acknowledge that I should consult my
own tax advisors before making this Deferral Election in order to determine
the tax effect of my participation in the Plan and its effects in
conjunction with other benefits of the Employer to which I may be entitled.
- ------------------------------------ ------------------------------
Signature of Eligible Employee Date
- ------------------------------------ ------------------------------
Signature of Spouse (necessary in Date
"community-property" states)
- ------------------------------------ ------------------------------
On behalf of Employer Date
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<PAGE> 15
APPENDIX B
ANSELL INCORPORATED
NON-QUALIFIED U.S. PENSION PLAN
BENEFICIARY DESIGNATION
I, __________________, am an eligible employee under the Ansell
Incorporated Non-Qualified U.S. Pension Plan (the "Plan"). I designate the
following as my primary beneficiary(ies) to receive any benefits payable under
the Plan by reason of my death (attach additional pages if more space is
needed):
Name(s), Address(es) and Social
Security Number(s) of Primary Relationship and Portion of Benefit
Beneficiary(ies): Payable to Each:
----------------------------------- -----------------------------------
If no primary beneficiary is living or is in existence on the date of
my death, the following shall be my successor beneficiary(ies) under the Plan
(attach additional pages if more space is needed):
Name(s), Address(es) and Social
Security Number(s) of Primary Relationship and Portion of Benefit
Beneficiary(ies): Payable to Each:
----------------------------------- -----------------------------------
I revoke any beneficiary designation previously made by me with respect
to the Plan. I understand that I may change the designations above at any time
by filing a new designation form with the Committee that administers the Plan,
and that such designation shall be effective upon receipt by the Committee.
I understand that, where I have designated more than one primary and/or
successor beneficiary, if a primary (or successor, if applicable) beneficiary
dies (or, if a trust, goes out of existence) before my benefits are to be
distributed among all designated beneficiaries, the predeceased beneficiary's
share shall be distributed among the remaining primary (or successor)
beneficiaries in proportion to their respective shares. The Employer may
distribute Plan benefits
<PAGE> 16
to any trustee named as a beneficiary in this form without inquiring into, or
otherwise being responsible for, the application of such distribution. I further
understand that, if no primary or successor beneficiary is living when my
benefits are to be distributed among all beneficiaries, the entire benefit will
be paid to my estate.
Dated:
----------------------------- -------------------------------
Signature of Eligible Employee
-------------------------------
Social Security Number
Received this ______ day of ________, 19____.
-------------------------------
Signature of Committee Member
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<PAGE> 1
EXHIBIT 10.2
ANSELL HEALTHCARE INCORPORATED
STOCK INCENTIVE PLAN
ARTICLE I
GENERAL
1.1. Purpose. The Ansell Stock Incentive Plan (the "Plan") has been
established by Ansell Healthcare Incorporated, a Delaware corporation (the
"Company"), to:
(a) attract and retain key employees and directors;
(b) motivate participating employees and directors, by means of
appropriate incentives, to achieve long-range goals;
(c) provide incentive compensation opportunities that are
competitive with those of other major corporations; and
(d) further identify Participants' interests with those of the
Company's other stockholders through compensation that is
based on the Company's common stock;
and thereby promote the long-term financial interest of the Company and the
Related Companies, including the growth in value of the Company's equity and
enhancement of long-term stockholder return.
1.2. Participation. Subject to the terms and conditions of the Plan,
the Board shall determine and designate, from time to time, from among the
employees and directors of the Company and the Related Companies, those persons
who will be granted one or more Awards under the Plan, and thereby become
"Participants" in the Plan.
In the discretion of the Board, and subject to the terms of the Plan, a
Participant may be granted any Award permitted under the provisions of the Plan,
and more than one Award may be granted to a Participant. Except as otherwise
agreed by the Company and the Participant, or except as otherwise provided in
the Plan, an Award under the Plan shall not affect any previous Award under the
Plan or an award under any other plan maintained by the Company or the Related
Companies.
1.3. Operation and Administration. The operation and administration of
the Plan, including the Awards made under the Plan, shall be subject to the
provisions of Article IX (relating to operation and administration). Capitalized
terms in the Plan shall be defined as set forth in the Plan (including the
definition provisions of Article X).
<PAGE> 2
ARTICLE II
OPTIONS
2.1. Definitions. The grant of an "Option" entitles the Participant to
purchase shares of Stock at a price fixed at the time the Option is granted, or
at a price determined under a method established at the time the Option is
granted, subject to the terms of this Article II. Options granted under this
Article II may be either Incentive Stock Options or Non-Qualified Stock Options,
as determined in the discretion of the Board. An "Incentive Stock Option" is an
Option that is intended to satisfy the requirements applicable to an "incentive
stock option" described in Section 422(b) of the Code. A "Non-Qualified Option"
is an Option that is not intended to be an Incentive Stock Option.
2.2. Eligibility. The Board shall designate the Participants to whom
Options are to be granted under this Article II and shall determine the number
of shares of Stock subject to each such Option. To the extent that the aggregate
fair market value of Stock with respect to which Incentive Stock Options are
exercisable for the first time by any individual during any calendar year (under
all plans of the Company and all Related Companies) exceeds $100,000, such
options shall be treated as Non-Qualified Stock Options, to the extent required
by Section 422 of the Code.
2.3. Price. The determination and payment of the purchase price of a
share of Stock under each Option granted under this Article II shall be subject
to the following:
(a) The purchase price shall be established by the Board or shall
be determined by a method established by the Board at the time
the Option is granted; provided, however, that in no event
shall such price be less than 100% of the Fair Market Value of
a share of Stock as of the date on which the Option is
granted.
(b) Subject to the following provisions of this Section 2.3, the
full purchase price of each share of Stock purchased upon the
exercise of any Option shall be paid at the time of such
exercise (except that, in the case of a cashless exercise
arrangement approved by the Board, payment may be made as soon
as practicable after the exercise) and, as soon as practicable
thereafter, a certificate representing the shares so purchased
shall be delivered to the person entitled thereto.
(c) The purchase price shall be payable in cash, or in shares of
Stock (valued at Fair Market Value as of the day of exercise)
that have been held by the Participant at least six months, or
in any combination thereof, as determined by the Board.
(d) A Participant may elect to pay the purchase price upon the
exercise of an Option through a cashless exercise arrangement
to the extent provided by the Board.
2.4. Exercise. Except as otherwise expressly provided in the Plan, an
Option granted under this Article II shall be exercisable in accordance with the
following terms of this Section 2.4:
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(a) The terms and conditions relating to exercise of an Option
shall be established by the Board, and may include, without
limitation, conditions relating to completion of a specified
period of service, achievement of performance standards prior
to exercise of the Option, or achievement of Stock ownership
objectives by the Participant.
(b) No Option may be exercised by a Participant after the
Expiration Date applicable to that Option.
(c) The exercise of an Option will result in the surrender any
tandem Stock Appreciation Right.
Notwithstanding the foregoing, the Board may delay the exercise of the Option
for a period of up to 60 days after the Participant files written notice
pursuant to this Section 2.4, if the Board, in its discretion, determines that
the issuance of shares of Common Stock pursuant to such exercise would cause the
percentage of beneficial ownership of the Company held by the Pacific Dunlop
Stockholders to be less than 80%.
2.5. Post-Exercise Limitations. The Board, in its discretion, may
impose such restrictions on shares of Stock acquired pursuant to the exercise of
an Option (including stock acquired pursuant to the exercise of a tandem Stock
Appreciation Right) as it determines to be desirable, including, without
limitation, restrictions relating to disposition of the shares and forfeiture
restrictions based on service, performance, Stock ownership by the Participant,
and such other factors as the Board determines to be appropriate.
2.6. Expiration Date. The "Expiration Date" with respect to an Option
means the date established as the Expiration Date by the Board at the time of
the grant; provided, however, that the Expiration Date with respect to any
option shall not be later than the earliest to occur of:
(a) the ten-year anniversary of the date on which the Option is
granted;
(b) if the Participant's Date of Termination occurs by reason of
death or Disability, the date which is 180 days after such
Date of Termination;
(c) if the Participant's Date of Termination occurs by reason of
Cause, such Date of Termination; or
(d) if the Participant's Date of Termination occurs for reasons
other than death, Disability or Cause, the day which is 30
days after such Date of Termination.
Any portion of an Option that is not vested on the Participant's Date of
Termination shall be forfeited and may not thereafter be exercised.
2.7. Reload Provision. In the event the Participant exercises an Option
and pays all or a portion of the purchase price in Stock, in the manner
permitted by Section 2.3, such Participant (either pursuant to the terms of the
Option Award, or pursuant to the exercise of Board discretion at
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the time the Option is exercised) may be issued a new Option to purchase
additional shares of Stock equal to the number of shares of Stock surrendered to
the Company in such payment. Such new Option shall have an exercise price equal
to the Fair Market Value per share on the date such new Option is granted, shall
first be exercisable six months from the date of grant of the new Option and
shall have an Expiration Date on the same date as the Expiration Date of the
original Option so exercised by payment of the purchase price in shares of
Stock.
ARTICLE III
STOCK APPRECIATION RIGHTS
3.1. Definition. Subject to the terms of this Article III, a Stock
Appreciation Right granted under the Plan entitles the Participant to receive,
in cash or Stock (as determined in accordance with Section 3.4), value equal to
all or a portion of the excess of: (a) the Fair Market Value of a specified
number of shares of Stock at the time of exercise; over (b) a specified price
which shall not be less than 100% of the Fair Market Value of the Stock at the
time the Stock Appreciation Right is granted, or, if granted in tandem with an
Option, the exercise price with respect to shares under the tandem Option.
3.2. Eligibility. Subject to the provisions of the Plan, the Board
shall designate the Participants to whom Stock Appreciation Rights are to be
granted under the Plan, shall determine the exercise price or a method by which
the price shall be established with respect to each such Stock Appreciation
Right, and shall determine the number of shares of Stock on which each Stock
Appreciation Right is based. A Stock Appreciation Right may be granted in tandem
with all or any portion of a previously or contemporaneously granted Option or
not in tandem with an Option.
3.3. Exercise. The exercise of Stock Appreciation Rights shall be
subject to the following:
(a) If a Stock Appreciation Right is not in tandem with an Option,
then the Stock Appreciation Right shall be exercisable in
accordance with the terms established by the Board in
connection with such rights, and may include, without
limitation, conditions relating to completion of a specified
period of service, achievement of performance standards prior
to exercise of the Stock Appreciation Rights, or achievement
of objectives relating to Stock ownership by the Participant.
However, except as otherwise expressly provided in the Plan,
no Stock Appreciation Right may be exercised by a Participant
after the Expiration Date applicable to that Stock
Appreciation Right.
(b) If a Stock Appreciation Right is in tandem with an Option,
then the Stock Appreciation Right shall be exercisable at the
time the tandem Option is exercisable. The exercise of a Stock
Appreciation Right will result in the surrender of the
corresponding rights under the tandem Option.
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3.4. Settlement of Award. Upon the exercise of a Stock Appreciation
Right, the value to be distributed to the Participant, in accordance with
Section 3.1, shall be distributed in cash, in shares of Stock (valued at their
Fair Market Value at the time of exercise), or in a combination thereof, in the
discretion of the Board.
3.5. Post-Exercise Limitations. The Board, in its discretion, may
impose such restrictions on shares of Stock acquired pursuant to the exercise of
a Stock Appreciation Right as it determines to be desirable, including, without
limitation, restrictions relating to disposition of the shares and forfeiture
restrictions based on service, performance, ownership of Stock by the
Participant, and such other factors as the Board determines to be appropriate.
3.6. Expiration Date. If a Stock Appreciation Right is in tandem with
an Option, then the "Expiration Date" for the Stock Appreciation Right shall be
the Expiration Date for the related Option. If a Stock Appreciation Right is not
in tandem with an Option, then the "Expiration Date" for the Stock Appreciation
Right shall be the date established as the Expiration Date by the Board;
provided, however, that subject to the following provisions of this Section 3.6,
the Expiration Date with respect to any Stock Appreciation Right shall not be
later than the earliest to occur of:
(a) the ten-year anniversary of the date on which the Stock
Appreciation Right is granted;
(b) if the Participant's Date of Termination occurs by reason of
death or Disability, the date which is 180 days after such
Date of Termination;
(c) if the Participant's Date of Termination occurs by reason of
Cause, such Date of Termination; or
(d) if the Participant's Date of Termination occurs for reasons
other than death, Disability or Cause, the date which is 30
days after such Date of Termination.
Any portion of a Stock Appreciation Right that is not vested on the
Participant's Date of Termination shall be forfeited and may not thereafter be
exercised.
ARTICLE IV
STOCK AWARDS
4.1. Definition. Subject to the terms of this Article IV, a Stock Award
under the Plan is a grant of shares of Stock to a Participant, the earning,
vesting or distribution of which is subject to one or more conditions
established by the Board. Such conditions may relate to events (such as
performance or continued employment) occurring before or after the date the
Stock Award is granted, or the date the Stock is earned by, vested in or
delivered to the Participant. If the vesting of Stock Awards is subject to
conditions occurring after the date of grant, the period beginning on the date
of grant of a Stock Award and ending on the vesting or forfeiture of such Stock
(as
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applicable) is referred to as the "Restricted Period." Stock Awards may provide
for delivery of the shares of Stock at the time of grant, or may provide for a
deferred delivery date. A Stock Award may, but need not, be made in conjunction
with a cash-based incentive compensation program maintained by the Company, and
may, but need not, be in lieu of cash otherwise awardable under such program.
4.2. Eligibility. The Board shall designate the Participants to whom
Stock Awards are to be granted, and the number of shares of Stock that are
subject to each such Award.
4.3. Terms and Conditions of Awards. Stock Awards granted to
Participants under the Plan shall be subject to the following terms and
conditions:
(a) Beginning on the date of grant (or, if later, the date of
distribution) of shares of Stock comprising a Stock Award, and
including any applicable Restricted Period, the Participant
shall be treated as owner of such shares shall have the right
to vote such shares.
(b) Payment of dividends with respect to Stock Awards shall be
subject to the following:
(i) On and after date that a Participant has a fully
earned and vested right to the shares comprising a
Stock Award, and the shares have been distributed to
the Participant, the Participant shall have all
dividend rights (and other rights) of a stockholder
with respect to such shares.
(ii) Prior to the date that a Participant has a fully
earned and vested right to the shares comprising a
Stock Award, the Board, in its sole discretion, may
award Dividend Rights with respect to such shares.
(iii) On and after the date that a Participant has a fully
earned and vested right to the shares comprising a
Stock Award, but before the shares have been
distributed to the Participant, the Participant shall
be entitled to Dividend Rights with respect to such
shares, at the time and in the form determined by the
Board.
(iv) A "Dividend Right" with respect to shares comprising
a Stock Award shall entitle the Participant, as of
each dividend payment date, to an amount equal to the
dividends payable with respect to a share of Stock
multiplied by the number of such shares. Dividend
Rights shall be settled in cash or in shares of
Stock, as determined by the Board, shall be payable
at the time and in the form determined by the Board,
and shall be subject to such other terms and
conditions as the Board may determine.
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ARTICLE V
PERFORMANCE UNITS
5.1. Definition. Subject to the terms of this Article V, the Award of
Performance Units under the Plan entitles the Participant to receive value for
the units at the end of a Performance Period to the extent provided under the
Award. The number of units earned, and the value received for them, will be
contingent on the degree to which the performance measures established at the
time of grant of the Award are met. For purposes of the Plan, the "Performance
Period" with respect to the award of any Performance Units shall be the period
over which the applicable performance is to be measured.
5.2. Eligibility. The Board shall designate the Participants to whom
Performance Units are to be granted, and the number of units to be the subject
to each such Award.
5.3. Terms and Conditions of Awards. For each Participant, the Board
will determine the value of units, which may be stated either in cash or in
units representing shares of Stock; the performance measures used for
determining whether the Performance Units are earned; the Performance Period
during which the performance measures will apply; the relationship between the
level of achievement of the performance measures and the degree to which
Performance Units are earned; whether, during or after the Performance Period,
any revision to the performance measures or Performance Period should be made to
reflect significant events or changes that occur during the Performance Period;
and the number of earned Performance Units that will be paid in cash and the
number of earned Performance Units to be paid in shares of Stock.
5.4. Settlement. Settlement of Performance Units shall be subject to
the following:
(a) The Board will compare the actual performance to the
performance measures established for the Performance Period
and determine the number of units as to which settlement is to
be made, and the value of such units.
(b) Settlement of units earned shall be wholly in cash, wholly in
Stock or in a combination of the two, to be distributed in a
lump sum or installments, as determined by the Board.
(i) For Performance Units stated in units representing
shares of Stock when granted, one share of Stock will
be distributed for each unit earned, or cash will be
distributed for each unit earned equal to either (A)
the Fair Market Value of a share of Stock at the end
of the Performance Period or (B) the average Stock
value over a period determined by the Board.
(ii) For Performance Units stated in cash when granted,
the value of each unit earned will be distributed in
its initial cash value, or shares of Stock will be
distributed based on the cash value of the units
earned divided by (A) the Fair Market Value of a
share of Stock at the end of the Performance Period
or (B) the average Stock value over a period
determined by the Board.
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(c) Shares of Stock distributed in settlement of the units shall
be subject to such vesting requirements and other conditions,
if any, as the Board shall determine. Such vesting
restrictions may include, without limitation, restrictions of
the type that may be imposed with respect to Stock Awards
under Section 4.
5.5. Termination During Performance Period. If a Participant's Date of
Termination occurs during a Performance Period with respect to any Performance
Units granted to him, the Board may determine that the Participant will be
entitled to settlement of all or any portion of the Performance Units as to
which he would otherwise be eligible, and may accelerate the determination of
the value and settlement of such Performance Units or make such other
adjustments as the Board, in its sole discretion, deems desirable.
ARTICLE VI
OPERATION AND ADMINISTRATION
6.1. Effective Date. The Plan shall be effective as of March _________,
2000 (the "Effective Date"). The Plan shall be unlimited in duration and, in the
event of Plan termination, shall remain in effect as long as any Awards under it
are outstanding; provided, however, that no Incentive Stock Options may be
granted under the Plan on a date that is more than ten years from the date the
Plan is adopted or, if earlier, the date the Plan is approved by shareholders.
6.2. Shares Subject to Plan. The shares of Stock with respect to which
Awards may be made under the Plan shall be shares currently authorized but
unissued or currently held or subsequently acquired by the Company as treasury
shares, including shares purchased in the open market or in private
transactions. Subject to the provisions of Section 6.4, the number of shares of
Stock which may be issued with respect to Awards under the Plan shall not exceed
2,500,000 shares in the aggregate. Except as otherwise provided herein, any
shares subject to an Award which for any reason expires or is terminated without
issuance of shares (whether or not cash or other consideration is paid to a
Participant in respect of such shares) shall again be available for Awards under
the Plan.
6.3. Individual Limits on Awards. Notwithstanding any other provision
of the Plan to the contrary, no Participant shall receive any Award of an Option
or a Stock Appreciation Right under the Plan to the extent that the sum of:
(a) the number of shares of Stock subject to such Award;
(b) the number of shares of Stock subject to all other prior
Awards of Options and Stock Appreciation Rights under the Plan
during the one-year period ending on the date of the Award;
and
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(c) the number of shares of Stock subject to all other prior stock
options and stock appreciation rights granted to the
Participant under other plans or arrangements of the Company
and Related Companies during the one-year period ending on the
date of the Award;
would exceed the Participant's Individual Limit under the Plan. Subject to the
provisions of Section 6.4, the determination made under the foregoing provisions
of this Section 6.3 shall be based on the shares subject to the Awards at the
time of grant, regardless of when the Awards become exercisable. Subject to the
provisions of Section 6.4, a Participant's "Individual Limit" shall be 150,000
shares of Stock.
6.4. Adjustments to Shares.
(a) If the Company shall effect any subdivision or consolidation
of shares of Stock or other capital readjustment, payment of
stock dividend, stock split, combination of shares or
recapitalization or other increase or reduction of the number
of shares of Stock outstanding without receiving compensation
therefor in money, services or property, then the Board shall
adjust (i) the number of shares of Stock available under the
Plan; (ii) the number of shares available under any individual
or other limits; (iii) the number of shares of Stock subject
to outstanding Awards and the number of shares of Stock
subject to future automatic grant as provided in Section 2.7;
and (iv) the per-share price under any outstanding Award and
the per-share purchase price under any future automatic grant
as provided in Section 2.7 to the extent that the Participant
is required to pay a purchase price per share with respect to
the Award.
(b) If the Company is reorganized, merged or consolidated or is
party to a plan of exchange with another corporation, pursuant
to which reorganization, merger, consolidation or plan of
exchange, the stockholders of the Company receive any shares
of stock or other securities or property, or the Company shall
distribute securities of another corporation to its
shareholders, there shall be substituted for the shares
subject to outstanding Awards an appropriate number of shares
of each class of stock or amount of other securities or
property which were distributed to the stockholders of the
Company in respect of such shares; provided, however, all or
any of the Awards may be cancelled by the Board on or
immediately prior to the effective date of the applicable
transaction, if the Board gives reasonable advance notice of
the cancellation to each affected Participant, and either: (i)
the Participant is permitted to exercise the Award for a
reasonable period prior to the effective date of the
cancellation; or (ii) the Participant receives payment or
other benefits that the Board determines to be reasonable
compensation for the value of the cancelled Awards.
(c) Upon (or, in the discretion of the Board, immediately prior
to) the sale to (or exchange with) a third party unrelated to
the Company of all or substantially all of the assets of the
Company, all Awards shall be cancelled and either (i) the
Participant shall be provided with reasonable advance notice
of the cancellation, and the Participant shall be permitted to
exercise the Award for a reasonable period prior to the
effective date of the cancellation; or (ii) the Participant
shall receive payment or other benefits that the Board
determines to be reasonable compensation for the value of the
cancelled Awards.
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In determining what action, if any, is necessary or appropriate under the
foregoing provisions of this Section 6.4, the Board shall act in a manner that
it determines to be consistent with the purposes of the Plan and of the affected
Awards and, where applicable or otherwise appropriate, in a manner that it
determines to be necessary to preserve the benefits and potential benefits of
the affected Awards for the Participants and the Company.
6.5. Limit on Distribution. Distribution of shares of Stock or other
amounts under the Plan shall be subject to the following:
(a) Notwithstanding any other provision of the Plan, the Company
shall have no liability to deliver any shares of Stock under
the Plan or make any other distribution of benefits under the
Plan unless such delivery or distribution would comply with
all applicable laws and the applicable requirements of any
securities exchange or similar entity.
(b) In the case of a Participant who is subject to Section 16(a)
and 16(b) of the Securities Exchange Act of 1934, the Board
may, at any time, add such conditions and limitations to any
Award to such Participant, or any feature of any such Award,
as the Board, in its sole discretion, deems necessary or
desirable to comply with Section 16(a) or 16(b) and the rules
and regulations thereunder or to obtain any exemption
therefrom.
(c) To the extent that the Plan provides for issuance of
certificates to reflect the transfer of shares of Stock, the
transfer of such shares may be effected on a non-certificated
basis, to the extent not prohibited by applicable law or the
rules of any stock exchange.
6.6. Liability for Cash Payments. Subject to the provisions of this
Article VI, each Related Company shall be liable for payment of cash due under
the Plan with respect to any Participant to the extent that such benefits are
attributable to the services rendered for that Related Company by the
Participant. Any disputes relating to liability of a Related Company for cash
payments shall be resolved by the Board.
6.7. Performance-Based Compensation. To the extent that the Board
determines that it is necessary or desirable to conform any Awards under the
Plan with the requirements applicable to "Performance-Based Compensation", as
that term is used in Code section 162(m)(4)(C), it may, at or prior to the time
an Award is granted, take such steps and impose such restrictions with respect
to such Award as it determines to be necessary to satisfy such requirements,
including, without limitation:
(a) The establishment of performance goals that must be satisfied
prior to the payment or distribution of benefits under such
Awards. Such performance goals include, but are not limited
to, earnings per share, net profits, total stockholder return,
cash flow, return on stockholders' equity and cumulative
return on net assets employed.
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(b) The submission of such Awards and performance goals to the
Company's stockholders for approval and making the receipt of
benefits under such Awards contingent on receipt of such
approval.
(c) Providing that no payment or distribution be made under such
Awards unless the Board certifies that the goals and the
applicable terms of the Plan and Agreement reflecting the
Awards have been satisfied.
To the extent that the Board determines that the foregoing requirements relating
to Performance-Based Compensation do not apply to Awards under the Plan because
the Awards constitute Options or Stock Appreciation Rights, the Board may, at
the time the Award is granted, conform the Awards to alternative methods of
satisfying the requirements applicable to Performance-Based Compensation.
6.8. Withholding. All Awards and other payments under the Plan are
subject to withholding of all applicable taxes, which withholding obligations
may be satisfied, with the consent of the Board, through the surrender of shares
of Stock which the Participant already owns, or to which a Participant is
otherwise entitled under the Plan; provided that such surrender shall not be
permitted if it results in a charge to earnings for financial accounting
purposes.
6.9. Transferability. Awards under the Plan are not transferable except
as designated by the Participant by will or by the laws of descent and
distribution; provided, however, the Board may permit a Participant to transfer
a Nonqualified Stock Option to the Participant's immediate family members or to
a trust for the benefit of the Participant or his or her immediate family
members, subject to such rules and limitations as the Board may establish. To
the extent that a Participant who receives an Award under the Plan has the right
to exercise such Award, the Award may be exercised during the lifetime of the
Participant only by the Participant.
6.10. Notices. Any notice or document required to be filed with the
Board under the Plan will be properly filed if delivered or mailed by registered
mail, postage prepaid, to the Board, in care of the Company, at its principal
executive offices. The Board may, by advance written notice to affected persons,
revise such notice procedure from time to time. Any notice required under the
Plan (other than a notice of election) may be waived by the person entitled to
notice.
6.11. Form and Time of Elections. Unless otherwise specified herein,
each election required or permitted to be made by any Participant or other
person entitled to benefits under the Plan, and any permitted modification or
revocation thereof, shall be in writing filed with the Board at such times, in
such form, and subject to such restrictions and limitations, not inconsistent
with the terms of the Plan, as the Board shall require.
6.12. Agreement With Company. At the time of an Award to a Participant
under the Plan, the Board may require a Participant to enter into an agreement
with the Company (the "Agreement") in a form specified by the Board, agreeing to
the terms and conditions of the Plan and to such additional terms and
conditions, not inconsistent with the Plan, as the Board may, in its sole
discretion, prescribe.
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6.13. Limitation of Implied Rights.
(a) Neither a Participant nor any other person shall, by reason of
the Plan, acquire any right in or title to any assets, funds
or property of the Company or any Related Company whatsoever,
including, without limitation, any specific funds, assets, or
other property which the Company or any Related Company, in
their sole discretion, may set aside in anticipation of a
liability under the Plan. A Participant shall have only a
contractual right to the amounts, if any, payable under the
Plan, unsecured by any assets of the Company or any Related
Company. Nothing contained in the Plan shall constitute a
guarantee by any of the Company or any Related Company that
the assets of such companies shall be sufficient to pay any
benefits to any person.
(b) The Plan does not constitute a contract of employment, and
selection as a Participant will not give any employee the
right to be retained in the employ of the Company or any
Related Company, nor any right or claim to any benefit under
the Plan, unless such right or claim has specifically accrued
under the terms of the Plan. Except as otherwise provided in
the Plan, no Award under the Plan shall confer upon the holder
thereof any right as a stockholder of the Company prior to the
date on which he or she fulfills all service requirements and
other conditions for receipt of such rights.
6.14. Benefits Under Qualified Retirement Plans. Awards to a
Participant (including the grant and the receipt of benefits) under the Plan
shall be disregarded for purposes of determining the Participant's benefits
under any Qualified Retirement Plan.
6.15. Evidence. Evidence required of anyone under the Plan may be by
certificate, affidavit, document or other information which the person acting on
it considers pertinent and reliable, and signed, made or presented by the proper
party or parties.
6.16. Action by Company or Related Company. Any action required or
permitted to be taken by the Company or any Related Company shall be by
resolution of its board of directors, or by action of one or more members of the
board (including a committee the board) who are duly authorized to act for the
board, or (except to the extent prohibited by applicable law or the rules of any
stock exchange) by a duly authorized officer of the company.
6.17. Gender and Number. Where the context admits, words in any gender
shall include any other gender, words in the singular shall include the plural
and the plural shall include the singular.
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ARTICLE VII
CHANGE IN CONTROL
7.1. Acceleration. Subject to the provisions of Section 6.4 (relating
to the adjustment of shares), and except as otherwise provided in the Plan or
the Agreement reflecting the applicable Award, upon the occurrence of a Change
in Control:
(a) All outstanding Options and Stock Appreciation Rights) shall
become fully exercisable.
(b) All Stock Awards shall become fully vested.
(c) Performance Units may be paid out in such manner and amounts
as determined by the Board.
ARTICLE VIII
ADMINISTRATION
8.1. Administration. The authority to control and manage the operation
and administration of the Plan shall be vested in the Board of Directors of the
Company in accordance with this Article VIII; provided, however, the Board, in
its sole discretion, may delegate all or any portion of its authority under the
Plan to a committee of the Board in which case references to the Board in the
Plan (except with respect to Article IX) shall be deemed to refer to such
committee.
8.2. Powers of Board. The Board's authority to manage and control the
operation and administration of the Plan shall be subject to the following:
(a) Subject to the provisions of the Plan, the Board will have the
authority and discretion to select employees to receive
Awards, to determine the time or times of receipt, to
determine the types of Awards and the number of shares covered
by the Awards, to establish the terms, conditions, performance
criteria, restrictions, and other provisions of such Awards,
and (subject to the restrictions imposed by Article X) to
cancel or suspend Awards. In making such Award determinations,
the Board may take into account the nature of services
rendered by the respective employee, his or her present and
potential contribution to the Company's success and such other
factors as the Board deems relevant.
(b) Subject to the provisions of the Plan, the Board will have the
authority and discretion to determine the extent to which
Awards under the Plan will be structured to conform to the
requirements applicable to Performance-Based Compensation as
described in Code section 162(m), and to take such action,
establish such procedures, and impose such restrictions at the
time such Awards are granted as the Board determines to be
necessary or appropriate to conform to such requirements.
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(c) The Board will have the authority and discretion to interpret
the Plan, to establish, amend, and rescind any rules and
regulations relating to the Plan, to determine the terms and
provisions of any agreements made pursuant to the Plan, and to
make all other determinations that may be necessary or
advisable for the administration of the Plan.
(d) Any interpretation of the Plan by the Board and any decision
made by it under the Plan is final and binding on all persons.
8.3. Delegation by Board. Except to the extent prohibited by applicable
law or the rules of any stock exchange, the Board may allocate all or any
portion of its responsibilities and powers to any one or more of its members and
may delegate all or any part of its responsibilities and powers to any person or
persons selected by it. Any such allocation or delegation may be revoked by the
Board at any time.
8.4. Information to be Furnished to Board. The Company and Related
Companies shall furnish the Board with such data and information as may be
required for it to discharge its duties. The records of the Company and Related
Companies as to an employee's or Participant's employment, termination of
employment, leave of absence, reemployment and compensation shall be conclusive
on all persons unless determined to be incorrect. Participants and other persons
entitled to benefits under the Plan must furnish the Board such evidence, data
or information as the Board considers desirable to carry out the terms of the
Plan.
8.5. Liability and Indemnification of Board. No member or authorized
delegate of the Board shall be liable to any person for any action taken or
omitted in connection with the administration of the Plan unless attributable to
his own fraud or willful misconduct; nor shall the Company or any Related
Company be liable to any person for any such action unless attributable to fraud
or willful misconduct on the part of a director or employee of the Company or
Related Company. The Board, the individual members thereof, and persons acting
as the authorized delegates of the Board under the Plan, shall be indemnified by
the Company against any and all liabilities, losses, costs and expenses
(including legal fees and expenses) of whatsoever kind and nature which may be
imposed on, incurred by or asserted against the Board or its members or
authorized delegates by reason of the performance of a Board function if the
Board or its members or authorized delegates did not act dishonestly or in
willful violation of the law or regulation under which such liability, loss,
cost or expense arises. This indemnification shall not duplicate but may
supplement any coverage available under any applicable insurance.
ARTICLE IX
AMENDMENT AND TERMINATION
The Board may, at any time, amend or terminate the Plan, provided that, subject
to Section 6.4 (relating to certain adjustments to shares), no amendment or
termination may, in the absence of written consent to the change by the affected
Participant (or, if the Participant is not then living, the affected
beneficiary), materially adversely affect the rights of any Participant or
beneficiary under any Award granted under the Plan prior to the date such
amendment is adopted by the Board.
14
<PAGE> 15
ARTICLE X
DEFINED TERMS
For purposes of the Plan, the terms listed below shall be defined as
follows:
(a) Award. The term "Award" shall mean any award or benefit
granted to any Participant under the Plan, including, without
limitation, the grant of Options, Stock Appreciation Rights,
Stock Awards or Performance Units.
(b) Board. The term "Board" shall mean the Board of Directors of
the Company.
(c) Cause. The term "Cause", with respect to any Participant,
shall mean, in the reasonable judgment of the Board:
(i) the willful and continued failure by the Participant
to substantially perform his or her duties with the
Company and Related Companies (other than any such
failure resulting from the Participant's Disability);
(ii) the willful engaging by the Participant in conduct
which is demonstrably and materially injurious to the
Company and Related Companies, monetarily or
otherwise; or
(iii) the engaging by the Participant in egregious
misconduct involving serious moral turpitude to the
extent that the Participant's credibility and
reputation no longer conform to the standard for the
Company and Related Companies management employees or
directors, as applicable.
For purposes of the Plan, no act, or failure to act, on an individual's
part shall be deemed "willful" unless done, or omitted to be done, by
the individual not in good faith and without reasonable belief that the
individual's action or omission was in the best interest of the Company
or the Related Company, as applicable.
(d) Change in Control. The term "Change in Control" means a change
in the beneficial ownership of the Company's voting stock
which occurs as follows:
(i) Any "person" (as such term is used in Section 13(d)
and 14(d)(2) of the Securities Exchange Act of 1934)
other than a person owned, directly or indirectly by
the stockholders of the Company in substantially the
same proportions as their ownership of the Company,
is or becomes a direct owner of stock of the Company
representing 40 percent or more of the total voting
power of the Company's then outstanding stock.
15
<PAGE> 16
(ii) A tender offer (for which a filing has been made with
the SEC which purports to comply with the
requirements of Section 14(d) of the Securities
Exchange Act of 1934 and the corresponding SEC rules)
is made for the stock of the Company, which has not
been negotiated and approved by the Board. In case of
a tender offer described in this paragraph (ii), the
Change in Control will be deemed to have occurred
upon the first to occur of (A) any time during the
offer when the person (using the definition in (i)
above) making the offer owns or has accepted for
payment stock of the Company with 40 percent or more
of the total voting power of the Company's
outstanding stock or (B) three business days before
the offer is to terminate unless the offer is
withdrawn first, if the person making the offer could
own, by the terms of the offer plus any shares owned
by this person, stock with 40 percent or more of the
total voting power of the Company's outstanding stock
when the offer terminates.
(iii) The stockholders of the Company approve a merger or
consolidation of the Company with any other company,
other than (A) such a merger or consolidation which
would result in the Company's voting stock
outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by
being converted into voting stock of the surviving
entity) more than 60% of the combined voting power of
the Company's or surviving entity's outstanding
voting stock immediately after such merger or
consolidation, or (B) such a merger or consolidation
which would result in the directors of the Company
who were directors immediately prior thereto
continuing to constitute at least 50% of the
directors of the surviving entity immediately after
such merger or consolidation. For purposes of this
paragraph (iv), "surviving entity" shall mean an
entity in which all of the Company's stockholders
become stockholders by the terms of such merger or
consolidation, and the phrase "directors of the
Company who were directors immediately prior thereto"
shall not include any director who was designated by
a person who has entered into an agreement with the
Company to effect a transaction described in this
paragraph (iv) or paragraph (i) next above, nor any
director who was not a director at the beginning of
the 24-consecutive-month period immediately preceding
the date of such merger or consolidation unless such
election or nomination was approved by a vote of at
least two-thirds of the directors then in office who
were directors before the beginning of such period.
(e) Code. The term "Code" means the Internal Revenue Code of 1986,
as amended. A reference to any provision of the Code shall
include reference to any successor provision of the Code.
(f) Date of Termination. A Participant's "Date of Termination"
shall be the date on which his employment with the Company and
all Related Companies terminates for any reason; provided that
a Date of Termination shall not be deemed to occur by reason
of a transfer of the Participant between the Company and a
Related Company or between two Related Companies; and further
provided that a Participant's employment shall not be
considered terminated while the Participant is on a leave of
absence from the Company or a Related
16
<PAGE> 17
Company approved by the Participant's employer. If, as a
result of a sale or other transaction, a Participant's
employer ceases to be a Related Company (and the Participant's
employer is or becomes an entity that is separate from the
Company), the occurrence of such transaction shall be treated
as the Participant's Date of Termination. In the case of a
Participant who is a director, Date of Termination shall be
the date that the Participant ceases to be a member of the
Board.
(g) Disability. Except as otherwise provided by the Board, a
Participant shall be considered to have a "Disability" during
the period in which he is unable, by reason of a medically
determinable physical or mental impairment, to engage in any
substantial gainful activity, which condition, in the opinion
of a physician selected by the Board, is expected to have a
duration of not less than 120 days.
(h) Fair Market Value. The "Fair Market Value" of a share of Stock
of the Company as of any date shall be the average of the
closing prices for such Stock for the immediately preceding
five business days, as reported on the securities exchange on
which the Stock is primarily traded.
(i) Option. The term "Option" shall mean any Incentive Stock
Option or Non-Qualified Stock Option granted under the Plan.
(j) Pacific Dunlop Stockholders. The term "Pacific Dunlop
Stockholders" means those companies who hold stock of the
Company and who are direct or indirect subsidiaries of Pacific
Dunlop Limited.
(k) Performance-Based Compensation. The term "Performance-Based
Compensation" shall have the meaning ascribed to it in section
162(m)(4)(C) of the Code.
(l) Qualified Retirement Plan. The term "Qualified Retirement
Plan" means any plan of the Company or a Related Company that
is intended to be qualified under Section 401(a) of the Code.
(m) Related Companies. The term "Related Company" means any
company during any period in which it is a "subsidiary
corporation" (as that term is defined in Code Section 424(f))
with respect to the Company.
(n) Retirement. "Retirement" of a Participant shall mean the
occurrence of a Participant's Date of Termination under
circumstances that constitutes a retirement under the terms of
the Qualified Retirement Plan of the Company or Related
Company that is extended to the Participant immediately prior
to the Participant's Date of Termination or, if no such plan
is extended to the Participant on his Date of Termination,
under the terms of any applicable retirement policy of the
Participant's employer.
(o) SEC. "SEC" shall mean the Securities and Exchange Commission.
(p) Stock. The term "Stock" shall mean shares of common stock of
the Company.
17
<PAGE> 1
EXHIBIT 10.3
SERVICES AGREEMENT
THIS SERVICES AGREEMENT ("Agreement") dated as of March ___, 2000, is
entered into by Pacific Dunlop Limited, a company organized under the laws of
Australia ("PDL") and Ansell Healthcare Incorporated, a Delaware corporation
("Ansell").
RECITALS
WHEREAS, Ansell and its affiliates designs, manufactures and markets
medical examination and surgical gloves, industrial and consumer gloves, and
condoms worldwide (the "Ansell Business"); and
WHEREAS, this Agreement is entered into in conjunction with an initial
public offering of Ansell's common stock, $.01 par value per share (the "Ansell
IPO"); and
WHEREAS, after the Ansell IPO, Ansell and its affiliates will continue
to need certain corporate and administrative support services from PDL with
respect to the operation of the Ansell Business for a period of time from and
after the Closing Date (as hereafter defined); and
WHEREAS, the parties desire to enter into an agreement to provide for
such services.
NOW, THEREFORE, in consideration of the premises and the mutual
promises of the parties contained herein, the parties agree as follows:
ARTICLE I.
DEFINITIONS
As used in this Agreement, the following terms shall have the indicated
meanings:
"Service Fee" means the amount identified on Exhibit A attached hereto.
The Service Fee shall be paid for the PDL Services described hereunder.
"Closing Date" means the date the Ansell IPO is closed.
"PDL Services" means those services to be provided by PDL to Ansell and
its affiliates as set forth in Exhibit A attached hereto, and as the same may be
amended and revised from time to time in accordance with the terms hereof.
ARTICLE II.
PDL SERVICES
Section 2.1. Scope of PDL Services. In consideration of the Service
Fee, PDL shall continue to provide to Ansell and its affiliates the various
services currently provided by PDL, as more specifically listed on Exhibit A to
this Agreement to Ansell.
<PAGE> 2
Section 2.2. Limitations. Notwithstanding the foregoing, the nature and
scope of the PDL Services shall not interfere with those services which PDL
provides during the term of this Agreement to its own direct or indirect
subsidiaries or affiliates. Any upgrades and improvements of such services that
PDL provides to its own direct or indirect subsidiaries or affiliates will be
made available to Ansell and its affiliates at PDL's sole election. Ansell
agrees that its requests for PDL Services shall be reasonable, as to both the
nature and the timing of the services to be provided.
Section 2.3. Location of Services. Except as expressly contemplated by
the terms of this Agreement, the PDL Services to be performed are contemplated
to be performed by PDL from Melbourne, Australia or such other location as
determined by PDL in its sole discretion.
Section 2.4. Staffing. In consultation with Ansell, PDL shall determine
both the staffing required and particular personnel assigned to perform the PDL
Services, including but not limited to clerical staff, technicians,
professionals or otherwise.
Section 2.5. Access. Ansell agrees to grant access to representatives
of PDL to Ansell's and its affiliates' facilities and its employees, agents and
consultants to provide the PDL Services provided for under this Agreement, as
necessary.
Section 2.6. Subsidiaries. The parties hereto agree that (i) the PDL
Services to be provided to Ansell under this Agreement will, at Ansell's
request, be provided to subsidiaries and affiliates of Ansell and (ii) PDL may
satisfy its obligation to provide or procure the PDL Services hereunder by
causing one or more of its subsidiaries or affiliates to provide or procure such
PDL Services. With respect to PDL Services provided to, or procured on behalf
of, any subsidiary or affiliate of Ansell, (i) Ansell agrees to pay on behalf of
such subsidiary or affiliate all amounts payable by or in respect of such PDL
Services and (ii) references in this Agreement to Ansell shall be deemed to
include such subsidiary or affiliate.
Section 2.7. Subcontractors. PDL may hire or engage one or more
subcontractors to perform any or all of its obligations under this Agreement.
PDL shall require such subcontractors, as a condition to their engagement, to
agree to be bound by the provisions substantially identical to those included in
this Agreement. Subject to Section 6.4 hereof, PDL shall in all cases remain
primarily responsible for all obligations undertaken by it in this Agreement
with respect to the scope, quality and nature of the PDL Services provided to
Ansell.
Section 2.8. Reports; Books and Records. PDL shall maintain for and
provide Ansell with or shall cause to be maintained for and provide to Ansell
data or reports requested by Ansell relating to (i) information relating to the
PDL Services that is required to satisfy any reporting or disclosure
requirement, and (ii) other information, including accounting reports, relating
to the PDL Services, as may be kept by PDL in the ordinary course of its
business. PDL shall provide such reports, or cause such reports to be provided,
to Ansell within a reasonable period of time after it is requested.
2
<PAGE> 3
ARTICLE III.
FEES, BILLING AND PAYMENT
Section 3.1. Service Fees. Ansell agrees that in consideration of the
PDL Services described in this Agreement, Ansell shall pay PDL the Service Fee
as set forth on Exhibit A hereto, as such Exhibit A may be amended and revised
from time to time by mutual consent of the parties. In addition, Ansell shall
reimburse PDL for all direct and identifiable costs and third-party
disbursements incurred by PDL in performing the PDL Services.
Section 3.2. PDL Billing. Monthly invoices will be sent and reasonable
backup documentation will accompany such invoices with respect to PDL Services
that are not based on a per annum fee. No back up documentation shall be
required with respect to PDL Services that are based on a per annum fee.
Section 3.3. Payment by Ansell. Payment for all PDL Services provided
hereunder shall be made monthly, in arrears, prior to the fifteenth day of each
calendar month. The Service Fee for PDL Services for which there is a per annum
fee shall be paid in equal monthly installments.
Section 3.4. Ansell Taxes. Ansell will reimburse PDL for all value
added, sales, use or excise taxes levied on amounts payable by Ansell to PDL
pursuant to this Agreement, provided that Ansell shall not be responsible for
remittance of such taxes to applicable tax authorities. Ansell shall not be
responsible for any income, franchise, privilege, or occupational taxes of PDL.
PDL shall cooperate with Ansell's efforts to identify taxable and nontaxable
portions of amounts payable pursuant to this Agreement (including segregation of
such portions on invoices) and to obtain refunds of taxes paid, where
appropriate. Ansell may furnish PDL with certificates or other evidence
supporting applicable exemptions from sales, use or excise taxation.
ARTICLE IV.
TERM OF AGREEMENT
Section 4.1. Effective Date and Term. The initial term of this
Agreement shall commence on the Closing Date and, except as otherwise provided
below, continue until June 30, 2001. This Agreement will be renewed
automatically thereafter for successive one-year terms unless either Ansell or
PDL elects not to renew this Agreement by giving the other party written notice
of its intention not to renew the Agreement not less than ninety (90) days prior
to the end of the then current term.
Section 4.2. Termination. This Agreement and the scope of the PDL
Services may be reduced, suspended, or terminated as follows:
(a) Either party hereto may terminate this Agreement immediately
upon written notice to the other party (i) in the event of the
other party's voluntary bankruptcy or insolvency, (ii) in the
event that the other party shall make an assignment for the
benefit of creditors, or (iii) in the event that a petition
shall have been filed against the other party under a
bankruptcy law, a corporate reorganization law or any other
law for relief of debtors (or other law similar in purpose or
effect).
3
<PAGE> 4
(b) If either party hereto (the "Defaulting Party") shall fail
adequately to perform in any material respect any of its
material obligations under this Agreement, whether voluntarily
or involuntarily or as a result of any law or regulation or
otherwise, the other party hereto shall have the option to
terminate this Agreement upon sixty (60) days' written notice
(which shall be reduced to thirty (30) days' written notice in
the event of a failure to make payment in accordance with the
terms hereof) to the Defaulting Party specifying the respects
in which the Defaulting Party has so failed to perform its
obligations under this Agreement, unless during such period
the Defaulting Party shall have substantially remedied the
default therein specified.
Section 4.3. Transition Assistance. Prior to and following the
termination of this Agreement or the failure to renew this Agreement, PDL shall
provide at Ansell's request and expense, reasonable transition services and
assistance in engaging or training another person or persons to provide such PDL
Services or their equivalent. PDL shall provide Ansell full access to all
records and other information relating to the PDL Services provided by PDL
immediately preceding such termination.
ARTICLE V.
