SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 2000 Commission File No. 0-6436
BLOCK DRUG COMPANY, INC.
(Exact name of registrant as specified in its charter)
New Jersey 22-1375645
(State or other jurisdiction of
incorporation or organization) I.R.S. Employer Identification No.)
257 Cornelison Avenue, Jersey City, New Jersey 07302-9988
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (201) 434-3000
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of each exchange on which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Class A Common Stock - $.10 par value
(Title of Class)
Indicate by check mark whether Registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days. Yes X No _
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. Yes X No _
As of June 6, 2000, nonaffiliates held no voting shares of the Registrant;
therefore, the aggregate market value of voting shares held by nonaffiliates is
zero. As of June 6, 2000, the aggregate market value of non- voting shares held
by nonaffiliates was $187,050,000. For purposes of this Form 10-K, nonaffiliates
are all holders of non-voting stock other than directors, officers and members
of the Block family.
As of June 6, 2000 there were 14,538,070 shares of Class A Common Stock and
8,671,372 shares of Class B Common Stock of Registrant outstanding.
Documents incorporated by reference: None
Number of pages contained within this document: 70
Exhibit Index can be found on page 57
<PAGE>
PART I
Item 1. Business
GENERAL
Block Drug Company, Inc. (the "Company") is a worldwide manufacturer and
marketer of denture care products, oral health care products, consumer
over-the-counter medicines, health and beauty aids and professional dental
products.
Approximately 61% of the Company's net sales are derived from non-U.S. markets,
including but not limited to the U.K., Germany, Japan, Italy, France, Canada,
Brazil, Holland, Argentina, Austria, Spain, Mexico, Australia and Belgium.
International operations are subject to certain risks. Fluctuations in foreign
currency exchange rates can impact consolidated financial results. Other risks
include possible nationalization, expropriation, importation limitations and
other restrictive government actions. For additional financial information on
international operations, refer to "Management's Discussion and Analysis of
Operating Results and Financial Condition" (Item 7), "Financial Instruments"
(Note 5), all found in this Form 10K.
Approximately 39% of the Company's net sales are derived from the United States
market. The Company markets virtually the same categories of products in both
domestic and international markets. Certain of the Company's professional dental
products are sold only in the U.S., Canada and in Italy.
PRODUCT SEGMENT AND OTHER FINANCIAL INFORMATION
The "Product Segment Net Sales Data" for the fiscal years ending March 31, 2000,
1999 and 1998 are as follows:
(In Thousands)
2000 1999 1998
Denture Care and Oral Health Care Products* $629,162 $595,116 $606,812
Consumer Over The Counter Medicines** 235,158 225,985 256,245
Consolidated Net Sales $864,320 $821,101 $863,057
*Includes professional dental products
**Includes health and beauty aids
DENTURE CARE AND ORAL HEALTH CARE PRODUCTS
The Company is a leading marketer of denture care products around the world. In
the U.S., these products include the Polident (Registered trademark) line of
denture cleansers; the Poli-Grip(Registered trademark) line of denture
adhesives; DentuCreme(Registered trademark) and Dentu-Gel(Registered trademark)
denture cleansers; and Polident(Registered trademark) Whitening Mouthwash. In
many international markets, the Company markets Corega (Registered trademark)
brand denture cleansers and adhesives.
Polident brand is marketed in five varieties; Polident(Registered trademark)
Five Minute; Polident(Registered trademark) Overnight; Smokers'
Polident(Registered trademark); Polident(Registered trademark) for Partials; and
Polident(Registered trademark)Powder.
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<PAGE>
The Poli-Grip line of denture adhesives includes Poli-Grip(Registered trademark)
Original; Poli-Grip(Registered trademark) Ultra Fresh and Poli-Grip(Registered
trademark) Free, a formula free of artificial ingredients.
One of the Company's leading brands is Sensodyne(Registered trademark)
anti-cavity toothpaste for sensitive teeth. Sensodyne is a worldwide brand name
except in Japan where the product is sold under the Shumitect(Registered
trademark) brand name. In most markets in which it is sold, Sensodyne is the
leading desensitizing toothpaste brand. In the U.S., the Company markets
Sensodyne(Registered trademark) Extra Whitening; Sensodyne(Registered trademark)
Tartar Control Plus Whitening; Sensodyne(Registered trademark) with Baking Soda;
Sensodyne(Registered trademark) Fresh Mint; Sensodyne(Registered trademark) Cool
Gel; and Sensodyne(Registered trademark) Original Flavor.