MISCELLANEOUS
Section 5.1. Independent Contractor Status. PDL shall perform the PDL
Services hereunder as an independent contractor. Nothing in this Agreement shall
constitute or be deemed to constitute a partnership or joint venture between the
parties hereto, or constitute or be deemed to constitute any party as the agent
or employee of the other party for any purpose whatsoever and neither party
shall have authority or power to bind the other or to contract in the name of,
or create a liability against, the other in any way or for any purpose. Each
party shall be responsible for any injury or death to its own employees,
including all workers' compensation claims or liabilities resulting therefrom,
and each such party shall remain responsible for reporting its income and paying
its own taxes.
Section 5.2. Confidentiality. The parties each agree that they will not
divulge to any third party, or to any person within each respective corporation
who does not have a need to know, any confidential matters relating to each
other's business and the businesses of the other party's customers, vendors,
employees or competitors which may become known by reason of performance of the
PDL Services described in this Agreement; provided, however, that the
obligations of either party under this section shall not apply to information
which has been in the public domain or becomes in the public domain without
breach of this Agreement or which a party is legally obligated to disclose. The
obligations of the parties hereto set forth in this section shall survive the
expiration or termination of this Agreement for a period of one (1) year.
Section 5.3. Force Majeure. Each party shall be excused for failure to
perform any part of this Agreement due to events beyond its control, including
but not limited to fire, storm, flood, earthquake, explosion, accident, riots
and other civil disturbances, sabotage, strikes or other labor disturbances,
injunctions, transportation embargoes or delays, failure of performance of third
parties necessary for the parties' performance under this Agreement, or the laws
or regulations of the federal, state or local government or breach or agency
thereof; provided, however, no force
4
<PAGE> 5
majeure event shall excuse the obligation of the party claiming the benefit of a
force majeure event from paying the applicable fees for any services provided by
the other party.
Section 5.4. Standard of Performance; Remedies; Consequential Damages.
In performing its obligations under this Agreement, PDL represents to Ansell
that it will use the same standard of care and good faith as it uses in
performing services for its own account. PDL agrees to exercise reasonable
diligence to correct errors or deficiencies in the PDL Services provided by it
hereunder. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, PDL MAKES NO
REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, INCLUDING, BUT NOT
LIMITED TO, ANY REPRESENTATION OR WARRANTY AS TO MERCHANTABILITY OR FITNESS FOR
A PARTICULAR PURPOSE, ARISING OUT OF THIS AGREEMENT AND THE PDL SERVICES TO BE
PROVIDED HEREUNDER. The sole remedy of Ansell for any claim relating to the
performance or nonperformance of the PDL Services shall be a refund by PDL to
Ansell of any charges or fees paid for the applicable PDL Services. In addition,
in no event shall either party be liable to the other for special, punitive,
incidental or consequential damages arising out of this Agreement.
Section 5.5. Notice. Any notice, request, designation, direction,
demand, election, acceptance or other communication shall be in writing and
shall be effective and deemed to have been given when it is (i) mailed postage
prepaid, by certified first class mail, return receipt requested, addressed to a
party and received by such party; (ii) hand or courier delivered; or (iii) sent
by telecopy with receipt confirmed, as follows:
If to PDL,
Pacific Dunlop Limited
101 Collins Street Level 41
Melbourne, Victoria Australia 3000
Attention: Secretary
Telephone: 011-613-9270-7270
Fax: 011-613-9654-4184
If to Ansell,
Ansell Healthcare Incorporated
200 Schulz Drive
Red Bank, New Jersey 07701
Attention: President
Telephone: 732-345-5353
Fax: 732-345-9737
Any party may from time to time designate another address to which
notice or other communication shall be addressed or delivered to such party and
such new designation shall be effective on the later of (i) the date specified
in the notice or (ii) receipt of such notice by the intended recipient.
5
<PAGE> 6
Section 5.6. Assignability; Successor and Assigns. Neither party hereto
shall assign this Agreement in whole or in part without the prior written
consent of the other party hereto, which consent shall not be unreasonably
withheld. This Agreement shall inure to the benefit of and shall be binding upon
the successor and permitted assigns of the parties hereto.
Section 5.7. No Third Party Beneficiaries. Each of the provisions of
this Agreement is for the sole and exclusive benefit of the parties hereto
respectively, as their interests may appear, and shall not be deemed for the
benefit of any other person or entity or group of persons or entities.
Section 5.8. Severability. If any term or condition of this Agreement
shall be held invalid in any respect, such invalidity shall not affect the
validity of any other term or condition hereof.
Section 5.9. Applicable Law. This Agreement shall be construed under
the laws of Victoria, Australia, and the rights and obligations of the parties
shall be determined under the substantive law of Victoria, Australia, without
giving effect to such jurisdiction's conflict of law rules or principles.
Section 5.10. Amendment or Modification. This Agreement may be amended,
modified, superseded, canceled, renewed or extended, and the terms and
conditions hereof may be waived, only by a written instrument signed by the
parties, or in the case of a waiver, by the party waiving compliance. Any waiver
by either party hereto of any condition, or of the breach of any provision or
term in any one or more instances shall not be deemed to be nor construed as a
further or continuing waiver of any such condition, or of the breach of any
other provision or term of this Agreement.
Section 5.11. Construction. Descriptive headings to sections and
paragraphs are for convenience only and shall not control or affect the meaning
or construction of any provisions in this Agreement.
Section 5.12. Counterparts. This Agreement may be executed in two
counterparts, each of which shall constitute an original, and both of which,
when taken together, shall constitute one and the same instrument.
Section 5.13. Look-Back. The parties acknowledge that the intent of
this Agreement is to accurately capture the scope and nature of the services
provided to Ansell by PDL as of the date hereof, so that such services may
continue uninterrupted for the term of this Agreement. Both parties have made a
good faith attempt to identify all of the services provided to Ansell by PDL as
of the date hereof. If, however, it is later determined that the parties
unintentionally omitted a description of services or charges therefor, both
parties shall negotiate in good faith to amend this Agreement to include such
services and charges, and charges and credits for such additional services shall
be retroactive back to the commencement date of this Agreement.
6
<PAGE> 7
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officers of the parties as of the date first written
above.
PACIFIC DUNLOP LIMITED
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Attest:
---------------------------------------
ANSELL HEALTHCARE INCORPORATED
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Attest:
---------------------------------------
<PAGE> 8
EXHIBIT A
Services to be provided by PDL to Ansell
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
FISCAL YEAR 2000
SERVICE FEE
SERVICES PER SERVICE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C>
o Public Relations Services
- Coordination of investor relations and media management A$50,000
per annum
- ---------------------------------------------------------------------------------------------------------------------------
o Legal Services
- Coordination of the registration, renewal, licensing and A$100,000
protection of Ansell's trademark portfolio including the per annum
provision and maintenance of the trademark management
infrastructure.
- Assistance with litigation management
- ---------------------------------------------------------------------------------------------------------------------------
o Acquisition Planning Services Executive General Manager
- Assistance in planning, negotiating and completing acquisitions A$2,700 per day
General Manager
A$1,700 per day
Manager
A$1,000 per day
(plus out-of-pocket expenses)
- ---------------------------------------------------------------------------------------------------------------------------
o Insurance Services [Charges will be amounts that PDL
- Coordination of insurance programs is advised by its broker would be
payable by Ansell if it secured
the coverage independently]
- ---------------------------------------------------------------------------------------------------------------------------
o Treasury Services
- Coordination and implementation of internal and external A$200,000
borrowing programs, credit facilities and Letters of Comfort per annum*
- Cash management
- Hedging currency and commodity exposure
- Interest rate management
- ---------------------------------------------------------------------------------------------------------------------------
o Tax Services
- Preparation and review of income tax returns A$200,000
- Assistance in managing and reporting employment taxes and per annum
transaction taxes
- Provision of technical advice
- ---------------------------------------------------------------------------------------------------------------------------
o Manufacturing Assistance Services Executive General Manager
- Review of manufacturing practices, costing systems, inventory A$2,700 per day
management systems and site selection General Manager
A$1,700 per day
Manager
A$1,000 per day
(plus out-of-pocket expenses)
- ---------------------------------------------------------------------------------------------------------------------------
o Information and Telecommunication Services in Australia and New Zealand A$82,000
o Use of telephone lines and equipment
o Telephone service support
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------------
* This fee does not include fees and interest charges to Ansell set forth
under a Credit Facility pursuant to which PDL makes loans to Ansell and
its affiliates. In addition, PDL will act as a counterparty with Ansell
in connection with hedging currency and commodity exposure and as a
counterparty will set terms that PDL in good faith believes are terms
that would be available to Ansell in the open market.
<PAGE> 1
EXHIBIT 10.4
REGISTRATION RIGHTS AND OWNERSHIP MAINTENANCE AGREEMENT
This REGISTRATION RIGHTS AND OWNERSHIP MAINTENANCE AGREEMENT is
effective as of March, 2000 among Ansell Healthcare Incorporated, a Delaware
corporation (the "Company"), Pacific Dunlop Investments (USA) Inc. ("PDI"),
Pacific Dunlop Capital Inc. ("PDC"), Pacific Dunlop Holdings (USA),
Inc., a Delaware corporation ("PDH") and PD International Pty. Ltd., a
corporation organized under the laws of Australia ("PD International"). (PDI,
PDC, PDH and PD International are hereinafter collectively referred to as the
"PDL Stockholders".)
WHEREAS, the PDL Stockholders collectively own, as of the date hereof,
all of the outstanding common stock, par value $.01 per share, of the Company
(the "Common Stock");
WHEREAS, the PD International intends to sell shares of Common Stock
representing up to twenty percent (20%) of the Company's outstanding Common
Stock in a registered public offering (the "Offering");
WHEREAS, the PDL Stockholders and the Company desire to establish
certain terms and conditions concerning the acquisition and disposition of
securities of the Company by the PDL Stockholders and their Affiliates (as
defined herein) after completion of the Offering;
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and agreements contained herein, the PDL Stockholders and the Company
agree as follows:
ARTICLE 1.
DEFINITIONS
1.1. Definitions.
(a) "Affiliate" has the meaning defined in Rule 12b-2 promulgated under
the Securities Exchange Act of 1934, as amended (such Act, including the rules
and regulations promulgated thereunder, the "1934 Act").
(b) "Applicable Stock" means, at any time, the (i) shares of Common
Stock owned by the PDL Stockholders and their Affiliates as of the date hereof,
plus (ii) shares of Common Stock purchased by the PDL Stockholders and their
Affiliates pursuant to Section 3.1 of this Agreement, plus (iii) shares of
Common Stock that were issued to the PDL Stockholders and their Affiliates in
respect of shares described in either clause (i) or clause (ii) of this Section
1.1(b) in any reclassification, share combination, share subdivision, share
dividend, share exchange, merger, consolidation or similar transaction or event.
<PAGE> 2
(c) "Beneficial Ownership" has the meaning defined in Rule 13d-3
promulgated under the 1934 Act.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Equity Security" means any (i) voting stock of the Company (other
than Eshares of voting stock not having the right to vote generally in any
election of directors of the Company or any of its subsidiaries), (ii)
securities of the Company convertible into or exchangeable for such stock, and
(iii) options, rights and warrants issued by the Company to acquire such stock.
(f) "Market Price" of any shares of Common Stock or Other Stock, as the
case may be, on any date means (i) the average of the last sale price of such
shares on each of the five trading days immediately preceding such date on a
U.S. national securities exchange on which such shares are traded, or (ii) if
such sale prices are unavailable or such shares are not so traded, the value of
such shares on such date determined in accordance with agreed-upon procedures
reasonably satisfactory to the PDL Stockholders and the Company.
(g) "Other Stock" means any class of the Company's capital stock other
than Common Stock, and any other security of the Company that, in the opinion of
the PDL Stockholders, will or is likely to be treated as stock for purposes of
Section 1504 of the Code.
(h) "Ownership Percentage" means, at any time, the fraction, expressed
as a percentage and rounded to the next highest thousandth of a percent, whose
numerator is the aggregate number of shares of the Applicable Stock and whose
denominator is the sum of the aggregate number of the outstanding shares of
Common Stock of the Company plus the aggregate number of Repurchased Shares;
provided, however, that any shares of Common Stock issued by the Company in
violation of its obligations under Section 3.1 of this Agreement shall not be
deemed outstanding for the purpose of determining the Ownership Percentage.
(i) "Parent's Voting Interest" means the percentage of the outstanding
Common Stock with respect to which the PDL Stockholders and their Affiliates
have Beneficial Ownership.
(j) "Person" means any individual, partnership, joint venture,
corporation, trust, unincorporated organization, limited liability company, or
other entity or organization.
(k) "Repurchased Shares" means the aggregate number of shares of the
Company's Common Stock that are, from and after the date hereof, repurchased by
the Company from its stockholders, less the aggregate number of shares of Common
Stock (up to the aggregate number so repurchased) that are re-issued (other than
shares re-issued in conjunction with an issuance of Common Stock pursuant to
which the PDL Stockholders have exercised in full their option as contemplated
by Section 3.1(a) of this Agreement) from and after the date hereof upon the
exercise of stock options or otherwise.
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<PAGE> 3
ARTICLE 2.
REGISTRATION RIGHTS
2.1. Demand Registration. For purposes of this Article 2, the term "PDL
Stockholders" shall include any Affiliates of the PDL Stockholders that may from
time to time own or sell, as the case may be, shares of Common Stock.
(a) (i) Demand Rights. The Company agrees that upon the request of one
or more of the PDL Stockholders it will file one or more registration statements
(each a "Registration Statement") under the Securities Act of 1933, as amended
(the "1933 Act") as to the number of shares of Common Stock specified in such
request (the "Registered Shares"). Notwithstanding the foregoing, the Company
shall not be obligated to file a registration statement relating to any
registration request under this Section 2.1: (A) unless the aggregate requests
by the PDL Stockholders for such registration cover at least two percent (2%) of
the outstanding Common Stock, (B) with respect to more than an aggregate of
three (3) registrations under this Section 2.1, which shall be increased to an
unlimited number of registrations if such additional registrations are effected
on Form S-3 or any successor similar short-form registration statement, or (C)
if, with respect to such request, the managing underwriter, the Securities
Exchange Commission ("SEC"), the 1933 Act or the rules and regulations
thereunder, or the form on which the registration statement is to be filed,
would require the conduct of an audit other than the regular audit conducted by
the Company at the end of its fiscal year, unless the PDL Stockholders agree to
pay the expenses of the Company in connection with such an audit other than the
regular audit in which case the Company shall be obligated to file a
Registration Statement relating to such request.
(ii) Withdrawn Requests. Except as otherwise provided herein, any
request by a PDL Stockholder for registration pursuant to this Section 2.1 which
is subsequently withdrawn prior to the Registration Statement becoming effective
shall not constitute a registration for purposes of determining the number of
registrations to which the PDL Stockholders are entitled pursuant to Section
2.1(a)(i)(B); provided, however, that the PDL Stockholders shall reimburse the
Company for all expenses incurred, including, without limitation, reasonable
fees and expenses of the Company's attorneys, accountants and investment
bankers, in connection with the preparation and filing, if filed, of such
Registration Statement.
(iii) Suspension of Company's Obligations. The Company's
obligations pursuant to Section 2.1 shall be suspended if: (i) the fulfillment
of such obligations would require the Company to make a disclosure that would,
in the reasonable good faith judgment of the Company's board of directors, be
detrimental to the Company and premature; (ii) the Company having filed a
registration statement with respect to Equity Securities to be distributed in an
underwritten public offering, is advised by its lead or managing underwriter
that an offering by the PDL Stockholders of the Registered Shares would
materially adversely affect the distribution of such Equity Securities, and has
furnished to the PDL Stockholders an officer's certificate to that effect; or
(iii) the board of directors of the Company shall determine in good faith that
such an offering will interfere with a pending or contemplated financing,
merger, sale of assets, recapitalization or other similar corporate action of
the Company and the Company shall have furnished to the PDL Stockholders an
officers' certificate to that effect. Such
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<PAGE> 4
obligations shall be reinstated: (x) in the case of clause (i) above, upon the
making of such disclosure by the Company (or, if earlier, when such disclosure
would either no longer be necessary for the fulfillment of such obligations or
no longer be detrimental); (y) in the case of clause (ii) above, upon the
conclusion of any period (not exceeding six (6) months) during which the Company
would not, pursuant to the terms of its underwriting arrangements, be permitted
to sell the Registered Shares for its own account; and (z) in the case of clause
(iii) above, not more than ninety (90) days from the date of the PDL
Stockholders' request under Section 2.1(a).
(iv) Priority in Demand Registrations. Subject to the last sentence
of this Section 2.1(a)(iv) and to the priority allocation provisions of this
Section 2.1(a)(iv), if a registration requested pursuant to Section 2.1 involves
an underwritten offering the Company may elect to sell securities pursuant to
such registration statement. If the Company does elect to sell securities
pursuant to such registration statement and the managing underwriter advises the
Company in writing that, in its opinion, the number of securities requested to
be included in such registration (including securities of the Company which are
not Registered Shares) exceeds the number which can be sold in such offering
without having an adverse effect on such offering as contemplated by the PDL
Stockholders (including the price at which the PDL Stockholders propose to sell
such Registered Shares), then the Company will (subject to the last sentence of
this Section 2.1(a)(iv)) include in such registration: (A) first, all of the
Registered Shares requested to be included in such registration by the PDL
Stockholders, and (B) second, that number of securities of the Company which are
not Registered Shares which, in the opinion of the managing underwriter, can be
sold without having the adverse effect referred to above. In the event that the
number of Registered Shares requested to be included in such registration
exceeds the number which, in the opinion of such managing underwriters, can be
sold, the number of such Registered Shares included in such registration shall
be allocated among all requesting PDL Stockholders as they agree.
Notwithstanding anything to the contrary contained herein, neither the Company
nor any other Person may include any securities in any registration pursuant to
this Section 2.1 without the prior written consent of the PDL Stockholders
requesting such registration.
(v) Selection of Underwriters. The PDL Stockholders shall have the
right to designate the underwriters for any public offering of Registered Shares
made pursuant to this Section 2.1.
(b) Company Obligations. The Company agrees to (i) use its best efforts
to have any registration of the Registered Shares made pursuant to this Section
2.1 declared effective as promptly as practicable after the filing of the
Registration Statement, and (ii) to keep such Registration Statement effective
for a period sufficient to complete the distribution of the Registered Shares.
The Company further agrees to supplement or make amendments to the Registration
Statement, if required by (x) the registration form utilized by the Company for
such registration or by the instructions applicable to such registration form,
(y) the 1933 Act or the rules and regulations thereunder or (z) the PDL
Stockholders (or any underwriter for the PDL Stockholders) with respect to
information concerning the PDL Stockholders or such underwriter or the plan of
distribution to be utilized with respect to the Registered Shares.
2.2. Incidental Registration. (a) If the Company shall at any time
propose to file a registration statement under the 1933 Act for an offering of
securities of the Company for cash (other than an offering relating to (i) a
business combination that is to be filed on Form S-4 under
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<PAGE> 5
the 1933 Act (or any successor form thereto) or (ii) any employee benefit plan,
including, without limitation a stock option or stock purchase plan), the
Company shall provide prompt written notice of such proposal to the PDL
Stockholders of its intention to do so and of such PDL Stockholders' rights
under this Section 2.2 and shall use its best efforts to include in such
registration statement such number of shares of Common Stock which the PDL
Stockholders have requested the Company to register (the "Incidental Registered
Shares"), which request shall be made to the Company within twenty (20) days
after the PDL Stockholders receive notice from the Company of such proposed
registration. Notwithstanding the foregoing: (A) if, at any time after giving
written notice of its intention to register any securities and prior to the
effective date of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to register such
securities, the Company may, at its election, give written notice of such
determination to the PDL Stockholders and, thereupon, shall be relieved of its
obligation to register the Incidental Registered Shares in connection with such
registration (but not from its obligation to pay the registration expenses
referred to in Section 2.6(b) incurred in connection therewith), and (B) if such
registration involves an underwritten offering, all PDL Stockholders requesting
to include their shares of Common Stock in the Incidental Registered Shares to
be included in the Company's registration must sell such shares to the
underwriters selected by the Company on the same terms and conditions as those
that apply to the Company, with such differences, including any with respect to
indemnification and liability insurance, as may be customary or appropriate in
combined primary and secondary offerings. If a registration requested pursuant
to this Section 2.2 involves an underwritten public offering, any PDL
Stockholder requesting to include its shares of Common Stock in the Incidental
Registered Shares to be included in such registration may elect, in writing
prior to the effective date of the registration statement filed in connection
with such registration, not to register such securities in connection with such
registration.
(b) Priority in Incidental Registrations. If a registration pursuant to
Section 2.2 involves an underwritten offering and the managing underwriter
advises the Company in writing that, in its opinion, the number of securities to
be included in such registration including the Incidental Registered Shares
exceeds the number which can be sold in such offering without having an adverse
effect on such offering as contemplated by the Company (including the price at
which the Company proposes to sell such securities), then the Company will
include in such registration: (i) first, all of the securities the Company
proposes to sell, and (ii) second, that number of Incidental Registered Shares
which, in the opinion of such managing underwriter, can be sold without having
the adverse effect referred to above, such amount to be allocated among all
requesting PDL Stockholders as they agree.
(c) Limitation with Respect to Incidental Registrations. If any
registration shall be made in connection with an underwritten public offering
pursuant to this Section 2.2, then the PDL Stockholders shall not effect any
public sale or distribution of any Common Stock (except as part of such public
offering) during the one hundred eighty (180) day period beginning on the
effective date of such registration, if, and to the extent that, the managing
underwriter(s) of any such offering determine(s) that such action is necessary
or desirable to effect such offering; provided, that each PDL Stockholder has
received the written notice required by Section 2.2(a). Notwithstanding the
foregoing, no PDL Stockholder shall be obligated to comply with the restrictions
of this subsection as a result of an underwritten public offering subject to
this Section 2.2 more than once in any twelve-month period.
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<PAGE> 6
2.3. Additional Rights. If the Company at any time grants any other
holders of Equity Securities any rights to request the Company to effect the
registration of any such Equity Securities on terms more favorable to such
holders than the terms set forth in this Agreement, this Agreement shall be
deemed amended or supplemented to the extent necessary to provide the PDL
Stockholders such more favorable rights and benefits.
2.4. Registration Procedures. Subject to the provisions of Sections 2.1
and 2.2 of this Agreement, in connection with the registration of shares of
Common Stock hereunder, the Company shall as promptly as possible:
(a) furnish to the PDL Stockholders, prior to the filing of any
registration statement or a supplement or amendment thereto, copies of such
registration statement, supplement, or amendment as is proposed to be filed, and
thereafter such number of copies of such registration statement, supplement, or
amendment (in each case including all exhibits thereto), the prospectus included
in such registration statement (including each preliminary prospectus) and such
other documents in such quantities as the PDL Stockholders may reasonably
request from time to time in order to facilitate the disposition of the
Registered Shares or the Incidental Registered Shares, as the case may be;
(b) use all reasonable efforts to register or qualify the Registered
Shares or the Incidental Registered Shares, as the case may be, under such other
securities or blue sky laws of such jurisdiction as the PDL Stockholders
reasonably request and do any and all other acts and things as may be reasonably
necessary or advisable to enable the PDL Stockholders to consummate the
disposition in such jurisdictions of the Registered Shares or the Incidental
Registered Shares, as the case may be; provided that the Company will not be
required to (i) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this Section 2.2(b), (ii)
subject itself to taxation in any such jurisdiction, or (iii) consent to general
service of process in any such jurisdiction;
(c) use all reasonable efforts to cause the Registered Shares or the
Incidental Registered Shares, as the case may be, to be registered with or
approved by such other governmental agencies or authorities as may be necessary
by virtue of the business and operations of the Company to enable the PDL
Stockholders to consummate the disposition of such shares;
(d) notify the PDL Stockholders, at any time when a prospectus relating
to such registration is required to be delivered under the 1933 Act, of the
happening of any event as a result of which the prospectus included in a
registration statement or a supplement or amendment contains an untrue statement
of a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and the
Company will prepare a supplement or amendment to such prospectus, supplement,
or amendment so that, as thereafter delivered to the purchasers of the
Registered Shares or the Incidental Registered Shares, as the case may be, such
prospectus, supplement, or amendment will not contain an untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading;
(e) enter into customary agreements (including an underwriting
agreement in customary form) and take such other actions as are reasonably
required in order to expedite or facilitate the disposition of the Registered
Shares or the Incidental Registered Shares, as the case may be;
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<PAGE> 7
(f) make available for inspection by the PDL Stockholders, any
underwriter participating in any disposition pursuant to such registration, and
any attorney, accountant or other agent retained by the PDL Stockholders or any
such underwriter (collectively, the "Inspectors"), all financial and other
records, pertinent corporate documents and properties of the Company
(collectively, the "Records") as shall be reasonably necessary to enable them to
exercise their due diligence responsibility, and cause the officers, directors
and employees of the Company to supply all information reasonably requested by
any such Inspector in connection with such registration; provided that (i)
Records and information obtained hereunder shall be used by such persons only to
exercise their due diligence responsibility and (ii) Records or information
which the Company determines, in good faith, to be confidential shall not be
disclosed by the Inspectors unless (x) the disclosure of such Records or
information is necessary to avoid or correct a misstatement or omission in a
registration statement or (y) the release of such Records or information is
ordered pursuant to a subpoena or other order from a court or governmental
authority of competent jurisdiction. The PDL Stockholders shall use reasonable
efforts, prior to any such disclosure described in (x) above, to inform the
Company that such disclosure is necessary to avoid or correct a misstatement or
omission in a registration statement. The PDL Stockholders further agree that
they will, upon learning that disclosure of such Records or information is
sought in a court or governmental authority, give notice to the Company and
allow the Company, at the expense of the Company, to undertake appropriate
action to prevent disclosure of the Records or information deemed confidential;
(g) use all reasonable efforts to obtain a comfort letter from the
independent public accountants for the Company in customary form and covering
such matters of the type customarily covered by comfort letters as the PDL
Stockholders reasonably request;
(h) otherwise comply with all applicable rules and regulations of the
SEC, and make generally available to its security holders, as soon as reasonably
practicable, an earnings statement covering a period of twelve (12) months,
beginning within three (3) months after the effective date of the registration,
which earnings statement shall satisfy the provisions of Section 11(a) of the
1933 Act and Rule 158 thereunder; and
(i) use all reasonable efforts to cause all Registered Shares or
Incidental Registered Shares, as the case may be to be listed on each securities
exchange on which similar securities issued by the Company are listed.
2.5. Conditions to Offerings. (a) The obligations of the Company to
take the actions contemplated by Sections 2.1 and 2.2 with respect to an
offering of shares of Common Stock shall be subject to the condition that the
PDL Stockholders shall conform to all applicable requirements of the 1933 Act
and the 1934 Act with respect to the offering and sale of securities and advise
each underwriter, broker or dealer through which any of the Registered Shares or
Incidental Registered Shares, as the case may be, are offered that such shares
are part of a distribution that is subject to the prospectus delivery
requirements of the 1933 Act.
(b) The Company may require the PDL Stockholders to furnish to the
Company such information regarding the PDL Stockholders or the distribution of
the Registered Shares or
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Incidental Registered Shares, as the case may be as the Company may from time to
time reasonably request in writing, in each case only as required by the 1933
Act or the rules and regulations thereunder or under state securities or blue
sky laws.
(c) The PDL Stockholders agree that, upon receipt of any notice from
the Company of the happening of any event of the kind described in Section
2.4(d), the PDL Stockholders will forthwith discontinue disposition of
Registered Shares or Incidental Registered Shares, as the case may be, pursuant
to the registration covering such shares until the PDL Stockholders' receipt of
the copies of the supplemented or amended prospectus contemplated by Section
2.4(d).
2.6. Registration Expenses. (a) All expenses incident to a registration
pursuant to Section 2.1 and 2.2, including, without limitation, all fees and
expenses of compliance with federal or state securities or blue sky laws
(including reasonable fees and disbursements of counsel in connection with blue
sky qualifications of the Registered Shares), rating agency fees, printing,
messenger, delivery and telephone expenses, the fees and expenses incurred in
connection with the listing of the securities to be registered on each
securities exchange on which similar securities issued by the Company are then
listed, fees and disbursements of counsel for the Company and its independent
certified public accountants (including the expenses of any comfort letters
required by or incident to such performance), securities acts liability
insurance (if the Company elects to obtain such insurance), the reasonable fees
and expenses of any special experts retained by the Company in connection with
such registration, and the fees and expenses of other persons retained by the
Company, shall be borne by the Company;
(b) The Company will have no responsibility for any of the expenses of
any of the holders of Registered Shares or Incidental Registered Shares incurred
in connection with any registration hereunder including, without limitation,
underwriting fees, discounts and commissions and transfer taxes, if any,
attributable to the sale of such shares and counsel fees of such holders.
2.7. Indemnification; Contribution. The provisions of this Section 2.7
shall apply in connection with registrations made pursuant to Sections 2.1 and
2.2.
(a) Indemnification by the Company. The Company agrees to indemnify, to
the fullest extent permitted by law, the PDL Stockholders, their directors and
officers, and their Affiliates against any and all losses, claims, damages,
liabilities and expenses (including attorneys' fees) arising out of or based
upon any untrue or alleged untrue statement of material fact contained in any
registration statement, prospectus, any amendment or supplement thereto or
preliminary prospectus (each as amended and or supplemented, if the Company
shall have furnished any amendments or supplements thereto), or any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein (in the case of a prospectus, in the
light of the circumstances under which they were made) not misleading, except
insofar as such untrue statement or omission is made in reliance on and
conformity with any information with respect to the PDL Stockholders furnished
to the Company in writing by the PDL Stockholders expressly for use therein. In
connection with an underwritten offering, the Company will indemnify each
underwriter thereof, the officers and directors of such underwriter, and each
Affiliate of each underwriter to the same extent as provided above with respect
to the indemnification of the PDL Stockholders; provided that such
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underwriter agrees to indemnify the Company to the same extent as provided below
with respect to the indemnification of the Company by the PDL Stockholders.
(b) Indemnification by the PDL Stockholders. In connection with any
registration in which the PDL Stockholders are participating, the PDL
Stockholders will furnish to the Company in writing such information and
affidavits with respect to the PDL Stockholders as the Company reasonably
requests for use in connection with any such registration statement, prospectus,
or preliminary prospectus and agrees to indemnify the Company, its directors,
its officers who sign any registration statement, and its Affiliates to the same
extent as the foregoing indemnity from the Company to the PDL Stockholders, but
only with respect to information relating to the PDL Stockholder furnished to
the Company in writing by the PDL Stockholders expressly for use in any
registration statement, prospectus, any amendment or supplement thereto, or any
preliminary prospectus.
(c) Conduct of Indemnification Proceedings. In case any proceeding
(including any governmental investigation) shall be instituted involving any
person in respect of which indemnity may be sought pursuant to Section 2.7(a) or
Section 2.7(b), such person (hereinafter called the "Indemnified Party") shall
promptly notify the person against whom such indemnity may be sought
(hereinafter called the "Indemnifying Party") in writing and the Indemnifying
Party, upon request of the Indemnified Party, shall retain counsel reasonably
satisfactory to the Indemnified Party to represent the Indemnified Party and any
others the Indemnifying Party may designate in such proceeding and shall pay the
fees and disbursements of such counsel related to such proceeding. In any such
proceeding, any Indemnified Party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the Indemnifying Party and the Indemnified Party and the Indemnified Party
shall have been advised by counsel that representation of both parties by the
same counsel would be inappropriate due to actual or potential differing
interests between them. It is understood that the Indemnifying Party shall not,
in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all such Indemnified Parties, and that
all such fees and expenses shall be reimbursed as they are incurred. The
Indemnifying Party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment against the Indemnified Party, the Indemnifying Party
agrees to indemnify the Indemnified Party from and against any loss or liability
by reason of such settlement or judgment. No Indemnifying Party shall, without
the prior written consent of the Indemnified Party, effect any settlement of any
pending or threatened proceeding in respect of which any Indemnified Party is or
could have been a party and indemnity could have been sought hereunder by such
Indemnified Party, unless such settlement includes an unconditional release of
such Indemnified Party from all liability on claims that are the subject matter
of such proceeding.
(d) Contribution. (i) If the indemnification provided for in this
Section 2.7 from the Indemnifying Party is unavailable to an Indemnified Party
in respect of any losses, claims, damages, liabilities or expenses referred to
in this Section 2.7, then the Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims, damages, liabilities or
expenses in such
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proportion as is appropriate to reflect the relative fault of the Indemnifying
Party and Indemnified Parties in connection with the actions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative fault of such Indemnifying Party
and Indemnified Parties shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such Indemnifying Party or
Indemnified Parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the losses, claims, damages, liabilities
and expenses referred to above shall be deemed to include, subject to the
limitations set forth in Section 2.7(c), any legal or other fees or expenses
reasonably incurred by such party in connection with any investigation or
proceeding.
(ii) The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 2.7(d) were determined by pro
rata allocation or by any other method of allocation which does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the 1933 Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
(iii) If indemnification is available under this Section 2.7, the
Indemnifying Parties shall indemnify each Indemnified Party to the full extent
provided in Sections 2.7(a) and 2.7(b) without regard to the relative fault of
said Indemnifying Party or Indemnified Party or any other equitable
consideration provided for in this Section 2.7(d).
2.8. Rule 144. The Company covenants that it will file the reports
required to be filed by it under the 1933 Act and the 1934 Act and the rules and
regulations promulgated thereunder, and it will take such further action as the
PDL Stockholders may reasonably request, all to the extent required from time to
time to enable the PDL Stockholders to sell shares of Common Stock without
registration under the 1933 Act within the limitation of the exemptions provided
by (a) Rule 144 under the 1933 Act, as such Rule may be amended from time to
time, or (b) any similar rule or regulation hereafter adopted by the SEC. Upon
the request of the PDL Stockholders, the Company will deliver to the PDL
Stockholders a written statement as to whether it has complied with such
requirements.
ARTICLE 3.
OWNERSHIP MAINTENANCE RIGHTS
3.1. Ownership Maintenance Rights.
(a) Common Stock Option. The Company hereby grants to the PDL
Stockholders, on the terms and conditions set forth herein, a continuing right
(the "Common Stock Option") to purchase from the Company, at the times set forth
herein, such number of shares of Common Stock as is necessary to allow the PDL
Stockholders and their Affiliates to maintain the then-current Ownership
Percentage. The Common Stock option shall be assignable, in whole or in part, by
the PDL Stockholders to any one or more Affiliate or Affiliates of the PDL
Stockholders.
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The exercise price per share of Common Stock purchased pursuant to the Common
Stock Option shall be (i) in the case of an issuance to a third party by the
Company of shares of Common Stock for cash consideration, the price per share of
Common Stock to be paid by such third party in connection with such issuance and
(ii) in all other cases, the Market Price per share of Common Stock as of the
date of first delivery of notice of each exercise of the Common Stock Option by
the PDL Stockholders (or their permitted assignees hereunder) to the Company as
provided in Section 3.1(d).
(b) Other Stock Option. The Company hereby grants to the PDL
Stockholders, on the terms and conditions set forth herein, a continuing right
(the "Other Stock Option" and, together with the Common Stock Option, the
"Options") to purchase from the Company, at the times set forth herein, such
number of shares of Other Stock as is necessary to allow the PDL Stockholders
and their Affiliates to own eighty percent (80%) of each class of outstanding
Other Stock. The Other Stock Option shall be assignable, in whole or in part, by
the PDL Stockholders to any one or more Affiliate or Affiliates of the PDL
Stockholders. The exercise price per share of Other Stock purchased pursuant to
the Other Stock Option shall be (i) in the case of an issuance by the Company of
shares of Other Stock to a third party for cash consideration, the price per
share of Other Stock to be paid by such third party in connection with such
issuance and (ii) in all other cases the Market Price per share of the Other
Stock as of the date of first delivery of notice of each exercise of the Other
Stock Option by the PDL Stockholders (or their permitted assignees hereunder) to
the Company as provided in Section 3.1(d).
(c) Notice. At least twenty (20) business days prior to the issuance of
any shares of Common Stock or the first date on which any event could occur
that, in the absence of a full or partial exercise of the Common Stock Option,
would result in a reduction in the Ownership Percentage, the Company will notify
the PDL Stockholders in writing (a "Common Stock Option Notice") of any plans
that the Company has to issue such shares or the date on which such event could
first occur. At least twenty (20) business days prior to the issuance of any
shares of Other Stock or the first date on which any event could occur that, in
the absence of a full or partial exercise of the Other Stock Option, would
result in the PDL Stockholders and their Affiliates owning less than eighty (80)
percent (80%) of each class of outstanding Other Stock, the Company will notify
the PDL Stockholders in writing (an "Other Stock Option Notice" and, together
with or separate from a Common Stock Option Notice, an "Option Notice") of any
plans that the Company has to issue such shares or the date on which such event
could first occur. Each Option Notice must specify the date on which the Company
intends to issue such additional shares or on which such event could first occur
(such issuance or event being referred to herein as an "Issuance Event" and the
date of such issuance or event as an "Issuance Event Date"), the number of
shares the Company intends to issue or may issue and the other terms and
conditions of such Issuance Event.
(d) Exercise. The Common Stock Option may be exercised by the PDL
Stockholders (or any Affiliate of the PDL Stockholders to which all or any part
of the Common Stock Option has been assigned) for a number of shares equal to or
less than the number of shares that are necessary for the PDL Stockholders and
their Affiliates to maintain, in the aggregate, the Ownership Percentage. The
Other Stock Option may be exercised by the PDL Stockholders (or any Affiliate of
the PDL Stockholders to which all or any part of the Other Stock Option has been
assigned) for a number of shares equal to or less than the number of shares that
are necessary for the PDL Stockholders and their Affiliates to own, in the
aggregate, eighty percent
11
<PAGE> 12
(80%) of each class of outstanding Other Stock. Each Option may be exercised at
any time after receipt of an applicable Option Notice and prior to the
applicable Issuance Event Date by the delivery to the Company of a written
notice to such effect specifying (i) the number of shares of Common Stock or
Other Stock (as the case may be) to be purchased by the PDL Stockholders or any
of their Affiliates, and (ii) a calculation of the exercise price for such
shares. Upon any such exercise of either Option, the Company will, prior to the
applicable Issuance Event Date, deliver to the PDL Stockholders (or any
Affiliate or the PDL Stockholders designated by the PDL Stockholders), against
payment therefor, certificates (issued in the name of the PDL Stockholders or
their permitted assignees hereunder, or as directed by the PDL Stockholders)
representing the shares of Common Stock or Other Stock (as the case may be)
being purchased upon such exercise. Payment for such shares shall be made by
wire transfer or intrabank transfer to such account as shall be specified by the
Company, for the full purchase price for such shares.
(e) Effect of Failure to Exercise. Any failure by the PDL Stockholders
to exercise either Option, or any exercise for less than all shares purchasable
under either Option, in connection with any particular Issuance Event shall not
affect the PDL Stockholders' right to exercise the relevant Option in connection
with any subsequent Issuance Event; provided, however, that, in the case of the
Common Stock Option, the Ownership Percentage following such Issuance Event in
connection with which the PDL Stockholders so failed to exercise such Option in
full or in part shall be recalculated as set forth in the definition thereof.
(f) Acknowledgement. Notwithstanding anything to the contrary herein,
the Company and the PDL Stockholders acknowledge that the procedures set forth
in this Section 3.1 relating to the exercise of the Options shall not apply
where the Company is not capable of giving advance notice of the relevant
Issuance Event. The PDL Stockholders and the Company agree that, in such case,
the Options shall be exercisable at such times and in such manner as the PDL
Stockholders and the Company may from time to time agree, and otherwise by the
PDL Stockholders in a reasonable time and manner.
(g) Common Stock Repurchase Program. (i) The Company will adopt,
implement as soon as practicable (but not more than sixty (60) days after the
Offering), and maintain a comprehensive, long-term common stock repurchase
program to satisfy its obligation to deliver shares upon exercise of stock
options granted under a stock option plan (the "Common Stock Repurchase
Program"). The Company agrees that, pursuant to the Common Stock Repurchase
Program, prior to any issuance of shares of Common Stock by the Company for
purposes contemplated by the Common Stock Repurchase Program, it shall have
repurchased a number of shares of Common Stock such that, immediately after such
issuance, the PDL Stockholders' Ownership Percentage is equal to or greater than
the PDL Stockholders' lowest Ownership Percentage at any time after the Offering
but prior to such issuance; provided that (i) nothing in this Section 3.1(g)
shall require the Company to take any action that would, in the Company's
reasonable determination, adversely affect the Company's accounting for its
stock option and employee stock purchase plans, and (ii) the parties shall
cooperate to effect repurchases in a manner that will not have a substantial
adverse economic impact on the Company. It is understood that any reduction in
the Company's cash position as a result of such repurchases is not a
"substantial adverse economic impact."
12
<PAGE> 13
(ii) The Company shall:
(A) provide to the PDL Stockholders at the end of each month,
and at such other times as the PDL Stockholders may request,
information as to (I) the total number of shares of Common Stock
repurchased by the Company in the last month and on a year-to-date
basis, (II) the total number of shares of Common Stock previously
issued to date, (III) the Company's current forecasts as to future
issuances, and (IV) such other information as the PDL Stockholders may
request in connection with the PDL Stockholders' ownership and tax
consolidation objectives; and
(B) notify the PDL Stockholders within one business day after
the date in any month in which the total number of shares of Common
Stock issued by the Company in such month equals or exceeds a number of
shares representing more than 1% of the outstanding shares prior to
such issuance.
ARTICLE 4.
MISCELLANEOUS
4.1. Effectiveness. This agreement shall become effective only upon the
closing of the Offering.
4.2. No Inconsistent Actions or Agreements. The Company will not
hereafter enter into any agreement with respect to its securities which is
inconsistent with the rights granted to the PDL Stockholders in this Agreement.
The Company agrees not to take, and agrees to cause its directors to refrain
from taking, any action which could impede or delay the exercise by the PDL
Stockholders of any of their rights under this Agreement.
4.3. Notices. All notices, requests and other communications to any
party hereunder shall be in writing (including telecopy or similar writing) and
shall be given:
If to the Company, to:
Ansell Healthcare Incorporated
200 Schulz Drive
Red Bank, New Jersey 07701
Attention: President
Facsimile: 732-345-5353
13
<PAGE> 14
If to the PDL Stockholders, to:
Pacific Dunlop Holdings Inc.
6121 Lakeside Drive
Suite 200
Reno, Nevada 89511
Attention: Stephen C. Geerling
Facsimile: 775-824-4626
with a copy to:
Gardner, Carton & Douglas
321 N. Clark Street
Chicago, IL 60610
Attention: Robert J. Wilczek
Facsimile: 312-644-3381
and
Pacific Dunlop Limited
101 Collins Street Level 41
Melbourne, Victoria Australia 3000
Attention: Secretary
Telephone: 011-613-9270-7270
Fax: 011-613-9654-4184
or such other address or telecopier number as such party may hereafter specify
for the purpose by notice to the other party hereto. Each such notice, request
or other communication shall be effective (i) if given by facsimile, when such
facsimile is transmitted to the facsimile number specified in this Section 4.3
and a confirmation is received or (ii) if given by any other means, when
delivered at the address specified in this Section 4.3.
4.4. Amendments; No Waivers.
(a) Any provision of this Agreement may be amended or waived if, and
only if, such amendment or waiver is in writing and signed, in the case of an
amendment, by all the PDL Stockholders and the Company, or in the case of a
waiver, by the party against whom the waiver is to be effective.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
4.5. Specific Performance. The Company acknowledges and agrees that the
PDL Stockholders' remedies at law for a breach or threatened breach of any of
the provisions of this
14
<PAGE> 15
Agreement would be inadequate and, in recognition of that fact, agrees that, in
the event of a breach or threatened breach by the Company of the provisions of
this Agreement, in addition to any remedies at law, the PDL Stockholders,
without posting any bond, shall be entitled to obtain equitable relief in the
form of specific performance, a temporary restraining order, a temporary or
permanent injunction or any other equitable remedy which may then be available
without proving that the PDL Stockholders' remedies at law are inadequate.
4.6. Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns; provided that no party may assign, delegate or otherwise
transfer any of its rights or obligations under this Agreement without the
consent of the other party hereto except as provided herein.
4.7. Governing Law. This Agreement shall be construed in accordance
with and governed by the law of the State of Delaware.
4.8. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
4.9. Termination. The parties' rights and obligations under Article 3
of this Agreement shall terminate at such time as the Parent's Voting Interest
falls below forty percent (40%). This Agreement shall terminate at such time as
the Parent's Voting Interest falls below five per cent (5%). Termination of this
Agreement (or of any rights and obligations under this Agreements prior to
termination of this Agreement) shall not affect any rights or obligations of any
of the parties hereto (or their permitted assigns) that arose prior to such
termination. The parties' rights under Section 2.7 shall survive termination of
this Agreement indefinitely.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
[Remainder of this Page Intentionally Left Blank]
15
<PAGE> 16
ANSELL HEALTHCARE INCORPORATED
By:
----------------------------------
Name:
-----------------------------
Title:
----------------------------
PACIFIC DUNLOP INVESTMENTS (USA) INC.
By:
----------------------------------
Name:
-----------------------------
Title:
----------------------------
PACIFIC DUNLOP CAPITAL INC.
By:
----------------------------------
Name:
-----------------------------
Title:
----------------------------
PACIFIC DUNLOP HOLDINGS (USA) INC.
By:
----------------------------------
Name:
-----------------------------
Title:
----------------------------
PD INTERNATIONAL PTY. LTD.
By:
----------------------------------
Name:
-----------------------------
Title:
----------------------------
16
<PAGE> 1
EXHIBIT 10.5
TAX SHARING AGREEMENT
This Tax Sharing Agreement (this "Agreement"), by and among the U.S.
entities of the Pacific Dunlop Group listed below, is made as of the ____day of
_____,_____,
WITNESSETH:
WHEREAS, the parties to this Agreement (the "Group") include only the
U.S. entities as follows:
<TABLE>
<CAPTION>
Group Members Unit
------------- ----
<S> <C>
Pacific Dunlop Investments (USA) Inc. Administration
Pacific Dunlop Capital Inc. Administration
Pacific Dunlop Finance Company Inc. Administration
Pacific Dunlop Footwear, Inc. Administration
Pacific Dunlop Holdings (USA) Inc. Administration
Pacific Dunlop Holdings Inc. Administration
Pacific Dunlop USA Inc. Administration
PAC Brands USA Inc. PAC Brands
Pacific Dunlop GNB Corporation Batteries
GNB Technologies Inc. Batteries
GNB Industrial Battery Company Batteries
GNB Battery Technologies Japan Inc. Batteries
Pacific Chloride Inc. Batteries
New Enpak Inc. Batteries
Ansell Healthcare Incorporated Ansell
Ansell Healthcare Products, Inc. Ansell
Ansell Protective Products, Inc. Ansell
Ansell Services, Inc. Ansell
TPL Holdings Inc. Accufix
TPLC Holdings Inc. Accufix
Cotac Corporation Accufix
Accufix Research Institute Inc. Accufix
</TABLE>
WHEREAS, Pacific Dunlop Investments (USA) Inc. ("PD Investments") is
the common parent corporation of all of the Group members,
WHEREAS, the members of the Group have made or will make an election to
file consolidated federal income tax returns pursuant to Section 1501 of the
Internal Revenue Code, and the regulations thereunder. Such federal consolidated
returns are being filed on a fiscal-year basis commencing July 1, and
WHEREAS, the parties desire to set forth their agreement with respect
to:
(1) The allocation and payment of the liabilities and benefits
arising from the filing of a consolidated tax return and the
accounting therefore; and
<PAGE> 2
(2) the participation and cooperation by each Group member in
coordinated tax planning and other matters related to the
preparation and filing of consolidated tax returns.
NOW, THEREFORE, in consideration of the premises and the mutual
agreement and benefits herein set forth, the parties agree as follows:
I. DEFINITIONS
A. Profitable Unit shall have the meaning attributed to it in
Paragraph II(1)
B. Loss Unit shall have the meaning attributed to it in Paragraph
II(2)
C. Separate Return Tax Liability shall mean the U.S. tax
liability of a Unit, net of foreign tax credits, that would
have accrued and be payable in any tax year, including U.S.
alternative minimum tax, if applicable, if such Unit were
required to have filed a Separate Unit Return (as defined
below).
D. Separate Unit Book Income shall mean the income or loss of
each Unit, computed pursuant to generally accepted accounting
principles.
E. Separate Unit Return shall mean with respect to a Unit
composed of more than one corporation a consolidated federal
income tax return prepared as if such Unit was separate from
the Group and with respect to a Unit which is composed of a
single corporation a separate federal income tax return
prepared as if such Unit was separate from the Group.
F. Unit shall mean the reporting division (e.g., Administration,
PAC Brands, Batteries, Ansell, or Accufix) to which each group
member is assigned by PD Investments and designated on page 1
of this agreement.
G. 100% Owned shall mean a Unit or where applicable a Group
member all of whose common shares are owned directly or
indirectly by PD Investments.
II. PURPOSE
The purposes and intended effects of this Agreement are:
(1) To require Units having positive taxable income ("Profitable
Units") to pay their share of the Group's consolidated tax
liability pursuant to Paragraph III(B) hereafter; and
(2) To compensate Group Units with excess losses or credits ("Loss
Units") which are utilized by Profitable Units to reduce such
Profitable Units' share of the Group's consolidated tax
liability when Loss Units could have used the losses or
credits if such Unit filed a Separate Unit Return.
III. TAX SHARING
A. The parties to this Agreement will use their best efforts and
will take all necessary action to assure that a consolidated
federal income tax return is filed by the Group for each year
that PD Investments is entitled to file a consolidated return
for the Group. PD Investments shall sign separate company tax
returns on behalf of the Group member.
B. Each Unit shall pay to PD Investments an amount equal to its
Separate Return Tax Liability. If the Unit is 100% Owned on
the last day of the taxable year, the tax computation shall
take into consideration the unexpired carryforward tax
benefits that such Unit generated prior to the tax year. If
the Unit is not 100% Owned on the last day of the taxable
year, the tax computation shall take into consideration only
the unexpired carryforward tax benefits that such Unit
generated (1)
2
<PAGE> 3
in prior tax years that it was not 100% Owned for the entire
tax year; and (2) in the tax year that it became non-100%
Owned, the prorated portion of the unexpired carryforward tax
benefits determined to be generated after the date it was no
longer 100% Owned. The prorated portion of the unexpired
carryforward tax benefits generated after the date the Unit
was no longer 100% Owned will be determined based on the
entire carryforward tax benefit generated in that tax year
multiplied by the percentage of days in the tax year the Unit
was not 100% Owned.
Payments to PD Investments by any Unit shall not be increased
because a separate company tax benefit is limited as a result
of a consolidated income tax return being filed, provided that
benefit could have been used to reduce the Unit's tax
liability if the Unit filed a Separate Unit Return.
Based on information provided by Units, PD Investments will
determine the required installment for the payment period and
bill each Profitable Unit accordingly. PD Investments will
remit the appropriate amount of the estimated consolidated
federal tax liability to the Internal Revenue Service ("IRS").
Profitable Units shall pay PD Investments, by the last day of
the month following the end of each fiscal quarter, an amount
equal to the estimated combined federal and state effective
income tax rate as determined by PD Investments for this
purpose on an annual basis multiplied by the period to date
tax-adjusted book income calculated through the end of each
fiscal quarter, less tax payments previously made. However,
any Unit which is 100% Owned by PD Investments at the end of
the fiscal quarter and with carryforward tax benefits
generated prior to the tax year, which could be used by that
Unit if a Separate Unit Return were filed, will not have to
make payments to PD Investments until such benefits have been
used (as computed on a separate company basis, or expire
unused). Any Unit which is not 100% Owned at the end of the
fiscal quarter and with carryforward tax benefits generated
(1) in prior years in which it was not 100% Owned, or (2) in a
prior year in which it was not 100% Owned for part of the tax
year, as determined in paragraph 1 of Section III B. above,
which could be used by that Unit if such Unit filed a Separate
Unit Return, will not have to make payments to PD Investments
until such benefits either would have been used or would have
expired unused by such Unit (if the Unit filed a Separate Unit
Return).
If a Unit has underestimated its tax-adjusted Separate Unit
Book Income for any period, such Unit shall pay PD Investments
all interest and penalties attributable to such
underestimation.
PD Investments will be responsible for managing the funds
received from Profitable Units in excess of estimated
consolidated federal tax liability and shall, in its sole
discretion, advance such excess funds to Loss Units in
accordance with the excess losses or credits of the Loss Units
utilized by Profitable Units to reduce such Profitable Unit's
share of the Group's consolidated tax liability. The advance
of such excess funds will bear interest at the rate determined
by PD Investments to be paid on intercompany group advances,
either until such advance is repaid or until the time PD
Investments is required to credit or pay such excess funds to
the Loss Unit. PD Investments shall be required to credit or
pay such excess funds, less amounts previously advanced or
allowed as a credit against the estimated tax liability owed
to PD Investments, to any Loss Unit at the time the Loss Unit
would be able to utilize eligible carryforward tax benefits if
it filed a Separate Unit Return.
Within thirty (30) days after the filing of the federal
consolidated tax return or such other later date as PD
Investments may determine, a final payment or credit, as
determined herein, will be due from or to each Unit. Such
final payment or credit shall be equal to the difference
between the total estimated payments made by such Units for
the year, the Separate Return Tax Liability and the state tax
liability, as determined in accordance with Article IV below,
and adjusted for
3
<PAGE> 4
each Unit's actual share of interest, late payment penalties
and other penalties (if any) arising from the filing of a
federal consolidated or state tax return.
If a Unit incurs a Net Operating Loss or has excess credits
(determined as if the Unit filed a Separate Unit Return) for a
Taxable Year and such Unit could carry back such Net Operating
Loss or credits on a Separate Unit Return basis, then such
Unit will be treated as carrying back such Net Operating Loss
or credits and will be entitled to payment in accordance with
this paragraph. A Net Operating Loss incurred or credit
generated by a Unit which is 100% Owned for the full year in
which such Net Operating Loss was incurred or credit generated
may be carried back on a Separate Unit Return basis only to
years in which the Unit was 100% Owned for the full year. A
Net Operating Loss incurred or credit generated by a Unit that
is not 100% Owned for the full year in which such Net
Operating Loss was incurred or credit generated may be carried
back only to years in which the Unit was not 100% Owned for
the full year. If a Unit may carry back a Net Operating Loss
or credits under this paragraph, then it shall calculate the
refund, if any, to which it would be entitled, if it had filed
Separate Unit Returns for the current and carryback years. PD
Investments shall pay to the Unit the amount of such refund
within 30 days of filing of the Consolidated Federal Income
Tax Return for the year in which such Net Operating Loss or
credits arise. A Net Operating Loss or Credit which cannot be
carried back may be carried forward as provided in this
Agreement.
C. PD Investments will have the responsibility for handling all
IRS examinations for the Group for all years for which the
Group files a consolidated federal income tax return. All
expenses of the examination and of defending any adjustments
or proposed adjustments which are directly attributable to a
specific Unit will be billed to such Unit. In addition, all
costs and expenses not directly attributable to any specific
Unit will be allocated by PD Investments among the Group in an
equitable manner.
D. If the consolidated federal tax liability for a taxable year
is changed as a result of an amended return, an IRS audit, or
a carryover or carryback of losses and/or credits, the Unit's
allocated shares of federal income tax liability will be
recomputed. Any difference between a Unit's previously
allocated share of the tax liabilities and benefits arising
from the filing of a consolidated tax return of the taxable
year and its recomputed allocated share of the tax liability,
benefits, interest, late payment penalties and other penalties
(if any), shall be remitted to PD Investments or the Units as
the case may be, within thirty (30) days after the change has
been determined to be final. Interest will be charged or paid
after thirty (30) days (such interest to be computed from the
date the change has been determined to be final) at the same
rate or rates used by the IRS with respect to late payments of
tax. Notwithstanding anything to be contrary, any Unit that is
not 100% Owned shall not be required to pay any amount to PD
Investments as a result of an adjustment which reduces a
Unit's Net Operating Loss carryover from a year or portion
thereof in which such Unit was 100% owned.
If any interest is to be paid to or received from the IRS as a
result of a consolidated tax deficiency or refund, such
interest will be allocated to Units in the same ratio that
each Unit's change in tax liabilities and benefits bears to
the total change in tax liability and shall be remitted to PD
Investments or the Unit, as the case may be.
E. Separate Return Tax Liability will be computed by allocating
all credits and adjustments to the Unit who earned the credit.
F. Pursuant to Section I C. above, Separate Return Tax Liability
includes U.S. alternative minimum tax. Each Unit shall
determine tax liabilities and make payments to PD Investments
equal to its
4
<PAGE> 5
Separate Return Tax Liability, including U.S. alternative
minimum tax, following the principle as discussed in Section
III B. above.
G. This Agreement shall govern the use of all carryover or
carryback of net operating losses of each Group member for
federal income tax purposes including those, if any, which
arose in a prior separate return limitation year ( as defined
in the Internal Revenue Code of 1986, as amended and the
treasury regulations issued thereunder).
H. PD Investments agrees to indemnify each Unit of the Group for
taxes (including interest and penalties) assessed directly on
and collected from the Unit by a governmental authority as a
result of filing a consolidated return with the Group to the
extent the Unit has previously made payment of such taxes
(including interest and penalties) under this agreement to PD
Investments or such taxes (including interest and penalties)
are properly charged under this agreement to another Unit
regardless of whether such taxes (including interest and
penalties) have been paid by the other Unit to PD Investments.
Where PD Investments has indemnified a Unit of the Group for
another Unit's taxes (including interest and penalties), the
Unit to whom the taxes (including interest and penalties) are
properly charged under this agreement must remit payment to PD
Investments upon notice.
IV. STATE INCOME TAXES
In the event consolidated or combined unitary state income tax returns
are required or elected, each Unit shall pay to PD Investment an amount
equal to its separate return tax liability using the apportionment
factors applicable if a separate state income tax return were filed.
Each Unit shall further determine tax liabilities and make payments to
PD Investments following the principle as discussed in Section III B.
above.
V. DURATION
This Agreement shall continue in full force and effect for so long as
the relationship among the Group members permits them to participate in
a consolidated return, unless otherwise terminated. In the event that a
party to this Agreement ceases to be a Group member, the Agreement
shall continue among the remaining Group members and their Units. In
the event a party to this Agreement ceases to be a Group member or in
the event a new election is validly exercised by the Group not to file
a consolidated federal income tax return, then an accounting shall be
made to determine the extent, if any, that a Group member received a
credit, payment or advance for any tax benefit which has not been
realized by the Group. Such amounts previously credited shall become
null and void. Amounts paid or advanced to such member will become due
and payable to PD Investments within thirty (30) days of termination.
VI. MODIFICATIONS
This Agreement may be modified by a signed writing to reflect changes
in the tax law, changes required by regulatory agencies, or changes to
more equitably share tax liability. This Agreement may also be modified
to include new subsidiaries joining the Group. Additional subsidiaries
will be covered by this Agreement in writing among PD Investments and
the subsidiaries.
VII. EFFECTIVE DATE
This Agreement shall be effective with respect to all taxable years
beginning after June 30, 1999.
5
<PAGE> 6
VIII. MISCELLANEOUS
This Agreement may be modified in whole or in party by a duly
authorized written instrument signed by all of the parties. If any
provisions of this Agreement are declared invalid, unenforceable or in
conflict with any applicable statute, rule or law, then such provisions
shall be deemed null and void to the extent that they conflict
therewith, but without invalidating any other provision hereof. This
Agreement shall be governed by and construed in accordance with the
state laws of the state of Delaware and the federal laws of the United
States.
[Signatures on next page]
6
<PAGE> 7
IN WITNESS WHEREOF, the parties have set forth their hands and seals below.
<TABLE>
<S> <C>
PACIFIC DUNLOP INVESTMENTS (USA) INC. PACIFIC DUNLOP CAPITAL INC.
By: By:
-------------------------------------------- --------------------------------------------
Name: Name:
------------------------------------------ -------------------------------------------
Title: Title:
----------------------------------------- ------------------------------------------
PACIFIC DUNLOP FINANCE COMPANY INC. PACIFIC DUNLOP FOOTWEAR, INC.
By: By:
-------------------------------------------- --------------------------------------------
Name: Name:
------------------------------------------ -------------------------------------------
Title: Title:
----------------------------------------- ------------------------------------------
PACIFIC DUNLOP HOLDINGS (USA), INC. PACIFIC DUNLOP HOLDINGS, INC.
By: By:
-------------------------------------------- --------------------------------------------
Name: Name:
------------------------------------------ -------------------------------------------
Title: Title:
----------------------------------------- ------------------------------------------
PACIFIC DUNLOP USA INC. PAC BRANDS USA, INC.
By: By:
-------------------------------------------- --------------------------------------------
Name: Name:
------------------------------------------ -------------------------------------------
Title: Title:
----------------------------------------- ------------------------------------------
PACIFIC DUNLOP GNB CORPORATION GNB TECHNOLOGIES INC.
By: By:
-------------------------------------------- --------------------------------------------
Name: Name:
------------------------------------------ -------------------------------------------
Title: Title:
----------------------------------------- ------------------------------------------
</TABLE>
7
<PAGE> 8
<TABLE>
<S> <C>
GNB INDUSTRIAL BATTERY COMPANY GNB BATTERY TECHNOLOGIES JAPAN INC.
By: By:
-------------------------------------------- --------------------------------------------
Name: Name:
------------------------------------------ -------------------------------------------
Title: Title:
----------------------------------------- ------------------------------------------
PACIFIC CHLORIDE INC. NEW ENPAK INC.
By: By:
-------------------------------------------- --------------------------------------------
Name: Name:
------------------------------------------ -------------------------------------------
Title: Title:
----------------------------------------- ------------------------------------------
ANSELL HEALTHCARE INCORPORATED ANSELL HEALTHCARE PRODUCTS, INC.
By: By:
-------------------------------------------- --------------------------------------------
Name: Name:
------------------------------------------ -------------------------------------------
Title: Title:
----------------------------------------- ------------------------------------------
ANSELL PROTECTIVE PRODUCTS, INC. ANSELL SERVICES, INC.
By: By:
-------------------------------------------- --------------------------------------------
Name: Name:
------------------------------------------ -------------------------------------------
Title: Title:
----------------------------------------- ------------------------------------------
TPL HOLDINGS INC. TPLC HOLDINGS INC.
By: By:
-------------------------------------------- --------------------------------------------
Name: Name:
------------------------------------------ -------------------------------------------
Title: Title:
----------------------------------------- ------------------------------------------
COTAC CORPORATION ACCUFIX RESEARCH INSTITUTE, INC.
By: By:
-------------------------------------------- --------------------------------------------
Name: Name:
------------------------------------------ -------------------------------------------
Title: Title:
----------------------------------------- ------------------------------------------
</TABLE>
8
<PAGE> 1
EXHIBIT 10.6.1
LOAN FACILITY AGREEMENT
ANSELL HEALTHCARE INCORPORATED
(ANSELL)
AND
PACIFIC DUNLOP HOLDINGS INC.
(PDH)
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Clause Page
<S> <C>
1. DEFINITIONS AND INTERPRETATION 1
1.1. Definitions 1
1.2. Interpretation 5
1.3. Business Day 6
2. LOAN 6
2.1. Amount 6
2.2. Drawing 6
2.3. Currency 7
2.4. Loan Agreement 7
2.5. External Finance 7
3. CONDITIONS PRECEDENT 7
3.1. Documents to be provided 7
4. INTEREST 7
4.1. Interest 7
4.2. Margin 7
4.3. Funds deposited with Lender 8
5. PAYMENT, REPAYMENT AND PREPAYMENT 8
5.1. Time and method of payment 8
5.2. Payments in gross 8
5.3. Prepayment 8
6. REPRESENTATIONS AND WARRANTIES 9
6.1. Representations and warranties 9
6.2. Survival of representations and warranties 9
7. UNDERTAKINGS 9
7.1. Term of undertakings 9
7.2. General undertakings 9
7.3. Negative pledge and disposal of assets 10
7.4. Financial Indebtedness 10
7.5. Application of surplus cash 10
8. EVENTS OF DEFAULT 11
8.1. Events of Default 11
8.2. Consequences of default 13
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<TABLE>
<CAPTION>
Clause Page
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9. COSTS AND EXPENSES 13
9.1. Costs and expenses 13
9.2. Establishment Fee 14
9.3. Tax 14
9.4. Additional payments 14
10. GUARANTEE 15
10.1. Guarantee 15
10.2. Payment 15
10.3. Amount of Secured Moneys 15
10.4. Proof by PDH 15
10.5. Avoidance of payments 15
10.6. Indemnity for avoidance of Outstanding Moneys 17
10.7. No obligation to marshal 17
10.8. Non-exercise of Ansell's rights 17
10.9. Principal and independent obligation 17
10.10. Suspense account 17
10.11. Unconditional nature of obligations 18
10.12. No competition 19
10.13. Continuing guarantee 20
10.14. Variation 20
11. INTEREST ON OVERDUE AMOUNTS 21
11.1. Payment of interest 21
11.2. Accrual of interest 21
11.3. Rate of interest 21
11.4. Payment of Interest 21
12. ASSIGNMENT 21
12.1. Assignment by Ansell 21
12.2. Assignment by PDH 21
13. GENERAL 21
13.1. Notices 21
13.2. Governing law and jurisdiction 22
13.3. Prohibition and enforceability 23
13.4. Waivers 23
13.5. Variation 23
13.6. Cumulative rights 23
13.7. Certificates of PDH 23
13.8. Counterparts 24
</TABLE>
SCHEDULE 1 - CONDITIONS PRECEDENT
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THIS LOAN FACILITY AGREEMENT
is made on 2000 between the following parties:
1. ANSELL HEALTHCARE INCORPORATED, a Delaware corporation
(ANSELL)
2. PACIFIC DUNLOP HOLDINGS INC., a Delaware corporation
(PDH)
RECITALS
Ansell has requested PDH and PDH has agreed to lend or procure
to be lent to Ansell and certain of Ansell Subsidiaries up to
$200,000,000 (or its equivalent in Optional Currencies) on the
terms and conditions contained in this agreement.
THE PARTIES AGREE
1. DEFINITIONS AND INTERPRETATION
1.1. DEFINITIONS
ANSELL SUBSIDIARY means a Subsidiary of Ansell;
AUTHORISATION includes:
(a) any consent, registration, filing, agreement,
notarisation, certificate, licence, approval, permit,
authority or exemption from by or with a Governmental
Agency; or
(b) any consent or authorisation regarded as given by a
Governmental Agency due to the expiration of the
period specified by a statute within which the
Governmental Agency should have acted if it wished to
proscribe or limit anything already filed, lodged,
registered or notified under that statute;
BORROWER means, in respect of a Loan, Ansell or such other
person being an Ansell Subsidiary nominated by Ansell and
approved by PDH as the Borrower for the purpose of that Loan;
BUSINESS DAY means:
(a) for the purposes of clause 13.1, a day on which banks
are open for business in the city where the notice or
other communication is received excluding a Saturday,
Sunday or public holiday; and
(b) for all other purposes, a day on which banks are open
for business in New York excluding a Saturday, Sunday
or public holiday;
DEPOSIT INTEREST RATE means on any day:
(c) in respect of a deposit in Dollars, the Federal Funds
Rate;
(d) in respect of a deposit in an Optional Currency, the
Equivalent Deposit Rate for that Optional Currency;
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EQUIVALENT DEPOSIT RATE means, in respect of an Interest
Period and an Optional Currency, the interest rate determined
by PDH in good faith to be the equivalent or nearest possible
equivalent to the Federal Funds Rate for that Optional
Currency;
EQUIVALENT INTEREST RATE means, in respect of an Optional
Currency in respect of which LIBOR is inapplicable, the
interest rate determined by PDH in good faith to be the
equivalent or the nearest possible equivalent to LIBOR for
that currency;
DOLLARS, US$ and $ means the lawful currency of the United
States of America;
ENCUMBRANCE means any Security Interest, easement given by way
of security, restrictive covenant given by way of security,
garnishee order, writ of execution, assignment of income or
monetary claim, and any agreement to create any of them or
allow them to exist;
ERISA means the Employee Retirement Income Security Act of
1974, as amended.
ERISA AFFILIATE means any trade or business (whether or not
incorporated) which, together with Ansell or any Borrower, as
the case may be, is treated as a single employer under Section
414(b) or (c) of the Code, or solely for purposes of Section
302 of ERISA and Section 412 of the Code, is treated as a
single employer under Section 414 of the Code.
ERISA EVENT means (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder,
with respect to a Plan; (b) the adoption of any amendment to a
Plan that would require the provision of security pursuant to
Section 401(a)(29) of the Code or Section 307 of ERISA; (c)
the existence with respect to any Plan of an "accumulated
funding deficiency" (as defined in Section 412 of the Code or
Section 302 of ERISA), whether or not waived; (d) the filing
pursuant to Section 412(d) of the Code or Section 303(c) of
ERISA of an application for a waiver of the minimum funding
standard with respect to any Plan; (e) the incurrence of any
liability under Title IV of ERISA with respect to the
termination of any Plan or Multiemployer Plan; (f) the receipt
by Ansell, any Borrower or any ERISA Affiliate from the PBGC
or a plan administrator of any notice relating to the
intention to terminate any Plan or Plans or to appoint a
trustee to administer any Plan; (g) the receipt by Ansell, any
Borrower or any ERISA Affiliate of any notice concerning the
imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in
reorganization, within the meaning of Title IV of ERISA; (h)
the occurrence of a "prohibited transaction" with respect to
which Ansell or any of its Subsidiaries is a "disqualified
person" (within the meaning of Section 4975 of the Code) or
with respect to which Ansell or any such Subsidiary could
otherwise be liable; and (i) any other event or condition with
respect to a Plan or Multiemployer Plan that could reasonably
be expected to result in a Material Adverse Effect;
EVENT OF DEFAULT means any event specified in clause 8.1;
FEDERAL FUNDS RATE means, in relation to any day, the rate per
annum (rounded upward, if necessary, to the nearest whole
multiple of one one-hundredth of one per cent) equal to the
weighted average of the rates on overnight Federal funds
transactions with members of the United States Federal Reserve
System arranged by Federal funds brokers, as published for
that day (or, if that day is not a
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New York Business Day, for the immediately preceding New York
Business Day) by the Federal Reserve Bank of New York, or if a
rate is not so published for any day which is a New York
Business Day, the average of the quotations for that day on
such transactions received by PDH from three Federal funds
brokers of recognised standing selected by PDH. For the
purposes of this definition "New York Business Day" means a
day on which such Federal funds transactions are carried on in
New York City.
FINANCIAL INDEBTEDNESS means any debt or other monetary
liability in respect of moneys borrowed or raised or any
financial accommodation whatever including, but not limited
to, under or in respect of any:
(a) bill of exchange, bond, debenture, note or similar
instrument;
(b) acceptance, indorsement or discounting arrangement;
(c) guarantee;
(d) finance lease;
(e) deferred purchase price (for more than 90 days) of
any asset or service;
(f) obligation to deliver goods or provide services paid
for in advance by any financier or in relation to any
other financing transaction;
(g) amount of capital and premium payable on or in
connection with the redemption of any preference
shares or any amount of purchase price payable for or
in connection with the acquisition of redeemable
preference shares; or
(h) foreign exchange contract, currency swap agreement,
interest rate swap, cap or collar agreement,
commodity derivative transaction or other similar
agreement or arrangement designed to alter or modify
risks arising from fluctuations in currency values,
interest rates or commodity prices,
and irrespective of whether the debt or liability:
(i) is present or future;
(j) is actual, prospective, contingent or otherwise;
(k) is at any time ascertained or unascertained;
(l) is owed or incurred alone or severally or jointly or
both with any other person; or
(m) comprises any combination of the above;
GOVERNMENTAL AGENCY means any government or any governmental,
quasi-governmental, administrative, fiscal or judicial body,
department, commission, authority, tribunal, agency or entity;
INTEREST RATE means in respect of each calendar month:
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(a) in respect of a Loan denominated in Dollars, the
aggregate of LIBOR on the first Business Day of that
month and the Margin;
(b) in respect of a Loan denominated in an Optional
Currency, the aggregate of the Equivalent Interest
Rate on the first Business Day of that month for that
Optional Currency and the Margin.
LENDER means, in relation to a Loan, PDH or such other person
being an affiliate of PDH nominated by PDH as the Lender for
the purpose of that Loan;
LIBOR means, on any date, the rate per annum determined by PDH
to be equal to the arithmetic mean (rounded upwards, if
necessary, to the nearest whole multiple of one thirty-second
of one per cent) of:
(a) the offered quotations for deposits in the currency
in which the Loan is or is to be denominated for a
term of 30 days for an amount closest to the amount
of the Loan which appear on the display designated as
page "LIBO" on the Reuter Monitor Money Rates Service
(or such other page or service as may replace the
LIBO page or the Reuter Monitor Money Rates Service
for the purpose of displaying London Interbank
Offered Rates of leading banks) as at 11.00 a.m. on
such day for delivery on the second London Business
Day after such day; or
(b) if, fewer than two such quotations appear on such
display or if no such display rate is then available,
the rate determined by PDH in good faith.
For the purposes of this definition London Business Day means
a day (other than a Saturday or Sunday) on which banks and
foreign exchange markets are open for business in London;
LIMIT means $200,000,000;
LOAN means each amount lent by a Lender to a Borrower pursuant
to a Loan Agreement;
LOAN AGREEMENT means each agreement between a Lender and a
Borrower in respect of a Loan, substantially in the form
attached hereto as Exhibit A;
MARGIN means, subject to clause 4.2, 0.95 per centum per
annum;
MATERIAL ADVERSE EFFECT means a material adverse effect on:
(a) the ability of Ansell to perform its obligations
under this agreement;
(b) the ability of a Borrower to perform its obligations
under a Loan Agreement;
(c) the rights and entitlements of PDH under this
agreement; or
(d) the rights and entitlements of a Lender under a Loan
Agreement;
MULTIEMPLOYER PLAN means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which Ansell or any Borrower or
any ERISA Affiliate is making or accruing an obligation to
make contributions or has within any of the preceding five
plan years made or accrued an obligation to make
contributions;
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OPTIONAL CURRENCY means any currency which is for the time
being freely transferable and convertible into dollars and
deposits of which are readily available and freely dealt in;
OUTSTANDING MONEYS means all debts and monetary liabilities of
a Borrower to a Lender under or in relation to a Loan
Agreement;
PBGC means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA;
PLAN means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of
ERISA or Section 412 of the Code or Section 307 of ERISA, and
in respect of which Ansell or any Borrower or any ERISA
Affiliate is (or, if such plan were terminated, would under
Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.
POTENTIAL EVENT OF DEFAULT means an event which, with the
giving of notice, lapse of time or fulfillment of any
condition, would be likely to become an Event of Default;
POWER means any right, power, authority, discretion or remedy
conferred on PDH or any leave by this agreement or Loan
Agreement or any applicable law;
PRIME RATE means, on any date, the rate posted as such by J.
P. Morgan on the Reuters Monitor System on that date and, if
no such rate is posted, the rate determined by PDH in good
faith;
RELEVANT CURRENCY means the currency in which any payment is
required under a Loan Agreement to be made;
REPAYMENT DATE means the date which is 3 years from the date
of this agreement or such later date agreed by PDH and Ansell;
SECURITY INTEREST means any security for the payment of money
or performance of obligations including a mortgage, charge,
lien, pledge, trust or power;
SUBSIDIARY of an entity means another entity which is a
subsidiary of or otherwise controlled by the first within the
meaning of any approved accounting standard;
TAXES means taxes, levies, imposts and duties imposed by any
authority (including stamp and transaction duties) together
with any related interest, penalties, fines and expenses in
connection with them, except if imposed on the overall net
income of PDH or a Lender; and
WITHDRAWAL LIABILITY means liability to a Multiemployer Plan
as a result of a complete or partial withdrawal from such
Multiemployer Plan, as such terms are defined in Part I of
Subtitle E of Title IV of ERISA.
1.2. INTERPRETATION
In this agreement, headings and boldings are for convenience
only and do not affect the interpretation of this agreement
and, unless the context otherwise requires:
(a) words importing the singular include the plural and
vice versa;
(b) words importing a gender include any gender;
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(c) other parts of speech and grammatical forms of a word
or phrase defined in this agreement have a
corresponding meaning;
(d) an expression importing a natural person includes any
company, partnership, joint venture, association,
corporation or other body corporate and any
Governmental Agency;
(e) a reference to any thing (including, but not limited
to, any right) includes a part of that thing but
nothing in this clause 1.2(e) implies that
performance of part of an obligation constitutes
performance of the obligation;
(f) a reference to a part, clause, party, annexure,
exhibit or schedule is a reference to a part and
clause of, and a party, annexure, exhibit and
schedule to, this agreement and a reference to this
agreement includes any annexure, exhibit and
schedule;
(g) a reference to a document includes all amendments or
supplements to, or replacements or novations of, that
document;
(h) a reference to a party to any document includes that
party's successors and permitted assigns;
(i) no provision of this agreement will be construed
adversely to a party solely on the ground that the
party was responsible for the preparation of this
agreement or that provision;
(j) a reference to liquidation includes official
management, appointment of an administrator,
compromise, arrangement, merger, amalgamation,
reconstruction, winding-up, dissolution, assignment
for the benefit of creditors, scheme, composition or
arrangement with creditors, insolvency, bankruptcy,
or any similar procedure or, where applicable,
changes in the constitution of any partnership or
person, or death.
1.3. BUSINESS DAY
Where the day on or by which any thing is to be done is not a
Business Day, that thing must be done on or by the preceding
Business Day.
2. LOAN
2.1. AMOUNT
PDH agrees to lend moneys or to procure moneys to be lent to
Ansell or to Ansell Subsidiaries nominated by Ansell and
approved by PDH on the terms and conditions contained in this
agreement provided that the aggregate outstanding principal
amount of all Loans must not exceed the Limit.
2.2. DRAWING
The amount of each Loan must be agreed between the relevant
Lender and Borrower.
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2.3. CURRENCY
Loans will be made in Dollars or in any Optional Currency
requested by the relevant Borrower approved by PDH.
2.4. LOAN AGREEMENT
Prior to any Loan being made, a Loan Agreement must be entered
into between the relevant Lender and relevant Borrower.
2.5. EXTERNAL FINANCE
Nothing in this agreement requires Ansell or any Ansell
Subsidiary to borrow moneys from PDH or any Subsidiary of PDH.
Subject to clause 7.4, any Loan may be refinanced from moneys
borrowed from any bank or other financial institution.
3. CONDITIONS PRECEDENT
3.1. DOCUMENTS TO BE PROVIDED
PDH is not obliged to provide or procure any Loan until each
of the conditions precedent set out in schedule 1 has been
satisfied.
4. INTEREST
4.1. INTEREST
Interest on the Outstanding Moneys in respect of each Loan:
(a) accrues daily from and including the day on which
each part of the Outstanding Moneys becomes owing up
to the day immediately preceding the day on which
that part is paid;
(b) is calculated monthly by reference to the applicable
Interest Rate on the first Business Day of the
relevant month;
(c) is payable in arrears on the first Business Day of
the month immediately following the month in which it
accrues;
(d) is calculated on actual days elapsed and a year of
360 days.
4.2. MARGIN
(a) PDH has the right to review and alter the Margin in
accordance with this clause.
(b) If following a review of the Margin, PDH decides that
it is appropriate that the Margin be altered, it may
give Ansell notice to that effect, which notice must:
(1) be in writing;
(2) specify the proposed new Margin;
(3) specify the date on which the new Margin is
to take effect;
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(4) be given not less than 30 days before the
new Margin is to take effect;
(5) not be given within the period of 11 months
following the date of this agreement or
within the period of 11 months following any
previous notice given under this clause.
4.3. FUNDS DEPOSITED WITH LENDER
Ansell or any Ansell Subsidiary may deposit moneys with PDH or
with any Subsidiary of PDH nominated by PDH. Interest at the
applicable Deposit Interest Rate:
(a) accrues daily from and including the day on which the
deposit is made;
(b) is payable monthly in arrears on the 2nd Business Day
of each month; and
(c) is calculated on actual days elapsed and a year of
360 days.
5. PAYMENT, REPAYMENT AND PREPAYMENT
5.1. TIME AND METHOD OF PAYMENT
Outstanding Moneys in respect of each Loan must be repaid to
the relevant Lender:
(a) in immediately available funds;
(b) in the Relevant Currency;
(c) on the Repayment Date or on such later date agreed by
the relevant Lender and Borrower; and
(d) to the account specified by the relevant Lender to
the relevant Borrower,
or in such other manner as the relevant Lender directs.
5.2. PAYMENTS IN GROSS
All payments in respect of a Loan must be made without:
(a) any set-off, counterclaim or condition; and
(b) any deduction or withholding for any Tax or any other
reason, unless the relevant Borrower is required to
make a deduction or withholding by applicable law.
5.3. PREPAYMENT
(a) A Borrower may prepay all or any part of a Loan
together with all unpaid accrued interest in respect
of the amount prepaid on any day to the relevant
Lender in accordance with clause 5.1 (other than
clause 5.1(c)).
(b) Amounts prepaid can be redrawn.
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6. REPRESENTATIONS AND WARRANTIES
6.1. REPRESENTATIONS AND WARRANTIES
Ansell represents and warrants that:
(a) INCORPORATION AND EXISTENCE: it has been duly
incorporated in accordance with the laws of its place
of incorporation, is validly existing and is in good
standing under those laws;
(b) POWER: it has power to enter into this agreement and
observe its obligations under this agreement;
(c) AUTHORISATIONS: it has in full force and effect the
authorisations necessary for it to enter into this
agreement, to observe its obligations and exercise
its rights under this agreement and to allow them to
be enforced;
(d) VALIDITY OF OBLIGATIONS: its obligations under this
agreement are valid and binding and are enforceable
against it in accordance with their terms subject
only to laws relating to insolvency and creditors'
rights generally and the discretionary nature of
equitable remedies;
(e) NO CONTRAVENTION OR EXCEEDING POWER: this agreement
and the transactions under it which involve it do not
contravene its constituent documents or any law or
obligation by which it is bound or to which any of
its assets are subject or cause a limitation on its
powers or the powers of its directors to be exceeded;
(f) RANKING OF OBLIGATIONS: its obligations under this
agreement rank at least equally with all its senior
unsecured indebtedness except liabilities mandatorily
preferred by laws of general application.
6.2. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The representations and warranties in, or given under, this
agreement including, but not limited to, clause 6.1 survive
the execution of this agreement.
7. UNDERTAKINGS
7.1. TERM OF UNDERTAKINGS
The undertakings in this clause 7 continue in full force and
effect from the date of this agreement until all Outstanding
Moneys under all Loan Agreements have been repaid.
7.2. GENERAL UNDERTAKINGS
Ansell undertakes to:
(a) MAINTAIN AUTHORISATIONS: obtain, renew on time and
comply with the terms of, each Authorisation
necessary for it to enter into this agreement to
which it is a party, to observe its obligations and
exercise its rights under them and to allow them to
be enforced;
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(b) INCORRECT REPRESENTATIONS OR WARRANTY: notify PDH if
any representation or warranty made by it or on its
behalf in connection with this agreement is found to
be incorrect or misleading;
(c) RANKING: ensure that at all times its obligations
under this agreement rank at least equally with all
its other senior unsecured indebtedness except
liabilities mandatorily preferred by law;
(d) STATUS CERTIFICATES: on request from PDH, give PDH a
certificate signed by a director of Ansell which
states whether an Event of Default or Potential Event
of Default continues unremedied; and
(e) NOTIFY DETAILS OF EVENTS OF DEFAULT OR POTENTIAL
EVENT OF DEFAULT: if an Event of Default or Potential
Event of Default occurs, promptly notify PDH giving
full details of the event and any step taken or
proposed to remedy it.
7.3. NEGATIVE PLEDGE AND DISPOSAL OF ASSETS
Whilst PDH has any obligations under this agreement, any
Lender has any obligation to lend any moneys under any Loan
Agreement or there are any Outstanding Moneys under any Loan
Agreement, Ansell must not, and must ensure that each Ansell
Subsidiary does not:
(a) deal with, sell or otherwise dispose of or part with
possession of;
(b) create, permit, suffer to exist, or agree to, any
Encumbrance, other than any Encumbrance existing on
the date hereof and an Encumbrance in favour of PDH
or a Lender, over; or
(c) attempt to do anything listed in clauses 7.3(a) and
(b) in respect of,
any of its assets or the assets of an Ansell Subsidiary,
except in the ordinary course of its ordinary business,
without the prior written consent of PDH.
7.4. FINANCIAL INDEBTEDNESS
Ansell must not, and must ensure that each of its Subsidiaries
does not, incur Financial Indebtedness other than:
(a) under a Loan Agreement; or
(b) with the prior written consent of PDH.
7.5. APPLICATION OF SURPLUS CASH
Ansell must and must ensure that each of its Subsidiaries
applies surplus cash either:
(a) by placing the same on deposit with PDH or any
Lender;
(b) by placing the sum on deposit with any other person
approved by PDH; or
(c) in reduction of Outstanding Moneys under applicable
Loan Agreements.
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8. EVENTS OF DEFAULT
8.1. EVENTS OF DEFAULT
An Event of Default occurs if:
(a) NON PAYMENT: a Borrower does not pay any money
payable under a Loan Agreement in accordance with the
relevant Loan Agreement;
(b) ENFORCEMENT OF JUDGMENT: distress is levied or a
judgment, order or Encumbrance is enforced, or
becomes enforceable against any property of a
Borrower and there is likely, in the reasonable
opinion of PDH, to be a Material Adverse Effect;
(c) INCORRECT REPRESENTATION OR WARRANTY: a
representation or warranty made or taken to be made
by or on behalf of Ansell under this agreement or a
Borrower in or in connection with a Loan Agreement is
found to be incorrect or misleading when made or
taken to be made and, if the relevant fact or
circumstance can be remedied, it is not remedied
within 5 Business Days after a notice from PDH to
Ansell specifying the representation and warranty
concerned;
(d) CEASING BUSINESS: Ansell or a Borrower stops payment,
ceases to carry on its business or a material part of
it, or threatens to do either of those things except
to reconstruct or amalgamate while solvent on terms
approved by PDH;
(e) INVESTIGATION: a person is appointed under
legislation to investigate or manage any part of the
affairs of Ansell or a Borrower and the outcome of
the investigation or appointment to manage is likely,
in the reasonable opinion of PDH, to have a Material
Adverse Effect;
(f) VOID DOCUMENT: this agreement or a Loan Agreement is
or becomes wholly or partly (in a material part)
void, voidable or unenforceable, or is claimed to be
so by Ansell or a Borrower or by anyone on behalf of
Ansell or a Borrower and with its authority, and
alternative documents or other arrangements
acceptable to PDH have not been entered into within
20 days after Ansell or the relevant Borrower (as the
case may be) becomes aware of the matter of concern;
(g) MATERIAL ADVERSE CHANGE: a change occurs in the
business, assets or financial condition of Ansell or
a Borrower, which is likely, in the reasonable
opinion of PDH, to have a Material Adverse Effect;
(h) CROSS DEFAULT: any present or future, or actual,
prospective or contingent, indebtedness of Ansell or
a Borrower in respect of any financial accommodation
(other than under this agreement or a Loan Agreement)
including, but not limited to, moneys payable under a
guarantee:
(1) is or becomes due and payable or is or
becomes capable of being declared due and
payable before the due date for payment; or
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(2) is not paid when due or upon the expiration
of any period of grace which may apply;
(i) ENCUMBRANCE: any Encumbrance is or becomes
enforceable against any asset of Ansell or any Ansell
Subsidiary;
(j) VITIATION OF THIS AGREEMENT:
(1) all or any part of any provision of this
agreement or any Loan Agreement is or
becomes illegal, void, voidable,
unenforceable or otherwise of limited force
or effect;
(2) any person becomes entitled to terminate,
rescind or avoid all or any material part or
material provision of this agreement or any
Loan Agreement;
(3) any person other than PDH or a Lender
alleges or claims that an event as described
in clause 8.1(j)(1) has occurred or that it
is entitled as described in clause
8.1(j)(2); or
(4) the execution, delivery or performance of
this agreement or any Loan Agreement
violates, breaches or results in a
contravention of any law, regulation or
Authorisation;
(k) CHANGE IN CONTROL: Pacific Dunlop Limited ceases to
hold directly or indirectly at least 51% of the
issued stock in Ansell;
(l) VOLUNTARY INSOLVENCY: Ansell or any Ansell Subsidiary
incorporated in the United States of America
commences a voluntary case or other proceeding
seeking liquidation, reorganisation or other relief
with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other
similar official of it or all or any substantial part
of its undertaking, property or assets, or consenting
to any such relief or to the appointment of or taking
possession by any such official in an involuntary
case or other proceeding commenced against it, or
making a general assignment for the benefit or
creditors, or failing generally to pay its debts as
they become due, or taking any corporate action to
authorize any of the foregoing; or
(m) INVOLUNTARY INSOLVENCY: an involuntary case or other
proceeding being commenced against Ansell or any
Ansell Subsidiary incorporated in the United States
of America seeking liquidation, reorganisation or
other relief with respect to it or its debts under
any bankruptcy, insolvency or other similar law now
or hereafter in effect or seeking the appointment of
a trustee, receiver, liquidator, custodian or other
similar official of it or all or any substantial
party of its undertaking, property or assets, and
such involuntary case or other proceeding remaining
undismissed, unnullified, unstayed or otherwise
effective for a period of 90 days or an order for
relief being entered against relevant person under
United States of America federal bankruptcy laws as
now or hereafter in effect;
PAGE 12
<PAGE> 16
(n) WINDING UP: a petition is presented or application is
made and is not withdrawn or dismissed or stayed
within 21 days or an order is made for the winding-up
or administration of any Borrower which is not
incorporated within the United States of America, or
an effective resolution is passed for the winding-up
of any such Borrower;
(o) ADMINISTRATOR: an administrative receiver, receiver,
manager or administrator is appointed or an
encumbrancer takes possession of all or a substantial
part of the undertaking, property or assets of any
Borrower, and is not paid out or discharged within 60
days after such appointment or taking possession;
(p) ANALOGOUS PROCEEDINGS: anything analogous and having
substantially similar effect to any of the events
specified in paragraphs (l) to (o) happens under the
laws of the jurisdiction of incorporation of a
Borrower; or
(q) ERISA. any ERISA Event shall have occurred or exist
with respect to Ansell or any Borrower which subjects
Ansell or such Borrower to any tax, penalty, or other
liability under or in connection with ERISA in an
aggregate amount in excess of $150,000.
8.2. CONSEQUENCES OF DEFAULT
If an Event of Default occurs, then PDH and each Lender may
declare at any time by notice to Ansell or each relevant
Borrower that:
(a) Outstanding Moneys in respect of each Loan are:
(1) payable to the relevant Lender on demand; or
(2) immediately due for payment to the relevant
Lender; and
(b) PDH's or the relevant Lender's obligations specified
in the notice are terminated.
9. COSTS AND EXPENSES
9.1. COSTS AND EXPENSES
Ansell must pay all costs and expenses of PDH and any
employee, officer, agent or contractor of PDH in relation to:
(a) the negotiation, preparation, execution, delivery and
stamping of this agreement;
(b) the enforcement, protection or waiver, or attempted
or contemplated enforcement or protection, of any
rights under this agreement;
(c) the consent or approval of PDH given under this
agreement; and
(d) any enquiry by any Governmental Agency involving
Ansell or a Borrower,
PAGE 13
<PAGE> 17
including, but not limited to, any administration costs of PDH
and any legal costs and expenses and any professional
consultant's fees for any of the above on a full indemnity
basis.
9.2. ESTABLISHMENT FEE
Ansell must pay to PDH on or before the date of this agreement
an establishment fee of US$200,000.
9.3. TAX
(a) Ansell must pay any Tax incurred or payable by PDH in
respect of the execution, delivery, performance,
release, discharge, amendment, enforcement or
attempted enforcement or otherwise in respect of any
of the following:
(1) this agreement;
(2) any agreement or document entered into or
signed under this agreement including any
Loan Agreement; and
(3) any transaction contemplated under this
agreement or any agreement or document
described in clause 9.3(a)(2) including the
making of any Loan .
(b) Ansell must pay any fine, penalty or other cost in
respect of a failure to pay any Tax described in
clause 9.3(a) except to the extent that the fine,
penalty or other cost is caused by the PDH's failure
to lodge money received from Ansell within 10
Business Days before the due date for lodgement.
(c) Ansell must indemnify PDH against any amount payable
under clause 9.3(a) or 9.3(b) or both.
9.4. ADDITIONAL PAYMENTS
If:
(a) Ansell is required to make a deduction or withholding
of Tax from any payment to be made to PDH under this
agreement; or
(b) PDH is required to pay any Tax concerning any payment
it receives from Ansell under this agreement,
then Ansell:
(c) must indemnify PDH against that Tax; and
(d) must pay to PDH an additional amount which PDH
determines to be necessary to ensure that it receives
when due a net amount (after payment of any Tax for
each additional amount) that is equal to the full
amount it would have received had a deduction or
withholding or payment of Tax not been made.
PAGE 14
<PAGE> 18
10. GUARANTEE
10.1. GUARANTEE
In consideration of the agreements on the part of PDH
contained in this agreement, Ansell unconditionally and
irrevocably guarantees to PDH as agent for and on behalf of
each Lender the payment of the Outstanding Moneys due to each
Lender under each Loan Agreement.
10.2. PAYMENT
If Outstanding Moneys under any Loan Agreement are not paid
when due, Ansell must immediately on demand from PDH pay to
PDH for the account of the relevant Lender those Outstanding
Moneys in the same manner and currency as those Outstanding
Moneys are required to be paid under the relevant Loan
Agreement.