Parodontax(Registered trademark) brand toothpaste for gum care is another
specialty dentifrice marketed by the Company outside of the United States. It is
sold in approximately 30 countries.
The Company markets Targon(Registered trademark) Smokers' Mouthwash to smokers
to remove tobacco tar from teeth. Targon is sold in three varieties; Original,
Clean Taste and Fresh Mint.
Serious dental medicines are marketed by the Company to dental professionals in
the U.S. and Canada. These include Atridox(Registered trademark) (doxycycline
hyclate) 10%, a treatment for chronic adult periodontitis (U.S. only);
PerioGlas(Registered trademark) brand bioactive glass used in the treatment of
periodontal disease; Atrisorb(Registered trademark), a barrier for guided tissue
regeneration in oral surgery; and Aphthasol(Register trademark) (amlexanox oral
paste, 5%) (U.S. only), the first and only prescription treatment for aphthous
ulcers, also known as canker sores. The products are detailed to dental
professionals through the Company's force of Dental Consultants.
CONSUMER OVER-THE-COUNTER MEDICINES
The Company markets consumer over-the-counter medicines in a variety of
categories in the U.S. and in most international markets.
The Company markets a broad selection of gas treatment and digestive products in
the U.S.
These include the Phazyme(Registered trademark) line of gas relief products;
Beano(Registered trademark) food enzyme dietary supplements and Nature's
Remedy(Registered trademark) brand laxative.
In the baby care products market, the Company markets Balmex(Registered
trademark) brand diaper rash ointments. Balmex(Registered trademark) Medicated
Plus Baby Powder was introduced just subsequent to the close of the fiscal year.
Three brands of powdered analgesics are marketed by the Company in the Southern
U.S.
These include the BC(Registered trademark), Goody's(Registered trademark) and
Stanback(Registered trademark) lines. Line extensions in this category include
Goody's(Registered trademark) PM, Goody's(Registered trademark) Body Pain
Formula and BC(Registered trademark) Allergy/Sinus.
Sleep-aid products sold by the Company include Nytol(Registered trademark) brand
and Nytol(Registered trademark) Natural. The latter brand is a homeopathic
sleep-aid.
The Chapo et(Registered trademark) line of lip care products includes a dozen
varieties of lip balm products.
Tegrin(Registered trademark) Shampoo is a value priced brand the Company markets
in the dandruff shampoo category.
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<PAGE>
ACQUISITIONS AND DIVESTITURES
The Company made a number of acquisitions and one divestiture during fiscal 2000
and one acquisition immediately after the close of fiscal 2000.
Acquisition (A)
or
Product Country Fiscal Year Divestiture (D)
Lava(Registered trademark) Brand Hand U.S. 2000 D
Soap
Chlorhexamed(Registered trademark) Germany 2000 A
Medicated Mouthwash and parts
of Europe
Louis Marcel(Registered trademark) U.K. 2000 A
Depilatory Line
Silidron(Registered trademark) and Brazil 2000 A
Espasmo Silidron(Registered trademark)
anti-gas products
Pelo Libre(Registered trademark) Argentina 2000 A
line of pediculicides
Parodontax(Registered trademark) Korea 2000 A
toothpaste (balance
of certain marketing
rights)
Spectro(Registered trademark) Canada 2001 A
line of over the counter
dermatology
products*
* See Note 18, "Subsequent Event"
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<PAGE>
MATERIAL REGULATIONS
The Company is subject to worldwide governmental regulations and controls
relating to product safety, efficacy, packaging, labeling and distribution. The
Company submits data to the Food and Drug Administration as necessary in
response to the ongoing monograph review of the safety and efficacy of all
over-the-counter drug products marketed in the U.S. As a responsible
manufacturer, the Company is alert to the possibility that the final monographs
to be issued in the foreseeable future may require formula modifications of
certain of its products to maintain compliance with these regulations, a
possibility facing competitive products as well.
While few of the products which the Company plans to introduce into the market
are "new drugs" or "new devices", those fitting the regulatory definitions are
subject to a stringent premarket approval process in most countries. Submission
of a substantial amount of preclinical and clinical information prior to market
introduction significantly increases the amount of time and related costs
incurred for preparing such products for market.
Manufacturing companies, especially those engaged in health care related fields,
are subject to a wide range of federal, state and local laws and regulations.
Concern for maintaining compliance with federal, state, local and foreign
regulations on environmental protection, hazardous waste management,
occupational safety and industrial hygiene has also increased substantially. The
Company's policies and practices in the areas of environmental quality, product
safety, loss prevention, occupational health and safety are tempered by the many
laws and regulations affecting these areas.
The Company cannot predict what additional legislation or governmental action,
if any, will be enacted or taken with respect to the above matters and what its
effect, if any, will be on the Company's consolidated financial position,
results of operations or cash flows.
MARKETING
The Company commits a substantial portion of its net revenues to advertising,
promotion, market research and test marketing. Its denture care, oral
healthcare, and over-the-counter consumer products are advertised directly to
consumers on network, cable and spot television, network and spot radio, and in
magazines and newspapers. The largest expenditures by the Company are for the
purchase of television time.
Oral hygiene and professional dental products are promoted by the Company
through dental journals. A team of Dental Sales Consultants sells products
directly to dentists and a TeleSales group at headquarters services dental
accounts by telephone.
The Company maintains a website which provides information on its product lines
to consumers and dental professionals. Dental offices can purchase the Company's
professional dental products on-line.
The Company sells its consumer denture, dental care, oral hygiene and
over-the-counter medicines through its national sales force. Sales are made
directly to food and drug chains, wholesalers, mass merchandisers and
independent food and drug stores. In addition, the Company employs marketing and
sales representatives in international markets.
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<PAGE>
TRADEMARKS AND PATENTS
The Company's principal trademarks are of material importance to its business.
These trademarks are owned by the Company or its wholly-owned subsidiaries.
Although the Company enjoys certain benefits under patents which it owns or
licenses, no one patent or license is material to our overall business or to an
individual business segment.
COMPETITION
The Company markets products in highly competitive fields. For many of its
products, its competitors include significantly larger corporations with
substantially greater resources. The high degree of trademark recognition and
goodwill associated with many of the Company's brand names are important factors
in its ability to compete effectively. While larger competitors are able to
commit significantly greater revenue to national advertising, the Company
believes its advertising and marketing expertise enable it to compete
effectively.
The primary competitive factors affecting proprietary over-the-counter
medicines, denture care, and consumer oral care products are product
formulation, reputation, advertising and consumer promotion.
MANUFACTURING
Most of the principal raw materials used by the Company in its domestic
manufacturing operations are purchased domestically. Although some of the
Company's raw materials are obtained from single source providers, most are
available from alternate suppliers as well. In cases where a raw material is
available only from one source alternate raw materials can be used as a
replacement. The Company maintains inventories of raw materials to protect
against a business interruption caused by moving from one supplier to another.
In addition, the Company has qualified alternate formulae to assure continued
product availability in the unlikely event any one raw material becomes
unavailable.
During the course of the fiscal year ended March 31, 2000, there were no
substantial raw material shortages. The Company was able to obtain all raw
materials required for its normal operations at competitive prices.
The Company manufactures the majority of its products. Some products are
manufactured by independent third parties. There is not a single third party
that manufactures 10% or more, in the aggregate, of the Company's products.
Item 2. Properties
The worldwide executive and administrative offices, manufacturing,
research and development, warehousing and distribution facilities of the Company
and its subsidiaries use an aggregate of approximately 2 million square feet.
This figure does not include undeveloped land on which its facilities are
located or land adjacent to certain properties. The Company or its subsidiaries
own substantially all of the properties.
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<PAGE>
Among these properties are the following: (1) corporate headquarters;
Jersey City, New Jersey; (2) professional dental product manufacturing:
Glendale, Wisconsin (leased); (3) manufacturing plants for the Company's denture
care, oral health care and over-the-counter products; Memphis, Tennessee;
Dungarvan, Ireland; Humacao, Puerto Rico (Dentco and Reedco); Plymouth, UK; Rio
de Janeiro, Brazil; and Salisbury, North Carolina (leased).
During the fiscal year, the Company sold its facilities in South
Brunswick, New Jersey; Buenos Aires, Argentina; and Mississauga, Canada.
The Company owns land contiguous to the Memphis, Plymouth and Dungarvan
facilities, which would allow for the future expansion of such facilities.
Additional warehouse and distribution facilities are in Mississauga, Canada
(leased); Memphis, Tennessee (leased); Dayton, New Jersey; Plymouth, UK and
Zaragoza, Spain.
The Company owns (two) or leases office facilities in fifteen countries.