10.3. AMOUNT OF SECURED MONEYS
(a) This clause 10 applies to the Outstanding Moneys
under present and future Loan Agreements.
(b) The obligations of Ansell under this clause 10 extend
to any increase in the Outstanding Moneys as a result
of:
(1) any amendment, supplement, renewal or
replacement of any Loan Agreement; or
(2) the occurrence of any other thing.
(c) Clause 10.3(b):
(1) applies regardless of whether Ansell is
aware of or consented to or is given notice
of any amendment, supplement, renewal or
replacement of any Loan Agreement or the
occurrence of any other thing; and
(2) does not limit the obligations of Ansell
under this clause 10.
10.4. PROOF BY PDH
In the event of the liquidation of a Borrower, Ansell
authorises PDH on behalf of each relevant Lender to prove for
all moneys which Ansell has paid or is or may be obliged to
pay under any this agreement, other document or agreement or
otherwise in respect of any Outstanding Moneys.
10.5. AVOIDANCE OF PAYMENTS
(a) If any payment, conveyance, transfer or other
transaction relating to or affecting any Outstanding
Moneys is:
(1) void, voidable or unenforceable in whole or
in part; or
(2) is claimed to be void, voidable or
unenforceable and that claim is upheld,
conceded or compromised in whole or in part,
PAGE 15
<PAGE> 19
the liability of Ansell under this clause 10
and any Power is the same as if:
(3) that payment, conveyance, transfer or
transaction (or the void, voidable or
unenforceable part of it); and
(4) any release, settlement or discharge made in
reliance on any thing referred to in clause
10.5(a)(3),
had not been made and Ansell must immediately take
all action and sign all documents necessary or
required by PDH to restore to PDH and each Lender the
benefit of this clause 10.
(b) Clause 10.5(a) applies whether or not PDH or any
Lender knew, or ought to have known, of anything
referred to in that clause 10.5(a).
10.6. INDEMNITY FOR AVOIDANCE OF OUTSTANDING MONEYS
(a) If any of the Outstanding Moneys (or moneys which
would have been Outstanding Moneys had they not been
irrecoverable) are irrecoverable by any Lender:
(1) from any Borrower; or
(2) from Ansell on the footing of a guarantee,
Ansell unconditionally and irrevocably and, as a
separate and principal obligation:
(3) indemnifies each Lender against any claim,
action, damage, loss, liability, cost,
charge, expense, outgoing or payment
suffered, paid or incurred by each Lender in
relation to the non- payment of those
moneys; and
(4) must pay to PDH for the account of each
relevant Lender an amount equal to those
moneys.
(b) Clause 10.6(a) applies to Outstanding Moneys (or
moneys which would have been Outstanding Moneys had
they not been irrecoverable) which are or may be
irrecoverable irrespective of whether:
(1) they are or may be irrecoverable by reason
of any event described in clause 10.11;
(2) they are or may be irrecoverable by reason
of any other fact or circumstance
whatsoever;
(3) the transactions or any of them relating to
those moneys are void or illegal or avoided
or otherwise unenforceable; and
(4) any matters relating to Outstanding Moneys
are or should have been within the knowledge
of PDH or any Lender.
PAGE 16
<PAGE> 20
10.7. NO OBLIGATION TO MARSHAL
Neither PDH nor any Lender is required to marshal or to
enforce or apply under or appropriate, recover or exercise:
(a) any Encumbrance, guarantee or other document or
agreement held, at any time, by or on behalf of PDH
or any Lender; or
(b) any money or asset which that Lender, at any time,
holds or is entitled to receive.
10.8. NON-EXERCISE OF ANSELL'S RIGHTS
Ansell must not exercise any rights it may have inconsistent
with this clause 10.
10.9. PRINCIPAL AND INDEPENDENT OBLIGATION
(a) This clause 10 is:
(1) a principal obligation and is not to be
treated as ancillary or collateral to any
other right or obligation; and
(2) independent of and not in substitution for
or affected by any Encumbrance which PDH or
any Lender may hold in respect of any
Outstanding Moneys or any obligations of any
Borrower or any other person.
(b) This clause 10 is enforceable against Ansell:
(1) without first having recourse to any
Encumbrance;
(2) whether or not PDH or any Lender has:
(A) made demand upon any Borrower; or
(B) given notice to any Borrower or any
other person in respect of any
thing; or
(C) taken any other steps against any
Borrower or any other person;
(3) whether or not any Outstanding Moneys is
due; and
(4) despite the occurrence of any event
described in clause 10.11.
10.10. SUSPENSE ACCOUNT
(a) PDH and each Lender may apply to the credit of a
suspense account:
(1) any amounts received under this clause 10;
(2) any dividends, distributions or other
amounts received in respect of the
Outstanding Moneys in any liquidation; and
(3) any other amounts received from any other
person in respect of the Outstanding Moneys.
(b) PDH and each Lender may retain the amounts in the
suspense account for as long as it determines and is
not obliged to apply them in or towards satisfaction
of the Outstanding Moneys.
PAGE 17
<PAGE> 21
10.11. UNCONDITIONAL NATURE OF OBLIGATIONS
(a) This clause 10 and the obligations of Ansell are not
released or discharged or otherwise affected by
anything which but for this provision might have that
effect, including, but not limited to:
(1) the grant to any Borrower or any other
person of any time, waiver, covenant not to
sue or other indulgence;
(2) the release (including without limitation a
release as part of any novation) or
discharge of any Borrower or any other
person;
(3) the cessation of the obligations, in whole
or in part, of any Borrower or any other
person under any Loan Agreement or any other
document or agreement;
(4) the liquidation of any Borrower or any other
person;
(5) any arrangement, composition or compromise
entered into by PDH, any Lender, any
Borrower or any other person;
(6) any Loan Agreement or any other document or
agreement being in whole or in part illegal,
void, voidable, avoided, unenforceable or
otherwise of limited force or effect;
(7) any extinguishment, failure, loss, release,
discharge, abandonment, impairment,
compound, composition or compromise, in
whole or in part of any Loan Agreement or
any other document or agreement;
(8) any Encumbrance being given to PDH or any
Lender by any Borrower or any other person;
(9) any alteration, amendment, variation,
supplement, renewal or replacement of any
Loan Agreement or any other document or
agreement;
(10) any moratorium or other suspension of any
Power;
(11) PDH or any Lender exercising or enforcing,
delaying or refraining from exercising or
enforcing, or being not entitled or unable
to exercise or enforce any Power;
(12) PDH or any Lender obtaining a judgment
against any Borrower or any other person for
the payment of any Outstanding Moneys;
(13) any transaction, agreement or arrangement
that may take place with PDH, any Lender,
any Borrower or any other person;
(14) any payment to PDH or any Lender, including
any payment which at the payment date or at
any time after the payment date is in whole
or in part illegal, void, voidable, avoided
or unenforceable;
(15) any failure to give effective notice to any
Borrower or any other person of any default
under any Loan Agreement or any other
document or agreement;
(16) any legal limitation, disability or
incapacity of any Borrower or of any other
person;
PAGE 18
<PAGE> 22
(17) any breach of any Loan Agreement or any
other document or agreement;
(18) the acceptance of the repudiation of, or
termination of, any Loan Agreement or any
other document or agreement;
(19) any Outstanding Moneys being irrecoverable
for any reason;
(20) any disclaimer by any Borrower or any other
person of any Loan Agreement or any other
document or agreement;
(21) any assignment, novation, assumption or
transfer of, or other dealing with, any
Powers or any other rights or obligations
under any Loan Agreement or any other
document or agreement;
(22) the opening of a new account of any Borrower
with PDH or any Lender or any transaction on
or relating to the new account;
(23) any prejudice (including, but not limited
to, material prejudice) to any person as a
result of:
(A) any thing done, or omitted by PDH,
any Lender, any Borrower or any
other person;
(B) PDH, any Lender or any other person
selling or realising any property
the subject of an Encumbrance at
less than the best price;
(C) any failure or neglect by PDH, any
Lender, a Receiver, Attorney or any
other person to recover any
Outstanding Moneys from any
Borrower or by the realisation of
any property the subject of an
Encumbrance; or
(D) any other thing;
(24) the receipt by PDH or any Lender of any
dividend, distribution or other payment in
respect of any liquidation; or
(25) any other act, omission, matter or thing
whatsoever whether negligent or not.
(b) Clause 10.11(a) applies irrespective of:
(1) the consent or knowledge or lack of consent
or knowledge, of PDH or any Lender, any
Borrower or any other person of any event
described in clause 10.11(a); or
(2) any rule of law or equity to the contrary.
10.12. NO COMPETITION
(a) Until all Outstanding Moneys have been fully paid and
this clause 10 has been finally discharged, Ansell is
not entitled to:
(1) be subrogated to PDH or any Lender;
(2) claim or receive the benefit of:
(A) any Encumbrance, other document or
agreement of which PDH or any
Lender has the benefit;
PAGE 19
<PAGE> 23
(B) any moneys held by PDH or any
Lender; or
(C) any Power;
(3) subject to clause 10.12(b) either directly
or indirectly to prove in, claim or receive
the benefit of any distribution, dividend or
payment arising out of or relating to the
liquidation of any Borrower liable to pay
any Outstanding Moneys;
(4) make a claim or exercise or enforce any
right, power or remedy (including, but not
limited to, under Encumbrance or by way of
contribution) against any Borrower liable to
pay any Outstanding Moneys;
(5) accept, procure the grant of or allow to
exist any Encumbrance in favour of Ansell
from any Borrower liable to pay any
Outstanding Moneys;
(6) exercise or attempt to exercise any right of
set-off against, or realise any Encumbrance
taken from, any Borrower liable to pay any
Outstanding Moneys; or
(7) raise any defence or counterclaim in
reduction or discharge of its obligations
under this clause 10.
(b) If required by PDH or any Lender, Ansell must prove
in any liquidation of any Borrower liable to pay any
Outstanding Moneys for all moneys owed to Ansell.
(c) Ansell must not do or seek, attempt or purport to do
anything referred to in clause 10.12(a).
10.13. CONTINUING GUARANTEE
This clause 10 is a continuing obligation of Ansell, despite:
(a) any settlement of account; or
(b) the occurrence of any other thing,
and remains in full force and effect until:
(c) all Outstanding Moneys have been paid in full; and
(d) this clause 10 has been finally discharged by PDH on
behalf of all Lenders.
10.14. VARIATION
This clause 10 extends to cover the Loan Agreements as
amended, varied or replaced, whether with or without the
consent of Ansell, including, but not limited to, any increase
in the limit or maximum principal amount available under a
Loan Agreement.
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11. INTEREST ON OVERDUE AMOUNTS
11.1. PAYMENT OF INTEREST
Ansell must pay interest on:
(a) any of the moneys due and payable by it under clause
10, but unpaid; and
(b) on any interest payable but unpaid under clause 11.
11.2. ACCRUAL OF INTEREST
The interest payable under this clause 11:
(a) accrues from day to day from and including the due
date for payment up to the actual date of payment,
before and, as an additional and independent
obligation, after any judgment or other thing into
which the liability to pay such moneys becomes
merged; and
(b) may be capitalised at 30 day intervals.
11.3. RATE OF INTEREST
The rate of interest payable under this clause 11 is the
higher of:
(a) Prime Rate:
(1) on the date that moneys became due and
payable under clause 10; and
(2) on each date which is 30 days after the
immediately preceding date on which the
Prime Rate was determined under this clause
11.3(a); and
(b) the rate fixed or payable under a judgment or other
thing referred to in clause 11.2(a).
11.4. PAYMENT OF INTEREST
Interest payable under this clause is payable on demand by
PDH.
12. ASSIGNMENT
12.1. ASSIGNMENT BY ANSELL
Ansell must not transfer or assign any of its rights or
obligations under this agreement without the prior written
consent of PDH.
12.2. ASSIGNMENT BY PDH
PDH must not assign any of its rights or transfer by novation
any of its rights and obligations under this agreement except
to an affiliate of PDH without the prior written consent of
Ansell, which consent must not be unreasonably withheld.
13. GENERAL
13.1. NOTICES
(a) Any notice or other communication including, but not
limited to, any request, demand, consent or approval,
to or by a party to this agreement:
PAGE 21
<PAGE> 25
(1) must be in legible writing and in English
addressed as shown below:
(A) if to PDH:
Address: Pacific Dunlop Holdings Inc.
6121 Lakeside Drive
Suite 200
Reno, Nevada 89511
Attention: Stephen C. Geerling
Facsimile: 775-824-4626
(B) if to Ansell:
Address: Ansell Healthcare Incorporated
200 Schulz Drive
Red Bank, New Jersey 07701
Attention: President
Facsimile: 732-345-5353
or as specified to the sender by any party
by notice;
(2) where the sender is a company, must be
signed on behalf of the sender;
(3) is regarded as being given by the sender and
received by the addressee:
(A) if by delivery in person, when
delivered to the addressee;
(B) if by post, [10] Business Days from
and including the date of postage;
or
(C) if by facsimile transmission,
whether or not legibly received,
when transmitted to the addressee,
but if the delivery or receipt is on a day
which is not a Business Day or is after
4.00pm (addressee's time) it is regarded as
received at 9.00 am on the following Business
Day; and
(4) can be relied upon by the addressee and the
addressee is not liable to any other person
for any consequences of that reliance if the
addressee believes it to be genuine, correct
and authorised by the sender.
(b) A facsimile transmission is regarded as legible
unless the addressee telephones the sender within 24
hours after the transmission is received or regarded
as received under clause 13.1(a)(3) and informs the
sender that it is not legible.
(c) In this clause 13.1, a reference to an addressee
includes a reference to an addressee's officers,
agents or employees or any person reasonably believed
by the sender to be an officer, agent, or employee of
the addressee.
13.2. GOVERNING LAW AND JURISDICTION
This agreement is governed by, and construed in accordance
with, the internal laws of the State of Delaware.
PAGE 22
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13.3. PROHIBITION AND ENFORCEABILITY
(a) Any provision of, or the application of any provision
of, this agreement or any Power which is prohibited
in any jurisdiction is, in that jurisdiction,
ineffective only to the extent of that prohibition.
(b) Any provision of, or the application of any provision
of, this agreement which is void, illegal or
unenforceable in any jurisdiction does not affect the
validity, legality or enforceability of that
provision in any other jurisdiction or of the
remaining provisions in that or any other
jurisdiction.
13.4. WAIVERS
(a) Waiver of any right arising from a breach of this
agreement or of any Power arising upon default under
this agreement or upon the occurrence of an Event of
Default must be in writing and signed by the party
granting the waiver.
(b) A failure or delay in exercise, or partial exercise,
of:
(1) a right arising from a breach of this
agreement or the occurrence of an Event of
Default; or
(2) a Power created or arising upon default
under this agreement or upon the occurrence
of an Event of Default,
does not result in a waiver of that right or Power.
(c) A party is not entitled to rely on a delay in the
exercise or non-exercise of a right or Power arising
from a breach of this agreement or on a default under
this agreement or on the occurrence of an Event of
Default as constituting a waiver of that right or
Power.
(d) A party may not rely on any conduct of another party
as a defence to exercise of a right or Power by that
other party.
(e) This clause may not itself be waived except by
writing.
13.5. VARIATION
A variation of any term of this agreement must be in writing
and signed by the parties.
13.6. CUMULATIVE RIGHTS
The Powers are cumulative and do not exclude any other right,
power, authority, discretion or remedy of PDH.
13.7. CERTIFICATES OF PDH
(a) A certificate under the hand of an officer of PDH
detailing the amount of the Outstanding Moneys due
and payable under this agreement or under any Loan
Agreement whether currently due and payable or not is
sufficient evidence unless the contrary is proved.
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<PAGE> 27
(b) A certificate under the hand of an officer of PDH
stating the opinion of PDH as to any thing is
sufficient evidence of that opinion at the date
stated on the certificate or failing that as at the
date of that certificate unless the contrary is
proved.
13.8. COUNTERPARTS
(a) This agreement may be executed in any number of
counterparts.
(b) All counterparts, taken together, constitute one
instrument.
(c) A party may execute this agreement by signing any
counterpart.
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This Agreement is entered into between the parties hereto for the uses
and purpose hereinabove set forth as of the date first above written.
ANSELL HEALTHCARE INCORPORATED
By:
----------------------------------------
Title:
-------------------------------------
PACIFIC DUNLOP HOLDINGS INC.
By:
----------------------------------------
Title:
-------------------------------------
PAGE 25
<PAGE> 29
SCHEDULE 1 - CONDITIONS PRECEDENT
CLAUSE 3.1
PDH must have received all of the following in a form and
substance satisfactory to PDH:
(a) a certified copy of:
(1) an extract of the minutes of a meeting of
the board of directors of Ansell which
evidences the resolutions authorising the
signing and delivery of and observance of
obligations under the agreement and which
acknowledges that the agreement will benefit
Ansell; and
(2) each instrument which evidence any other
necessary corporate or other action in
connection with the agreement; and
(b) a certificate of Ansell certifying that attached
thereto are true and correct copies of all
governmental and regulatory authorisations and
approvals required for the due execution, delivery
and performance of this agreement; and
(c) a certificate of Ansell certifying that attached
thereto are true and correct copies of the
Certificate of Incorporation and the By-laws of
Ansell, in each case in effect on such date.
PAGE 26
<PAGE> 30
EXHIBIT A
FORM OF LOAN AGREEMENT
[TO BE ATTACHED]
PAGE 27
<PAGE> 1
EXHIBIT 10.6.2
LOAN AGREEMENT
[ ]
(BORROWER)
AND
[ ]
(LENDER)
[FREEHILL, HOLLINGDALE, & PAGE LOGO]
101 Collins Street Melbourne Victoria 3000 Australia
GPO Box 128A Melbourne 3001
Telephone (03) 9288 1234 Facsimile (03) 9288 1567 DX 240 Melbourne
Reference: PWS
MELBOURNE PERTH CANBERRA
BRISBANE SINGAPORE HANOI
HO CHI MINH CITY
CORRESPONDENT OFFICES IN JAKARTA AND KUALA LUMPUR
LIABILITY IS LIMITED BY THE SOLICITORS SCHEME UNDER THE PROFESSIONAL STANDARDS
ACT 1994 (NSW)
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
CLAUSE PAGE
<S> <C>
1. DEFINITIONS AND INTERPRETATION 1
1.1. Definitions 1
1.2. Interpretation 2
1.3. Business Day 3
1.4. Loan Facility Agreement 3
2. LOAN 3
2.1. Amount 3
2.2. Drawing 3
2.3. Currency 3
3. CONDITIONS PRECEDENT 3
3.1. Documents to be provided 3
4. INTEREST 3
4.1. Interest 3
4.2. Funds deposited with Lender 4
5. PAYMENT, REPAYMENT AND PREPAYMENT 4
5.1. Time and method of payment 4
5.2. Payments in gross 4
5.3. Additional payments 4
5.4. Prepayment 5
6. REPRESENTATIONS AND WARRANTIES 5
6.1. Representations and warranties 5
6.2. Survival of representations and warranties 6
7. UNDERTAKINGS 6
7.1. Term of undertakings 6
7.2. General undertakings 6
7.3. Negative pledge and disposal of assets 6
8. EVENTS OF DEFAULT 7
8.1. Events of Default 7
8.2. Consequences of default 9
9. INTEREST ON OVERDUE AMOUNTS 9
9.1. Payment of interest 9
9.2. Accrual of interest 9
9.3. Rate of interest 9
</TABLE>
PAGE 1
<PAGE> 3
<TABLE>
<CAPTION>
CLAUSE PAGE
<S> <C>
10. COSTS AND EXPENSES 10
10.1. Costs and expenses 10
10.2. Tax 10
11. ASSIGNMENT 11
11.1. Assignment by the Borrower 11
11.2. Assignment by the Lender 11
12. GENERAL 11
12.1. Notices 11
12.2. Governing law and jurisdiction 12
12.3. Prohibition and enforceability 12
12.4. Waivers 12
12.5. Variation 13
12.6. Cumulative rights 13
12.7. Certificates of the Lender 13
12.8. Counterparts 13
12.9. Attorneys 13
</TABLE>
PAGE 2
<PAGE> 4
THIS LOAN AGREEMENT
is made on between the following parties:
1. [ ]
of [ ]
(BORROWER)
2. [ ]
of [ ]
(LENDER)
RECITALS
The Borrower has requested the Lender and the Lender has
agreed to lend or procure to be lent to the Borrower up to
[ ] on the terms and conditions contained in this
agreement.
THE PARTIES AGREE
1. DEFINITIONS AND INTERPRETATION
1.1. DEFINITIONS
ANSELL means Ansell Healthcare Incorporated;
BUSINESS DAY means:
(a) for the purposes of clause 12.1, a day on which banks
are open for business in the city where the notice or
other communication is received excluding a Saturday,
Sunday or public holiday; and
(b) for all other purposes, a day on which banks are open
for business in New York, New York excluding a
Saturday, Sunday or public holiday;
[DEPOSIT INTEREST RATE means on any day the [Federal Funds
Rate/the Equivalent Deposit Rate;]
[EQUIVALENT DEPOSIT RATE has the meaning contained in the Loan
Facility Agreement;]
[EQUIVALENT INTEREST RATE has the meaning contained in the
Loan Facility Agreement;]
[DOLLARS, US$ and $ means the lawful currency of the United
States of America;]
EVENT OF DEFAULT means any event specified in clause 8.1 or in
clause 8.1 of the Loan Facility Agreement;
INTEREST RATE means in respect of each calendar month the
aggregate of [LIBOR on the first Business Day of that month
and the Margin/the Equivalent Interest Rate on the first
Business Day of that month and the Margin];
LIBOR has the meaning contained in the Loan Facility
Agreement;
LIMIT means, subject to clause , $[ ];
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LOAN means each amount lent by a Lender to a Borrower pursuant
to this agreement;
LOAN FACILITY AGREEMENT means the agreement so called dated
[ ] between Pacific Dunlop Holdings Inc. and Ansell
Healthcare Inc;
MARGIN has the meaning contained in the Loan Facility
Agreement;
OUTSTANDING MONEYS means all debts and monetary liabilities of
the Borrower to the Lender under or in relation to this
agreement;
PDH means Pacific Dunlop Holdings Inc;
POWER means any right, power, authority, discretion or remedy
conferred on the Lender by this agreement or any applicable
law;
RELEVANT CURRENCY means ];
REPAYMENT DATE means the date which is 3 years from the date
of this agreement or such later date agreed by PDH and Ansell.
1.2. INTERPRETATION
In this agreement, headings and boldings are for convenience
only and do not affect the interpretation of this agreement
and, unless the context otherwise requires:
(a) words importing the singular include the plural and
vice versa;
(b) words importing a gender include any gender;
(c) other parts of speech and grammatical forms of a word
or phrase defined in this agreement have a
corresponding meaning;
(d) an expression importing a natural person includes any
company, partnership, joint venture, association,
corporation or other body corporate and any
Governmental Agency;
(e) a reference to any thing (including, but not limited
to, any right) includes a part of that thing but
nothing in this clause 1.2(e) implies that
performance of part of an obligation constitutes
performance of the obligation;
(f) a reference to a part, clause, party, annexure,
exhibit or schedule is a reference to a part and
clause of, and a party, annexure, exhibit and
schedule to, this agreement and a reference to this
agreement includes any annexure, exhibit and
schedule;
(g) a reference to a document includes all amendments or
supplements to, or replacements or novations of, that
document;
(h) a reference to a party to any document includes that
party's successors and permitted assigns;
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(i) no provision of this agreement will be construed
adversely to a party solely on the ground that the
party was responsible for the preparation of this
agreement or that provision;
(j) a reference to liquidation includes official
management, appointment of an administrator,
compromise, arrangement, merger, amalgamation,
reconstruction, winding-up, dissolution, assignment
for the benefit of creditors, scheme, composition or
arrangement with creditors, insolvency, bankruptcy,
or any similar procedure or, where applicable,
changes in the constitution of any partnership or
person, or death.
1.3. BUSINESS DAY
Where the day on or by which any thing is to be done is not a
Business Day, that thing must be done on or by the preceding
Business Day.
1.4. LOAN FACILITY AGREEMENT
A word or phrase (other than one defined in clause 1.1)
defined in the Loan Facility Agreement has the same meaning in
this agreement.
2. LOAN
2.1. AMOUNT
The Lender agrees to lend moneys to the Borrower on the terms
and conditions contained in this agreement provided that the
aggregate outstanding principal amount of all Loans must not
exceed the Limit.
2.2. DRAWING
The amount of each Loan must be agreed between the relevant
Lender and Borrower.
2.3. CURRENCY
Loans will be made in the Relevant Currency.
3. CONDITIONS PRECEDENT
3.1. DOCUMENTS TO BE PROVIDED
The Lender is not obliged to provide or procure any Loan until
each of the conditions precedent set out in schedule 1 has
been satisfied.
4. INTEREST
4.1. INTEREST
Interest on each part of the Outstanding Moneys in respect of
each Loan:
(a) accrues daily from and including the day on which
each part of the Outstanding Moneys becomes owing up
to the day immediately preceding the day on which
that part is paid;
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(b) is calculated monthly by reference to the applicable
Interest Rate on the first Business Day of the
relevant month;
(c) is payable in arrears on the first Business Day of
the month immediately following the month in which it
accrues;
(d) is calculated on actual days elapsed and a year of
360 days.
4.2. FUNDS DEPOSITED WITH LENDER
The Borrower may deposit moneys with the Lender. Interest at
the applicable Deposit Interest Rate:
(a) accrues daily from and including the day on which the
deposit is made;
(b) is payable monthly in arrears on the 2nd Business Day
of each month; and
(c) is calculated on actual days elapsed and a year of
360 days.
5. PAYMENT, REPAYMENT AND PREPAYMENT
5.1. TIME AND METHOD OF PAYMENT
Outstanding Moneys in respect of each Loan must be repaid to
the Lender:
(a) in immediately available funds;
(b) in the Relevant Currency;
(c) on the Repayment Date or on such later date agreed by
the Lender and Borrower; and
(d) to the account specified by the Lender to the
Borrower,
or in such other manner as the Lender directs.
5.2. PAYMENTS IN GROSS
All payments in respect of a Loan must be made without:
(a) any set-off, counterclaim or condition; and
(b) any deduction or withholding for any Tax or any other
reason, unless the Borrower is required to make a
deduction or withholding by applicable law.
5.3. ADDITIONAL PAYMENTS
If:
(a) the Borrower is required to make a deduction or
withholding of Tax from any payment to be made to the
Lender under this agreement; or
(b) the Lender is required to pay any Tax concerning any
payment it receives from the Borrower under this
agreement
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then the Borrower:
(c) indemnifies the Lender against that Tax; and
(d) must pay to the Lender an additional amount which the
Lender determines to be necessary to ensure that it
receives when due a net amount (after payment of any
Tax for each additional amount) that is equal to the
full amount it would have received had a deduction or
withholding or payment of Tax not been made.
5.4. PREPAYMENT
(a) The Borrower may prepay all or any part of a Loan
together with all unpaid accrued interest in respect
of the amount prepaid on any day to the Lender in
accordance with clauses 5.1 (other than clause
5.1(c)).
(b) Amounts prepaid can be redrawn.
6. REPRESENTATIONS AND WARRANTIES
6.1. REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
(a) INCORPORATION AND EXISTENCE: it has been duly
incorporated in accordance with the laws of its place
of incorporation, is validly existing and is in good
standing under those laws;
(b) POWER: it has power to enter into this agreement and
observe its obligations under this agreement;
(c) AUTHORISATIONS: it has in full force and effect the
Authorisations necessary for it to enter into this
agreement, to observe its obligations and exercise
its rights under this agreement and to allow them to
be enforced;
(d) VALIDITY OF OBLIGATIONS: its obligations under this
agreement are valid and binding and are enforceable
against it in accordance with their terms subject
only to laws relating to insolvency and creditors'
rights generally and the discretionary nature of
equitable remedies;
(e) NO CONTRAVENTION OR EXCEEDING POWER: this agreement
and the transactions under it which involve it do not
contravene its constituent documents or any law or
obligation by which it is bound or to which any of
its assets are subject or cause a limitation on its
powers or the powers of its directors to be exceeded;
(f) RANKING OF OBLIGATIONS: its obligations under this
agreement rank at least equally with all its senior
unsecured indebtedness except liabilities mandatorily
preferred by laws of general application.
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6.2. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The representations and warranties in, or given under, this
agreement including, but not limited to, clause 6.1 survive
the execution of this agreement.
7. UNDERTAKINGS
7.1. TERM OF UNDERTAKINGS
The undertakings in this clause 7 continue in full force and
effect from the date of this agreement until all Outstanding
Moneys have been repaid.
7.2. GENERAL UNDERTAKINGS
The Borrower undertakes to:
(a) MAINTAIN AUTHORISATIONS: obtain, renew on time and
comply with the terms of, each Authorisation
necessary for it to enter into this agreement to
which it is a party, to observe its obligations and
exercise its rights under them and to allow them to
be enforced;
(b) INCORRECT REPRESENTATIONS OR WARRANTY: notify the
Lender and PDH if any representation or warranty made
by it or on its behalf in connection with this
agreement is found to be incorrect or misleading;
(c) RANKING: ensure that at all times its obligations
under this agreement rank at least equally with all
its other senior unsecured indebtedness except
liabilities mandatorily preferred by law;
(d) STATUS CERTIFICATES: on request from the Lender or
PDH, give the Lender or PDH (as the case may be) a
certificate signed by a director of the Borrower
which states whether an Event of Default or Potential
Event of Default continues unremedied; and
(e) NOTIFY DETAILS OF EVENTS OF DEFAULT OR POTENTIAL
EVENT OF DEFAULT: if an Event of Default or Potential
Event of Default occurs, promptly notify the Lender
and PDH giving full details of the event and any step
taken or proposed to remedy it.
7.3. NEGATIVE PLEDGE AND DISPOSAL OF ASSETS
The Borrower must not, and must ensure that each of its
Subsidiaries does not:
(a) deal with, sell or otherwise dispose of or part with
possession of;
(b) create, permit, suffer to exist, or agree to, any
interest or Encumbrance, other than any Encumbrance
existing on the date hereof and an Encumbrance in
favour of PDH or the Lender, over; or
(c) attempt to do anything listed in clauses 7.3(a) and
(b) in respect of,
any of its assets or the assets of any of its Subsidiaries,
except in the ordinary course of its ordinary business,
without the prior written consent of PDH.
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8. EVENTS OF DEFAULT
8.1. EVENTS OF DEFAULT
An Event of Default occurs if:
(a) NON PAYMENT: the Borrower does not pay any money
payable under this agreement in accordance with this
agreement;
(b) ENFORCEMENT OF JUDGMENT: distress is levied or a
judgment, order or Encumbrance is enforced, or
becomes enforceable against any property of the
Borrower and there is likely, in the reasonable
opinion of PDH, to be a Material Adverse Effect;
(c) INCORRECT REPRESENTATION OR WARRANTY: a
representation or warranty made or taken to be made
by or on behalf of the Borrower in or in connection
with this agreement is found to be incorrect or
misleading when made or taken to be made and, if the
relevant fact or circumstance can be remedied, it is
not remedied within [ ] Business Days after a notice
from the relevant Lender specifying the
representation and warranty concerned;
(d) CEASING BUSINESS: the Borrower stops payment, ceases
to carry on its business or a material part of it, or
threatens to do either of those things except to
reconstruct or amalgamate while solvent on terms
approved by PDH;
(e) INVESTIGATION: a person is appointed under
legislation to investigate or manage any part of the
affairs of the Borrower and the outcome of the
investigation or appointment to manage is likely, in
the reasonable opinion of PDH, to have a Material
Adverse Effect;
(f) VOID DOCUMENT: this agreement is or becomes wholly or
partly (in a material part) void, voidable or
unenforceable, or is claimed to be so by the Borrower
or by anyone on behalf of the Borrower and with its
authority, and alternative documents or other
arrangements acceptable to PDH have not been entered
into within 20 days after the Borrower becomes aware
of the matter of concern;
(g) MATERIAL ADVERSE CHANGE: a change occurs in the
business, assets or financial condition of the
Borrower, which is likely, in the reasonable opinion
of PDH, to have a Material Adverse Effect;
(h) CROSS DEFAULT: any present or future, or actual,
prospective or contingent, indebtedness of the
Borrower in respect of any financial accommodation
(other than under a this agreement) including, but
not limited to, moneys payable under a guarantee:
(1) is or becomes due and payable or is or
becomes capable of being declared due and
payable before the due date for payment; or
(2) is not paid when due or upon the expiration
of any period of grace which may apply;
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(i) ENCUMBRANCE: any Encumbrance is or becomes
enforceable against any asset of the Borrower or any
of its Subsidiaries;
(j) VITIATION OF THIS AGREEMENT:
(1) all or any part of any provision of this
agreement is or becomes illegal, void,
voidable, unenforceable or otherwise of
limited force or effect;
(2) any person becomes entitled to terminate,
rescind or avoid all or any material part or
material provision of this agreement;
(3) any person other than PDH or the Lender
alleges or claims that an event as described
in clause 8.1(j)(1) has occurred or that it
is entitled as described in clause
8.1(j)(2); or
(4) the execution, delivery or performance of
this agreement violates, breaches or results
in a contravention of any law, regulation or
Authorisation;
(k) CHANGE IN CONTROL: PDH ceases to hold directly or
indirectly at least 51% of the issued stock in
Ansell;
(l) [VOLUNTARY INSOLVENCY: the Borrower commences a
voluntary case or other proceeding seeking
liquidation, reorganisation or other relief with
respect to itself or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar
official of it or all or any substantial part of its
undertaking, property or assets, or consenting to any
such relief or to the appointment of or taking
possession by any such official in an involuntary
case or other proceeding commenced against it, or
making a general assignment for the benefit or
creditors, or failing generally to pay its debts as
they become due, or taking any corporate action to
authorize any of the foregoing; or
(m) INVOLUNTARY INSOLVENCY: an involuntary case or other
proceeding being commenced against the Borrower
incorporated in the United States of America seeking
liquidation, reorganisation or other relief with
respect to it or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar
official of it or all or any substantial party of its
undertaking, property or assets, and such involuntary
case or other proceeding remaining undismissed,
unnullified, unstayed or otherwise effective for a
period of [90] days or an order for relief being
entered against the Borrower under United States of
America federal bankruptcy laws as now or hereafter
in effect; ]
(n) [WINDING UP: a petition is presented or application
is made and is not withdrawn or dismissed or stayed
within 21 days or an order is made for the winding-up
or administration of the Borrower or an effective
resolution is passed for the winding-up of the
Borrower;]
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(o) [ADMINISTRATOR: an administrative receiver, receiver,
manager or administrator is appointed or an
encumbrancer takes possession of all or a substantial
part of the undertaking, property or assets of the
Borrower, and is not paid out or discharged within
[60] days after such appointment or taking
possession;]
(p) ANALOGOUS PROCEEDINGS: anything analogous and having
substantially similar effect to any of the events
specified in paragraphs (l) to (o) happens under the
laws of the jurisdiction of incorporation of the
Borrower; or
(q) FACILITY AGREEMENT: an Event of Default shall occur
under the Facility Agreement dated ________, 2000
between Ansell Healthcare Incorporated and Pacific
Dunlop Holdings Inc.
8.2. CONSEQUENCES OF DEFAULT
If an Event of Default occurs, then the Lender or PDH may
declare at any time by notice to the Borrower that:
(a) Outstanding Moneys in respect of each Loan are:
(1) payable to the Lender on demand; or
(2) immediately due for payment to the relevant
Lender; and
(b) the Lender's obligations specified in the notice are
terminated.
9. INTEREST ON OVERDUE AMOUNTS
9.1. PAYMENT OF INTEREST
The Borrower must pay interest on:
(a) any of the Outstanding Moneys due and payable by it
under this agreement, but unpaid; and
(b) on any interest payable but unpaid under clause 9.
9.2. ACCRUAL OF INTEREST
The interest payable under this clause 9:
(a) accrues from day to day from and including the due
date for payment up to the actual date of payment,
before and, as an additional and independent
obligation, after any judgment or other thing into
which the liability to pay such moneys becomes
merged; and
(b) may be capitalised at 30 day intervals.
9.3. RATE OF INTEREST
The rate of interest payable under this clause 9 is the higher
of:
(a) Prime Rate:
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(1) on the date those Outstanding Moneys became
due and payable; and
(2) on each date which is 30 days after the
immediately preceding date on which the
Prime Rate was determined under this clause
9.3(a); and
(b) the rate fixed or payable under a judgment or other
thing referred to in clause 9.2(a).
10. COSTS AND EXPENSES
10.1. COSTS AND EXPENSES
The Borrower must pay all costs and expenses of the Lender and
any employee, officer, agent or contractor of the Lender in
relation to:
(a) the negotiation, preparation, execution, delivery and
stamping of this agreement;
(b) the enforcement, protection or waiver, or attempted
or contemplated enforcement or protection, of any
rights under this agreement;
(c) the consent or approval of the Lender or PDH given
under this agreement; and
(d) any enquiry by any Governmental Agency involving the
Borrower,
including, but not limited to, any administration costs of the
Lender and any legal costs and expenses and any professional
consultant's fees for any of the above on a full indemnity
basis.
10.2. TAX
(a) The Borrower must pay any Tax incurred or payable by
the Lender in respect of the execution, delivery,
performance, release, discharge, amendment,
enforcement or attempted enforcement or otherwise in
respect of any of the following:
(1) this agreement;
(2) any agreement or document entered into or
signed under this agreement; and
(3) any transaction contemplated under this
agreement or any agreement or document
described in clause 10.2(a)(2) including the
making of any Loan .
(b) The Borrower must pay any fine, penalty or other cost
in respect of a failure to pay any Tax described in
clause 10.2(a) except to the extent that the fine,
penalty or other cost is caused by the Lender's
failure to lodge money received from the Borrower
within 10 Business Days before the due date for
lodgement.
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(c) The Borrower indemnifies the Lender against any
amount payable under clause 10.2(a) or 10.2(b) or
both.
11. ASSIGNMENT
11.1. ASSIGNMENT BY THE BORROWER
The Borrower must not transfer or assign any of its rights or
obligations under this agreement without the prior written
consent of the Lender or PDH.
11.2. ASSIGNMENT BY THE LENDER
The Lender must not assign any of its rights or transfer by
novation any of its rights and obligations under this
agreement except to a related body corporate (as defined by
the Corporations Law) of PDH without the prior written consent
of the Borrower, which consent must not be unreasonably
withheld.
12. GENERAL
12.1. NOTICES
(a) Any notice or other communication including, but not
limited to, any request, demand, consent or approval,
to or by a party to this agreement:
(1) must be in legible writing and in English
addressed as shown below:
(A) if to the Lender:
Address: [ ]
[ ]
Attention: [ ]
Facsimile: [ ]
(B) if to the Borrower:
Address: [ ]
[ ]
Attention: [ ]
Facsimile: [ ]
or as specified to the sender by any party
by notice;
(2) where the sender is a company, must be
signed on behalf of the sender;
(3) is regarded as being given by the sender and
received by the addressee:
(A) if by delivery in person, when
delivered to the addressee;
(B) if by post, [10] Business Days from
and including the date of postage;
or
(C) if by facsimile transmission,
whether or not legibly received,
when transmitted to the addressee,
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but if the delivery or receipt is on a day
which is not a Business Day or is after
4.00pm (addressee's time) it is regarded as
received at 9.00 am on the following
Business Day; and
(4) can be relied upon by the addressee and the
addressee is not liable to any other person
for any consequences of that reliance if the
addressee believes it to be genuine, correct
and authorised by the sender.
(b) A facsimile transmission is regarded as legible
unless the addressee telephones the sender within 2
hours after the transmission is received or regarded
as received under clause 12.1(a)(3) and informs the
sender that it is not legible.
(c) In this clause 12.1, a reference to an addressee
includes a reference to an addressee's officers,
agents or employees or any person reasonably believed
by the sender to be an officer, agent, or employee of
the addressee.
12.2. GOVERNING LAW AND JURISDICTION
(a) This agreement is governed by the laws of [ ].
(b) The Borrower irrevocably submits to the non-exclusive
jurisdiction of the courts of the [ ].
(c) The Borrower appoints [ ] in relation to proceedings
in [ ] as its agent to receive service of any legal
process on its behalf without excluding any other
means of service permitted by the law of the relevant
jurisdiction.
(d) The Borrower irrevocably waives any objection to the
venue of any legal process on the basis that the
process has been brought in an inconvenient forum.
12.3. PROHIBITION AND ENFORCEABILITY
(a) Any provision of, or the application of any provision
of, this agreement or any Power which is prohibited
in any jurisdiction is, in that jurisdiction,
ineffective only to the extent of that prohibition.
(b) Any provision of, or the application of any provision
of, this agreement which is void, illegal or
unenforceable in any jurisdiction does not affect the
validity, legality or enforceability of that
provision in any other jurisdiction or of the
remaining provisions in that or any other
jurisdiction.
12.4. WAIVERS
(a) Waiver of any right arising from a breach of this
agreement or of any Power arising upon default under
this agreement or upon the occurrence of an Event of
Default must be in writing and signed by the party
granting the waiver.
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(b) A failure or delay in exercise, or partial exercise,
of:
(1) a right arising from a breach of this
agreement or the occurrence of an Event of
Default; or
(2) a Power created or arising upon default
under this agreement or upon the occurrence
of an Event of Default,
does not result in a waiver of that right or Power.
(c) A party is not entitled to rely on a delay in the
exercise or non-exercise of a right or Power arising
from a breach of this agreement or on a default under
this agreement or on the occurrence of an Event of
Default as constituting a waiver of that right or
Power.
(d) A party may not rely on any conduct of another party
as a defence to exercise of a right or Power by that
other party.
(e) This clause may not itself be waived except by
writing.
12.5. VARIATION
A variation of any term of this agreement must be in writing
and signed by the parties.
12.6. CUMULATIVE RIGHTS
The Powers are cumulative and do not exclude any other right,
power, authority, discretion or remedy of the Lender.
12.7. CERTIFICATES OF THE LENDER
(a) A certificate under the hand of an officer of the
Lender detailing the amount of the Outstanding Moneys
due and payable under this agreement whether
currently due and payable or not and the applicable
Interest Rate at any time is sufficient evidence
unless the contrary is proved.
(b) A certificate under the hand of an officer of the
Lender stating the opinion of the Lender as to any
thing is sufficient evidence of that opinion at the
date stated on the certificate or failing that as at
the date of that certificate unless the contrary is
proved.
12.8. COUNTERPARTS
(a) This agreement may be executed in any number of
counterparts.
(b) All counterparts, taken together, constitute one
instrument.
(c) A party may execute this agreement by signing any
counterpart.
12.9. ATTORNEYS
Each of the attorneys executing this agreement states that the
attorney has no notice of the revocation of the power of
attorney appointing that attorney.
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SCHEDULE 1 - CONDITIONS PRECEDENT
CLAUSE 3.1
The Lender and PDH must have received all of the following in
a form and substance satisfactory to PDH:
(a) a certified copy of:
(1) an extract of the minutes of a meeting of
the board of directors of the Borrower which
evidences the resolutions authorising the
signing and delivery of and observance of
obligations under the agreement and which
acknowledges that the agreement will benefit
the Borrower; and
(2) each instrument which evidence any other
necessary corporate or other action in
connection with the agreement; and
(b) a certificate of the Borrower certifying that
attached thereto are true and correct copies of all
governmental and regulatory authorisations and
approvals required for the due execution, delivery
and performance of this agreement; and
(c) a certificate of the Borrower certifying that
attached thereto are true and correct copies of the
constitute documents (in its constitution) of the
Borrower.
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<TABLE>
<S> <C>
EXECUTED AS AN AGREEMENT:
SIGNED for
[ ]
by its attorney in
the presence of:
- ------------------------------------------------ --------------------------------------------------
Witness Attorney
- ------------------------------------------------ --------------------------------------------------
Name (please print) Name (please print)
SIGNED for
[ ]
by its attorney in
the presence of:
- ------------------------------------------------ --------------------------------------------------
Witness Attorney
- ------------------------------------------------ --------------------------------------------------
Name (please print) Name (please print)
</TABLE>
PAGE 15
<PAGE> 1
EXHIBIT 10.7.2
[ANSELL LETTERHEAD]
Dear Jeff,
It is with pleasure that we confirm the terms and conditions of the continuation
of your USA employment with Ansell, located at the Corporate Headquarters in Red
Bank, NJ. These terms will be effective from 1 January 2000, and this letter
replaces and supersedes all previous letters relating to the terms of your
employment in the USA.
GROSS SALARY
Your initial gross salary is US$217,000. This is subject to Ansell's normal
annual review process. Your initial review will be effective from July 1, 2000.
NOTIONAL BASE SALARY
Your Notional Base Salary, which is used mainly for the purposes of Australian
Superannuation calculation, is A$184,600 per annum. This will be adjusted at the
same time and by the same percentage as your Gross Salary.
INCENTIVE PLAN
You are eligible to participate in the Ansell Key Executive Plan.
EMERGENCY TRAVEL
In the event of family emergency, such as serious illness or death of a direct
member of your family in Australia, Ansell will pay the cost of return economy
class airfares for you and your spouse, as appropriate to the circumstances, to
attend to the situation.
TAX CONSULTANCY
Ansell will reimburse the reasonable cost of tax consultancy provided by Arthur
Anderson.
CAR ALLOWANCE
You will receive a car allowance in accordance with the Ansell USA Car Policy.
BUSINESS EXPENSES
All reasonable business expenses will be reimbursed upon the production of
suitable vouchers/receipts and authorization of the Chief Executive Officer.
MEDICAL INSURANCE
You, and members of your immediate family residing with you, will be covered
under the existing Ansell Plan.
TELEPHONE EXPENSES
Ansell will reimburse telephone charges, including phone installation, rental,
business calls, and personal calls, to a limit of US$100 per month.
<PAGE> 2
[ANSELL LETTERHEAD]
ANNUAL LEAVE
You are entitled to four weeks per annum paid annual leave. Work schedules and
public holidays, as observed by Ansell in New Jersey, will be followed.
AUSTRALIAN BENEFIT ARRANGEMENTS
You will retain your membership in the Pacific Dunlop Superannuation Plan, and
Australian Long Service Leave will continue to accrue.
UNITED STATES RETIREMENT PLAN
You are eligible to participate in the Ansell Non-Qualified Retirement Plan.
You may contribute a portion of your normal salary and annual bonus to this
Plan. In addition, Ansell will credit to your account in the Plan an amount not
exceeding US$35,000 per year until June 30, 2002.
Upon completion of your employment in the USA, and repatriation to Australia,
the balance of your account in the Plan will be paid to you.
DURATION, REPATRIATION, & TERMINATION
Ansell will, at your written request, assist in obtaining for you a suitable
alternative position within Ansell or Pacific Dunlop's Australian operations (or
another location if mutually agreed). In the event that no suitable alternative
position can be found within six months of your written request, Ansell will:
a) repatriate you, your family and your household goods and personal
effects to Melbourne, Australia and
b) provide twelve months employment at the level of your Notional Base
Salary with Ansell or the Pacific Dunlop Group, or twelve months salary
continuance in lieu thereof.