The Company's plants and facilities, in the opinion of management, are in
good condition and, together with expansions and alterations recently completed,
or in the process of being completed as part of the manufacturing restructuring
plan, are regarded by management as adequate for current requirements and for
those of the next several years. "Management's Discussion and Analysis of
Operating Results and Financial Condition" (Item 7) further describes the
Company's now completed restructuring plan.
Item 3. Legal Proceedings
The Company is involved in various routine litigation incidental to its
continuing and discontinued operations. While the significance of these matters
cannot be fully assessed at this time, management, on advice of counsel, does
not believe that any liability that may arise from these proceedings will have a
material adverse impact on the Company's consolidated financial position,
results of operations or liquidity.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of the holders of Class B Common Stock
during the quarter ended March 31, 2000.
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<PAGE>
<TABLE>
PART II
<CAPTION>
Item 5. Market for the Registrant's Common Stock and Related Security Holder
Matters
STOCK PRICE AND DIVIDEND INFORMATION
Market Price Cash Dividends Declared
Range of Class A Per Share
Common Stock*
============================== ============================================
<S> <C> <C> <C> <C>
Fiscal Year Ended March 31, High** Low**
2000
First Quarter $42 23/32 $33 1/64 $0.3175 Class A Shares
$0.110625 Class B Shares
Second Quarter 42 19/32 33 1/64 $0.3175 Class A Shares
$0.110625 Class B Shares
Third Quarter 38 53/64 24 7/16 $0.32 Class A Shares
$0.11125 Class B Shares
Fourth Quarter 36 1/2 26 1/2 $0.32 Class A Shares***
$0.11125 Class B Shares***
------------------------------------------------- --------------- -------------- --------------------------------------------
Fiscal Year Ended March 31, High** Low**
1999
First Quarter 43 23/64 $34 11/64 $0.315 Class A Shares
$0.11 Class B Shares
Second Quarter 37 15/16 30 41/64 $0.315 Class A Shares
$0.11 Class B Shares
Third Quarter 42 23/64 31 11/32 $0.3175 Class A Shares
$0.110625 Class B Shares
Fourth Quarter 45 5/8 35 7/16 $0.3175 Class A Shares****
$0.110625 Class B Shares****
================================================= =============== ============== ============================================
</TABLE>
* The Company's Class A (non-voting) Common Stock is traded
on the NASDAQ National Market System. There is no established trading
market for the Company's Class B (voting) Common Stock.
** These are high and low bid quotes and reflect inter-dealer
prices without retail mark-up, mark-down or commission and may not
necessarily represent actual transactions.
The prices have been restated to reflect the 3% stock dividend.
*** In addition, a 3% stock dividend was paid on January 3, 2000
to Class A and B shareholders in Class A and B Common Stock,
respectively.
**** In addition, a 3% stock dividend was paid on January 4, 1999
to Class A and B shareholders in Class A and B Common Stock,
respectively.
The following table indicates the approximate number of shareholders of each
class of the Company's equity securities based upon the number of record
holders as of June 6, 2000.
Title of Class Number of Shareholders
============================================ =================================
Common Stock, Class A (non-voting) 379
Common Stock, Class B (voting) 5
============================================ =================================
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<PAGE>
<TABLE>
Item 6. Selected Financial Data
<CAPTION>
Fiscal Year Ended March 31,
2000(3) 1999(3) 1998 1997(2) 1996
=================================== ================== ================== ================== ================= ================
<S> <C> <C> <C> <C> <C>
Net Sales $ 864,320,000 $ 821,101,000 $863,057,000 $ 862,471,000 $ 715,242,000
Interest, Dividends & Other Income $ 29,898,000 $ 27,984,000 $ 25,882,000 $ 28,335,000 $ 30,157,000
Income from Continuing Operations
Before Income Taxes $ 75,388,000 $ 67,497,000 $ 69,611,000 $ 10,817,000 $ 65,501,000
Income Taxes $ 18,629,000 $ 15,875,000 $ 17,819,000 $ 2,210,000 $ 11,798,000
Income from Continuing Operations $ 56,759,000 $ 51,622,000 $ 51,792,000 $ 8,607,000 $ 53,703,000
Weighted Average Number of 23,481,000 23,538,000 23,492,000 23,449,000 23,406,000
Common Shares Outstanding(1)
Income from Continuing Operations,
Per Share of Common Stock (Basic $2.42 $2.19 $2.20 $0.37 $2.29
and Diluted)(1)
Earnings Per Share of
Common Stock (Basic and $2.42 $2.19 $2.20 $0.37 $3.79
Diluted)(1)
Cash Dividends Per Share of
Class A Common $1.28 $1.27 $1.25 $1.20 $1.12
Cash Dividends Per Share of
Class B Common $0.444 $0.441 $0.435 $0.415 $0.30
Stock Dividends Per Share of
Class A Common 3% 3% 3% 3% 3%
Stock Dividends Per Share of
Class B Common 3% 3% 3% 3% 3%
Depreciation $ 22,660,000 $ 20,852,000 $ 19,651,000 $ 20,210,000 $ 19,012,000
Working Capital $ 83,595,000 $ 82,033,000 $ 39,867,000 $ 108,452,000 $ 120,803,000
Current Ratio 1.3 1.3 1.2 1.4 1.6
Total Assets $1,176,931,000 $1,164,785,000 $1,087,072,000 $1,014,923,000 $929,117,000
Long-Term Notes and Bonds
Payable $ 105,308,000 $ 107,012,000 $ 58,318,000 $ 55,943,000 $ 56,143,000
Shareholders' Equity $ 682,373,000 $ 683,885,000 $ 647,255,000 $ 631,320,000 $641,042,000
Number of Employees 3,184 3,251 3,380 3,703 3,600
=================================== ================== ================== ================== ================= ================
</TABLE>
Management's Discussion and Analysis of Operating Results and Financial
Condition is presented on pages 10 to 19 of this report.
(1) Restated to reflect stock dividends on Class A and Class B
Common Stock.
(2) Fiscal 1997 income statement numbers reflect a pre-tax charge
of $72,450,000 for manufacturing, restructuring and re-engineering
charges. Additionally, these amounts reflect the consolidation of the
Block Drug Company (Japan) Inc. subsidiary, which had been previously
accounted for as a 50%-owned equity joint venture. The Company
acquired the remaining 50% share in fiscal year 1997.
(3) Fiscal 2000 and 1999 income statement numbers reflect credits
of $8,577,000 and $12,673,000, respectively, in connection with the
manufacturing,restructuring and re-engineering. See Note 13 to the
Consolidated Financial Statements.
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<PAGE>
Item 7. Management's Discussion and Analysis of Operating Results and Financial
Condition
Operating Results
Consolidated Sales:
Consolidated worldwide net sales for the fiscal year ended March 31, 2000 were
$864.3 million compared to $821.1 million and $863.1 million in fiscal 1999
and 1998, respectively. In the first quarter of fiscal 2000, the Company sold
its remaining household product, Lava(Registered trademark) brand hand soap.
During fiscal 1999, the Company sold three of its household product brands
(2000
Flushes(Registered trademark) toilet bowl cleaners, X-14(Registered trademark)
toilet bowl and hard surface cleaners and Carpet Fresh(Registered trademark)
rug and room deodorizers). In fiscal 2000, excluding the effects of the
divestitures and the stronger US dollar, consolidated sales were $884.3
million, an increase of 10% over the prior year.
Consolidated sales for the fourth quarter ended March 31, 2000 were $239.1
million compared to $233.1 and $232.7 million for the quarter ended March 31,
1999 and 1998, respectively. Excluding the effects of the divestitures and the
stronger US dollar, sales for the fourth quarter ended March 31, 2000 would
have increased 6.6%.
The Company's operations are now managed as two divisions to better reflect
the Company's operations and management structure. The Americas Division
includes markets in North and South America; the International Division
includes Europe, Asia/Pacific, Africa and the Middle East. In fiscal 1999, the
Company's operations were managed in three geographic areas (See Note 16).
SALES BY DIVISION - FOURTH QUARTER
(Dollars in Thousands)
Percent Percent
FY 2000 Change FY 1999 Change FY 1998
Americas Division $119,963 3.2 % $116,214 -5.0 % $122,370
International Division 119,133 1.9 % 116,892 6.0 % 110,319
---------- -------- --------
$239,096 2.6 % $233,106 0.2 % $232,689
======== ======== ========
Americas Division:
The Americas Division sales for the fourth quarter ended March 31,2000 were
$120 million compared to $116.2 million and $122.4 million for the fourth
quarter ended March 31, 1999 and 1998, respectively. Excluding the effects of
the divestitures and the stronger US dollar, sales for the fourth quarter
ended March 31, 2000 would have increased 7.1%.