Should termination be at Ansell's instigation without due cause, then a) and b)
above would apply. Should you voluntarily terminate your employment at any time,
a notice of 90 days would apply.
If, during your USA employment, Ansell offers you a transfer to another location
more than 60 miles from your New Jersey residence, you may elect not to accept
such relocation. In such circumstances, then a) and b) would apply.
Unless terminated earlier, Ansell may review the terms contained in this letter
at any time after June 30, 2002.
SALE OF PRINCIPAL RESIDENCE
Ansell will reimburse reasonable expenses relating to the sale of your New
Jersey home as a consequence of your return to Australia at the end of your USA
employment, or at any time, if at Ansell's instigation.
<PAGE> 3
[ANSELL LETTERHEAD]
Should the selling price be less than the original purchase cost, Ansell will
compensate you for 75% of this shortfall after not less than three years of
continuous occupancy. If the selling price is greater than the original purchase
cost, you will be required to pay Ansell 25% of this gain.
Jeff, we believe that the above records all the material terms for the
continuation of your employment in the USA. Please acknowledge your
understanding and agreement to the above terms by signing the enclosed copy and
returning it to Phil Corke, Sr. VP Human Resources.
Yours sincerely,
/s/ Harry Boon
Harry Boon
Chief Executive Officer
I have read and understood the terms and conditions set out in this letter, and
hereby acknowledge my acceptance of these terms of my USA employment.
Signature /s/ Jeffrey Cox Date
---------------------------------- ----------------------
Name Jeffrey Cox
---------------------------------------
<PAGE> 1
EXHIBIT 10.7.3
[ANSELL LETTERHEAD]
PRIVATE & CONFIDENTIAL
Dear Peter,
It is with pleasure that we confirm the terms and conditions of the continuation
of your USA employment with Ansell, located at the Corporate Headquarters in Red
Bank, NJ. These terms will be effective from 1 January 2000, and this letter
replaces and supersedes all previous letters relating to the terms of your
employment in the USA.
GROSS SALARY
Your initial gross salary is US$183,000. This is subject to Ansell's normal
annual review process. Your initial review will be effective from July 1, 2000.
NOTIONAL BASE SALARY
Your Notional Base Salary, which is used mainly for the purposes of Australian
Superannuation calculation, is A$153,185 per annum. This will be adjusted at the
same time and by the same percentage as your Gross Salary.
INCENTIVE PLAN
You are eligible to participate in the Ansell Key Executive Plan.
EMERGENCY TRAVEL
In the event of family emergency, such as serious illness or death of a direct
member of your family in Australia, Ansell will pay the cost of return economy
class airfares for you and your spouse, as appropriate to the circumstances, to
attend to the situation.
TAX CONSULTANCY
Ansell will reimburse the reasonable cost of tax consultancy provided by Arthur
Anderson.
CAR ALLOWANCE
You will receive a car allowance in accordance with the Ansell USA Car Policy.
BUSINESS EXPENSES
All reasonable business expenses will be reimbursed upon the production of
suitable vouchers/receipts and authorization of the Chief Executive Officer.
MEDICAL INSURANCE
You, and members of your immediate family residing with you, will be covered
under the existing Ansell Plan.
TELEPHONE EXPENSES
Ansell will reimburse telephone charges, including phone installation, rental,
business calls, and personal calls, to a limit of US$100 per month.
<PAGE> 2
ANNUAL LEAVE
You are entitled to four weeks per annum paid annual leave. Work schedules and
public holidays, as observed by Ansell in New Jersey, will be followed.
AUSTRALIAN BENEFIT ARRANGEMENTS
You will retain your membership in the Pacific Dunlop Superannuation Plan, and
Australian Long Service Leave will continue to accrue.
UNITED STATES RETIREMENT PLAN
You are eligible to participate in the Ansell Non-Qualified Retirement Plan.
You may contribute a portion of your normal salary and annual bonus to this
Plan. In addition, Ansell will credit to your account in the Plan an amount not
exceeding US$40,000 per year until June 30, 2002.
Upon completion of your employment in the USA, and repatriation to Australia,
the balance of your account in the Plan will be paid to you.
DURATION, REPATRIATION, & TERMINATION
Your USA employment is for an indefinite period. However, at any time after
June 30, 2002:
1. Ansell may review the terms contained in this letter
2. Ansell will, at your written request, assist in obtaining for you a suitable
alternative position within Ansell or Pacific Dunlop's Australian operations
(or another location if mutually agreed). In the event that no suitable
alternative position can be found within six months of your written request,
Ansell will:
a) repatriate you, your family and your household goods and personal
effects to Melbourne, Australia and
b) provide twelve months employment at the level of your Notional Base
Salary with Ansell or the Pacific Dunlop Group, or twelve months salary
continuance in lieu thereof.
Should termination be at Ansell's instigation without due cause, then a) and b)
above would apply. Should you voluntarily terminate your employment at any time,
a notice of 90 days would apply.
If, during your USA employment, Ansell offers you a transfer to another location
more than 60 miles from your New Jersey residence, you may elect not to accept
such relocation. In such circumstances, then a) and b) would apply.
SALE OF PRINCIPAL RESIDENCE
Ansell will reimburse reasonable expenses relating to the sale of your New
Jersey home as a consequence of your return to Australia at the end of your USA
employment, or at any time, if at Ansell's instigation.
<PAGE> 3
Should the selling price be less than the original purchase cost, Ansell will
compensate you for 75% of this shortfall after not less than three years of
continuous occupancy. If the selling price is greater than the original purchase
cost, you will be required to pay Ansell 25% of this gain.
Peter, we believe that the above records all the material terms for the
continuation of your employment in the USA. Please acknowledge your
understanding and agreement to the above terms by signing the enclosed copy and
returning it to Phil Corke, Sr. VP Human Resources.
Yours sincerely,
/s/ Harry Boon
Harry Boon
Chief Executive Officer
I have read and understood the terms and conditions set out in this letter, and
hereby acknowledge my acceptance of these terms of my USA employment.
Signature /s/ Peter Soszyn Date 1/10/00
-------------------------------- -----------------------
Name Peter Soszyn
-------------------------------------
<PAGE> 1
EXHIBIT 10.8.1
LEASE AGREEMENT
BY AND BETWEEN
THE INDUSTRIAL DEVELOPMENT BOARD OF
THE CITY OF DOTHAN, ALABAMA
AND
ANSELL INCORPORATED
Dated as of April 30, 1985
The interests of The Industrial Development Board of the City of Dothan,
Alabama in this Lease Agreement and any rents, revenues and receipts derived by
it under this Lease Agreement have been assigned to First Alabama Bank of
Dothan.
Prepared By:
Johnston, Wisner & Hinesley, P.C.
209 North Oates Street
Dothan, Alabama 36303
<PAGE> 2
LEASE AGREEMENT
TABLE OF CONTENTS
(This Table of Contents is not a part of this Lease
Agreement and is only for convenience of reference)
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STATEMENT OF FACTS
Parties .........................................................1
Recitals ........................................................1
STATEMENT OF TERMS
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
Section 1.1 Definitions .....................................................2
Section 1.2 Rules of Construction ...........................................8
ARTICLE II
REPRESENTATIONS BY ISSUER
ARTICLE III
REPRESENTATIONS AND COVENANTS BY LESSEE
ARTICLE IV
DEMISING CLAUSE; ACQUISITION, RENOVATION AND
EQUIPPING OF PROJECT; CREATION OF PROJECT FUND
Section 4.1 Demise of the Project ..........................................17
Section 4.2 Issuance of the Bond; Application of Proceeds ..................17
Section 4.3 Disbursements from the Construction Fund .......................20
Section 4.4 Request for Advance--Generally..................................21
Section 4.5 Request for Advance--Final .....................................21
Section 4.6 Conditions Precedent to Disbursements ..........................22
Section 4.7 Authorized Lessee Representative;
Authorized Issuer Representative ...............................22
Section 4.8 Investment of Construction Fund and Bond Fund Moneys Permitted .23
Section 4.9 Special Arbitrage Covenants ....................................23
</TABLE>
<PAGE> 3
ii
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ARTICLE V
EFFECTIVE DATE OF THE LEASE; DURATION OF LEASE
TERM; RENTAL PROVISIONS
Section 5.1 Effective Date of this Lease Agreement;
Duration of Lease Term .........................................24
Section 5.2 Delivery and Acceptance of Possession . ........................24
Section 5.3 Amounts Payable ................................................24
Section 5.4 Place of Rental Payments .......................................24
Section 5.5 Obligations of Lessee Hereunder Unconditional ..................24
ARTICLE VI
MAINTENANCE, TAXES AND INSURANCE
Section 6.1 Maintenance and Modification of Project
by Lessee ......................................................25
Section 6.2 Removal of Equipment ...........................................26
Section 6.3 Taxes, Other Governmental Charges and
Utility Charges ................................................26
Section 6.4 Insurance Required .............................................27
Section 6.5 Performance by Issuer or Bank ..................................28
ARTICLE VII
DAMAGE, DESTRUCTION AND CONDEMNATION
Section 7.1 Damage and Destruction .........................................29
Section 7.2 Condemnation ...................................................30
ARTICLE VIII
SPECIAL COVENANTS
Section 8.1 No Obligation of the Issuer with
Respect to Project .............................................32
Section 8.2 Right of Access to the Project .................................32
Section 8.3 Granting of Easements Affecting
Project Site ...................................................32
Section 8.4 Release and Indemnification
Covenants ......................................................32
Section 8.5 Financial Statements ...........................................33
Section 8.6 Further Assurances and Corrective
Instruments ....................................................34
Section 8.7 Tax Exempt Status on the Bond ..................................34
Section 8.8 Payment of Issuer Expenses .....................................34
Section 8.9 Investment Tax Credit ..........................................35
Section 8.10 Registration and Transfer of the Bond ..........................35
</TABLE>
<PAGE> 4
iii
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Section 8.11 Representations and Agreements of
Lessee and Issuer with Respect to
Capital Expenditures ...........................................36
ARTICLE IX
ASSIGNMENT AND SUBLEASING; SELLING; PREPAYMENT;
RENT PREPAYMENT AND ABATEMENT
Section 9.1 Assignment and Subleasing ......................................37
Section 9.2 Assignment of Revenues and Lease
Agreement by Issuer ............................................37
Section 9.3 Restrictions on Sale of Project by
Issuer .........................................................37
Section 9.4 Redemption of Prepayment of Bond ...............................37
Section 9.5 Prepayment of Rents ............................................38
Section 9.6 References to Bond Ineffective After
Bond Paid ......................................................38
ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
Section 10.1 Events of Default Defined ......................................38
Section 10.2 Remedies on Default ............................................40
Section 10.3 No Remedy Exclusive ............................................41
Section 10.4 Agreement to Pay Attorneys' Fees and
Expenses........................................................41
Section 10.5 No Additional Waiver Implied by One
Waiver .........................................................41
Section 10.6 Waiver of Appraisement and Valuation ...........................41
ARTICLE XI
OPTIONS AND OBLIGATIONS OF LESSEE
Section 11.1 General Option to Purchase Project .............................42
Section 11.2 Conveyance on Exercise of Option or
Obligation to Purchase .........................................42
Section 11.3 Relative Position of Options and
Lease Assignment ...............................................42
Section 11.4 Determination of Taxability ....................................43
Section 11.5 Release of Unimproved Portion of
Project Site ...................................................43
Section 11.6 Obligation to Purchase Project .................................43
</TABLE>
<PAGE> 5
iv
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ARTICLE XII
MISCELLANEOUS
Section 12.1 Immunity of Members, Officers and
Employees Of Issuer ............................................43
Section 12.2 Notices ........................................................44
Section 12.3 Binding Effect .................................................44
Section 12.4 Severability and Governing Law .................................44
Section 12.5 Amendments, Changes and Modifications ..........................45
Section 12.6 Execution Counterparts .........................................45
Section 12.7 Captions .......................................................45
Section 12.8 Net Lease ......................................................45
EXHIBIT A DESCRIPTION OF PROJECT SITE
EXHIBIT B DESCRIPTION OF EQUIPMENT
</TABLE>
<PAGE> 6
THIS LEASE AGREEMENT is dated as of April 30, 1985, and is between THE
INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF DOTHAN, ALABAMA (the "Issuer" ), a
public corporation, organized pursuant to the laws of the State of Alabama, and
ANSELL INCORPORATED, (the "Lessee"), a Delaware corporation.
STATEMENT OF FACTS
The Issuer was created pursuant to Act No. 648 enacted during the 1949
Regular Session of the Alabama Legislature, as amended (appearing as Code of
Alabama, 1975, ss. 11-54-80 through ss. 11-54-101) (the "Act"), for the purpose
of financing projects which will develop and promote for the public good and
general welfare trade, commerce, industry and employment opportunities and will
promote the general welfare of the City of Dothan, Alabama (the "City") and the
State of Alabama (the "State"). The Act authorizes the Issuer to acquire,
improve, enlarge and expand projects for the purpose of promoting industry and
trade by inducing manufacturing, industrial, commercial and research enterprises
to locate in this State or to enlarge or expand existing enterprises for
promoting the use of agricultural products and natural resources of this State,
and promoting a sound and proper balance between agriculture, commerce and
industry. Any land, building or other improvement thereon and all real and
personal properties deemed necessary in connection therewith, which is suitable
for use by any industry for manufacturing, processing or assembling of any
agricultural or manufactured products and any commercial enterprises in storing,
warehousing, distributing or selling products of agriculture, mining or industry
qualifies as a project. The Act also authorizes the Issuer to lease to others
any or all of such properties. Pursuant to the Act, the Issuer has the power and
authority to issue bonds or other evidences of indebtedness in order to fully
carry out its purposes.
The Lessee has requested the Issuer to issue its revenue bond to pay the
costs of acquiring, constructing, enlarging and equipping certain real property
located at 1500 Industrial Road, Dothan, Alabama (the "Project"), for lease to
the Lessee for use as a coal-fired boiler facility.
After careful study and investigation of the nature of the Lessee's
request, the Issuer has determined that the acquisition, renovation, enlarging
and equipping of the Project for lease to the Lessee will result in the
promotion of the public good and general welfare, trade, commerce, industry and
employment opportunities and the promotion of the general welfare of the City
and State, and that the Issuer, in issuing its revenue bond to pay the costs of
the Project, will be acting in furtherance of the public purposes for which it
was created.
By proper action, the Issuer has authorized the issuance of its $1,590,000
principal amount Industrial Revenue Bond, Series 1985 (Ansell Project #2) (the
"Bond").
<PAGE> 7
In consideration of the foregoing premises and the respective
representations and agreements herein contained, the Issuer and the Lessee
agree as follows:
STATEMENT OF TERMS
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
Section 1.1. Definitions.
The "Act" means Act No. 648 enacted during the 1949 Regular Session of the
Alabama Legislature, as amended.
"Additional Bonds" means any Bonds issued pursuant to Section 203 of the
Indenture and Section 4.2(h) hereof.
"Authorized Issuer Representative" means the person designated as
Authorized Issuer Representative pursuant to the provisions of Section 4.7
hereof.
"Authorized Lessee Representative" means the person designated as
Authorized Lessee Representative pursuant to the provisions of Section 4.7
hereof, who is that same person or persons designated as "Project Supervisor"
for purposes of the Indenture.
"Bank" means First Alabama Bank of Dothan, a state banking association
organized under the laws of the State of Alabama, whose principal office is
located in the City of Dothan, Alabama.
"Base Rate" means the rate of interest designated by the Bank periodically
as its base rate. Such rate which is in effect as of the close of business on
each business day shall be the effective applicable rate for that day and for
any succeeding non-business day.
"Bond" means The Industrial Development Board of the City of Dothan,
Alabama Industrial Revenue Bond, Series 1985 (Ansell Project #2) in the original
principal amount of $1,590,000.
"Bond Counsel" means an attorney or a firm of attorneys with nationally
recognized expertise in matters of municipal finance.
"Bond Fund" means the Bond Fund created in Section 402 of the
Indenture.
"Bondholder" or "holder" or "owner" of the Bond means the Bank and any
subsequent registered owner or owners of the Bond.
-2-
<PAGE> 8
"Building" means the buildings, structures and other facilities or
improvements forming a part of the Project, as they may at any time exist,
including any air conditioning and heating systems (which shall be deemed
fixtures), as more particularly described in Exhibit A attached hereto and made
a part hereof by reference.
"Building Value" means the fair rental value of the Building.
"City" means the City of Dothan, Alabama.
"Code" means the Internal Revenue Code of 1954, as amended.
"Completion Date" means the date specified as such in Section 4.2 hereof.
"Construction Fund" means the fund established pursuant to Section 303 of
the Indenture.
"Costs of the Project" means the payments for the items set forth in
Section 4.3 hereof.
"Equipment" means all items, if any, of equipment, machinery, apparatus,
fittings, furniture, furnishings and personal property of every kind or
description whatsoever now or hereafter located on the Project Site (but limited
only to those items which were purchased with any of the proceeds of the Bond),
together with all substitutions for and replacements of the foregoing (including
but not limited to those items of the Equipment more particularly described in
Exhibit B, attached hereto and made a part hereof by reference).
"Equipment Book" means the records of the Lessee which contain a list and
description, to the extent reasonable, of all items of property constituting a
part of the Equipment as they shall exist at any time.
"Event of Default" means any of the events specified as such in and
defined as such by Section 10.1 hereof.
"Financing Documents" means this Lease Agreement, the Bond, the
Indenture, the Guaranty and the Lease Assignment.
"Financing Statements" means any Uniform Commercial Code financing
statement which may be filed with respect to the security interests granted
under this Lease, the Indenture, the Lease Assignment or any other Financing
Documents, in such form and with such signatures as may be required by the laws
of the applicable jurisdictions.
-3-
<PAGE> 9
"Governing Body" means the directors of the Issuer or the successor to the
powers of the directors of the Issuer.
"Governmental Authority" means the United States, any state of the United
States and any county, city or political subdivision thereof and any board,
bureau, council, commission, department, agency, court, legislative body or
other instrumentality of the United States, any state of the United States or
any county, city or political subdivision thereof.
"Governmental Requirement" means any constitution, law, statute, code,
ordinance, resolution, rule, regulation, requirement, directive, judgment, writ,
injunction, order, decree or demand of any Governmental Authority.
"Guaranty" means the Guaranty and Indemnification Agreement, dated as of
the date of the Issuance of the Bond, by and between the Lessee and the Bank,
guaranteeing to the Bank all payments under this Lease Agreement and the Bond
and other amounts specified therein.
"Guarantor" means any person, firm or corporation that may enter into any
Guaranty and Indemnification Agreement guaranteeing the performance of all or
any of the agreements of the Lessee under this Lease Agreement, or the payment
of the principal of, premium, if any, and interest on the Bond, and their
heirs, executors, successors and assigns.
"Indenture" means the Mortgage, Security Agreement & Indenture of Trust
between the Issuer and the bank therein named as Trustee, dated as of the date
of issuance of the Bond, and pursuant to which (i) the Bond has been issued and
(ii) the Issuer's interest in this Lease Agreement, the rents and revenues
received by the Issuer from the Project and the Project itself are pledged and
conveyed as security for any and all payments whatsoever due on the Bond.
"Independent Counsel" means an attorney duly admitted to practice law
before the highest court of any state and not an officer or a full-time employee
of the Issuer or the Lessee, but who may be counsel to the Issuer or the Lessee.
"Issuer" means (i) The Industrial Development Board of the City of
Dothan, Alabama and (ii) any public body resulting from or surviving any
consolidation or merger to which it or its successors may be a party.
"Lease," "Lease Agreement" or "this Agreement" means this Lease Agreement.
"Lease Assignment" means the Collateral Assignment of Leases or Leases and
Rents, dated as of the date of the issuance of the Bond, by and between the
Issuer and the Bank, assigning the Issuer's interest in this Lease Agreement,
and
-4-
<PAGE> 10
any other leases of the real and personal property covered by this Lease
Agreement and related rights, as security for the Bond.
"Lessee" means Ansell Incorporated, a Delaware corporation, and its
successors and assigns (to the extent permitted by this Lease Agreement).
"Local Facilities" means facilities (A) located within the Territorial
Area of the Project and (B) the principal user (within the meaning of Section
103(b)(6) of the Code) of which is or will be the Lessee or any principal user
of the Project (within the meaning of Section 103(b)(6) of the Code) or one or
more related persons (as defined in Section 103(b)(6)(c) of the Code) of the
Lessee or any such principal user of the Project.
"Net Proceeds", when used with respect to any insurance (including title
insurance) or condemnation award, means the gross proceeds from the insurance or
condemnation award with respect to which that term is used remaining after
payment of all expenses (including attorneys' fees and expenses of attorneys)
incurred in the collection of such gross proceeds.
"Permitted Encumbrances" means, as of any particular time: (i) the Lease
Agreement, this Indenture and the Financing Statements filed hereunder; (ii)
liens for ad valorem taxes permitted to exist as provided in the Lease Agreement
and not then delinquent; (iii) utility, access and other easements and rights of
way, restrictions and exceptions that are approved in writing by the Bondholder;
(iv) any mechanic's, laborer's, materialmen's, supplier's, or vendor's lien or
right of purchase money security interest in respect thereof, if payment is not
yet due and payable under the contract in question; (v) such minor defects,
irregularities, encumbrances, easements, rights-of-way and clouds on title as
normally exists with respect to properties similar in character to the Project
and as approved in writing by the Bondholder; (vi) The Lease Agreement dated as
of September 1, 1965, as recorded in Miscellaneous Book 38, Page 783, in the
Probate Office of Houston County, Alabama, and the Supplemental Lease Agreement
dated as of March 1, 1966, as recorded in Miscellaneous Book 39, Page 586, in
the Probate Office of Houston County, Alabama, between the Industrial
Development Board of the City of Dothan, Alabama (the "Board"), and Akwell
Industries Incorporated (successor to Universal Compounding Company), which was
transferred by instrument of Assignment and Assumption of Lease Agreement dated
December 18, 1981 from Akwell Industries, Inc., to Ansell Life Style Industries,
Inc., and filed for record on January 5, 1982 at Miscellaneous Book 66, Page
507, in the Office of the Judge of Probate of Houston County, Alabama, (vii) the
Mortgage, Indenture and Deed of Trust dated as of September 1, 1965, as recorded
in Mortgage Book 520, Page 827, in the Probate Office of Houston County,
Alabama, and the Supplemental Indenture dated as of March 1, 1966, as recorded
-5-
<PAGE> 11
in Mortgage Book 529, Page 639, in the Probate Office of Houston County,
Alabama, between the Board and The First National Bank of Dothan, (viii) the
Lease Agreement dated as of October 1, 1974, between the Board and Akwell
Industries, Incorporated, as amended by Amendment to Lease Agreement dated as of
July 9, 1981, which was assigned by instrument of Assignment and Assumption of
Lease Agreement dated December 18, 1981 from Akwell Industries, Inc., to Ansell
Life Style Industries, Inc. and recorded on January 5, 1982 at Miscellaneous
Book 66, Page 511, in the Office of the Judge of Probate of Houston County,
Alabama, (ix) subject to utility right of way in deed from Tom L. Murray and
Vetta E. Murray dated September 1, 1947, as recorded in Miscellaneous Book 17,
Page 351, in the Probate Office of Houston County, Alabama. (x) That certain
Lease Agreement by and between the Industrial Development Board of the City of
Dothan, Alabama, as Lessee, and Ansell Incorporated, as Lessor, which Lease
Agreement is dated July 25, 1984 and which Lease Agreement was filed for record
on July 25, 1984 at Miscellaneous Book 73, Page 477, in the Office of the
Probate Judge of Houston County, Alabama. (xi) That certain Mortgage, Security
Agreement and Indenture of Trust by and between the Industrial Development Board
of the City of Dothan, Alabama, as Mortgagor, and First Alabama Bank of Dothan,
Dothan, Alabama, as Mortgagee; which Mortgage is dated July 25, 1984 and was
filed for record on July 25, 1984 at Mortgage Book 670, Page 479, in the Office
of the Probate Judge of Houston County, Alabama, plus right of way. (xii)
Subject to Easement granted by The Industrial Development Board of the City of
Dothan, Alabama, for Storm Drainage and Sanitary Sewer Line which is recorded in
the Office of the Judge of Probate of Houston County, Alabama at Miscellaneous
Book 225 on Page 573. (xiii) Subject to Easement granted by Earle Miskell,
President of Akwell Industries, Inc. for Storm Drainage and Sanitary Sewer Line
which is recorded in the Office of the Judge of Probate of Houston County,
Alabama at Miscellaneous Book 225 on Page 567. (xiv) Subject to Easement granted
by The Industrial Development Board of the City of Dothan, Alabama, by Harry P.
Hall, Chairman, for Storm Drainage and Sanitary Sewer Line which is recorded in
the Office of the Judge of Probate of Houston County, Alabama at Miscellaneous
Book 205 on Page 367. (xv) Subject to Easement granted by Economy Homes, Inc.
for Guy Wire and Anchor Permit which is recorded in the Office of the Judge of
Probate of Houston County, Alabama, at Miscellaneous Book 43 on Page 253.
"Person" or "person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated association or
government or any political subdivision thereof or any department or agency
thereof.
"Plans" means the informal plans for acquisition, renovation and equipping
of the Project, prepared by the Lessee or its agents, and as further amended
from time to time as permitted herein.
-6-
<PAGE> 12
"Principal Project User" means the Lessee, any other principal user
(within the meaning of Section 103(b)(6) of the Code) of the Project and any
related person (as defined in Section 103(b)(6)(C) of the Code) of the Lessee or
any such principal user of the Project.
"Prior Issues" shall mean the following industrial revenue development
bonds: (a) that certain issue dated as of March 1, 1966 and entitled The
Industrial Development Board of the City of Dothan, Alabama's $250,000
Industrial Development First Mortgage Revenue Note, Series B (Akwell Project)
issued to The First National Bank of Dothan; (b) that certain issue dated as of
October 1, 1974 and entitled The Industrial Development Board of the City of
Dothan, Alabama's $800,000 First Mortgage Revenue Bond, Series 1974, A-1; and
(c) that certain issue dated July 1, 1984, and entitled The Industrial
Development Board of the City of Dothan, Alabama's $2,200,000 Industrial
Development Mortgage Revenue Bond, Series 1984 (Ansell Project) issued to First
Alabama Bank of Dothan.
"Project" means the Project Site, the Building and the Equipment
constituting the facilities of the Borrower in the City to be financed with Bond
proceeds, as more fully described in Exhibit A and Exhibit B hereto.
"Project Site" means the real estate described in Exhibit A, attached
hereto and made a part hereof by reference, and being that same realty referred
to in the Indenture as the "Leased Realty" or the "Mortgaged Property".
"Related Person" means any person who or which is a related person within
the meaning of "related person" under Section 103(b)(6)(C) of the Code.
"Rent" or Rental" means the amount of payment provided in Section 5.3
hereof or elsewhere herein for the full and timely payment of the principal,
interest and premium, if any, on the Bond on the proper due dates.
"Space" means the floor space in the Building measured in square feet and
determined both in terms of gross area and in terms of net usable area.
"State" means the State of Alabama.
"Substantially Restored" or "Substantially Restore" means replacement,
repair, rebuilding or restoration of damaged or destroyed property as specified
in Section 7.1 hereof.
"Survey" means the plat or survey for Angell Incorporated, dated March 18,
1985, and prepared and sealed by Henry Judah of Judah and Associates, Newton,
Alabama, Land Surveyors, Registered Land Surveyor No. 9793.
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"Surveyor" means the person duly registered as a land surveyor under the
laws of the State of Alabama who prepared and sealed the Survey.
"Tenant" means any person who at any time uses or occupies any space in
the Project under a lease, sublease, usufruct or other agreement for use or
occupancy, whether existing on the date of this Lease Agreement or arising after
such date and whether written or oral, and each "related person" of such user or
occupant, as the term "related person" is used in Section 103(b)(6)(C) of the
Code. The term Tenant shall not include the Lessee, any such "related person" of
the Lessee, any employee of the Lessee using the Project solely in the course of
his or her employment by the Lessee.
"Tenant Leases" shall mean all leases, subleases, usufructs and other
agreements for use or occupancy of any part of the Project, whether existing on
the date of this Lease Agreement or arising after such date and whether written
or oral. The term Tenant Leases shall not include this Lease Agreement.
"Term" means the period from the effective date of this Lease Agreement
until its termination pursuant to Section 5.1 hereof.
"Territorial Area of the Project" means the City of Dothan, Alabama.
"Title Policy" means the mortgagee's policy of title insurance, insuring
the Bank, to be issued pursuant to Title Insurance Company of Minnesota
commitment for title insurance number P247297, dated April 3, 1985, upon
satisfaction of the requirements for issuance set forth in Schedule B thereof,
subject only to the exceptions set forth in Schedule B thereof, together with
any subsequent endorsements to such policy of title insurance. The title policy
shall provide coverage in an amount equal to the original aggregate principal
amount of the Bond.
"Trustee" means the trustee at the time serving as such under the
Indenture.
"Unimproved" when used with reference to the Project Site, means any part
or parts of the Project Site upon the surface of which no part of a building or
other structure rests.
Section 1.2. Rules of Construction. (a) "Herein," "hereby," "hereunder,"
"hereof," "hereinbefore," "hereinafter" and other equivalent words refer to this
Lease Agreement and not solely to the particular portion thereof in which any
such word is used.
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(b) Words importing the singular number shall include the plural number
and vice versa, and any pronoun used herein shall be deemed to cover all
genders.
(c) All references herein to particular Articles or Sections are
references to Articles or Sections of this Lease Agreement, unless otherwise
indicated.
(d) The terms defined in this Article I (except as herein otherwise
expressly provide or unless the context otherwise requires) for all purposes of
this Lease Agreement shall have the respective meanings specified in this
Article I.
ARTICLE II
REPRESENTATIONS BY ISSUER
The Issuer makes the following representations as the basis for the
undertakings on its part herein contained and hereby covenants and agrees:
(a) The Issuer is a public corporation of the State of Alabama, duly
incorporated pursuant to the provisions of the Act.
(b) Under the provisions of the Act, the Project constitutes a "project"
within the meaning of the Act, the Issuer has the power and authority to enter
into the transactions contemplated by this Lease Agreement and to carry out its
obligations hereunder, including but not limited to all requisite power and
authority under the Act (1) to issue, and deliver the Bond as provided herein,
(2) to finance the Costs of the Project, (3) to enter into this Lease Agreement,
and (4) to assign this Lease Agreement pursuant to the Lease Assignment and to
execute and deliver the Indenture.
(c) The Governing Body of the Issuer has duly authorized the execution and
delivery by the Issuer of this Lease Agreement, the Bond, the Lease Assignment,
the Indenture and all other instruments and documents previously or
contemporaneously executed and delivered by the Issuer in connection with the
Bond.
(d) By resolution duly adopted on December 11, 1984, the Issuer took
affirmative action providing for financing the Project through the issuance of
the Bond. Based upon the Lessee's representations, the Issuer has found and does
hereby declare that the issuance of the Bond and the use of the proceeds derived
from the issuance of the Bond to pay the costs of acquiring, renovating,
enlarging and equipping the Project for lease to the Lessee will result in the
promotion of the public good and general welfare, trade, commerce, industry and
employment opportunities and the promotion of the general welfare and further
the use of agricultural products and natural resources of the City and State,
and the Issuer, in
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issuing the Bond, will be acting in furtherance of the public purposes for which
it was created.
(e) The Bond will be payable and bear interest as set forth therein. As
security for payment of the principal of, premium, if any, interest on and other
amounts payable under the Bond, the Issuer will assign this Lease Agreement to
the Bank pursuant to the Lease Assignment and will convey the Project to the
Bank pursuant to the Indenture. The Issuer will not otherwise assign this Lease
Agreement or pledge any payments under this Lease Agreement or transfer or
otherwise dispose of the Project.
(f) There are no actions, suits, proceedings, inquiries or investigations
pending, or to the knowledge of the Issuer threatened, against or affecting the
Issuer in any court or before any Governmental Authority or arbitration board or
tribunal, which involve the possibility of materially and adversely affecting
the transactions contemplated by this Lease Agreement or which, in any way,
would adversely affect the validity or enforceability of the Bond, this Lease
Agreement, the Lease Assignment, the Indenture or any agreement or instrument to
which the Issuer is a party and which is used or contemplated for use in the
consummation of the transactions contemplated hereby or thereby.
(g) Neither the nature of the Issuer nor any of its activities or
properties, nor any relationship between the Issuer and any other person, nor
any circumstance in connection with the issuance of the Bond is such as to
require the consent, approval or authorization of, or the filing, registration
or qualification with, any Governmental Authority on the part of the Issuer in
connection with the execution, delivery, and performance of this Lease
Agreement, the Lease Assignment and the Indenture or the issuance of the Bond,
other than (i) the filing of the information required by Section 103(l)(2) of
the Code (Internal Revenue Service form 8038) and (ii) the recording of the
Indenture and the Lease Assignment and the filing of Financing Statements to
perfect the security interests created under the Indenture and the Lease
Assignment.
(h) No event has occurred and no condition exists which would constitute
an Event of Default as defined in this Lease Agreement or which, with the lapse
of time or with the giving of notice or both, would become such an Event of
Default.
(i) Neither the execution and delivery of the Bond, this Lease Agreement,
the Indenture and the Lease Assignment, nor the consummation of the transactions
contemplated hereby and thereby, nor the fulfillment of or compliance with the
terms and conditions of the Bond, the Lease Assignment, the Indenture and this
Lease Agreement, will constitute or result in a violation or breach of or
default under, or result in the creation of a lien or encumbrance (other than a
Permitted
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<PAGE> 16
Encumbrance) upon any property of the Issuer under, the provisions of any
charter instrument, by-law, indenture, mortgage, deed to secure debt, security
agreement, promissory note, lease or other agreement or instrument to which the
Issuer is a party or by which the Issuer is bound or any license, judgment,
decree, law, statute, order, rule or regulation of any court or Governmental
Authority having jurisdiction over the Issuer or its activities or properties.
(j) This Lease Agreement has not been pledged or hypothecated in any
manner or for any purpose other than as provided in the Lease Assignment as
security for the payment of the Bond.
(k) Other than the Prior Issues heretofore defined, the Issuer has issued
no "obligations" (as that term is used in Section 103(b)(6) of the Code), the
proceeds of which have been or will be used with respect to Local Facilities.
(l) Pursuant to Section 103(k)(2) of the Code, a public hearing (the
"Hearing") on issuance of the Bond was held by the City on March 27, 1985.
Notice of the Hearing was published in The Dothan Eagle on March 11, 1985. The
Mayor of the City of Dothan, Alabama, acting as chief executive officer,
following final approval by the Issuer and the Hearing conducted by the City,
approved issuance of the Bond on April __, 1985.
(m) Prior to or concurrently with issuance of the Bond, the Issuer will
complete and file the information required by Section 103(l)(2) of the Code
(Internal Revenue Service Form 8038).
(n) No commitment to acquire or purchase any portion of the Project, which
will be paid for with proceeds from the sale of the Bond, was made by the
Lessee, any Guarantor, or any related person or persons (as defined in Section
103(b) of the Code and regulations thereunder) prior to December 11, 1984.
(o) The Project is located wholly within the City and will constitute a
"project" within the meaning of the Act.
(p) Prior to issuance of the Bond, the Issuer shall duly elect to have the
provisions of Section 103(b)(6)(D) of the Code apply to such issue, and such
election shall be made in accordance with the applicable regulations or
procedures of the Code.
ARTICLE III
REPRESENTATIONS AND COVENANTS BY LESSEE
The Lessee makes the following representations as the basis for the
undertakings on the Lessee's part herein contained and hereby covenants and
agrees:
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(a) The Lessee is a corporation organized and existing under the laws of
the State of Delaware, and its principal officers are more than twenty-one (21)
years of age, are of sound mind and executed and delivered this Lease Agreement
and the Guaranty free from duress, coercion or other defenses to the execution
thereof, with full authority and power to do so, on behalf of and as and for the
official act of the Lessee. The Lessee will not change its principal place of
business without first giving the Bank at least sixty (60) days prior written
notice of-its new address and county.
(b) The Lessee has the power and authority to enter into the transactions
contemplated by the Financing Documents and has duly executed and delivered this
Lease Agreement and the Guaranty.
(c) Neither the execution and delivery of this Lease Agreement or the
Guaranty, nor the consummation of the transactions contemplated hereby and
thereby, nor the fulfillment of or compliance with the terms and conditions of
this Lease Agreement or the Guaranty, will constitute or result in a violation
or breach of or default under, or result in the creation of a lien or
encumbrance (other than a Permitted Encumbrance) upon any property of the Lessee
under, the provisions of any charter instrument, by-law, indenture, mortgage,
deed to secure debt, security agreement, promissory note, lease or other
agreement or instrument to which the Lessee is a party or by which the Lessee
is bound or any license, judgment, decree, law, statute, order, rule or
regulation of any court or Governmental Authority having jurisdiction over the
Lessee or the Lessee's activities or properties.
(d) This Lease Agreement and the Guaranty constitute valid and binding
obligations of the Lessee, enforceable in accordance with their terms, except to
the extent that enforcement may be limited by bankruptcy, insolvency or other
similar laws of general application affecting the rights of creditors or by
general principles of equity.
(e) There are no actions, suits, proceedings, inquiries or investigations
pending, or threatened, against or affecting the Lessee in any court or before
any Governmental Authority or arbitration board or tribunal, which involve the
possibility of materially and adversely affecting the properties, business,
prospects, profits or condition (financial or otherwise) of the Lessee, or the
ability of the Lessee to perform the Lessee's obligations under any of the
Financing Documents, or which, in any way, would adversely affect the validity
or enforceability of this Lease Agreement, the Guaranty, or any agreement or
instrument to which the Lessee is a party and which is used or contemplated
hereby or thereby. The Lessee is not in default with respect to any order or
decree of any court, Governmental Authority or arbitration board or tribunal.
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<PAGE> 18
(f) No representation or covenant contained in this Lease Agreement or in
any schedule, certificate or other report delivered or to be delivered to the
Bank pursuant hereto or in connection with the Financing Documents, including,
without limitation, any financial statements of the Lessee, contains or shall
contain any untrue statement of a material fact as of the date made or omits or
shall omit any material fact necessary in order to make any such representation
or covenant not misleading in any material respect as of the date made.
(g) No event has occurred and no condition exists which would constitute
an Event of Default as defined in this Lease Agreement or which, with the lapse
of time or with the giving of notice or both, would become such an Event of
Default.
(h) The issuance of the Bond by the Issuer has induced the Lessee to lease
the Project.
(i) The Lessee will operate the Project only for purposes permitted by the
Act until the Bond is paid and satisfied in full, and its initial intended use
is as an office building.
(j) Ninety percent (90%) or more of the proceeds of the sale of the Bond
will be used to pay those items of the Costs of the Project, or portions
thereof, which constitute costs of acquisition, construction, reconstruction or
improvement of land or property of a character subject to the allowance for
depreciation within the meaning of Section 103(b)(6)(A) of the Code. None of the
proceeds of the sale of the Bond will be used, directly or indirectly, as
working capital (as the term "working capital" is used in
Section 21.103-10(b)(1)(ii) of the regulations promulgated under Section 103 of
the Code) or to finance inventory.
(k) Other than the Prior Issues heretofore defined, as of the date of
issuance of the Bond, there are not outstanding any bonds or other obligations
(as the term "obligations" is used in Section 103(b)(6)(B) of the Code) issued
by the Issuer or any other issuer, the proceeds of which were to be used with
respect to Local Facilities.
(l) Other than the Prior Issues heretofore defined, there are no other
obligations heretofore issued or to be issued by or on behalf of any state,
territory or possession of the United States, or political subdivision of any of
the foregoing, or of the District of Columbia, for the benefit of the Lessee or
any "related person" within the meaning of Section 103(b)(6)(C) of the Code,
which constitute "industrial development bonds" within the meaning of Section
103(b) of the Code and which (i) were or are to be sold at substantially the
same time as the Bond, (ii) were or are to be sold at substantially the same
interest rate as the interest rate on the Bond, (iii) were or are to be sold
pursuant to a common
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plan of marketing with the marketing plan for the Bond, and (iv) are payable
directly or indirectly by the Lessee or from the source from which the Bond is
payable.
(m) No portion of the proceeds of the Bond will be used to provide, and
the Project does not include in whole or in part and will not be used in whole
or in part as, a private or commercial golf course, country club, massage
parlor, tennis club, skating facility (including roller skating, skateboard, and
ice skating), racquet sports facility (including handball or racquetball court),
hot tub facility, suntan facility, racetrack or health club facility. No portion
of the proceeds of the Bond will be used to provide a facility the primary
purpose of which is, and no portion of the Project is for the purpose of or will
be used for providing, retail food and beverage services, automobile sales or
service, recreations, entertainment, gambling, or any store the principal
business of which is the sale of alcoholic beverages for consumption off
premises. No portion of the proceeds of the Bond will be used to provide any
airplane, sky box or other private luxury box.
(n) There is no other obligation which has been issued or will be issued
by or on behalf of any state, territory or possession of the United States, or
any political subdivision of any of the foregoing, or of the District of
Columbia, which is issued as part of the issuance of the Bond and the interest
on which is excluded from gross income under any provision of law other than
Section 103(b)(6) of the Code.
(o) The Lessee (i) will not permit the use of proceeds of the Bond, or
take or omit to take any other action, or permit any action to be taken, which
will cause the interest on the Bond to be or become subject to federal income
taxes under the Code, provided that the Lessee shall not have violated this
representation if the interest on the Bond becomes taxable to a person who is a
"substantial user" of the Project or a "related person" of such substantial
user, within the meaning ascribed to those terms in Section 103(b) of the Code,
and (ii) will file or cause to be filed with the Internal Revenue Service or any
other authorized Governmental Authority any and all statements or other
instruments, if any, required under Section 103 of the Code, including the
regulations thereunder, so that the interest on the Bond will continue to be
excludable from the gross income of the holder of the Bond for federal income
tax purposes.
(p) The average maturity of the Bond does not exceed the average economic
life of the components comprising the Project by more than twenty percent (20%),
determined pursuant to Section 103(b)(14) of the Code.
(q) The Project Site is located entirely within the City, and the Building
and the Equipment will be located entirely on the Project Site. None of the
Equipment shall be removed from
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<PAGE> 20
the Project Site for any purpose (other than temporary removal for the purpose
of making repairs) without the prior written approval of the holder of the Bond.
(r) With respect to the Project and the acquisition, renovation,
enlarging, equipping, use and operation of the Project:
(i) None of the Costs of the Project to be paid from Bond proceeds
were incurred prior to the adoption by the Issuer, on December 11, 1984,
of its resolution providing for the financing of the Project through the
issuance of the Bond.
(ii) The Project, as operated for its intended purpose will in all
respects conform to and comply with all covenants, conditions,
restrictions, and reservations affecting the Project and all Governmental
Requirements of Governmental Authorities having jurisdiction over the
operation of the Project.
(iii) To the extent required by applicable Governmental Requirements
or any effective restrictive covenant as of the date hereof, the
acquisition, renovation, enlarging and equipping of the Project has been
approved by all Governmental Authorities or by the beneficiary of any such
restrictive covenant, as the case may be.
(iv) The Lessee has obtained all certificates, licenses, permits,
authorizations, consents and approvals from Governmental Authorities
required as of the date hereof for the acquisition, renovation, enlarging
and equipping of the Project, and all such certificates, licenses,
permits, authorizations, consents and approvals are in full force and
effect.
(v) All utility services (including, but not limited to, water, storm
and sanitary sewer, gas, electric and telephone facilities) necessary for
the use and operation of the Project for its intended purpose are
available through public or private easements or rights of way at the
boundaries of the Project Site.
(vi) No part of the Project lies within a "special flood hazard area"
as defined and specified by the United States Department of Housing and
Urban Development pursuant to the Flood Disaster Protection Act of 1973.
(vii) The Lessee shall not sublease or rent to, or otherwise permit,
any Tenant under any Tenant Lease, or under any assignment or sublease
under any Tenant Lease, to use or occupy any part of the Building (a) for
any purpose other than purposes permitted by the Act or (b)
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unless the form of lease, identity of tenant, term and rental have been
previously approved in writing by the Bank.
(viii) The Lessee shall at all times use not less than 100% of the
Space, and Space having not less than 100% of the Building Value, for use
in the active conduct of the Lessee's business. The Lessee shall not
sublease or rent to or otherwise permit any Tenant under any Tenant Lease,
or under any assignment or sublease under any Tenant Lease, to use or
occupy more than eight percent (8%) of the Space or Space having more than
eight percent (8%) of the Building Value; provided, however, that the
Lessee may permit such Tenant under a Tenant Lease, or under an assignment
or sublease under a Tenant Lease, to use or occupy more than eight
percent (8%) of the Space or Space having more than eight percent (8%) of
the Building Value if the following requirements are complied with prior
to entering into any such Tenant Lease:
(a) The Lessee shall deliver to the Bank a copy of the form of lease
(or assignment or sublease) which will be used and such form shall be
satisfactory to the Bank. Such Tenant Lease shall require the Tenant to
prepare and file or furnish the Borrower with all information necessary to
file any supplemental statement required of Principal Project Users by
Section 1.103-10(b) (2)(vi)(c) of the regulations promulgated under
Section 103 of the Code in the manner and time required for such filing
and shall require that the Tenant furnish the Lessee (which shall furnish
the Bank) copies of each such supplemental statement prior to filing. Such
Tenant Lease shall also provide, with respect to facilities of which the
Tenant or any Related Person of the Tenant is a principal user,
certification as to capital expenditures (within the meaning of Section
103(b)(6)(D)(ii) of the Code) during the three years prior to issuance of
the Bond, limitations on capital expenditures (within the meaning of
Section 103(b)(6)(D)(ii) of the Code) and certification as to any
outstanding, and limitations on issuance of, other Section 103
Obligations, all designed so that the $10,000,000 limitation contained in
Section 103(b)(6)(D) of the Code will not be exceeded by virtue of capital
expenditures made or obligations issued with respect to facilities of
which the Tenant or any Related Person of the Tenant is a principal user.
(b) The Borrower shall deliver to the Bank an opinion of Bond Counsel
to the effect that the execution, delivery and performance of such Tenant
Lease (or assignment or sublease thereunder, as the case may be) will not
result in an Event of Taxability (as defined in the Bond).
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(s) Less than twenty-five percent (25%) of the proceeds of the Bond will be
used, directly or indirectly, for the acquisition of land (or an interest
therein), and no land to be acquired with any proceeds of the Bond will be used
for farming purposes.
(t) Rehabilitation expenditures, if any, with respect to any existing
building (and the equipment therefor) which is to be acquired with proceeds of
the Bond shall equal or exceed fifteen percent (15%) of the cost of acquiring
such building financed with proceeds of the Bond. For this purpose,
"rehabilitation expenditures" means, any amount properly chargeable to capital
account which is incurred by the person acquiring the building for property (or
additions or improvements to property) in connection with the rehabilitation of
any such building. In the case of an integrated operation contained in a
building before its acquisition, the term "rehabilitation expenditures" includes
rehabilitating existing equipment in such building or replacing it with
equipment having substantially the same function. All such rehabilitation
expenditures shall be incurred not later than two years after the later of the
date on which any such existing building is acquired or the date on which the
Bond is issued.
ARTICLE IV
DEMISING CLAUSE; ACQUISITION, RENOVATION AND
EQUIPPING OF PROJECT; DISBURSEMENTS FROM
CONSTRUCTION FUND
Section 4.1. Demise of the Project. The Issuer demises and leases to the
Lessee, and the Lessee leases from the Issuer, the Project at the rental set
forth in Section 5.3 hereof and in accordance with the provisions of this Lease
Agreement, subject only to Permitted Encumbrances.
Section 4.2. Issuance of the Bond; Application of Proceeds.
Contemporaneously with the execution and delivery of this Lease Agreement, the
Issuer has issued and delivered the Bond to the Bank, and the Bank has paid
therefor a purchase price of $1,590,000. On the terms and conditions of this
Lease Agreement, upon receipt of the proceeds from the sale of the Bond the
Issuer will deposit the same in the Construction Fund as provided in Section
4.3. The moneys in the Construction Fund shall be used for the acquisition,
renovation, enlarging and equipping of the Project. In connection with such
acquisition, renovation, enlarging and equipping, the Lessee, as agent for the
Issuer, represents and agrees as follows:
(a) The Lessee shall cause the Project to be acquired and renovated with
first-class materials and in a good, substantial and workmanlike manner, subject
to the provisions of paragraph (d) below, and Lessee agrees that all plans,
specifications and
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contracts will be approved in writing by the Bank. The Lessee shall also cause
the Project to be equipped with the Equipment (if any) described in Exhibit B
hereto. The Lessee agrees that the acquisition, renovation, enlarging and
equipping of the Project will be completed as promptly as practicable after the
issuance of the Bond (but in no event later than December 31, 1986 which shall
be the Completion Date) but if such acquisition, renovation, enlarging and
equipping is not completed, there shall be no resulting liability on the part of
the Issuer and no diminution in or postponenment of the payments required to be
made by the Lessee hereunder or under the Guaranty.
(b) The Lessee shall cause the acquisition, renovation, enlarging and
equipping of the Project to comply with all applicable Governmental
Requirements. The Lessee shall obtain, or cause to be obtained, and maintain in
full force and effect all certificates, licenses, permits, authorizations,
consents and approvals from Governmental Authorities required for the
acquisition, renovation, enlarging and equipping of the Project. The Lessee
shall also obtain, or cause to be obtained, and maintain in full force and
effect all certificates, licenses, permits, authorizations, consents and
approvals from Governmental Authorities required for the use, occupancy or
operation of the Project. The Lessee shall deliver to the Issuer, the Bondholder
and the Trustee copies of such certificates, licenses, permits, authorizations,
consents and approvals upon written request.
(c) The Lessee, and to the extent applicable the Issuer, shall comply with
restrictive covenants and easements affecting the Project, if any.
(d) The Lessee shall notify the Bondholder and the Trustee within ten (10)
days of the Lessee's discovery or the Lessee's receipt of notification
(whichever occurs first) of any material departure from the Plans and, upon
demand by the Bondholder, shall correct any and all defects in the Project and
any and all material departures from the Plans, except those departures which
the Bondholder has approved.
(e) The Lessee shall purchase on behalf of the Issuer all materials,
personal property, fixtures and equipment to be used or incorporated in the
renovation, enlarging and equipping of the Project, including the Equipment but
excluding any such items purchased by the contractors working on the Project, so
that the absolute ownership thereof is vested in the Issuer immediately upon
delivery thereof to the Project Site. The Lessee shall cause each contractor
working on the Project to purchase all materials, personal property, fixtures
and equipment which such contractor purchases for use or incorporation in the
renovation and equipping of the Project so that the absolute ownership thereof
is vested in such contractor immediately upon delivery thereof to the Project
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<PAGE> 24
Site and the absolute ownership thereof will be vested in the Issuer immediately
upon payment therefor by the Issuer to the contractor. If required by the
Bondholder, the Lessee shall produce and furnish, the contracts, bills of sale,
statements, receipted vouchers, or other agreements under which title thereto is
acquired by the Lessee on behalf of the Issuer or such contractor, as the case
may be. Without limiting the generality of the foregoing, the Lessee expressly
covenants and agrees that the Lessee shall not purchase or permit any contractor
to purchase any such materials, personal property, fixtures or equipment subject
to any security agreement or other agreement or contract under which any person
reserves the right to remove or repossess any such materials, personal property,
fixtures or equipment.
(f) As often as the Issuer or the Bondholder may require, the Lessee shall
permit an engineer or any other person designated by the Issuer or the
Bondholder to enter upon and inspect the Project and all materials to be used in
the acquisition, renovation, enlarging and equipping of the Project, to examine
all detailed plans and shop drawings which may be kept at the construction site,
and to discuss the progress of construction with, and to be advised as to the
same by, the Authorized Lessee Representative or any contractor working on the
Project. Inspection of the construction by an engineer or any other person so
designated shall be for the sole purpose of protecting the security for the
Bond, and such inspection is in no way to be construed as a representation that
there is compliance with the Plans or that the construction of the Project is
free from faulty materials or workmanship.
(g) In the event of default of any contractor or subcontractor under any
contract made by it in connection with the Project, the Issuer, or the Lessee as
agent for the Issuer, shall promptly proceed (at Lessee's sole cost and expense)
to exhaust all remedies of the Issuer and the Lessee against said contractors
and subcontractors or their sureties for the performance of the contract.
(h) Upon the request of the Lessee, if Lessee is not in default hereunder,
the Issuer may issue and sell one or more series of Additional Bonds pursuant to
the Indenture to pay the cost of completing the Project, the costs of additions,
modifications or improvements to the Project, or the costs of additions,
modifications, or improvements to other properties of the Lessee located within
the geographical area of operation of the Issuer in Dothan, Alabama as the
Lessee may deem necessary or desirable; provided, that: (a) in the opinion of
Bond Counsel, which opinion shall be in writing and filed with the Trustee and
the Issuer, the interest on such Additional Bonds shall be exempt from federal
income tax within the limitations of Section 103(b)(6) of the Code and the
regulations thereunder, and the interest on the Bond initially
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issued as a part of the Financing Documents referenced herein will continue to
be exempt from Federal income tax within the limitations of Section 103(b)(6) of
the Code and the regulations thereunder, (b) the terms of such Additional Bonds
are approved in writing by the Lessee, (c) the Issuer and the Lessee enter into
any amendment to this Lease Agreement necessary or desirable in connection with
the issuance of such Additional Bonds, and (d) the Issuer complies with all
other provisions of Section 203 of the Indenture with respect to the issuance of
Additional Bonds.
Section 4.3. Disbursements from the Construction Fund. Money in the
Construction Fund shall be used for the following purposes, which are called
Costs of the Project, but for no other purposes:
(a) Payment or reimbursement of the fees and expenses for recording this
Lease Agreement, the Indenture, the Lease Assignment and any other documents or
instruments required to be recorded or filed under this Lease Agreement; the
fees and expenses for recording or filing any title curative documents and any
other documents or instruments that either the Lessee or bond counsel may deem
desirable to file for record; the fees and expenses for recording or filing any
Financing Statements related to this Lease Agreement, the Indenture or the Lease
Assignment; and the premium for the Title Policy.
(b) Payment or reimbursement of all advances and payments made or costs
incurred prior to or after the delivery of this Lease Agreement for expenditures
in connection with the following: examining title to the Project, preparation of
plans and specifications for the Project (including any preliminary study or
planning of the Project or any aspect thereof and including the Plans),
acquisition, renovation, enlarging and equipping of the Project, acquisition,
construction and installation necessary to provide utility services, all real or
personal properties deemed necessary in connection with the Project or any one
or more of the foregoing expenditures (including architectural, surveying,
engineering and supervisory services with respect to any of the foregoing), and
expenses incidental to any one or more of the foregoing, including the premium
on any payment or performance bonds.
(c) Payment or reimbursement of the legal and accounting fees and
expenses, financial consultant's fees, financing charges (including underwriting
or placement fees) and printing and engraving costs incurred in connection with
the authorization, sale and issuance of the Bond and the preparation and review
of the documents and instruments executed in connection therewith and in
connection with the acquisition, renovation, enlarging and equipping of the
Project.
(d) Payment or reimbursement of the fees, if any, for architectural,
surveying, engineering and supervisory services with respect to the Project.
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(e) Payment or reimbursement of the fees, charges and expenses of the
Trustee incurred under this Agreement including the initial or acceptance fee of
the Trustee.
(f) Payment or reimbursement of any expense incurred in seeking to enforce
any remedy against any supplier, contractor or subcontractor in respect of any
default under a contract relating to the Project.
(g) Payment or reimbursement of any other costs relating to the Project
which proceeds of the Bond may be used to pay under the provisions of the Act.
Section 4.4. Request for Advance -- Generally. The Lessee shall request
disbursements under this Lease Agreement, except for the final disbursement, by
submitting to the Trustee a written requisition for the disbursement, signed by
the Lessee or Authorized Lessee Representative and the Authorized Issuer or
Issuer Representative endorsed by the Bondholder, certifying as provided in
Section 303 of the Indenture.
Section 4.5. Request for Advance -- Final. The Lessee shall request the
final disbursement under this Lease Agreement by submitting to the Trustee a
requisition for disbursement which shall include the information set forth in
Section 303 of the Indenture plus the following:
(a) A written requisition for the disbursement, signed by an Authorized
Lessee Representative and the Issuer Representative endorsed by the Bondholder,
and the certificate required under Section 4.4 of this Lease Agreement and
certifying the total amount of the Costs of the Project.
(b) An additional certificate signed by the Authorized Lessee
Representative, certifying that: (i) the acquisition, renovation, enlarging and
equipping of the Project has been completed to the satisfaction of the Lessee
based upon the Lessee's knowledge at the time; (ii) all other facilities
necessary in connection with the Project have been acquired, renovated, and
equipped to the satisfaction of the Lessee; and (iii) a permanent certificate of
occupancy and all the certificates, licenses, permits, authorizations, consents
and approvals required by any Governmental Authority for the occupancy,
operation and use of the Project for its intended purpose have been obtained, so
that the Project may be fully occupied, operated and used for its intended
purpose immediately. Notwithstanding the foregoing, such certificate may state
that it is given without prejudice to any rights against third parties which
exist on the date of such certificate or which may subsequently come into being
and is given only for the purpose of complying with this Section this Lease
Agreement.
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Section 4.6. Conditions Precedent to Disbursements. In addition to all
other requirements for disbursements under this Lease Agreement, the following
shall be conditions precedent to the Trustee's obligation to make disbursements:
(a) The Issuer and the Lessee shall have submitted a requisition complying
in form and substance with the requirements of Section 4.4 or, in the case of
the final disbursement, Section 4.5, within a reasonable amount of time before
the disbursement is to be made.
(b) The holder of the Bond shall have had the opportunity to inspect the
Project and to consult with the Authorized Lessee Representative and the
Authorized Issuer Representative or, in the presence of the Authorized Lessee
Representative, knowledgeable representatives of any contractors regarding the
progress of acquisition, construction and equipping of the Project, and the
Trustee shall not make any disbursement if, in the judgment of the holder of the
Bond, acquisition, renovation, enlarging or equipping of the Project is not
proceeding on schedule; provided, however, that the holder of the Bond shall
have no obligation to inspect the Project and no liability or obligation by
virtue of any inspection of the Project.
Section 4.7. Authorized Lessee Representative; Authorized Issuer
Representative. Prior to or at the time of the issuance of the Bond, the Lessee
shall by a written certificate furnished to the Issuer and the Bank appoint an
Authorized Lessee Representative for the purpose of taking all actions and
making all certificates required to be taken and made by the Authorized Lessee
Representative under the provisions of this Lease Agreement and may appoint an
alternate Authorized Lessee Representative to take any such action or make any
such certificate if the same is not taken or made by the Authorized Lessee
Representative initially appointed. These certificates shall contain the
specimen signatures of the appointee and alternate (if any) and shall be
furnished to the Issuer and the Bank. In the event any such person, or any
successor appointed pursuant to the provisions of this Section, should resign,
become unavailable or unable to take any action or make any certificate provided
for in this Lease Agreement, another Authorized Lessee Representative or
alternate Authorized Lessee Representative shall thereupon be appointed by the
Lessee.
Whenever under the provisions of this Lease Agreement the approval of the
Lessee is required or the Issuer or the Bank is required to take some action at
the request or direction of the Lessee, such approval or such request or
direction shall be made by the Authorized Lessee Representative unless otherwise
specified in this Lease Agreement, and the Issuer or the Bank shall be
authorized to act and rely upon any such approval, request or direction and the
Lessee shall have no complaint or claim of any nature whatsoever against the
Issuer or the Bank as a result of any such action or reliance.
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Prior to or at the time of the issuance of the Bond, the Issuer shall by a
written certificate furnished to the Lessee and the Bank appoint an Authorized
Issuer Representative for the purpose of taking all actions and making all
certificates required to be taken and made by the Authorized Issuer
Representative under the provisions of this Lease Agreement and may appoint an
alternate Authorized Issuer Representative to take any such action or make any
such certificate if the same is not taken or made by the Authorized Issuer
Representative initially appointed. These certificates shall contain the
specimen signatures of the appointee and alternate and shall be furnished to the
Lessee and the Bank. In the event any such person, or any successor appointed
pursuant to the provisions of this Section, should resign, become unavailable or
unable to take any action or make any certificate provided for in this Lease
Agreement, another Authorized Issuer Representative or alternate Authorized
Issuer Representative shall thereupon be appointed by the Issuer.
Whenever under the provisions of this Lease Agreement the Authorized
Issuer Representative is required to take some action or make a certificate, the
Lessee or the Bank shall be authorized to rely upon any such actions or
certificates and the Issuer shall have no complaint or claim of any nature
whatsoever against the Lessee or the Bank as a result of any action taken in
reliance thereon.
Section 4.8. Investment of Construction Fund and Bond Fund Moneys
Permitted. Upon the written request and direction of an Authorized Lessee
Representative, any money held as a part of the Construction Fund or the Bond
Fund shall be invested or reinvested by the Trustee in Bonds of the United
States or in Bonds of the State of Alabama or deposited in a bank on interest or
invested or reinvested in other investments approved by the Bank. No investment
shall be made which may result in any Bond being considered an "arbitrage bond"
within the meaning of Section 103(c) of the Code. The Trustee may make
investments through its own bond department.
Section 4.9. Special Arbitrage Covenants. The Issuer and the Lessee
certify each to the other and to and for the benefit of the holder of the Bond
that none of the proceeds from the issue of the Bond will be invested or
otherwise used in any manner which would result in the Bond being classified as
an arbitrage bond within the meaning of Section 103(c)(2) of the Code and any
regulations proposed or promulgated thereunder. Pursuant to such certification,
the Issuer and the Lessee jointly and severally obligate themselves to comply
throughout the term of the Bond with the requirements of Section 103(c) of the
Code, and any regulations proposed or promulgated from time to time thereunder,
so that the Bond shall not be classified as an arbitrage bond.
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ARTICLE V
EFFECTIVE DATE OF THIS LEASE; DURATION OF
LEASE TERM; RENTAL PROVISIONS
Section 5.1. Effective Date of this Lease Agreement; Duration of Lease
Term. This Lease Agreement shall become effective on its delivery, and, subject
to the provisions of this Lease Agreement (including particularly Articles X and
XI hereof), shall expire on the date when the final payment on the Bond is due,
or if the Bond and all payments hereunder have not been fully paid then on such
date as such payment or provisions for such payment shall have been made.
Section 5.2. Delivery and Acceptance of Possession. The Issuer hereby
delivers to the Lessee possession of the Project as it exists on the date this
Lease Agreement is executed by the Lessee (subject to the provisions of Section
8.2 and Article X hereof) and the Lessee hereby accepts possession of the
Project as it exists on the date this Lease Agreement is executed by the Lessee.
The Issuer will not take any action, other than pursuant to Article X of this
Lease, to prevent the Lessee from having quiet and peaceful possession and
enjoyment of the Project during the Term and will, at the request of the Lessee
and at the cost of the Lessee, cooperate with the Lessee in order that the
Lessee may have quiet and peaceful possession and enjoyment of the Project.
Section 5.3. Amounts Payable. At least one day before the date when each
payment on the Bond is due, the Lessee shall pay to the Trustee for the account
of the Issuer, as rent for the Project, a sum equal to the amount due on the
Bond, whether as principal, premium, interest or otherwise.
Each rental payment under this Section shall at all times be sufficient to
pay the total amount of principal, interest on, premium, if any, and other
amounts payable under the Bond on the date of each such payment.
If the Lessee fails to make the payments required in this Section within
ten (10) days of the date due, the item or installment so in default shall
continue as an obligation of the Lessee until the amount in default shall have
been fully paid, and the Lessee shall pay the same with a late charge in the
amount of two percent (2%) of the overdue payment.
Section 5.4. Place of Rental Payments. The rental payments required to be
made under Section 5.3 hereof shall be paid directly to the Trustee, at its
principal office, in lawful money of the United States of America in immediately
available funds, for the account of the Issuer.
Section 5.5. Obligations of Lessee Hereunder Unconditional. The
obligations of the Lessee to make the
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payments required under Section 5.3 hereof and to perform and observe the other
agreements on its part contained herein shall be absolute and unconditional and
shall not be subject to diminution by set-off, counterclaim, abatement or
otherwise, and during the Term the Lessee (i) will not suspend or discontinue,
or permit the suspension or discontinuance of, any payments provided for in
Section 5.3 hereof, (ii) will perform and observe all of its other agreements
contained in this Lease Agreement, and (iii) will not terminate this Lease
Agreement for any cause including, without limiting the generality of the
foregoing, impossibility or illegality of performance on the part of the Issuer
or the Trustee of any of the obligations of the Issuer and the Trustee or either
of them under or in connection with the Bond or any of the Financing Documents,
failure to acquire, renovate, enlarge and equip the Project whether on account
of the abandonment of the Project or any curtailment or cessation of the
operation of the Project or any failure or inability of the Lessee to operate or
utilize the Project, force majeure, any acts or circumstances that may
constitute failure of consideration, eviction or constructive eviction, sale,
loss, destruction or condemnation of or damage to the Project, commercial
frustration of purpose, any change in the tax or other laws or administrative
rulings of or administrative actions by any Governmental Authority, or any
failure of the Issuer or the Trustee to perform and observe any agreement,
whether expressed or implied, or any duty, liability or obligation arising out
of or connected with this Lease Agreement.
ARTICLE VI
MAINTENANCE, TAXES AND INSURANCE
Section 6.1. Maintenance and Modification of Project by Lessee. The Lessee
shall, at its own expense, (i) keep the Project in safe condition, and (ii) keep
the Project in good repair and operating condition, making from time to time all
necessary repairs thereto and renewals and replacements thereof, all of which
shall become a part of the Project and shall be included under this Lease
Agreement and the Indenture to the same extent as if originally included
hereunder and thereunder.
The Lessee shall promptly report to the Trustee and the Issuer any
replacements of any part of the Project and shall at all times keep and maintain
the Equipment Book. The Lessee shall deliver the Equipment Book, or a certified
copy thereof, to the Bank within a reasonable time after written request
therefor by the Issuer or the Bank.
The Issuer shall not be under any obligation to renew, repair or replace
any inadequate, obsolete, worn-out, unsuitable, undesirable or unnecessary part
of the Project.
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Section 6.2. Removal of Equipment. The Lessee may remove or permit the
removal of any part of the Project without the prior written consent of the
Issuer or the Trustee, however, as long as the Equipment will be replaced with
new Equipment, and the new Equipment will be acquired in such a manner that no
purchase money security interest will be granted in it and no other security
interest will be granted which would take priority over the security interest
granted under the Indenture. This Section shall be in addition to and shall in
no way limit the provisions of Section 604 of the Indenture.
Section 6.3. Taxes, Other Governmental Charges and Utility Charges. The
Lessee will promptly pay, as the same become due, all utility charges and all
taxes, assessments, and governmental charges of any kind whatsoever that may at
any time be lawfully assessed or levied upon or with respect to the Project or
the Specified Payment Sources (defined in the Bond) including all ad valorem
taxes lawfully assessed upon the Project, all utility and other charges incurred
in the operation, maintenance, use, occupancy and upkeep of the Project, and all
assessments and charges lawfully made by any governmental body for public
improvements that may be secured by or result in a lien on the Project;
provided, that with respect to special assessments or other governmental charges
that may lawfully be paid in installments over a period of years, the Lessee
shall be obligated to pay only such installments as are required to be paid
during the Term.
The Lessee may in good faith contest any such taxes, assessments and other
charges, at the Lessee's expense and in the Lessee's name or, if required by
law, in the name of the Issuer. In the event of any such contest, the Lessee may
permit the taxes, assessments or other charges so contested to remain unpaid
during the period of such contest and any appeal therefrom, provided that the
Lessee furnishes the Issuer and the Trustee with an opinion of Independent
Counsel, to the effect that by nonpayment of any such items the security
afforded pursuant to the terms of the Lease Assignment or the Indenture will
not be materially endangered or the Project nor will any part of the Project be
subject to loss or forfeiture. Otherwise such taxes, assessments or charges
shall be paid forthwith. The Issuer at the expense of the Lessee will cooperate
fully with the Lessee in any such contest. Notwithstanding the foregoing,
however, the Lessee shall pay all taxes, assessments and other charges which may
be subject to any contest or any appeal therefrom on or before the date when
payment is required by law, so that, if required by law, payment shall be made
prior to the commencement, during, or prior to or upon the conclusion of any
contest or appeal.
The Lessee may at its own expense and in its own name and behalf apply for
any tax exemption allowed by the State of Alabama or any political or taxing
subdivision thereof under any existing or future provision of law which grants
or may grant any such tax exemption.
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Section 6.4. Insurance Required. Throughout the Term, the Lessee shall
keep the Project continuously insured against such risks as are customarily
insured against with respect to property similar to the Project by businesses of
like size and type (other than business interruption insurance), paying as the
same become due all premiums in respect thereto, including but not necessarily
limited to:
(a) Insurance Protection for direct and indirect damage or loss to
the Project by reason of fire, smoke, tornado, ice, wind, lightning,
water, explosion, riot, vandalism, malicious mischief, and any other
casualty against which the Issuer or the Trustee requires insurance, in an
amount at all times equal to one hundred percent (100%) of the actual cash
value of the Project. The insurance required by this subsection may
contain a deductible provision of not in excess of $1,000 direct damage
applicable to each separate instance of loss or damage insured against.
(b) General public liability insurance against claims for bodily
injury, death or property damage occurring on, in or about the Project and
the adjoining streets, sidewalks and passageways, such insurance to afford
protection under a combined single limits policy of not less than
$1,000,000 with respect to bodily injury and property damage to all
persons, in any one occurrence. Such policies may provide for
self-insurance of the Lessee to the extent of $1,000 with respect to all
claims insured against arising from any single occurrence. Such
self-insurance may, at the Lessee's option, be taken directly as a
deductible amount or indirectly under any type of retrospective rating
arrangement between the Lessee and such insurer as it may select.
(c) During construction and if required by the Trustee or the Bank,
all-risk builders' risk extended coverage insurance on a completed value,
non-reporting form, with limits not less than the total amount to be paid
under any construction contract, which policy shall not contain any
provision terminating its coverage upon occupancy of any part of the
Building. The insurance required by this subsection shall provide
protection for direct and indirect damage or loss to the Project from the
risks named in subsection (a) of this Section and from flood, earthquake,
collapse, collision and theft.
(d) Workers' Compensation insurance as required by law.
The Net Proceeds of the insurance carried pursuant to the provisions
of this Section shall be applied as follows: (i) the Net Proceeds of the
insurance required by subsections (a) and (c) shall be applied as provided
in Section 7.1 hereof; and (ii) the Net Proceeds of the insurance required
by subsections (b) and (d) shall be applied toward extinguishment or
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satisfaction of the liability with respect to which such insurance proceeds have
been or are to be paid.
Each policy required by this Section: (i) shall be issued by a generally
recognized and responsible insurer selected by the Lessee authorized to issue
such coverage, under the form of policy provided, in accordance with the laws of
the State of Alabama; (ii) shall name the Trustee, the Bank and the Issuer as
insured parties (the Trustee, the Bank and the Issuer each being called, in this
Section, an "Additional Insured"); (iii) shall provide that the policy cannot be
cancelled as to each Additional Insured except after the insurer gives each
Additional Insured thirty (30) days written notice of cancellation; (iv) shall
provide that the policy cannot lapse if it is not, renewed for any reason except
after the insurer gives each Additional Insured thirty (30) days written notice
of the non-renewal; (v) shall provide that no material change in the coverage
provided by the policy shall be effective except after the insurer gives each
Additional Insured thirty (30) days written notice of the change; (vi) shall
state that notice of any claim against any Additional Insured shall be deemed to
have occurred only when an officer or authorized agent of the Additional Insured
has received actual notice, and has actual knowledge, of the claim; and (vii)
shall not be subject to invalidation as to any Additional Insured by reason of
any act or omission of the Lessee and shall not be subject to invalidation as to
the Lessee by reason of any act or omission of any Additional Insured.
The Lessee shall not procure or maintain in force any insurance policy
which might have the effect of reducing the loss payable under any policy
required pursuant to this Section. The insurance herein required may be
contained in blanket policies now or hereafter maintained by the Lessee.
Immediately upon the issuance of each policy required under this Section,
the Lessee shall deliver a duplicate original policy or certificate of insurance
to the Trustee. The Lessee shall renew each policy on or before the date
specified therein for renewal and shall within ten (10) days of such renewal
deliver to the Trustee a duplicate original renewal policy, endorsement or
certificate of insurance evidencing such renewal.
Upon request by the Trustee, the Lessee shall execute a separate
instrument to assign to the Bank, as collateral for the Bond, all policies of
insurance required under this Section.
Section 6.5. Performance by Issuer, the Trustee or the Bank. If the Lessee
shall fail to perform any of its duties or obligations under this Lease
Agreement (including, without limitation, Sections 6.1, 6.3 and 6.4) or shall
fail to comply with any provision of this Lease Agreement (including, without
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limitation, Section 6.1, 6.3 and 6.4), the Issuer, the Trustee or the Bank may
(but shall be under no obligation to) pay all amounts, or take any action,
required to perform any of such duties or obligations or to comply with any
provisions of this Lease Agreement (including, without limitation, paying for or
performing required repairs, paying taxes, assessments and other governmental
charges, and obtaining any required insurance policy). All amounts so advanced
by the Issuer, the Trustee or the Bank, and all expenses incurred by the Issuer,
the Trustee or the Bank in taking any such action, shall be additional
obligations of the Lessee to the party making the advance or incurring the
expense, payable upon demand with interest at the rate which is two percent (2%)
per annum more than the Base Rate.
ARTICLE VII
DAMAGE, DESTRUCTION AND CONDEMNATION
Section 7.1. Damage and Destruction. If prior to payment in full of the
Bond the Project is damaged by fire or other casualty to such extent that the
claim for loss (including any deductible amount pertaining thereto) resulting
from such damage is not greater than the amount of the deductible under the
insurance policy required by Section 6.4(a), the Lessee shall be obligated to
continue to pay the amounts required to be paid pursuant to Section 5.3 hereof.
In the event of such damage or destruction, the Lessee shall proceed promptly to
and shall Substantially Restore the property damaged or destroyed.
If prior to payment in full of the Bond the Project is destroyed or is
damaged by fire or other casualty to such extent that the claim for loss
(including any deductible amount pertaining thereto) resulting from such
destruction or damage is in excess of the amount of the deductible under the
insurance policy required by Section 6.4(a), the Lessee shall be obligated to
continue to pay the amounts required to be paid pursuant to Section 5.3 hereof.
In the event of such damage or destruction, the Lessee shall promptly give
written notice thereof to the Trustee, and all Net Proceeds of insurance
resulting from claims for such losses shall be paid to and held in the Bond Fund
by the Trustee and shall be invested in securities of the type referred to in
Section 4.11 hereof. if within thirty (30) days after such damage or destruction
the Lessee exercises its option to purchase the Project pursuant to Section 11.1
of this Agreement, the Trustee shall apply the Net Proceeds to the purchase
price payable by the Lessee at the closing of the Lessee's purchase of the
Project. Otherwise, the Lessee shall proceed promptly to, and shall,
substantially restore the property damaged or destroyed, and the Trustee shall
apply the Net Proceeds of insurance received by it to payment of the costs for
such replacement, repair, rebuilding or restoration as may be required for the
property damaged or destroyed to be Substantially Restored, either on completion
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thereof or as the work progresses, as directed by the Lessee and the Issuer.
Each such direction of the Lessee and the Issuer shall, be accompanied by a
requisition, in form acceptable to the Trustee, signed by the Authorized Lessee
Representative and the Authorized Issuer Representative and approved by the
Bondholder, certifying, as to the replacement, repair, rebuilding or restoration
and as to the Net Proceeds of insurance held by the Trustee, to the same effect
as the certificate of the Authorized Lessee Representative and the Authorized
Issuer Representative required for disbursements from the Construction Fund is
required to certify as to the Construction Fund. The Trustee may conclusively
rely upon such direction of the Lessee and the Issuer and shall have no
liability or responsibility for payments made pursuant to this Section in
reliance thereon. If such Net Proceeds are not sufficient to pay in full the
costs of such replacement, repair, rebuilding or restoration, the Lessee shall
nonetheless complete the work thereof and shall pay that portion of the cost
thereof in excess of the amount of Net Proceeds. The Lessee shall not, by reason
of the payment of such excess costs, be entitled to any reimbursement from the
Issuer or the Trustee or any abatement, dimunition or postponement of the
amounts payable under Section 5.3 hereof.
Any balance of Net Proceeds remaining after payment of all costs of
replacement, repair, rebuilding or restoration required to Substantially Restore
the property damaged or destroyed shall be paid to the Trustee and applied to
prepay the principal balance on the Bond by reducing the principal portion of
payments thereon in the inverse order of their due dates. If payment in full of
the Bond has been made, all Net Proceeds shall be paid to the Lessee.
For purposes of this Lease Agreement, property damaged or destroyed shall
be considered "Substantially Restored" if, within four (4) consecutive months
after the date of damage or destruction, it is in substantially the same
condition as existed prior to the event causing such damage or destruction, with
such changes, alterations and modifications (including the substitution and
addition of other property) as may be desired by the Lessee, subject to approval
by the Trustee, and as (A) will not impair operating unity or productive
capacity of the Project and (B) will not change the character of the Project to
such an extent that the Issuer would not be permitted to own, finance or lease
the Project under the Act. The action required to "Substantially Restore" the
property damaged or destroyed shall be the action required for the Project to be
Substantially Restored.
Section 7.2. Condemnation. If the title in and to, or the temporary use
of, the Project shall be taken under the exercise of the power of eminent domain
by any Governmental Authority or by any person acting under governmental
authority, the Lessee shall be obligated to continue to pay the amounts
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required to be paid pursuant to Section 5.3 hereof. The Lessee shall pay to the
Trustee the Net Proceeds received by the Lessee from any award made in any such
eminent domain proceeding. The Issuer shall pay to the Trustee the Net Proceeds
received by the Issuer. Unless the Lessee exercises its option to purchase the
Project pursuant to Section 11.1 hereof within thirty (30) days from the date of
entry of a final order in the eminent domain proceeding granting such
condemnation, the Trustee shall apply the Net Proceeds which it receives in one
or more of the following ways, as it shall deem desirable:
(a) the restoration of the Project to substantially the same condition
as existed immediately prior to the acquisition of title by the person
exercising the power of eminent domain;
(b) the acquisition, by construction or otherwise, of other
improvements suitable for the Lessee's operations of the Project and which (A)
will not impair operating unity or productive capacity of the Project and (B)
will not change the character of the Project to such an extent that the Issuer
would not be permitted to own, finance or lease the Project under the Act;
provided, that such improvements will be acquired subject to no liens, security
interests or encumbrances prior to the lien and security interests afforded by
the Lease Assignment and the Indenture, other than Permitted Encumbrances; or
(c) payment to the Trustee to prepay the principal balance on the Bond
by reducing the principal portion of payments thereon in the inverse order of
their due dates and requiring the Lessee to pay any principal balance left due
and owing plus accrued interest thereon as a mandatory repayment of the Bond,
or, if the payment in full of the Bond has been made, payment to the Lessee.
In the event that the Lessee exercises its option to purchase the Project
pursuant to Section 11.1 hereof within thirty (30) days following the entry of a
final order in any such eminent domain proceeding granting such condemnation and
thereafter purchases the Project pursuant to Article XI hereof, the Bank shall
apply the Net Proceeds which it receives from any award made in any such eminent
domain proceeding to the purchase price payable by the Lessee at the closing of
the Lessee's purchase of the Project.
If the Trustee elects a restoration under paragraph (a) or the acquisition of
improvements under paragraph (b), the Lessee shall direct such restoration or
acquisition and such direction shall be accompanied by a certificate of the
Authorized Lessee Representative and the Authorized Issuer Representative and
endorsed by the Bondholder, in form acceptable to the Trustee, as to such
restoration or acquisition and as to the Net
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Proceeds of such condemnation award, and from time to time the Lessee and the
Issuer may direct that the Trustee apply the Net Proceeds toward such
restoration or such acquisition, as the case may be, as costs of the restoration
or acquisition are incurred, provided that each such direction by the Lessee and
the Issuer will be accompanied by a current certificate of the Authorized Lessee
Representative and the Authorized Issuer Representative and endorsed by the
Bondholder, in form acceptable to the Trustee as to such restoration or
acquisition and as to the Net Proceeds of such condemnation award. The Trustee
may conclusively rely upon any such directions and shall have no liability for
payments made pursuant to this Section in reliance thereon.
The Issuer shall cooperate fully with the Lessee in the handling and conduct of
any prospective or pending eminent domain proceeding with respect to the
Project. In no event will the Issuer or the Lessee voluntarily settle, or
consent to the settlement of, any prospective or pending eminent domain
proceeding with respect to the Project or any part of the Project without the
prior written consent of the other and of the Trustee.
ARTICLE VIII
SPECIAL COVENANTS
Section 8.1. No Obligation of the Issuer with Respect to Project. The
Issuer has, and shall have, no obligation or duty to supervise, inspect or
otherwise observe the Project.
Section 8.2. Right of Access to the Project. In addition to the rights
granted under Section 4.2 hereof, the Issuer, the Trustee and the duly
authorized agents of either or both of them shall have such rights of access to
the Project as may be reasonably necessary to cause to be completed and
acquisition provided for in Section 4.2 hereof and thereafter for the proper
maintenance of the Project in the event of failure by the Lessee to perform its
obligations under Section 6.1 hereof.
Section 8.3. Granting of Easements Affecting Project Site. The Lessee may
at any time or times, but only with written approval of the Bondholder, grant
easements, licenses, rights of way, and other rights or privileges with respect
to the Project Site, provided such grant or conveyance will not impair the
effective use of the Project, will not interfere with the operation of the
Project, will not reduce the value of the Project, and will be subordinate and
inferior to the Indenture and the Lease Assignment.
Section 8.4. Release and Indemnification Covenants. The Lessee releases
the Issuer, the Trustee and the Bank from, covenants and agrees that the Issuer,
the Trustee and the Bank shall not be liable for, and shall indemnify and save
the
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Issuer, the Trustee and the Bank harmless from and against all claims by or on
behalf of any person arising from: (i) the conduct or management of, or from any
work or thing done in or on, the Project during the Term; (ii) any condition of
the Project caused by the Lessee; (iii) any breach or default on the part of the
Lessee in the performance of any of its obligations under this Lease Agreement;
(iv) any act of negligence of the Lessee or of any agents, contractors,
servants, employees or licensees of the Lessee; and (v) any loss or damage to
property or any injury to or death of any persons occurring on or about or
resulting from any defect in the Project. The Lessee shall also indemnify and
save the Issuer, the Trustee and the Bank harmless from and against all costs
and expenses incurred in or in connection with any action or proceeding brought
on any of the matters against which the Lessee has indemnified them under this
Section, and, upon notice from the Issuer, the Trustee or the Bank, the Lessee
shall defend them or either of them in any such action or proceeding. The
foregoing indemnity shall be effective only to the extent of any loss sustained
by the Issuer, the Trustee or the Bank in excess of the Net Proceeds received by
the Issuer, the Trustee or the Bank, as the case may be, from any insurance
carried with respect to the loss sustained and shall not be effective for
damages that result from gross negligence or willful misconduct on the part of
the Issuer, the Trustee or the Bank; provided, however, that the negligence or
misconduct of one indemnified party shall not affect the indemnification of the
other party. Notwithstanding anything in this Lease Agreement to the contrary,
the indemnification agreements contained in this Section shall not be effective
against liability for damage arising out of bodily injury to persons or damage
to property caused by or resulting from the sole negligence of the Issuer, the
Trustee or the Bank, as the case may be.
Section 8.5. Financial Statements. The Lessee shall furnish to the
Trustee:
(a) As soon as practicable after the end of each calendar year, and in
any event within ninety (90) days thereafter, duplicate copies of a balance
sheet and statement of income for the Lessee in the form then currently used by
the Trustee and such other financial information (including copies of federal
and state income tax returns as filed) as the Trustee may reasonably request;
and
(b) promptly upon receipt thereof, one copy of an annual audited
financial report submitted to the Lessee by independent accountants in
connection with an annual audit made by them on the books of the Lessee.
Each balance sheet and statement of income shall be in reasonable detail,
satisfactory in scope to the Trustee and certified as accurate and complete by
the Lessee and any
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accountant or agent who prepared them or assisted in preparing them.
Section 8.6. Further Assurances and Corrective Instruments. The Issuer and
the Lessee shall, from time to time, execute, acknowledge and deliver, or cause
to be executed, acknowledged and delivered, such supplements hereto and such
further instruments as may reasonably be required for correcting any inadequate
or incorrect description of the Project or for carrying out the intention of or
facilitating the performance of this Lease Agreement. The Lessee shall also,
from time to time upon request by the Issuer, the Trustee or the Bank, make,
execute and deliver or cause to be made, executed and delivered any and all
other and further instruments, documents, certificates, agreements, financing
statements, letters, representations and other writings which may be necessary
or desirable, in the opinion of the Issuer, the Trustee or the Bank, in order to
effectuate, complete, correct, perfect or continue and preserve the obligations
of the Lessee under any of the Financing Documents.
Section 8.7. Tax Exempt Status of the Bond. The Lessee shall use ninety
percent (90%) or more of the proceeds derived from the sale of the Bond to pay
those items of the Costs of the Project, or portions thereof, which constitute
costs of acquisition, construction, reconstruction or improvement of land or
property of a character subject to the allowance for depreciation within the
meaning of Section 103(b)(6)(A) of the Code.
The Lessee will not permit the use of the proceeds of the Bond in a
manner, or take or omit to take any other action, or permit any action to be
taken, which will cause the interest on the Bond to become subject to federal
income taxes under the Code, provided, that the Lessee shall not have violated
this covenant if the interest on the Bond becomes taxable to a person who is a
"substantial user" of the Project or a "related person". The terms "substantial
user" and "related person" as used in this Section shall have the meaning
ascribed to them in Section 103(b) of the Code. The Lessee will file or cause to
be filed with the Internal Revenue Service or any other authorized governmental
agency any and all statements or other instruments, if any, required under
Section 103 of the Code, including the regulations thereunder, so that the
interest on the Bond will continue to be excludable from the gross income of the
holder of the Bond for federal income tax purposes.
Section 8.8. Payment of Issuer Expenses. Anything herein to the contrary
notwithstanding, the Lessee covenants to pay any expenses not specifically
mentioned herein which are incurred by the Issuer in connection with the Project
or any of the Financing Documents, and which are not payable from the
Construction Fund pursuant to Section 4.4 hereof.
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Section 8.9. Investment Tax Credit. The Issuer covenants and agrees that
any investment tax credit with respect to any part of the Project shall be made
available to the Lessee and the Issuer will fully cooperate with the Lessee in
any effort by the Lessee to avail the Lessee of any such investment tax credit,
but the Issuer shall have no responsibility or liability for failure of the
Lessee to receive any such investment tax credit.
Section 8.10. Registration and Transfer of the Bond. The Bond shall be
registered as to both principal and interest. The Bond Registrar, as defined in
the Indenture, shall keep registers for registration and transfer of the Bond.
The registration books shall list the names and addresses of each holder of the
Bond as specified by each such holder in writing (delivered to the Bond
Registrar) upon acquisition of its Bond and from time to time thereafter.
Transfer of the Bond shall as provided herein and in Section 210 of the
Indenture be made only upon surrender thereof at the principal office of the
Bond Registrar by the registered owner in person or by his attorney duly
authorized in writing together with a written instrument of transfer in form
reasonably satisfactory to the Issuer and the Trustee, duly executed by the
registered owner or his attorney duly authorized in writing.
The Issuer and Bond Registrar may deem and treat the registered holder of
the Bond as the absolute owner of the Bond for the purpose of receiving payment
of or on account of principal thereof and interest due thereon and for all other
purposes whatsoever, and the Issuer and the Bond Registrar shall not be affected
by any notice to the contrary.
Upon surrender for transfer of the Bond at the principal office of the
Bond Registrar, the Bond Registrar shall either reissue the Bond to the
transferee or transferees or shall execute and deliver to the transferee or
transferees in exchange for the Bond a new registered Bond without coupons in
the same principal amount.
The holder of the Bond shall pay any tax or other governmental charge
required to be paid with respect to any transfer of the Bond.
If any holder of the Bond sells, transfers, assigns or otherwise disposes
of any interest in the Bond, such sale, transfer, assignment orother disposition
(hereinafter generally referred to as a "transfer"): (i) shall be recorded
reflecting the ownership of the transferee on the books of the holder; (ii) the
holder shall receive the interest or principal payments with respect to the
transferee's interest in the Bond as agent for the transferee; and (iii) any
transfer of the transferee's interest must be recorded on the books of the
holder in a book entry system.
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Section 8.11. Representations and Agreements of Lessee and Issuer with
Respect to Capital Expenditures. The Issuer is issuing the Bond pursuant to an
election made by it (prior to issuance of the Bond) under Section 103(b)(6)(D)
of the Code. It is the intention of the parties hereto that the interest on the
Bond be and remain free from federal income taxation, and, to that end, the
Lessee and the Issuer represent and agree with each other as follows:
(a) The Lessee represents that the sum of (i) the aggregate principal
amount of the Bond being issued plus (ii) capital expenditures made during the
three year period immediately preceding the issuance and delivery of the Bond
(other than those mentioned in Section 103(b)(6)(F) of the Code) with respect
to Local Facilities does not exceed $10,000,000.
(b) During the three-year period immediately following the date of the
issuance and delivery of the Bond, the Lessee shall not make or cause or permit
to be made any capital expenditures (other than those mentioned in section
103(b)(6)(F) of the Code) with respect to Local Facilities which would cause
the interest payable on the Bond to be or become subject to federal income
taxation.
(c) Within ninety (90) days after the first three anniversary dates of
the issuance and delivery of the Bond, the Lessee shall furnish to the holder of
the Bond a certificate of an independent certified public accountant (or firm
thereof) stating that, during the period beginning three years prior to the date
of issuance and delivery of the Bond and extending through the applicable date
such certificate is to cover, capital expenditures (including as capital
expenditures for this purpose the original principal amount of the Bond) in
excess of $10,000,000 (or any such larger amount as may at the time be permitted
by law) have not been paid or incurred with respect to Local Facilities. Each
such certificate shall list and describe by date, payee and purpose all such
capital expenditures paid or incurred since the period covered by the preceding
such certificate or, in the case of the first such certificate, since the date
of issuance of the Bond.
(d) The Issuer and the Lessee shall fully comply, during the term of
this Lease Agreement, with all rules, rulings, and regulations promulgated by
the Department of the Treasury or the Internal Revenue Service with respect to
bonds issued under Section 103(b)(6)(D) of the Code so as to maintain the
tax-exempt status of the interest payable on the Bond. Without limiting the
generality of the foregoing, the Lessee shall file, and shall cause each
Principal Project User to file, a copy of the Issuer's election to have Section
103(b)(6)(D) apply to the Bond with the Lessee's or such Principal Project
User's (as the case may be) federal income tax return for the
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fiscal year which includes the date of issuance of the Bond, and the Lessee
shall file, and shall cause each Principal Project user to file, all
supplemental statements listing capital expenditures when and as required by the
regulations promulgated under Section 103 of the Code.
ARTICLE IX
ASSIGNMENT AND SUBLEASING; SELLING; PREPAYMENT;
RENT PREPAYMENT AND ABATEMENT
Section 9.1. Assignment and Subleasing. The Lessee shall not assign this
Lease or sublease the Project, as a whole or in part, without obtaining the
prior written consent of the Issuer, the Trustee and the Bondholder.
Section 9.2. Assignment of Revenues and Lease Agreement by Issuer. This
Lease Agreement and all rents, revenues and receipts derived by the Issuer under
this Lease Agreement, including but not limited to all payments required under
Section 5.3 hereof, are assigned to the Trustee pursuant to the Lease Assignment
as security for payment of the principal of, premium, if any, interest on and
other amounts payable under the Bond. The Lessee assents to such assignment and
further agrees to assign all rents and revenues derived by Lessee under any and
all subleases of the Project, and hereby agrees that, as to the Trustee, the
Lessee's obligation to make such payments shall be absolute and shall not be
subject to any defense or any right of set-off, counterclaim or recoupment
arising out of any breach by the Issuer of any obligation to the Lessee, whether
hereunder or otherwise. The Issuer hereby directs the Lessee, and the Lessee
hereby agrees, to pay to the Trustee all amounts payable to the Issuer pursuant
to this Lease Agreement, other than amounts paid on account of or to reimburse
the Issuer for expenses of the Issuer which the Lessee is required to pay and
other than amounts to be paid the Issuer as indemnification.
Section 9.3. Restrictions on Sale of Project by Issuer. The Issuer shall
not sell, convey, assign, transfer, mortgage, encumber or otherwise dispose of
any part of the Project during the Term, without obtaining the prior written
consent of the Trustee, the Lessee and the Bondholder.
Section 9.4. Redemption or Prepayment of Bond. If no Event of Default
exists, the Issuer, upon receipt of written notice from the Lessee and the
Trustee directing prepayment of the Bond in accordance with the provisions of
the Bond, shall forthwith take all steps that may be necessary under the Bond to
effect prepayment or redemption of all or part of the Bond as may be specified
by the Lessee, on the earliest prepayment date specified by the Lessee on which
such prepayment may be made under the Bond, provided that the Lessee may direct
the redemption or the prepayment of the Bond as an entirety whether
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or not an Event of Default then exists hereunder. The Issuer shall not be
obligated to arrange for notice of prepayment or to take any other step
necessary for prepayment under the provisions of the Bond unless the Lessee
provides reasonable assurance to the Issuer, the Trustee and the Bank that the
funds required for the proposed prepayment will be available for that purpose on
or before the date of the proposed prepayment. Such assurance shall be provided
at the same time as the Lessee's notice directing prepayment of the Bond is
given to the Issuer.
Section 9.5. Prepayment of Rents. There is expressly reserved to the
Lessee the right, and the Lessee is authorized and permitted, at any time it may
choose, to prepay all or any part of the rents payable under Section 5.3 hereof
(or to cause such rent to be prepaid as contemplated by Bond), and the Issuer
agrees that the Trustee may accept such prepayments when the same are tendered
by the Lessee. All rents so prepaid shall be credited to the rental payments
specified in Section 5.3 hereof, in the inverse order of their due dates, and at
the election of the Lessee shall be used for the prepayment of the Bond in the
manner and to the extent permitted under the Bond.
Section 9.6. References to Bond Ineffective After Bond Paid. Upon payment
in full of the Bond (or provision for payment thereof having been made in
accordance with the provisions of the Bond), all references in this Lease
Agreement to the Bond shall be ineffective and neither the Issuer, the Trustee
nor the Bank shall thereafter have any rights hereunder, except for any rights
that shall have theretofore vested.
ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
Section 10.1. Events of Default Defined. The following shall be "Events of
Default" under this Lease Agreement, and the term "Event of Default" shall mean,
whenever used in this Lease Agreement, any one or more of the following events:
(a) Failure by the Lessee to pay the amounts required to be paid under
Section 5.3 hereof and in Section 901 of the Indenture at the times specified
therein.
(b) Failure by the Lessee to observe and perform any covenant,
condition or agreement on the Lessee's part to be observed or performed under
this Lease Agreement, other than as referred to in subsection (a) of this
Section, for a period of thirty (30) days after the date when written notice
specifying such failure and requesting that it be remedied is given to the
Lessee by the Issuer or the Trustee, unless the Issuer and the Trustee shall
agree in writing to an extension of such time prior to its expiration.
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(c) The occurrence under the Bond or any of the other Financing
Documents of a default, event of default or Event of Default (as such terms may
be defined in any of the other Financing Documents).
(d) The failure by the Lessee promptly to lift any execution,
garnishment or attachment of such consequence as will impair the Lessee's
ability to carry on the Lessee's operations at the Project Site or the entry by
the Lessee into an agreement of composition with the Lessee's creditors.
(e) If the Lessee shall (i) apply for or consent to the appointment of,
or the taking of possession by, a receiver, custodian, trustee or liquidator of
all or a substantial part of the Lessee's property, (ii) admit in writing the
Lessee's inability, or be generally unable, to pay the Lessee's debts as such
debts become due, (iii) make a general assignment for the benefit of the
Lessee's creditors, (iv) commence a voluntary case under the Federal Bankruptcy
Code (as now or hereafter in effect), (v) file a petition seeking to take
advantage of any other law relating to bankruptcy, insolvency, reorganization,
winding-up, or composition or adjustment of debts, (vi) fail to controvert in a
timely or appropriate manner, or acquiesce in writing to, any petition filed
against the Lessee in an involuntary case under said Federal Bankruptcy Code, or
(vii) take any action for the purpose of effecting any of the foregoing.
(f) If a proceeding or case shall be commenced, without the application
or consent of the Lessee, in any court of competent jurisdiction, seeking (i)
the liquidation, reorganization, dissolution, winding-up, or composition or
readjustment of debts of the Lessee, (ii) the appointment of a trustee,
receiver, custodian, liquidator or the like of all or any substantial part of
the assets of the Lessee, or (iii) similar relief in respect of the Lessee under
any law relating to bankruptcy, insolvency, reorganization, winding-up, or
composition or adjustment of debts, and such proceeding or case shall continue
undismissed, or an order, judgment or decree approving or ordering any of the
foregoing shall be entered and continue unstayed and in effect, for a period of
sixty (60) days from commencement or such proceeding or case or the date of such
order, judgment or decree, or an order for relief against the Lessee shall be
entered in an involuntary case under said Federal Bankruptcy Code.
(g) If for any reason, the Lessee named herein ceases to lease the
Project or to "own" the building as "own" is defined for federal tax purposes;
provided, however, the Trustee may waive this provision by written notice given
to Lessee.
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Section 10.2. Remedies on Default. Whenever any Event of Default referred
to in Section 10. 1 hereof shall have happened and is continuing, the Issuer or
the Trustee, as specified below, may, to the extent permitted by law, take any
one or more of the following remedial steps:
(a) The Issuer, with the consent of the Trustee, or the Trustee may,
at its option, or upon written request of the holder of the Bond, shall
declare all installments of rent payable under Section 5.3 hereof
immediately due and payable, whereupon the same shall become immediately
due and payable.
(b) The Issuer, with the consent of the Trustee, or the Trustee may
re-enter and take possession of the Project without terminating this Lease
Agreement and without any liability to the Lessee for such entry and
repossession and sublease the Project for the account of the Lessee,
holding the Lessee liable for the excess, if any, of the rent and other
amounts payable by the Lessee under this Lease Agreement over the rents
and other amounts which are payable by such sublessee under such sublease.
(c) The Issuer, with the consent of the Trustee, or the Trustee may
terminate this Lease, exclude the Lessee from possession of the Project
and use its best efforts to lease the Project to another for the account
of the Lessee, holding the Lessee liable for all rent and other payments
due up to the effective date of such leasing and for the excess, if any,
of the rent and other amounts payable by the Lessee under this Lease had
this Lease not been terminated, over the rents and other amounts which are
payable by such new Lessee under such new Lease.
(d) The Issuer, with the consent of the Trustee, or the Trustee may
from time to time take whatever action at law or in equity may appear
necessary or desirable to collect the rents payable by the Lessee
hereunder then due and thereafter to become due, or to enforce performance
and observance of any obligation, agreement or covenant of the Lessee
under this Lease Agreement or any of the other Financing Documents.
The amounts required to be paid pursuant to subparagraph (a) above shall also
include any other payments then due or to become due hereunder.
Any amounts collected pursuant to action taken under this Section shall be
paid directly to the Trustee.
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This Section shall be construed in conjunction with Section 902 of the
Indenture, and any portion which may appear to be contradictory shall be
construed in favor of the Issuer and the Trustee to give them the most liberal
interpretation for additional remedies in case of default.
Section 10.3. No Remedy Exclusive. No remedy herein conferred upon or
reserved to the Issuer or the Trustee is intended to be exclusive of any other
available remedy or remedies, but each and every such remedy shall be cumulative
and shall be in addition to every other remedy given under this Lease Agreement
or any of the other Financing Documents now or hereafter existing at law or in
equity by statute. No delay or omission to exercise any right or power accruing
upon any failure or Event of Default shall impair any such right or power or
shall be construed to be a waiver thereof, but any such right and power may be
exercised from time to time and as often as may be deemed expedient. In order to
entitle the Issuer to exercise any remedy reserved to it in this Article, it
shall not be necessary to give any notice, other than such notice as may be
herein expressly required. Such rights and remedies as are given the Issuer
hereunder shall also extend to, and may be exercised by, the Trustee, and the
Trustee shall be entitled to the benefit of all covenants and agreements herein
contained.
Section 10.4. Agreement to Pay Attorneys' Fees and Expenses. If an Event
of Default occurs and the Issuer or the Trustee employs attorneys or incurs
other expenses for the collection of amounts payable under Section 5.3 hereof or
the enforcement of performance or observance of any obligation or agreement on
the part of the Lessee herein contained, the Lessee shall pay to the Issuer or
to the Trustee, as the case may be, the reasonable fees of such attorneys and
such other expenses so incurred by the Issuer or the Trustee.
Section 10.5. No Additional Waiver Implied by One Waiver. In the event any
agreement contained in this Lease Agreement should be breached by either party
and thereafter waived by the other party, such waiver shall be limited to the
particular breach so waived and shall not be deemed to waive any other breach
hereunder.
Section 10.6. Waiver of Appraisement and Valuation. If an Event of Default
occurs, the Lessee hereby waives, to the extent the Lessee may lawfully do so,
the benefit of all appraisement, valuation, stay, extension or redemption laws
now or hereafter in force and all right to appraisement and redemption to which
the Lessee may be or become entitled.
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ARTICLE XI
OPTIONS AND OBLIGATIONS OF LESSEE
Section 11.1. General Option to Purchase Project. The Lessee shall have,
and is hereby granted, the option to purchase the Project at any time after the
fifth anniversary date of issuance of the Bond and prior to the expiration of
the Term. To exercise this option the Lessee shall give written notice to the
Issuer and to the Trustee, and shall specify therein the date of closing such
purchase, which date shall be not less than forty-five (45) nor more than ninety
(90) days from the date such notice is mailed, and shall make arrangements
satisfactory to the Trustee for the taking of other steps required to effect the
prepayment in full of the Bond. The purchase price payable by the Lessee in the
event of the Lessee's exercise of the option granted in this Section shall be
the sum of the following:
(a) an amount of money which will be sufficient to pay the full unpaid
principal balance on the Bond, including, without limitation, principal,
premium, if any, all interest to accrue to such prepayment date and all other
amounts due thereon, and any expenses incurred by the Issuer or the Trustee,
plus
(b) the sum of five thousand dollars.
Section 11.2. Conveyance on Exercise of Option or Obligation to Purchase.
At the closing of the purchase pursuant to this Article, the Issuer will upon
receipt of the purchase price deliver to the Lessee the following:
(a) If the Indenture shall not at the time have been satisfied in full, a
quit claim deed, a release and a termination statement (with respect to any
effective Financing Statements) from the Trustee releasing the property with
respect to which the option was exercised.
(b) Documents conveying to the Lessee legal title to the property being
purchased, as such property then exists, subject to the following: (i) those
liens and encumbrances (if any) to which title to said property was subject when
conveyed to the Issuer; (ii) those liens and encumbrances created by the Lessee
or to the creation or suffering of which the Lessee consented; (iii) those liens
and encumbrances resulting from the failure of the Lessee to perform or observe
any of the agreements on the Lessee's part contained in this Lease Agreement;
and (iv) Permitted Encumbrances other than this Lease Agreement, the Indenture
and the Lease Assignment.
Section 11.3. Relative Position of Options and Lease Assignment. The
options granted to the Lessee in this Article shall be and remain subordinate
and inferior to the Lease
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Assignment and the Indenture and may not be exercised if an Event of Default has
occurred hereunder.
Section 11.4. Determination of Taxability. If a "Determination of
Taxability" (as defined in the Bond) occurs and as a result the Issuer is
required to prepay the Bond pursuant to the Bond, the Lessee shall be required
to purchase the Project not less than one business day prior to the date of any
such prepayment and agrees to pay to the Trustee as the purchase price for the
Project the amount necessary to effect such prepayment of the Bond pursuant to
the Bond, plus the sum of one hundred dollars. Upon the occurrence of a
Determination of Taxability, the Lessee shall also pay all other amounts which
the Issuer is required to pay under the terms of the Bond.
The purchase price and other amounts provided for above shall be paid
directly to the Trustee.
Section 11.5. Release of Unimproved Portion of Project Site. While the
Lessee is not in default hereunder, Lessee, at its option, may request the
Issuer to obtain from the Trustee the release of any of the Unimproved portion
of the Project Site not needed by the Issuer or the Lessee as a part of the
Project and not useful in the leasing or in the maintenance and care of the
Project, and the Issuer shall, pursuant to Section 605 of the Indenture, apply
to the Trustee for a release of said Unimproved property. The release shall be
executed upon compliance with the requirements of Section 605 of the Indenture.
Section 11.6. Obligation to Purchase Project. The Lessee hereby agrees to
purchase, and the Issuer hereby agrees to sell, the Project for one hundred
dollars at the expiration of the Term (including any extension thereof pursuant
to Section 5.1 hereof) or at the prior termination of the Term, provided that
the Bond shall have been paid in full. The obligation provided for in this
Section shall be and remain subordinate and inferior to the Lease Assignment and
the Indenture and may not be exercised if an Event of Default exists hereunder.
ARTICLE XII
MISCELLANEOUS
Section 12.1. Immunity of Members, Officers and Employees of Issuer. No
recourse shall be had for the enforcement of any obligation, covenant, promise
or agreement of the Issuer contained in this Lease Agreement or for any claim
based hereon or otherwise in respect hereof or upon any obligation, covenant,
promise or agreement of the Issuer contained in the Bond against any director,
member, officer, agent or employee, as such, in his individual capacity, past,
present, or future, of the Issuer or of any successor corporation, whether by
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virtue of any constitutional provision, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, it being expressly agreed
and understood that this Lease Agreement and the Bond are solely corporate
obligations of the Issuer payable only from the funds and assets of the Issuer
herein and in the Bond specifically provided to be subject to such obligation
and that no personal liability whatsoever shall attach to, or be incurred by,
any director, member, officer, agent or employee, as such, past, present or
future, of the Issuer or of any successor corporation, either directly or
through the Issuer or any successor corporation, under or by reason of any of
the obligations, covenants, promises or agreements entered into between the
Issuer and the Lessee whether contained in this Lease Agreement or in the Bond
or to be implied herefrom or therefrom as being supplemental hereto or thereto,
and that all personal liability of that character against every such director,
member, officer, agent and employee is, by the execution of this Lease Agreement
and as a condition of, and as part of the consideration for, the execution of
this Lease Agreement, expressly waived and released. The immunity of directors,
members, officers, agents and employees of the Issuer under the provisions
contained in this Section shall survive the termination of this Lease Agreement.
Section 12.2. Notices. All notices, certificates or other communications
hereunder shall be in writing and shall be sufficiently given and shall be
deemed given when mailed by registered or certified mail, postage prepaid,
addressed as follows: if to the Issuer, addressed to it at The Industrial
Development Board of the City of Dothan, Alabama, P.O. Box 638, Dothan, Alabama
36302, if to the Lessee, addressed to the Lessee at P.O. Box 1252, Dothan,
Alabama 36302; and if to the Bank, addressed to it at P.O. Box 6507, Dothan,
Alabama 36302; if to the Trustee, as provided in the Indenture. A duplicate copy
of each notice, certificate or other communication given hereunder by either the
Issuer, the Trustee or the Lessee to the other shall also be given to the Bank.
The Issuer, the Lessee, the Trustee and the Bank may, by notice given hereunder,
designate any further or different addresses to which subsequent notices,
certificates or other communications shall be sent.
Section 12.3. Binding Effect. This Lease Agreement shall inure to the
benefit of and shall be binding upon the Issuer, the Lessee and their respective
successors and assigns, subject, however, to the limitations contained in
Sections 9.1, 9.3 and 12.1 hereof.
Section 12.4. Severability and Governing Law. If any provision of this
Lease Agreement shall be invalid, inoperative or unenforceable as applied in any
particular case in any jursidications or jurisdictions or in all jurisdictions,
or because it conflicts with any other provision or provisions
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<PAGE> 50
hereof or any constitution, statute or rule of public policy, or for any other
reason, such circumstances shall not have the effect of rendering the provision
in question invalid, inoperative or unenforceable in any other case or
circumstance, or. of rendering any other provision or provisions herein
contained invalid, inoperative or unenforceable to any extent whatever. In the
event any provision of this Lease Agreement shall be held invalid, inoperative
or unenforceable by any court of competent jurisdiction such holding shall not
invalidate or render inoperative or unenforceable any other provision hereof.
This Lease Agreement shall be governed exclusively by the applicable laws of the
State of Alabama.
Section 12.5. Amendments, Changes and Modifications. Subsequent to the
issuance of the Bond and prior to its payment in full, this Lease Agreement and
the Bond may not be effectively amended, changed, modified or altered and may
not be terminated except by written instrument executed by or on behalf of the
Issuer, the Lessee and the Trustee as provided in Section 1201 of the Indenture.
Section 12.6. Execution Counterparts. This Lease Agreement may be executed
in several counterparts, each of which shall be deemed an original and all of
which shall constitute but one and the same instrument, and it shall not be
necessary in making proof of this Lease Agreement to produce or account for more
than one such counterpart.
Section 12.7. Captions. The captions or headings in this Lease Agreement
are for convenience only, in no way define, limit or describe the scope or
intent of any provisions of this Lease Agreement, and do not constitute a part
of this Lease Agreement.
Section 12.8. Net Lease. This Lease Agreement shall be deemed and
construed to be a "Net Lease," and the Lessee shall pay absolutely net during
the Term the rent and all other payments required hereunder, free of any
deductions, without abatement, deduction or set off other than those herein
expressly provided.
IN WITNESS WHEREOF, the Issuer has caused this Lease Agreement to be
executed in its corporate name and caused its corporate seal to be hereunto
affixed and attested by its duly authorized officer, and the Lessee has executed
and sealed this Lease Agreement, all as of the date first above written.
(CORPORATE SEAL) THE INDUSTRIAL DEVELOPMENT
BOARD OF THE CITY OF
ATTEST: DOTHAN, ALABAMA
/s/ Pierce Flatt By: /s/ James Milton Williams
- ------------------------------ ----------------------------
Secretary Chairman
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<PAGE> 51
LESSEE:
ANSELL INCORPORATED
By: /s/ Robert J. Martin
--------------------------
ATTEST: Its President
----------------------
By: /s/ Phillip K. Williams
----------------------------
Its Secretary
---------------------------
STATE OF ALABAMA )
: ss.
COUNTY OF HOUSTON )
I, Katherine Smith, a Notary Public in and for said State at Large, hereby
certify that James Milton Williams and Pierce Flatt, whose names as Chairman and
Secretary, respectively, of the Board of Directors of The Industrial Development
Board of the City of Dothan, Alabama, a public corporation created and existing
under the Constitution and laws of the State of Alabama, are signed to the
foregoing Lease Agreement and who are known to me, acknowledged before me on
this day that, being informed of the contents of the above and foregoing Lease
Agreement, they, as such officers and with full authority, executed the same
voluntarily for and as the act of said public corporation on the day the same
bears date.
Given under my hand and official seal of office, this the 30th day of
April, 1985.
(SEAL) /s/ Katherine S. Smith
----------------------------
Notary Public
STATE OF ALABAMA )
: ss.
COUNTY OF HOUSTON )
I, Katherine S. Smith, a Notary Public in and for said State at Large
certify that Robert J. Martin and Phillip K. Williams, whose names as President
and Secretary respectively, of Ansell Incorporated, a Delaware corporation, are
signed to the foregoing Lease Agreement and who are known to me, acknowledged
before me on this day that, being informed of the contents of the above and
foregoing Lease Agreement, they, as such officers and with full authority,
executed the same voluntarily on the day the same bears date.
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<PAGE> 52
Given under my hand and official seal of office, this the 30th day of April,
1985.
(SEAL) /s/ Katherine S. Smith
-----------------------------
Notary Public
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<PAGE> 53
EXHIBIT A
Parcel #1
A parcel of land in the City of Dothan, Houston County, Alabama, and being more
particularly described as follows: Commencing at the intersection of the west
line of the E 1/2 of the SE 1/4 of Section 2, T3N, R26E, and the north side of
Murray Road and thence easterly along the north side of Murray Road 259.32 feet,
thence N07 degrees 22' 48"W 827.58 feet to the POINT OF BEGINNING: and thence
N07 degrees 22' 48"W 266.88 feet, thence S80 degrees 44' 30"E 200.52 feet,
thence S00 degrees 03' 26"E 232.10 feet, thence S89 degrees 56' 34"W 163.77 feet
to the point of beginning. Said parcel containing 1.02 acres more or less.
Parcel #2
Lots One through Twenty-One, inclusive, of Dothan Chamber of Commerce Industrial
Site, a map or plat of which is recorded in Plat Book 3, Page 54, in the Office
of the Judge of Probate of Houston County, Alabama.
<PAGE> 1
EXHIBIT 10.8.2
STATE OF NORTH CAROLINA
LEASE AGREEMENT
COUNTY OF WILKES
This LEASE AGREEMENT ("the Lease") is made as of this 4th day of April,
1997, by and between Golden Realty Company, a general partnership (the
"Landlord"), and Ansell Edmont Industrial Inc., a Delaware corporation (the
"Tenant").
FOR AND IN CONSIDERATION of the mutual agreements contained herein,
Landlord and Tenant agree as follows
1. PREMISES. Landlord hereby leases to Tenant and Tenant hereby
leases from Landlord upon the terms and conditions and for the purposes set
forth in this Lease, approximately 4.40 acres known as Golden Needles Plant#7
located in the City of Wilkesboro, State of North Carolina and described in
Exhibit A attached hereto and incorporated herein by reference (the "Leased
Premises").
2. TERM.
a. This Lease shall be for a period of three years beginning
April 4, 1997 (the "Commencement Date") (being the effective date of
that certain Asset Purchase Agreement among Golden Needles Knitting,
Inc., Tom Thumb Glove Co., Inc., Monte Glove Co., Inc., Medical Glove
Devices, Inc., Landlord, Tenant, Harold F. Plemmons, Linda G. Plemmons,
Michael G. Coniff and Diane C. Coniff), and ending at midnight April
30, 2000, unless modified or earlier terminated pursuant to the terms
hereof (the "Initial Term").
b. Provided Tenant is not in default hereunder, at the expiration
of the Initial Term, Tenant shall have the option to renew this Lease
for one (1) additional three (3) year period (collectively, the
"Renewal Term") on all of the same terms and conditions as are
contained in this Lease including, without limitation, Rent (as later
defined). The Renewal Term shall commence as of the end of the Initial
Term or the preceding Renewal Term, as applicable. If Tenant desires to
exercise the Renewal Term, Tenant shall give Landlord written notice of
such desire not less than sixty (60) days prior to the expiration of
the Initial Term or the preceding Renewal Term, as applicable. If
Tenant does not provide such notice to Landlord, Tenant shall
conclusively be deemed to have elected not to renew this Lease
(collectively, the Initial Term and the Renewal Term, if exercised,
shall be referred to hereinafter as the "Lease Term").
3. RENTAL.
a. Tenant shall pay monthly rental equal to Eleven Thousand Two
Hundred Fifty Dollars ($11,250.00), payable in advance, on or before
the first (1st) day of each calendar month during the Lease Term
without notice, deduction, demand or set off (the "Rent"). The Rent for
any partial month shall be paid in advance and prorated daily from such
date to the first (1st) day of the next calendar month. The first
(1st) payment of Rent shall be due and payable on or before the
Commencement Date.
b. Except as otherwise mutually agreed upon by Landlord and
Tenant, Rent shall be payable by checks made payable to Landlord and
mailed or delivered to the address set forth in Section 28 below or
such other address as Landlord may designate to Tenant in writing. To
defray administrative and handling expenses, Tenant agrees to pay an
additional charge of Ten and No/100 Dollars ($10) for each returned
check. All Rent shall bear interest at the rate of ten percent (10%)
per annum if not received by Landlord by the tenth (10th) day of the
month.
4. TAXES AND ASSESSMENTS. Commencing on the Commencement Date, Tenant
shall be responsible for, and covenant to pay directly to the applicable taxing
authority, on or before the date delinquent all
<PAGE> 2
Taxes (as defined below). As used herein, "Taxes" shall mean all real estate
taxes and assessments, special or otherwise, levied or assessed upon or with
respect to the Leased Premises and accruing during the term of the Lease. Should
the State of North Carolina, or any political subdivision thereof, or any other
governmental authority having jurisdiction over the Leased Premises (a) impose a
tax, assessment, charge or fee, which Landlord shall be required to pay, by way
of supplement to or substitution for such real estate taxes, or (b) impose an
income or franchise tax or a tax on rents in substitution for or as a supplement
to a tax levied against the Leased Premises, all such taxes, assessments, fees
or charges (hereinafter defined as "in lieu of taxes") shall be deemed to
constitute Taxes hereunder. Except as hereinabove provided with regard to "in
lieu of taxes", Taxes shall not include any inheritance, estate, succession,
transfer, gift, franchise, net income or capital stock tax. In determining the
amount of Taxes for any year, the amount of special assessments to be included
shall be limited to the amount of the installment (plus any interest payable
thereon) of such special assessment required to be paid during such year as if
Landlord had elected to have such special assessment paid over the maximum
period of time permitted by law.
5. UTILITIES. Tenant shall arrange and promptly pay, as and when due,
directly to the utility company all utility charges on or to the Leased Premises
during the term of this Lease, including but not limited to electric, gas, storm
water, sewage and water. Landlord shall not be responsible for the stoppage or
interruption of any utility services.
6. USE OF THE LEASED PREMISES. Tenant shall use the Leased Premises
only as a warehouse and distribution facility and for no other purpose without
the prior written consent of Landlord, which consent shall not be unreasonably
withheld or delayed.
7. COMPLIANCE WITH LAWS. Tenant shall not permit the Leased Premises
or any portion thereof to be used in any unlawful manner or in any manner that
may create a nuisance. Tenant shall comply with any and all laws, ordinances,
orders or regulations, now in force or which hereinafter may be enacted or
promulgated by any lawful authority having jurisdiction over the Leased Premises
or the use thereof, including but not limited to, compliance with the
requirements of all policies of insurance at any time in force with respect to
the Leased Premises. Notwithstanding the foregoing, in no event shall Tenant be
required to make any capital expenditures, nor shall Tenant be responsible or
required to replace or make other than ordinary day-to-day modifications or
repairs and reasonable preventative maintenance of a type ordinarily conducted
by prudent owners of properties similar to the Leased Premises, to the building
systems, structural components or roof of the Leased Premises to satisfy its
obligations under this Section 7, nor shall Tenant assume any responsibilities
for those matters contemplated by Section 23e hereof.
8. ENTRY. Upon reasonable advance notice, Landlord, its agents or
representatives, may enter the Leased Premises at all reasonable times during
usual business hours, for any purpose, including but not limited to exhibiting
the Leased Premises to prospective buyers and tenants. Any such entry by
Landlord shall not unreasonably interfere with Tenant's business.
9. SIGNAGE. Tenant may install an identification sign on the Leased
Premises upon prior written approval by Landlord which shall not be unreasonably
withheld or delayed; provided any such signage shall comply with all laws,
ordinances and regulations.
10. ASSIGNMENT AND SUBLETTING. Tenant shall not assign this Lease nor
sublet or otherwise transfer any or all of the Leased Premises without
Landlord's prior written consent, which consent shall not be unreasonably
withheld or delayed. If Landlord consents to any such assignment, sublet or
transfer, Tenant shall not be released from the obligations under this Lease.
Tenant may, however, assign the lease to an Affiliate (as hereinafter defined)
of Tenant without the prior written consent of Landlord. For the purposes of
this Section, "Affiliate" shall mean any person or entity which controls, is
controlled by or is under common control with Tenant and "control" means
ownership of more than fifty percent (50%) of the total voting power of the
outstanding stock of a corporation or of the outstanding ownership of a
non-corporate entity. The acceptance of Rent or other amounts due hereunder
shall not be deemed to be a consent by Landlord to any such assignment, sublet
or other transfer, nor shall the same be deemed a waiver of any right or remedy
of Landlord under this Lease.
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<PAGE> 3
11. ALTERATIONS. Tenant shall have the right at any time and from
time to time during the term of the Lease to make at Tenant's sole expense such
alterations, additions or improvements to any portion of the Leased Premises,
either inside or outside, as Tenant may deem necessary or desirable, provided
that Tenant shall have obtained Landlord's prior written consent, which consent
shall not be unreasonably withheld or delayed. If Landlord consents to any such
alteration, addition or improvement, Landlord may require plans and
specifications to be submitted and approved by Landlord. All alterations,
additions or improvements approved by Landlord shall, at Landlord's option,
become a part of the Leased Premises and Landlord's property upon the expiration
or earlier termination of this Lease. All work done pursuant to this Section 11
shall be done in a good and workmanlike fashion and Tenant shall pay before
delinquency all of the costs thereof.
12. MAINTENANCE.
(a) Tenant covenants, at its sole cost and expense, to keep the
Leased Premises and all fixtures located therein in the same condition
and repair they are in as of the date hereof,, ordinary wear and tear
excepted, and shall promptly repair and maintain the Leased Premises at
its sole cost and expense; provided, however, with the exception of
ordinary day-to-day maintenance, in no event shall Tenant be
responsible for the cost of roof repairs (or replacement) or repair or
replacement of structural components of the Leased Premises or any
building system, or any other item which would constitute a capital
expenditure or capitalized expense under generally accepted accounting
principles.
(b) Landlord covenants, at its sole cost and expense, to keep and
maintain (and replace, if necessary), the roof and any of the
structural components of the Leased Premises in the same condition and
repair they are in as of the date hereof, ordinary wear and tear
excepted; provided, however, ordinary day-to-day maintenance of such
items shall be the responsibility of Tenant hereunder. Subject to
Tenant's obligation to perform ordinary day-to-day maintenance as
aforesaid, Landlord further covenants, at its sole cost and expense, to
perform any and all extraordinary repairs within the Leased Premises,
replace any building systems and/or make any capital improvements, all
to the extent necessary to keep the Leased Premises and all fixtures
located thereon in the same condition and repair they are in as of the
date hereof, ordinary wear and tear excepted. If Landlord fails to
perform its maintenance obligations hereunder, Tenant shall have the
right, after providing Landlord with thirty (30) days' written notice
and opportunity to perform the necessary repairs, to perform such
repairs (and replacements, if necessary) on Landlord's behalf and at
Tenant's option (a) set-off the costs thereof against all Rent then
next coming due; and/or (b) submit an invoice to Landlord for all such
costs, which invoice shall be paid by Landlord within thirty (30) days.
(c) All work performed and all repairs made hereunder by Landlord
or Tenant as appropriate, shall be done in a good and workmanlike
manner which shall be consistent with industry standards, using only
materials and labor of reasonable quality and in compliance with all
applicable buildings and zoning laws and with all other laws,
ordinances, orders, rules, regulations, and requirements of all
federal, state, and municipal governments and the appropriate
departments, commissions, boards, and officers thereof.
13. Intentionally Deleted.
14. CASUALTY.
(a) if the Leased Premises shall be damaged by fire or other
casualty and if such damage does not render all or a substantial
portion of the Leased Premises untenantable then, subject to this
Section 14, Landlord shall proceed with all appropriate diligence to
repair and restore the Leased Premises so as to render the Leased
Premises tenantable and return it to the condition it was in prior to
such casualty. If any such damage renders all or a portion of the
Leased Premises untenantable, Landlord shall, within thirty (30) days
after the occurrence of such damage, estimate the length of time that
will be required to substantially complete the repair and restoration
of the Leased Premises, necessitated by such damage and shall by notice
advise Tenant of such estimate. If it is so estimated that the amount
of time required to
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<PAGE> 4
substantially complete such repair and restoration will extend beyond the
expiration date of this Lease or exceed ninety (90) days from the date such
damage occurred, then either Landlord or Tenant shall have the right to
terminate this Lease as of the date of such damage by giving notice to the other
at any time within twenty (20) days after Landlord gives Tenant the notice
containing said estimate (it being understood that Landlord may, if it elects to
do so, also give such notice of termination together with the notice containing
said estimate). Unless this Lease is terminated as provided in the preceding
sentence, Landlord shall, subject to this Section 14, proceed with all diligence
as aforesaid. If the amount of time actually required by Landlord to complete
the necessary repair or restoration exceeds one hundred eighty (180) days,
Tenant may, at any time after the expiration of such time period, elect to
terminate this Lease upon written notice to Landlord.
If any such fire or casualty damage renders any portion of the
Leased Premises untenantable and if this Lease shall not be terminated (or until
such time as this Lease is terminated) pursuant to the foregoing provisions of
this Section 14 by reason of such damage, and provided that such fire or
casualty was not caused as a result of the negligence of Tenant, its employees
and/or agents, then a percentage portion of Rent corresponding to the percentage
portion of the Leased Premises that was rendered untenantable shall abate during
the period beginning with the date of such damage and ending with the date when
Landlord substantially completes its repair or restoration required hereunder.
If this Lease is terminated pursuant to this Section 14, Rent shall be
apportioned on a per diem basis and be paid to the date of damage.
b. The insurance proceeds shall be payable to Landlord. The
proceeds received by Landlord on account of such damage or destruction, less the
cost, if any, of such recovery, shall be applied by Landlord to the payment of
the cost, of such restoration, repair, replacement, rebuilding or alteration,
(hereinafter referred to as the "Work"), including expenditures made for
temporary repairs or for the protection of property pending the completion of
permanent restoration, repair, replacement, rebuilding or alteration to the
Leased Premises. If the insurance proceeds in the hands of Landlord exceeds the
amount required to pay the cost of the Work, Landlord shall be entitled to
retain such excess amount. If the insurance proceeds are insufficient, and
Tenant shall have fulfilled its obligations under this Lease, Landlord shall
still be fully responsible for satisfying its obligations hereunder.
c. Notwithstanding any provisions to the contrary in this
paragraph, Landlord shall not be required to rebuild the Leased Premises if
Tenant is in default in the performance of any term in this Lease.
15. INSURANCE.
a. Throughout the Lease Term, Tenant shall maintain, at its
expense, the following:
i. comprehensive general public liability insurance, which
shall include coverage for personal liability, contractual liability,
Tenant's legal liability, bodily injury (including death) and property
damage all on an occurrence basis with respect to the business carried
on or from the Leased Premises and Tenant's use and occupancy of the
Leased Premises and
ii fire, all-hazard risk and extended coverage insurance
on Landlord's interest in the property and Building constituting the
Leased Premises and on Tenant's property in the Leased Premises.
b. All liability insurance shall be in such amounts and against
such hazards and contingencies as may be customarily obtained by
prudent property owners of buildings such as the Leased Premises. The
casualty insurance shall be in an amount equal to the replacement value
of such property. All such insurance policies shall name Landlord and
Landlord's designee as an additional insureds and shall provide that
they shall not be canceled without thirty (30) days prior written
notice to Landlord and Landlord's designee. Tenant shall deliver, upon
the reasonable request of Landlord, certificates of the
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<PAGE> 5
required insurance. All such insurance policies shall be issued by an
insurance company authorized to do business in the State of North
Carolina and approved by Landlord.
C. Tenant shall have the option to self-insure a deductible of
up to $200,000 on each of the hazard insurance and the public liability
insurance policies.
16. INDEMNIFICATION. Subject to the provisions of this Lease,
Landlord and Tenant each (in either case the "Indemnitor") agree to hold
harmless and indemnify the other, and the other's respective beneficiaries,
mortgagees of the Leased Premises, or any portion thereof, agents, partners,
officers, servants and employees (collectively, the "Indemnitees") against
claims and liabilities, including, without limitation, reasonable attorneys'
fees, for death or injury to third parties including, without limitation, claims
and liabilities attributable to injury or death to any of Tenant's employees and
damage to or theft or misappropriation or loss of property that may arise from
or be caused directly or indirectly by any breach by the Indemnitor of any
provision of this Lease or any negligent act or omission or any willful
misconduct of the Indemnitor or any of the Indemnitor's respective agents,
beneficiaries, partners or employees. Such third parties shall not be deemed
third party beneficiaries of this Lease. If any action or proceedings is brought
against any of the Indemnitees by reason of any such act of Indemnitor or any of
the Indemnitor's respective beneficiaries, or their respective agents, partners
or employees, then the Indemnitor will, at the Indemnitor's expense, upon the
written request of the Indemnitees, defend such action or proceeding by counsel
reasonably satisfactory to the Indemnitees
17. DEFAULT.
a. If Tenant should fail to perform or observe any term of this
Lease, including, but not limited to, the following:
i. failure in the payment of any Rent, additional rental
or other sum due hereunder within ten (10) days after the day
due;
ii. failure to perform any covenant or condition of this
Lease, other than those specified in another subsection of this
Section 17, and the failure to cure the same within this (30)
days of receipt of notice thereof (provided, however, that if
such failure does not involve the payment of money and is not by
its nature susceptible to a cure within thirty (30) days, Tenant
shall have such additional time (up to ninety (90) additional
days) as may be reasonably necessary so long as Tenant at all
times diligently and continuously prosecutes the cure to
completion);
iii. Tenant's voluntary assignment for the benefit of
creditors, or
iv. Tenant files a petition for relief of any kind
under the provisions of Title 11 of the United States Code, as
amended (the "Bankruptcy Code") or an involuntary petition under
the Bankruptcy Code is filed against Tenant or a receiver or
trustee is appointed for Tenant's property, and such involuntary
petition is not dismissed within sixty (60) days.
b. then, in addition to any other rights and remedies under
this Lease, in law or equity, and with or without terminating this
Lease, Landlord, its agents and representatives may in accordance with
applicable legal process, re-enter and repossess the Leased Premises
without prior notice, and exercise any of the following rights:
i. correct or repair any condition which constitutes
such default and recover from Tenant any amount expended by
Landlord to cure such default;
ii. demand Tenant vacate the Leased Premises and remove
all of Tenant's property thereon;
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<PAGE> 6
iii. accelerate the Rent, with such amount calculated
on a present value basis at 8% per annum, or
iv. relet the Leased Premises on Tenant's behalf, and
recover from Tenant any deficiency between the amount received
as rent, less all costs of reletting, and the amounts due under
this Lease.
c. If any amount owing to Landlord under this Lease is
collected through an attorney, Tenant agrees to pay an additional amount equal
to the amount of the reasonable attorney's fees (determined without reference to
any statutory presumption).
d. Landlord shall take reasonable efforts to relet the Leased
Premises to mitigate its damages upon a termination of the Lease. Landlord shall
not be entitled to consequential, punitive or incidental damages.
18. SURRENDER.
a. Upon expiration or earlier termination of this Lease, Tenant
shall perform each of the following:
i. quit and surrender the Leased Premises to Landlord in
the same order, condition and repair as of the Commencement Date,
ordinary wear and tear excepted; and
ii. remove from the Leased Premises all of Tenant's
property and repair any damage caused by such removal.
b. If Tenant fails to vacate the Leased Premises, upon the
expiration or earlier termination of this Lease, Landlord may remove
and/or store Tenant's property at Tenant's expense without liability to
Tenant for any loss or damage thereto. If Tenant does not claim and
take delivery of any of Tenant's property that remains on the Leased
Premises or in storage for more than twenty (20) days after the
termination or expiration of this Lease, as well as pay Landlord all
amounts due under this Lease, including costs of removal and storage,
Landlord may sell all or any portion of such property at a public or
private sale after having given Tenant ten (10) days prior written
notice.
c. Landlord may apply the proceeds of such sale to the costs of
removal, storage and sale of the property, and then to payment of all
amounts due Landlord under this Lease. Any amount remaining shall be
paid to Tenant upon Tenant's written demand, without interest.
d. Notwithstanding the foregoing, Tenant shall retain all
right, title and interest in the trade fixtures, furniture, equipment
and non-fixture personalty owned by Tenant, located on the Leased
Premises and used in the operation of its business.
19. HOLDING OVER. If Tenant holds over and remains in possession of
the Leased Premises beyond the expiration of the Lease Term or other termination
of this Lease, such holding over shall not be deemed or construed to be a
renewal of this Lease but shall constitute the creation of a month-to-month
tenancy or a tenancy at sufferance which may be terminated by Landlord upon
thirty (30) days prior written notice to Tenant. By such holding over, Tenant
shall be deemed to have agreed to be bound by the terms and conditions of this
Lease, except during such month-to-month tenancy, Tenant shall pay a monthly
rental rate equal to one hundred fifty percent (150%) of the Rent herein
provided for the preceding month.
20. SUBORDINATION.
a. Subject to the provisions of Section 20.b. below, Tenant's
interest under this Lease and in the Leased Premises is and shall
remain subordinate to the lien of every present and future mortgage,
deed
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<PAGE> 7
of trust or other security instrument applicable to the Leased Premises
and any extensions or renewals thereof, and to all advances made
thereunder. This provision is self-operative. Upon Landlord's request,
Tenant agrees to execute any additional documents as may be required by
any third party to evidence this subordination. If a new owner acquires
the Leased Premises, Tenant agrees to attorn to such new owner as
Tenant's landlord and to continue to perform all of Tenant's
obligations under this Lease for such new owner.
b. As a precondition to Section 20.a., Landlord shall obtain a
written agreement from any mortgagee or holder of any deed of trust as
to the Premises, upon terms and conditions reasonably acceptable to
Tenant which provides, substantially, that as long as Tenant performs
its obligations under this Lease and no default exists hereunder, the
Tenant's possession of the Premises shall not be disturbed as a result
of any foreclosure, deed in lieu of foreclosure or sale under the
encumbrance.
21. EMINENT DOMAIN.
(a) If the Leased Promises should be the subject of a Total
Taking, or a Partial Taking, then this Lease shall terminate as of the
date when physical possession of the Leased Premises is taken by the
condemning authority, As used herein, a "Total Taking" shall mean a
total taking (or condemnation of title) of (a) the fee interest in all
or substantially all of the Leased Premises or (b) such title to or
casement in, over, under or such rights to occupy and use any parts of
the Leased Premises to the exclusion of Landlord and Tenant as shall
have the effect, in the reasonable judgment of Landlord and Tenant, of
rendering the portion of the Leased Premises remaining unsuitable for
Tenant's continued use. Less than a Total Taking but a taking which in
the reasonable judgment of Tenant renders the Leased Premises unfit or
undesirable for Tenant's use is referred to herein as a "Partial
Taking".
(b) All proceeds payable in respect of a taking shall be the
property of Landlord. Tenant hereby assigns to Landlord all rights of
Tenant in or to such proceeds, provided that Tenant shall be entitled
to separately petition the condemning authority for a separate award
for its moving expenses and trade fixtures only.
(c) Upon a Partial Taking, in which the Lease is not terminated,
then the percentage portion of Rent corresponding to the percentage
portion of the buildings comprising a portion of the Leased Premises
that was taken shall abate commencing with the date of such taking and
continuing through the expiration of the term.
22. SALE BY LANDLORD. In the event Landlord sells or transfers the
Leased Premises during the Lease Term, the purchaser shall purchase the Leased
Premises subject to this Lease and Tenant hereby acknowledges that after such
sale, Tenant shall look solely to such third party purchaser as Landlord under
this Lease. Landlord shall be released from all future obligations hereunder,
and Tenant's remedies for any future breach of this Lease shall be solely
against the new owner.
23. ENVIRONMENTAL MATTERS.
a. following definitions shall apply herein:
"Environmental Law" means any federal, state or local
law, ordinance, rule, regulation or common law related to or
addressing protection of human health and safety or the
environment.
"Hazardous Material" means any waste, pollutant,
material, hazardous or toxic substance or waste, petroleum,
petroleum-based substance or waste, special waste, or any
constituent of any such substance or waste, the exposure to,
presence, use, generation, treatment, storage, release,
disposal, handling, cleanup or remediation of which is
regulated by or under any Environmental Law.
-7-
<PAGE> 8
"Liabilities" means any and all liabilities, expenses,
demands, damages, punitive or exemplary damages,
consequential damages, costs, cleanup costs, response costs,
losses, causes of action, claims for relief, attorneys' and
other legal fees, consultants' fees, other professional
fees, penalties, fines, assessments and charges.
b. Throughout the Lease Term, Tenant shall not cause, permit or
allow any Hazardous Materials to be handled, placed, stored, dumped,
dispensed, released, discharged, deposited, manufactured, generated,
treated, processed, used, transported or located in, on, under or about
the Leased Premises without Landlord's prior written consent; provided,
however, that Tenant may handle, store or use without Landlord's prior
written consent Hazardous Materials which are directly related to
Tenant's ordinary business operations on the Leased Premises under the
terms of the Lease, if Tenant engages in such permitted activity in a
safe and lawful manner and in full compliance with any and all
applicable Environmental Laws, which compliance shall be at Tenant's
sole expense. Upon the expiration or earlier termination of this Lease,
Tenant, at Tenant's expense, shall remove all Hazardous Materials from
the Leased Premises,
c. Tenant shall give Landlord immediate written notice of any
spill, discharge, disposal, release or threatened release of any
Hazardous Materials in, on, under or about the leased premises during
the Lease term. Tenant shall promptly provide to Landlord a description
of actions proposed to be taken by Tenant to contain, remove, clean up
and remediate such Hazardous Materials and any resultant damage to or
impact on property, persons and/or the environment (including, without
limitation soil, surface water, groundwater and other media) on, under
or about the Leased Premises or any adjoining premises. Tenant shall
not take any such actions without Landlord's prior written consent;
provided, however, that nothing herein shall prevent Tenant from
complying with applicable Environmental Laws regarding the immediate
response to or containment of releases of Hazardous Materials. Upon
Landlord's approval and at Tenant's expense, Tenant shall promptly take
all actions necessary to contain, remove, clean up and remediate such
Hazardous Materials and any resultant damage to or impact on property,
persons and/or the environment (including, without limitation, soil,
surface water, groundwater and other media) on, under or about the
Leased Premises or any surrounding premises, in complete compliance
with all applicable Environmental Laws.
d. Tenant shall indemnify, release and hold Landlord harmless
from and against any and all Liabilities suffered by, incurred by or
assessed against Landlord, its officers, directors, shareholders,
partners, employees, agents, representatives, heirs, successors and
assigns related to or as a result of (i) any actual or alleged
violation of any Environmental Law by Tenant related to Tenant's use,
occupation or operation of the Leased Premises, or (ii) the presence,
discharge, release, removal, remediation or cleanup of any Hazardous
Materials in, on, under or about the Leased Premises or any
improvements thereon arising out of Tenant's use, occupation or
operation of the Leased Premises after the date hereof, including
without limitation any migration of any such Hazardous Materials onto
any surrounding premises; provided, however, that this indemnification
obligation shall not apply to any Hazardous Materials released or
discharged in, on, under or about the Leased Premises before the date
hereof, including any Hazardous Materials that have been discharged
from underground storage tanks located on the Leased Premises prior to
the date hereof.
e. Landlord shall indemnify, release and hold Tenant harmless
from and against all Liabilities suffered by, incurred by or assessed
against Tenant, its officers, directors, shareholders, partners,
employees, agents, representatives, heirs, successors and assigns
related to or as a result of action taken by any governmental entity or
agency or by any third party claimant as a result of the presence,
disturbance, discharge, release, removal or cleanup of any Hazardous
Materials in, on, under or about the Leased Premises or any
improvements thereon prior to the date hereof, including any migration
of any such Hazardous Materials onto any surrounding premises, and
including any Hazardous Materials that have been discharged from
underground storage tanks located on the Leased Premises prior to the
date hereof.
-8-
<PAGE> 9
f. The obligations in this Section shall survive the
expiration or earlier termination of this Lease.
24. QUIET ENJOYMENT. Landlord covenants and agrees that Tenant, upon
paying all charges herein provided for and observing and keeping the covenants,
agreements, and conditions of this Lease on its part to be kept, shall lawfully
and quietly hold, occupy, and enjoy said Leased Premises during the term of this
Lease without hindrance or molestation of Landlord or any person or persons
claiming under Landlord.
25. INTENTIONALLY DELETED.
26. LIENS. Tenant shall keep the Leased Premises and Tenant's
leasehold estate free from any liens arising out of any work performed,
material furnished or obligations incurred with respect to the Leased Premises.
In the event any such lien is filed against the Leased Premises, Tenant shall
cause such lien to be discharged by payment or bonding within thirty (30) days
of the filing of the lien.
27. ESTOPPEL. Tenant shall, from time to time, upon ten (10) days
prior notice, deliver to Landlord or its designee, a written statement
certifying the following:
a. this Lease is unmodified and in full force and effect;
b. the amount of Rent then payable under this Lease and the
date to which Rent has been paid;
c. to the best of Tenant's knowledge, there are no defaults
under this Lease or a detailed description of such default; and
d. Tenant is in possession of the Leased Premises.
28. NOTICES. All notices required to be given by the terms of this
Lease shall be in writing, and deemed given when sent by: a) registered or
certified mail, postage prepaid, return receipt requested, b) prepaid telex or
telecopier or c) national overnight delivery service to the addresses and
numbers set forth below:
Tenant: 1300 Walnut St.
P.O. Box 6000
Coshocton, OH 43812-6000
Attn: Mr. William J. Reed
Fax: 614-623-3559
With a copy to: Gardner, Carton & Douglas
321 North Clark Street
Suite 3400
Chicago, IL 60610-4795
Attn: Robert J. Wilczek, Esq.
Fax: (312) 644-3381
-9-
<PAGE> 10
Landlord: Harold E. Plemmons
50 Sea Gate Drive
Suite 1203B
Naples, FL 33940
and
Michael G. Coniff
10 Sea Gate Drive
Unit 75
Naples, FL 33940
With copies to: Vannoy, Colvard, Triplett, McClean & Vannoy
922 C Street
P.O. Box 1388
North Wilkesboro, NC 28659
Ann, Howard C. Colvard, Esq.
Fax: (910) 838-7250
and
Peter M. Schneiderman & Associates, P.C.
30300 Northwestern Highway
Suite 222
Farmington Hills, MI 48334
Attn: Peter M. Schneiderman
Telephone: (810) 855-6687
Fax: (810) 855-6687
Either party may designate a different address by written notice given to the
other
29. MISCELLANEOUS.
a. SUCCESSORS AND ASSIGNS. This Lease shall be binding upon
the parties hereto and their respective successors and assigns.
b. ENTIRE AGREEMENT. This Lease represents the entire agreement
and all prior and contemporaneous discussions and documents are
superseded by the Lease. Any statement or representation not contained
herein shall not be binding on either party All subsequent amendments
hereto must be in writing and signed by the parties hereto.
c. INVALIDITY. The invalidity or unenforceability of any term
herein shall not affect the validity or enforceability of any other
term.
d. GOVERNING LAW. This Lease shall be construed and enforced
in accordance with the laws of the State of North Carolina.
e. WAIVER. No right or remedy under this Lease shall be waived
unless the waiver is in writing and signed by the party claimed to
have made the waiver, and waiver will not be interpreted as a
continuing waiver.
-10-
<PAGE> 11
f. COUNTERPARTS. This Lease may be executed in two (2) or more
counterparts with all being deemed collectively as one lease.
g. BROKERS. Landlord and Tenant each represent and warrant to
the other that they have not dealt with any real estate agent or broker
in connection with this transaction, whose commission shall be payable
by Landlord. Landlord and Tenant each hereby indemnify and save the
other harmless from and against all loss, cost and expense incurred by
reason of a breach of such representation or warranty.
h. ATTORNEY FEES. If any action is taken to enforce any
provision of this Lease, the prevailing party shall be entitled to
recover from the other party its reasonable attorneys' fees and all
costs incurred in such enforcement.
i. OPTION TO PURCHASE.
Tenant shall have the option to purchase the Leased Premises (the
"Option") as hereinafter provided and subject to the conditions and
limitations hereinafter provided:
(a) Tenant shall have the option to purchase the Leased Premises
at an option price ("Option Price") equal to $1,500,000.00; provided,
however, on each successive anniversary of the Commencement Date, the
Option Price shall be adjusted by the amount of the percentage increase
in the CPI (as defined below) over a base year of 1997 (being the year
of the Commencement Date); provided, however, that in no event shall
the Option Price be less than $1,500,000.00.
(b) Tenant may only exercise the Option if the Lease is in full
force and effect, and no default, or circumstance which would
constitute a default but for the passage of time or giving of notice or
both on the part of Tenant hereunder exists, at the time Tenant
notifies Landlord of the exercise of the Option and at the time set for
closing of the Option.
(c) Tenant shall signify its intent to exercise the Option, if
at all, by delivering to Landlord, not later than one hundred eighty
(180) days prior to the expiration of the Term (or Renewal Term, if
applicable), its irrevocable written notice of its exercise of the
Option (the "Notice"). Delivery of this notice shall create a binding
agreement on the part of Tenant and Landlord to sell/buy the Leased
Premises as set forth in this Section 29i.
(d) Tenant shall within thirty (30) days after receipt of the
Notice, furnish to Landlord a copy of Tenant's commitment for an
owner's policy of title insurance (the "Commitment") issued by Chicago
Title Insurance Company (the "Title Insurer") showing title to the
Leased Premises in Landlord, which may be subject only to the
exceptions set forth on Exhibit B attached hereto (the "Permitted
Exceptions"). Tenant shall pay all costs of issuance of the Commitment
and any policy issued in connection therewith. In addition, Tenant may,
at its sole cost and expense, obtain an update of the survey previously
prepared for the Property prior to the closing under the Asset Purchase
Agreement (the "Survey"), showing no additional encroachments,
exceptions or survey defects of any kind which do not constitute
Permitted Exceptions. Tenant shall be allowed ten (10) days after
receipt of the Commitment, all underlying title documents and the
Survey for examination and the making of objections to any title or
survey matter that is not a Permitted Exception (the "Unpermitted
Exceptions"). Said objections shall be made in writing or deemed to be
waived. If any objections are so made, Landlord shall be allowed thirty
(30) days to cause the Title Insurer to remove or endorse over any
Unpermitted Exception.
If any Unpermitted Exceptions are not removed or endorsed over
within thirty (30) days from the date of written objection thereto, as
above provided, any agreement of purchase resulting from the exercise
of the Option shall, at the written election of Tenant, be null and
void. In such event neither party shall be liable for damages to the
other party, and this Lease shall continue in full force and effect.
Tenant shall exercise its election by declaring any such resulting
purchase agreement null and void by delivering to Landlord a written
notice to such effect within three (3) days after the expiration of the
aforesaid thirty (30)
-11-
<PAGE> 12
day period. Failure by Tenant to deliver to Landlord, in writing, the
aforesaid election to declare the resulting purchase agreement null and
void within the time period prescribed herein shall constitute an
election by Tenant to take title to the Leased Premises as it then is
(with the right to deduct from the Option Price liens and encumbrances
of a definite and ascertainable amount if created by Landlord or any
party claiming by, through or under Landlord).
(e) Subject to the performance by Tenant, Landlord agrees to
execute and deliver a special warranty deed, conveying title to the
Leased Premises to Tenant or as Tenant may designate, subject only to
the Permitted Exceptions.
(f) Closing of the Option shall occur within forty-five (45)
days from receipt by Landlord of the Notice or such other date as may
be mutually agreed upon by Landlord and Tenant, or as such date may be
extended by reason of delays occasioned by operation of (d) hereof. All
rents and other charges payable by Tenant in respect of the Leased
Premises and all other obligations of Tenant hereunder accruing prior
to closing of the Option shall be paid, performed and complied with
until such time as closing of the Option shall occur and the full
Option Price has been paid to Landlord. Notwithstanding any provision
to the contrary herein contained, if the date of closing of the Option
shall extend beyond the term of the Lease, the Lease and all rights and
obligations as therein contained shall be extended to the date of
closing of the Option on the same terms as set forth in the Lease.
Closing shall occur through an escrow with the escrow department
of the Title Insurer ("Escrowee"), in accordance with the general
provisions of the Escrowee's usual form of deed and money escrow
agreement with special provisions inserted in the escrow agreement as
may be required to conform to this Section 29i and subject to the terms
of a separate money lender's escrow, if any, and with provision for a
"New York" style closing. Upon the creation of such escrow payment of
the Option Price and delivery of the warranty deed shall be made
through the escrow. This Section 29i shall not be merged into nor in
any manner superseded by the escrow agreement.
The Option Price shall be paid to Landlord by Tenant by wire
transfer of "good funds" on the date of closing of the Option.
The parties agree that the adjustments for rent and other matters
shall be made as of the date of closing of the Option. The parties
further agree that all title and survey charges (other than for the
cost of endorsements necessary to insure over any Unpermitted
Exceptions) shall be paid by Tenant and all charges for the state,
county and local transfer taxes and recording fees shall be paid by
Landlord. All escrow fees shall be divided equally between Landlord and
Tenant.
(g) Time shall be of the essence in the performance of the terms
and conditions of the Option.
(h) At closing of the Option, Tenant shall deliver to Landlord
and Landlord shall deliver to Tenant an agreement canceling and
terminating this Lease and releasing each party from its obligations to
the other party under this Lease accruing subsequent to Closing.
(i) For purposes of this Section 29i the "CPI" shall mean the
"Revised Consumer Price Index-All Cities (1984 = 100)" published by the
Bureau of Labor Statistics of the United States Department of Labor,
or, in case such index is no longer published, such other index as is
then customarily used for this purpose.
j. Time is of the Essence. Time is of the essence of this Lease
and all of its provisions.
k. Landlord's Authority. Landlord represents and warrants that
it has full and complete authority to enter into this Lease under all
of the terms, conditions and provisions set forth herein.
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<PAGE> 13
1. Tenant's Authority. Tenant represents and warrants that it
has full and complete authority to enter into this Lease under all of
the terms, conditions and provisions set forth herein.
m. Landlord's Title. Landlord represents and warrants that as
of the Commencement Date, it has marketable fee simple title to the
Leased Premises subject only to the Permitted Exceptions,
n. Memorandum of Lease. On the Commencement Date, Landlord and
Tenant shall enter into, and record, a "short form" or Memorandum of
Lease in recordable form attached hereto as Exhibit C and made a part
hereof, which shall set forth the parties, the legal description, the
Commencement Date and Expiration Date of the term of the Lease, the
renewal option, and the option to purchase.
IN WITNESS WHEREOF, Tenant and Landlord duly execute this Lease under
seal as of the day and year first above written.
<TABLE>
<S> <C>
LANDLORD:
Golden Realty Company, a general partnership (SEAL)
By: /s/ Michael G. Coniff (SEAL)
------------------------------------------
General Partner
By: /s/ Howard E. Plemmons (SEAL)
------------------------------------------
General Partner
Attest: TENANT:
By: Ansell Edmont Industrial, Inc., a Delaware corporation
--------------------------
Title: Secretary By: /s/ William J. Reed
---------- ------------------------------------------------
[CORPORATE SEAL] Title: President
---------
</TABLE>
-13-
<PAGE> 14
EXHIBIT A
TO
LEASE AGREEMENT
BEGINNING on a railroad spike (found) in the Northern Right of Way of Hwy 268
(Right of Way described in Deed Book 659 at Page 510), said iron being the West
lien of Deed Book 493 at Page 551 of the Wilkes County Registry and also being
located North 62 degrees 30' 03" West 1,615.58 feet from Grid Monument "Holly";
THENCE with same Right of Way, South 72 degrees 17' 54" West 46.36 feet to a
N.C. D.O.T. Right of Way disc; THENCE South 23 degrees 27' 14" East 16.13 feet
to a point in a drop inlet; THENCE South 35 degrees 56' 41" West 57.01 feet to a
N.C. D.O.T. Right of Way disc; THENCE South 88 degrees 04' 11" West 134.93 feet
to a N.C. D.O.T. Right of way disc; THENCE North 41 degrees 30' 47" West 15.69
feet to a N.C. D.O.T. Right of Way disc; THENCE South 88 degrees 04' 11" West
41.07 feet to an iron; THENCE leaving said Right of Way, North 03 degrees 05'
48" West 158.18 feet to a spike (found); THENCE North 77 degrees 15' 54" West
7.65 feet to a spike (found); THENCE North 03 degrees 04' 19" West 231.25 feet
to a spike (found); THENCE North 07 degrees 43' 48" East 65.95 feet to a spike
(found), said being the Southeast corner of Deed Book 647 at Page 101 of the
Wilkes County Registry; THENCE continuing North 07 degrees 43' 48" East 82.00
feet to a spike (found); THENCE North 03 degrees 21' 19" West 267.03 feet to an
iron (found); THENCE with the Town of Wilkesboro's line, North 87 degrees 31'08"
East 179.34 feet to a P.K. Nail; THENCE with same, North 87 degrees 3 1' 08"
East 44.99 feet to an iron; THENCE South 03 degrees 00' 56" East 275.15 feet to
an iron; THENCE South 03 degrees 00' 56" East 155.81 feet to an iron (found),
said iron being located North 86 degrees 52' 05" East 44.99 feet from a spike
(found), the Southwest corner of Deed Book 601 at page 145; THENCE South 03
degrees 00' 56" East 251.92 feet to a REBAR (found); THENCE South 15 degrees 06'
21 " East 33.23 feet to a REBAR (found); THENCE South 23 degrees 10' 05" East
32.86 feet to the BEGINNING.
CONTAINING 4.40 acres more or less by Coordinate Computation. For further
reference see Deed Book 503 at Page 127, Deed Book 640 at Page 708 and Deed Book
601 at Page 145 of the Wilkes County Registry.
ALSO included in the above is a 25 foot Easement along the Western Boundary of
the above described 4.40 acre tract, said Easement extends to the center of the
river and serving Ellen Whitaker's 0.42 acre lot.
<PAGE> 15
EXHIBIT B
1. Ordinances, building codes, subdivision ordinances, subdivision
regulations, zoning ordinances, restrictions, prohibitions and other
requirements imposed by a governmental authority.
2. Right of way Agreement in favor of James Walter Byrd, Jr., et al.
recorded in Book 691, page 739.
3. Reservation of easement contained in deed recorded in Book 671, page 577.
4. Right of way agreements to Travelers Inns of North Wilkesboro, Inc.
recorded in Book 601, pages 146 and 147.
5. Right of way to Duke Power Company recorded in Book 516, page 330.
6. Water easements to Town of Wilkesboro recorded in Book 656, page 531 and
Book 456, page 183.
7. Floating easement to Town of Wilkesboro recorded in Book 656, page 530.
8. Right of way to Department of Transportation recorded in Book 577, page
20.
9. Right of way to State Highway Commission recorded in Book 435, page 24.
10. Sewer line easement to Town of Wilkesboro recorded in Book 634, page 581.
11. Easement to Town of Wilkesboro for water line and pumping station
recorded in Book 407, page 53.
12. Right of North collegiate Drive recorded in Book 694, page 825.
13 All matters shown on the survey by Jerry Lackey, R.S., dated June 13,
1991 and revised March 20, 1997.
14. Rights of other in and to appurtenant easement for driveway as contained
in instrument recorded in Book 691, page 790.
15. Taxes, dues and assessments for the year the purchase option is
exercised, not yet due and payable.
-15-
<PAGE> 16
EXHIBIT C
STATE OF NORTH CAROLINA
MEMORANDUM OF LEASE
COUNTY OF WILKES
This MEMORANDUM OF LEASE is made effective as of April __, 1997, pursuant
to the terms of the Lease Agreement dated of even date herewith (the "Lease")
by and between Golden Realty Company, a general partnership with an address of
1000 Springs St., Wilkesboro, NC 28697 ("Landlord"), and Ansell Edmont
Industrial Inc., a Delaware corporations, with an address of 1300 Walnut St.,
P.O. Box 6000, Coshocton, OH 43812-6000 ("Tenant").
Landlord is the owner of certain real property located in Wilkes County,
North Carolina, which is more particularly described on Exhibit A, attached
hereto and incorporated herein by reference (the "Land"), which Land contains a
building and other improvements (the Land, building and other improvements are
collectively called the "Premises").
Landlord has leased to Tenant and Tenant has leased from Landlord the
Premises for a term of three (3) years beginning on April __, 1997, and
expiring on April __, 2000.
The Lease contains an option for renewal for an additional term of three
(3) years as more particularly described in the Lease.
The Lease contains an option to purchase the Premises for terms as more
particularly described in the Lease.
All of the provisions set forth in the Lease are hereby incorporated into
and made a part of this Memorandum. To the extent that any provision hereof
conflicts with any provision of the Lease, the Lease shall control. Copies of
the Lease are on file in the offices of Landlord and Tenant at the addresses
set forth above.
[SIGNATURES ON THE FOLLOWING PAGE]
DRAWN BY AND MAIL TO:
Parker Poe Adams & Bernstein L.L.P. (GEG)
2500 Charlotte Plaza
Charlotte, North Carolina 28244
<PAGE> 17
IN WITNESS WHEREOF, Landlord and Tenant have signed and sealed this
Memorandum of Lease effective as of the date first above written.
LANDLORD:
Golden Realty Company, a general partnership
(SEAL)
By: (SEAL)
---------------------------------
General Partner
By: (SEAL)
---------------------------------
General Partner
TENANT:
Ansell Edmont Industrial, Inc., a Delaware
corporation
By:
---------------------------------
_____ President
ATTEST:
- -------------------------
________ Secretary
[CORPORATE SEAL]
2
<PAGE> 18
STATE OF _____________
COUNTY OF _____________
I, __________________________, a Notary Public of the County and State
aforesaid, certify that ________________________, a general partner of GOLDEN
REALTY COMPANY, a general partnership, personally appeared before me this day
and acknowledged the execution of the foregoing instrument as general partner
on behalf of Golden Realty Company.
Witness my hand and official stamp or seal this ___ day of April, 1997.
My Commission Expires: --------------------------------
Notary Public
- -----------------------------
[NOTARY SEAL]
STATE OF _____________
COUNTY OF _____________
I, __________________________, a Notary Public of the County and State
aforesaid, certify that ________________________, a general partner of GOLDEN
REALTY COMPANY, a general partnership, personally appeared before me this day
and acknowledged the execution of the foregoing instrument as general partner
on behalf of Golden Realty Company.
Witness my hand and official stamp or seal this ___ day of April, 1997.
My Commission Expires: --------------------------------
Notary Public
- -----------------------------
[NOTARY SEAL]
STATE OF _____________
COUNTY OF _____________
I, __________________________, a Notary Public for the above State and
County, hereby certify that ________________________ personally came before me
this day and acknowledged that she/he is __________________ Secretary of Ansell
Edmont Industrial Inc., a Delaware corporation, and that by authority duly given
and as the acts of said corporation, the foregoing instrument was signed in its
name by its President, sealed with its corporate seal and attested by him/her as
its ________________ Secretary.
Witness my hand and official seal, this the ___ day of April, 1997.
My Commission Expires: --------------------------------
Notary Public
- -----------------------------
[NOTARY SEAL]
3
<PAGE> 19
EXHIBIT A
BEGINNING on a railroad spike (found) in the Northern Right of Way of Hwy 253
(Right of Way described in Deed Book 659 at Page 510), said iron being the West
lien of Deed Book 493 at Page 551 of the Wilkes County Registry and also being
located North 62 degrees 30' 03" West 1,615.58 feet from Grid Monument
"Holly"; THENCE with same Right of Way, South 72 degrees 17' 54" West 46.36
feet to a N.C.D.O.T. Right of Way disc; THENCE South 23 degrees 27' 14" East
16.13 feet to a point in a drop inlet; THENCE South 35 degrees 56' 41" West
57.01 feet to a N.C.D.O.T. Right of Way disc; THENCE South 88 degrees 04' 11"
West 134.93 feet to a N.C.D.O.T. Right of way disc; THENCE North 41 degrees 50'
47" West 15.69 feet to a N.C.D.O.T. Right of Way disc; THENCE South 88 degrees
04' 11" West 41.07 feet to an iron; THENCE leaving said Right of Way, North 03
degrees 05' 48" West 158.18 feet to a spike (found); THENCE North 77 degrees
15' 54" West 7.65 feet to a spike (found); THENCE North 03 degrees 04' 19" West
231.25 feet to a spike (found); THENCE North 07 degrees 43' 48" East 65.95 feet
to a spike (found), said being the Southeast corner of Deed Book 647 at Page
101 of the Wilkes County Registry; THENCE continuing North 07 degrees 43' 48"
East 82.00 feet to a spike (found); THENCE North 03 degrees 21' 19" West 267.03
feet to an iron (found); THENCE with the Town of Wilkesboro's line, North 87
degrees 31' 08" East 179.34 feet to a P.K. Nail; THENCE with same, North 87
degrees 31' 08" East 44.99 feet to an iron; THENCE South 03 degrees 00' 56"
East 275.15 feet to an iron; THENCE South 03 degrees 00' 56" East 155.81 feet
to an iron (found), said iron being located North 86 degrees 52' 06" East 44.99
feet from a spike (found), the Southwest corner of Deed Book 601 at Page 145;
THENCE South 03 degrees 00' 56" East 251.92 feet to a REBAR (found); THENCE
South 15 degrees 06' 21" East 33.23 feet to a REBAR (found); THENCE South 23
degrees 10' 05" East 32.86 feet to the BEGINNING.
CONTAINING 4.40 acres more or less by Coordinate Computation. For further
reference see Deed Book 503 at Page 127, Deed Book 640 at Page 708 and Deed
Book 601 at Page 145 of the Wilkes County Registry.
TOGETHER WITH a non-exclusive 20 foot easement for ingress, egress and regress
created by the right-of-way agreement recorded in Deed Book 691, Page 790.
ALSO included in the above is a 25 foot Easement along the Western Boundary of
the above described 4.40 acre tract, said Easement extends to the center of the
river and serving Ellen Whitaker's 0.42 acre lot.
4
<PAGE> 1
EXHIBIT 10.8.3
ASSIGNMENT OF LEASE
This Assignment of Lease ("Assignment"), made and entered into as of the
24th day of April, 1997, by and among Tom Thumb Glove Co., Inc. ("Tenant"),
Ansell Edmont Industrial, Inc. ("Assignee") and River Road Properties, Inc.
("Landlord"):
W I T N E S S E T H:
WHEREAS, Landlord and Tenant have entered into that certain Lease Agreement
dated March 1, 1995 (the "Lease").
WHEREAS, the Lease demises that property specifically described on
Exhibit A attached hereto (the "Premises"), all as more particularly described
in the Lease, a copy of which, along with all subsequent amendments, previously
have been delivered to Assignee which acknowledges receipt by execution of this
Agreement.
WHEREAS, (a) Tenant desires to assign its interest in the Lease to
Assignee, (b) Assignee desires to accept such assignment and assume all
obligations as tenant under the Lease, (c) Landlord is willing to consent to
said Assignment on the terms and conditions hereinafter set forth, effective
12:01 a.m. on April 24, 1997 ("Effective Time").
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. ASSIGNMENT BY TENANT. Tenant hereby transfers, assigns and sets over
to Assignee all of Tenant's right, title and interest in and to the Lease as of
the Effective Time.
2. ACCEPTANCE AND ASSUMPTION BY ASSIGNEE. Assignee (and if Assignee
consists of more than one person or entity, each of them jointly and severally)
hereby accepts the foregoing assignment of Tenant's right, title and interest
in and to the Lease and assumes and agrees to make all future payments as they
come due under the Lease and to perform and keep all covenants, agreements and
obligations contained in the Lease to be made, kept and performed as the tenant
thereunder. Assignee shall make no further assignment of the Lease or sublease
of the Premises demised thereby, or any part thereof, without in each case
first obtaining the written consent of Landlord.
3. CONSENT OF LANDLORD. Landlord hereby consents to the Assignment of the
Lease by Tenant to Assignee on the terms contained above.
<PAGE> 2
4. ESTOPPEL. Landlord represents and states that as of the Effective
Time, Tenant has paid all rent due to date, and that to the best of Landlord's
knowledge the Tenant is in compliance with the remaining provisions of the
Lease.
5. SEVERABILITY. The invalidity, illegality or unenforceability of any
provisions hereof, shall not in any way affect, impair, invalidate or render
unenforceable this Assignment or any provision hereof.
6. FULL FORCE AND EFFECT. Except to the extent modified hereby, all of
the terms of the Lease shall remain in full force and effect.
IN WITNESS WHEREOF, Landlord, Tenant and Assignee have executed this
Assignment as of the date set forth above.
LANDLORD: TENANT:
River Road Properties, Inc. Tom Thumb Glove Co., Inc.
BY: Earnest R. Ryder BY: /s/ Howard E. Plemmons
----------------------- -----------------------
ITS: President ITS: President
ASSIGNEE:
Ansell Edmont Industrial, Inc.
BY: William J. Reed
-----------------------------
ITS: President
-2-
<PAGE> 3
EXHIBIT A
LEGAL DESCRIPTION
BEING all of that real property described in that certain deed recorded in
Book 734, Page 894 in the office of the Register of Deeds of Wilkes County,
North Carolina, which said deed is incorporated fully herein for a more certain
and adequate description.
Excepted from the real property herein described are those three areas,
marked A, B and C on Exhibit B, attached hereto and incorporated fully herein
by reference, which have been previously leased to Thom McAn Manufacturing,
Inc. or Melville Corporation.
-3-
<PAGE> 4
EXHIBIT B
(FLOOR PLAN APPEARS HERE)
<PAGE> 5
TOM THUMB GLOVE CO., INC.
P.O. DRAWER 640
WILKESBORO, NORTH CAROLINA 28697
April 4, 1997
River Road Properties Inc.
c/o E. Ray Ryder
206 Ivy Lane
Wilkesboro, NC 28697
Re: REQUEST TO ASSIGN LEASE AGREEMENT
Dear Ray:
Reference is made to the lease agreement between River Road
Properties, Inc. ("River Road") and Tom Thumb Glove Co., Inc. ("Tom Thumb"), a
copy of which is attached as Exhibit A hereto (the "Agreement").
Tom Thumb proposes to sell substantially all of its assets, including
an assignment of its rights and obligations under the Agreement, to Ansell
Edmont Industrial Inc. ("Ansell Edmont"). Ansell Edmont is a major manufacturer
of industrial gloves headquartered in Atlanta, Georgia, and is a wholly-owned
subsidiary of Pacific Dunlop Holdings, Inc.
Tom Thumb hereby requests River Road's written consent to such
assignment of the Agreement to Ansell Edmont. Please indicate River Road's
consent by signing the enclosed copy of this letter in the space provided below
and returning it to me as soon as possible.
Inasmuch as the proposed sale to Ansell Edmont is planned for April
11, 1997, your prompt attention to this letter is respectfully requested.
Please call me to discuss any questions you have about Tom Thumb's
request. Thank you for your attention to this matter.
Sincerely,
Tom Thumb Glove Co., Inc.
By: /s/ Howard E. Plemmons
------------------------------
The above requested consent to
assignment is hereby given:
RIVER ROAD PROPERTIES, INC.
By: /s/ Earnest R. Ryder
------------------------
Its: President
-----------------------
Date: April 7th, 1997
----------------------
Enclosures
<PAGE> 6
EXHIBIT A
NORTH CAROLINA
LEASE AGREEMENT
WILKES COUNTY
THIS LEASE AGREEMENT, made and entered into as of the 1st day of March,
1995, by and between RIVER ROAD PROPERTIES, INC., a corporation lawfully present
and doing business in North Carolina, with its principal office and place of
business in Wilkes County, North Carolina (hereinafter "LESSOR") and TOM
THUMB GLOVE CO., INC., a corporation lawfully present and doing business in
North Carolina, with its principal office and place of business in Wilkes
County, North Carolina (hereinafter "LESSEE").
W I T N E S S E T H:
---------------------
Subject to the terms and conditions hereinafter stated, Lessor does
hereby let and lease unto Lessee, and Lessee does hereby accept as tenant, that
certain tract or parcel of land, with improvements thereon, lying and being in
the Town of Wilkesboro, Wilkes County, North Carolina, more specifically
described, as follows:
BEING all of that real property described in that certain deed recorded
in Book 734, Page 894 in the office of the Register of Deeds of Wilkes
County, North Carolina. A copy of said deed is attached hereto, marked
as Exhibit A, and incorporated fully herein for a more certain and
adequate description.
Excepted from the real property herein described and not subject to the
terms of this Lease Agreement are those three areas, marked A, B, and C
on Exhibit B, attached hereto and incorporated fully herein by
reference, which have been previously leased to Thom McAn
Manufacturing, Inc. or Melville Corporation.
This Lease is made upon the following terms and conditions:
1. This Lease shall begin as of the effective date hereof and, subject
to Lessee's option to renew or unless sooner terminated as herein provided,
shall exist and continue until 11:59 p.m. on the 31st day of March, 2000. It is
expressly understood and agreed, moreover, that if Lessee should remain in
possession of the leased premises after the termination of said term or any
renewal or extension thereof, Lessee shall be considered a tenant from month to
month under all terms and provisions of this Agreement, which shall continue in
full force and effect during the entire period of such holding over.
<PAGE> 7
2. During the original term hereof and as base rental for the leased
premises, Lessee shall pay, or cause to be paid, without notice or demand
therefor, the sum of $15,000 per month. Such sums shall be due and payable, in
advance, on or before the 10th day of each applicable month hereunder. All such
rental shall be paid to Lessor at its address, hereinafter stated.
3. Should Lessee faithfully comply with all of the terms and provisions
of this Agreement on its part to be kept and performed and not otherwise be in
default hereunder, Lessee shall have the right to renew or extend the term of
this Agreement for an additional period of 60 consecutive calendar months,
commencing April 1, 2000, and expiring at 11:59 p.m. on March 31, 2005. As
base rental for the leased premises during any such renewal term, Lessee shall
pay, or cause to be paid, without notice or demand therefor, a monthly sum
obtained by multiplying $15,000 by a fraction, the numerator of which is the
Consumer Price Index for All Urban Consumers (1982-1984 equals 100) relating to
Charlotte, North Carolina as published by the Bureau of Labor Statistics, U.S.
Department of Labor (or if that Index is not available for Charlotte, North
Carolina, then an available index for the metropolitan area geographically
nearest to Charlotte, North Carolina, published by the Bureau or its successors,
or if none, by any other instrumentality of the United States or the State of
North Carolina), (referred to in this Lease as "CPI-U"), for the month of
April, 2000 and the denominator of which is the CPI-U for the month of March,
1995. Notwithstanding anything to the contrary in this Agreement, in no event
shall the monthly base rental be less than the sum of $15,000. Should Lessee
elect to renew and extend the term of this Agreement, Lessee must notify Lessor,
in writing, at least 90 days prior to the expiration of the original term
hereof. In the event Lessee exercises its option to renew, all terms and
conditions of this Agreement, excepting only increased rental, shall continue in
full force and effect.
4. As additional rental during the original term and any renewal or
extension hereof, Lessee shall pay the total costs of all applicable ad valorem
taxes, insurance premiums, and all required or necessary maintenance to the
leased premises or attributable thereto. Specifically, Lessee, at its sole cost
and expense, shall maintain the leased premises in its present condition and
state of repair, reasonable wear and tear and damage by fire or other casualty,
excepted. Lessee shall further pay all personal property taxes assessed against
its equipment and personal property located upon or within the leased premises.
5. Lessee, at its sole cost and expense, shall maintain that amount of
hazard insurance and public liability insurance upon the leased premises as
Lessor may reasonably require. All of such policies of insurance shall name
Lessor, together with Lessor's lender, if applicable, as the owner and
mortgagee, respectively, of the leased premises and as additional insureds, to
the fullest extent of their insurable interests. All hazard insurance shall be
at least in the amount of the full replacement value of the
<PAGE> 8
improvements located upon the leased premises. Lessor shall be entitled to
receive and retain, as its property, any and all proceeds paid under such
policies of insurance received on account of damage or destruction to the
improvements located upon the leased premises.
6. If, during the term of this Lease, the main structure forming a part
of the leased premises is damaged by fire or other casualty to an extent equal
to, or less than, 40% of the then tax appraised value of the said building, as
said value is then determined by the office of Wilkes County Tax Supervisor,
Lessor shall repair said structure with all reasonable efforts, and Lessee
shall be allowed a proportionate reduction of rent during the time the repairs
are being made, excepting (a) if Lessee is able to use and occupy the leased
premises without substantial inconvenience, or (b) if repairs are delayed
because of any act or failure on the part of Lessee. In either of such events,
Lessee shall not be entitled to any reduction of rental. For greater certainty,
the main structure located upon the leased premises is the brick and masonry
building formerly occupied by Thom McAn Manufacturing Company.
Damage or destruction of only the main structure of the leased premises
by fire in excess of the value stipulated above during the term of this Lease
Agreement shall result in this Lease Agreement being declared void, and all
rights, responsibilities, and duties of the parties, one to the other, for the
unexpired part of the term of this Lease Agreement shall terminate.
7. If, at any time during the term of this Lease, Lessee shall be
adjudged bankrupt or insolvent by any federal or state court of competent
jurisdiction, or should a receiver be appointed for Lessee or any of its
assets, Lessor may, at its option, immediately declare this Lease terminated and
canceled and take possession of the leased premises.
8. Lessee may not assign this Lease, or sublet any part or all of the
leased premises, without the express written consent of Lessor, which such
consent will not be unreasonably withheld. Any such permitted assignment or
subletting will not relieve Lessee of its duties and liabilities hereunder.
9. If the whole, or any part, of the main structure located upon the
leased premises shall be taken or condemned by competent authority in the
exercise of the power of eminent domain, or deeded under threat thereof, this
Lease Agreement shall automatically terminate on the date of such taking and any
prepaid rental hereunder shall be prorated to the date of such taking. Lessor
shall be entitled to receive the entire condemnation award for and on account of
the taking of any portion or all of such real property, in any and every such
event. Should any portion of the leased premises, other than the main structure
located thereon, be taken or condemned by competent authority in the exercise of
the power of eminent domain, or deeded under threat thereof, this Lease
<PAGE> 9
Agreement shall continue in full force and effect, without reduction in the
rental to be paid by Lessee hereunder.
10. Throughout the entire term hereof, Lessee will indemnify Lessor
and save it harmless from and against any and all claims, actions, demands,
liability, and expense in connection with Lessee's execution and entering into
this Lease Agreement, and loss of life, personal injury, or damage to property
occurring in or about, or arising out of, the leased premises, or occasioned
wholly or in part by any act or omission of Lessee, its agents, licensees,
assignees, sublessees, customers, or employees. In the event Lessor shall be
made a party to any litigation, commenced by or against Lessee, its agents,
licensees, assignees, sublessees, customers, or employees, then Lessee shall
protect and hold Lessor harmless and shall pay all costs, expenses, and
reasonable attorneys' fees incurred or paid by Lessor in connection with such
litigation.
11. Lessee covenants and agrees that it will maintain, or cause to be
maintained, the leased premises in a good condition and state of repair; that it
will not commit, or allow to be permitted, any unlawful act upon the leased
premises; and, that it will surrender the leased premises and improvements at
the end of the term hereof in at least as good a condition and state of repair,
as the same where in at the inception hereof, reasonable wear and tear and
damage by fire or other casualty excepted.
12. This Lease is executed and accepted specifically subject to all
lawful governmental zoning, environmental, and water shed ordinances and
regulations, now in force or hereafter adopted which in any manner affect the
use of the leased premises. This Agreement is further subject to those
reservations and applicable restrictions set forth in the deed, hereinabove
referred to.
13. During the term of this Lease, and any permitted extension or
renewal hereof, Lessor and its agent(s) or other representative(s) shall have
the right to enter upon the leased premises, or any part thereof, at any and
every hour and time for the purpose of examining the same.
14. Any notices hereunder shall be sent to the respective parties, and
rental hereunder shall be paid by Lessee to Lessor, at the addresses as follow:
LESSOR:
River Road Properties, Inc.
c/o E. Ray Ryder
206 Ivy Lane
Wilkesboro, NC 28697
<PAGE> 10
LESSEE:
Tom Thumb Glove Co., Inc.
P.O. Drawer 640
Wilkesboro, NC 28697
15. Lessee, upon the payment of rental and the performance of all of
the terms of this Lease, shall have the right to peaceful and quiet possession
of the leased premises, without disturbance or claim by Lessor, or from
any person, firm, or corporation claiming under or through Lessor.
16. Lessee specifically covenants and agrees that it has fully
inspected the leased premises and improvements, and that it accepts the same in
their present condition, "as is - where is."
17. Should Lessee default in its payment of rental or in the perf-
ormance of any of the terms of this Lease on its part to be kept and performed,
Lessor, at its option, shall have the right to immediate possession of the
leased premises, together with the right to enter upon the leased premises and
remove Lessee and its personal property therefrom, without resort to any other
person or Court for authority.
18. This Lease Agreement embodies the entire agreement between the
parties hereto pertaining to the leased premises, and supersedes and replaces
any prior agreements regarding the leased premises. The same shall not be
modified or amended, except in writing duly signed by the parties to be charged
thereby.
19. The laws of the State of North Carolina shall govern the validity,
interpretation, performance, and enforcement of this Lease Agreement.
20. All rights, options, and remedies of Lessor contained in this Lease
Agreement shall be construed and held to be cumulative, and no one of them shall
be exclusive of any other. Lessor shall have the right to pursue any one or all
of such remedies or any other remedy or relief that may be provided by law,
whether or not stated in this Lease Agreement. Any waiver by Lessor of Lessee's
breach or failure to perform any of the applicable terms of this Agreement shall
not be deemed to be a waiver of any such future breach or default by Lessee.
<PAGE> 11
IN WITNESS WHEREOF, the parties have properly executed this Agreement,
under seal and in duplicate originals, one of which being retained by each of
the parties, as of the effective date first hereinabove stated and on the date
set forth in the acknowledgments of the respective parties.
ATTEST: LESSOR:
/s/ Steven R. Ryder RIVER ROAD PROPERTIES, INC.
- ---------------------------
__________ Secretary By: /s/ Ray Ryder
----------------------------------
[CORPORATE SEAL] President
ATTEST: LESSEE:
/s/ Wanda H. Adams TOM THUMB GLOVE CO., INC.
- ---------------------------
__________ Secretary By: /s/ Howard E. Plemmons
----------------------------------
[CORPORATE SEAL] ________ President
NORTH CAROLINA
WILKES COUNTY
I, a Notary Public, certify that Steve Ryder, personally came before me
this day and acknowledged that (s)he is ___________ Secretary of RIVER ROAD
PROPERTIES, INC., a North Carolina corporation, and that by authority duly
given and as the act of the Corporation, the foregoing instrument was signed in
its name by its ___________ President, sealed with its corporate seal and
attested by Steve Ryder as its _________ Secretary.
Witness my hand and official stamp or seal, this 23rd day of June, 1995.
/s/ Paula E. Byrd
---------------------------------
NOTARY PUBLIC
My Commission Expires: 10-25-97
----------
<PAGE> 12
NORTH CAROLINA
WILKES COUNTY
I, a Notary Public, certify that Wanda Adams, personally came before me
this day and acknowledged that (s)he is _____________ Secretary of TOM THUMB
GLOVE CO., INC., a North Carolina corporation, and that by authority duly given
and as the act of the Corporation, the foregoing instrument was signed in its
name by its ___________ President, sealed with its corporate seal and attested
by Wanda Adams as its ___________ Secretary.
Witness my hand and official stamp or seal, this 23rd day of June, 1995.
/s/ Paula E. Byrd
------------------------------
NOTARY PUBLIC
My Commission Expires: 10-25-97
----------
<PAGE> 13
EXCISE TAX
NORTH CAROLINA 812.00 Real Estate Excise Tax
RECORDING TIME, BOOK AND PAGE
RICHARD L. WOODRUFF
REGISTER OF DEEDS
WILKES COUNTY, N.C.
'94 SEP 6PM 4:15
- ------------------------------------------------------------------------------
Tax Lot No. Parcel Identifier No.
------------------------- ---------------------
Verified by County on the day of , 19
----------------- ------------ ----------- ----
by
-----------------------------------------------------------------------------
===============================================================================
Mail after recording to Grantee
-------------------------------------------------------
- -------------------------------------------------------------------------------
This instrument was prepared by H.C. Colvard, Jr., Esq.
------------------------------------------------
Brief description for the Index 17.96 Acres, Wilkesboro Township
===============================================================================
NORTH CAROLINA GENERAL WARRANTY DEED
THIS DEED made this 6th day of September 19 94 , by and between
---------- ----------------- ------
===============================================================================
GRANTOR GRANTEE
Thom McAn Manufacturing, Inc. River Road Properties, Inc.
c/o H.C. Colvard, Jr., Esq.
P.O. Box 1388
N. Wilkesboro, NC 28659
Enter in appropriate block for each party; name, address, and, if appropriate,
character of entity, e.g. corporation or partnership.
===============================================================================
The designation Grantor and Grantee as used herein shall include said parties,
their heirs, successors, and assigns, and shall include singular, plural,
masculine, feminine or neuter as required by context.
WITNESSETH, that the Grantor, for a valuable consideration paid by the Grantee,
the receipt of which is hereby acknowledged, has and by these presents does
grant, bargain, sell and convey unto the Grantee in fee simple, all that
certain lot or parcel situated in the City of Wilkesboro , Wilkesboro
---------------- ---------------
Township, Wilkes County, North Carolina and more particularly described
--------------
as follows:
EXHIBIT A
<PAGE> 14
The foregoing description constitutes a resurvey by Jerry R. Lackey, R.L.S.
L-1430 of the lands described in that prior Deed from Melville Corporation to
Thom McAn Manufacturing Inc. recorded in Book 697, Page 256 in the office of
the Register of Deeds of Wilkes County, North Carolina. It is the specific
intent and covenant of the Grantor to convey only the lands described in said
prior Deed.
The property hereinabove described was acquired by Grantor by Instrument
recorded in Book 697, Page 256
-------------------------------------------
A map showing the above described property is recorded in Plat Book ___________
page ___.
TO HAVE AND TO HOLD the aforesaid lot or parcel of land and all privileges and
appurtenances thereto belonging to the Grantee in fee simple.
And the Grantor covenants with the Grantee, that Grantor is seized of the
premises in fee simple, has the right to convey
of all its encumbrances, and that Grantor will warrant and defend the title
against the lawful claims of all persons
Title to the property hereinabove described is subject to the following
exceptions:
The permitted encumbrances, shown above, together with the standard public
utility and Department of Transportation easements of record.
IN WITNESS WHEREOF, the Grantor has hereunder set his hand and seal, or if
corporate, has caused this instrument is to be signed in its corporate name by
the duly authorized officers and its seal to be hereunder affixed by authority
of its Board of Directors, this day and year ???? above written.
USE BLACK INK ONLY
Thom McAn Manufacturing, Inc.
- ------------------------------------ ---------------------------------(SEAL)
(Corporate Name)
By: /s/ R. S. McGrady ---------------------------------(SEAL)
--------------------------------
President
- --------------- ---------------------------------(SEAL)
ATTEST: ---------------------------------(SEAL)
/s/ W. L. Hyatt
---------------------------------- ---------------------------------(SEAL)
Secretary (Corporate Seal)
- ------------------------------------- ---------------------------------(SEAL)
(Corporate Name)
By: ---------------------------------(SEAL)
----------------------------------
President
------------------ ---------------------------------(SEAL)
ATTEST:
---------------------------------(SEAL)
- --------------------------------------
Secretary (Corporate Seal)
- ------------
<PAGE> 15
EXHIBIT B
(FLOOR PLAN APPEARS HERE)
<PAGE> 1
Exhibit 21.1
SUBSIDIARIES OF ANSELL HEALTHCARE INCORPORATED
*Denotes entities that will become subsidiaries as part of the Reorganization
<TABLE>
<CAPTION>
NAME OF STATE OR JURISDICTION OF
SUBSIDIARY INCORPORATION
- ---------- -------------
<S> <C>
Ansell Healthcare Products Inc. Delaware
Ansell Holdings (BVJ) Inc. Delaware
Ansell International Holdings Inc. Delaware
Ansell Overseas Inc. Delaware
Ansell Protective Products Inc. Delaware
Ansell Services Inc. Delaware
*Ansell Canada Inc. Canada
*Ansell Edmont Industrial Inc. de Mexico, S.A. De C.V. Mexico
*Ansell Perry de Mexico, S.A. de C.V. Mexico
*Commercializadora GNK S.A. de C.V. Mexico
*Golden Needles de Mexico S.A. de C.V. Mexico
*Ansell Australian Division Australia
*PDOCB Pty Ltd Australia
*Ansell Protective Products Europe NV Belgium
*Ansell S.A. France
*Laboratories Degan S.A. France
*Ansell GmbH Germany
*Ansell Medical Products Pvt Ltd India
*JK Ansell Ltd India
*Kemwell International Ltd India
*Suretex Prophylactics India Ltd India
*Pacific Dunlop Japan KK Japan
*Ansell Ambi Sdn Bhd Malaysia
*Ansell (Kedah) Sdn Bhd Malaysia
*Ansell (Kulim) Sdn Bhd Malaysia
*Ansell Malaysia Sdn Bhd Malaysia
*Ansell Medical Sdn Bhd Malaysia
*Ansell NP Sdn Bhd Malaysia
*Ansell New Zealand Division New Zealand
*STX Prophylactics S.A. (Proprietary) Ltd. South Africa
*Ansell Lanka (Pvt) Ltd Sri Lanka
*Ansell (Thailand) Ltd Thailand
*Latex Investments Ltd Mauritius
*Suretex Limited Thailand
*Ansell Glove Company Ltd United Kingdom
*Ansell UK Ltd United Kingdom
*Golden Needles Knitting and Glove Company Ltd. United Kingdom
*Mates Vending Ltd United Kingdom
</TABLE>
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' REPORT ON SCHEDULE AND CONSENT
The Board of Directors
Pacific Dunlop Limited:
The audits of Ansell Group referred to in our report dated September 10, 1999,
included the related financial statement schedule as of June 30, 1999, and for
each of the fiscal years in the three-year period ended June 30, 1999, included
in the registration statement. This financial statement schedule is the
responsibility of management. Our responsibility is to express an opinion on
this financial statement schedule based on our audits. In our opinion, such
financial statement schedule, when considered in relation to the basic combined
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.
We consent to the use of our report with respect to Ansell Group included
herein and to the reference to our firm under the heading "Experts" in the
Prospectus.
/s/ KPMG LLP
Columbus, Ohio
February 14, 2000
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Ansell Healthcare Incorporated:
We consent to the use of our report with respect to Ansell Healthcare
Incorporated included herein and the reference to our firm under the heading
"Experts" in the Prospectus.
/s/ KPMG LLP
Columbus, Ohio
February 14, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> JUN-30-1999
<CASH> 65,564,000
<SECURITIES> 0
<RECEIVABLES> 134,556,000
<ALLOWANCES> (3,805,000)
<INVENTORY> 143,095,000
<CURRENT-ASSETS> 372,095,000
<PP&E> 358,933,000
<DEPRECIATION> (141,451,000)
<TOTAL-ASSETS> 860,755,000
<CURRENT-LIABILITIES> 527,387,000
<BONDS> 440,421,000
0
0
<COMMON> 0
<OTHER-SE> 292,192,000
<TOTAL-LIABILITY-AND-EQUITY> 860,755,000
<SALES> 354,747,000
<TOTAL-REVENUES> 354,747,000
<CGS> 228,481,000
<TOTAL-COSTS> 168,020,000
<OTHER-EXPENSES> (831,000)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,548,000
<INCOME-PRETAX> 25,979,000
<INCOME-TAX> 4,971,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,733,000
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