US sales for the fourth quarter increased 1.7% compared to the prior year
period. Excluding the effects of the divestiture, sales increased 3.7%. US
sales growth for the fourth quarter was
driven by strong sales of Sensodyne(Registered trademark) toothpaste,
BC(Registered trademark) analgesic powders, Balmex(R) diaper rash ointments
and Beano(Registered trademark) food enzyme dietary supplement brands. Fourth
quarter sales of Polident(Registered trademark) denture cleanser,
Nytol(Registered trademark) sleep aid, and Chap-et(Registered trademark) lip
balm brands were lower than the prior year comparable period.
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<PAGE>
Item 7. Management's Discussion and Analysis of Operating Results and Financial
Condition (Cont'd)
In Canada, sales growth of 16% for the fourth quarter of fiscal 2000 was mainly
due to increased sales of Sensodyne(Registered trademark) toothpaste and denture
care brands. Sales of R&C(Registered trademark) Shampoo and Nytol(Registered
trademark) brands declined during the fourth quarter.
In Latin America, sales growth was 5.1% for the fourth quarter compared to the
prior year period, although sales were negatively impacted by the divestiture of
household products, currency weakness in Brazil and economic softness in
Argentina. Excluding the effects of a stronger US dollar, sales were up 25.2%.
In Brazil, sales decreased by 18% for the fourth quarter as a result of economic
recession as well as the effects of major currency devaluation. In Argentina,
sales increased by 16% for the fourth quarter due to sales growth of
Kwell(Registered trademark) and Pelo Libre(Registered trademark) pediculicide
brands. Mexico recorded a sales growth of 61% for the fourth quarter due to a
combination of marketing support behind key brands and a strong local currency.
Sales in Colombia and Uruguay were lower for the quarter.
International Division:
The International Division showed a modest growth of 1.9% for the fourth quarter
compared to the prior year period. Excluding the effects of a stronger US
dollar, sales grew 6.1%. The European group showed growth of 3%; the Asia group
was down by 1%.
In Germany, sales increased 37% for the fourth quarter largely due to strength
in core businesses as well as the contributions made by recent depilatory and
mouthwash acquisitions. In France, sales declined by 16%, primarily due to
higher sales in food stores in the prior year period. Sales in Italy declined by
43% for the fourth quarter reflecting declined sales across brands in the
pharmacy channel. The UK group sales increased 18% for the quarter primarily due
to sales growth of Sensodyne(Registered trademark), and increased sales of
Piriton(Registered trademark) allergy relief and Nytol(Registered trademark)
sleep aid brands. The Asia group reported slightly lower sales for the fourth
quarter. In Japan, Poli-Grip(Registered trademark) denture adhesive sales
increased, while Polident(Registered trademark) denture cleanser sales declined
modestly.
SALES BY DIVISION - FOR THE YEAR
(Dollars in Thousands)
Percent Percent
FY 2000 Change FY 1999 Change FY 1998
Americas Division $424,317 1 % $420,288 -9.1 % $462,256
International Division 440,003 9.8 % 400,813 -- 400,801
--------- -------- --------
$864,320 5.3 % $821,101 - 4.9 % $863,057
======== ======== ========
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<PAGE>
Item 7. Management's Discussion and Analysis of Operating Results and Financial
Condition (Cont'd)
Americas Division:
Sales in the Americas Division for the fiscal year ended March 31, 2000 were
$424.3 million compared to $420.3 million and $462.3 million in fiscal 1999 and
1998, respectively. Excluding the effects of the divestitures and the stronger
US dollar, fiscal 2000 sales would have increased 6.4%.
US sales were up by 2.2% for the current year. Excluding the effects of the
divestiture, sales for the current year would have increased 5.4%. US sales
growth was driven by relatively strong sales of Sensodyne(Registered trademark),
BC(Registered trademark) and Goody's(Registered trademark) analgesic powders
(which reported increases in sales of 17% and 6%, respectively) and
Balmex(Registered trademark) diaper rash ointment brands.
Canadian sales increased by 3.6% during the fiscal year. Excluding the effects
of the divestiture, current year sales would have increased 8.2 %. The increase
was primarily due to increased sales of Sensodyne(Registered trademark) and
denture care brands.
Latin America sales for the year were down by 8.4%. Excluding the effects of the
divestiture and a stronger US dollar , sales would have increased 27.0%. The
increase was mainly attributed to strong sales growth in Mexico. In Brazil, a
recessive economy and the effects of major currency devaluation impacted sales
negatively.
International Division:
Sales of the International Division for the fiscal year ended March 31, 2000
were $440 million compared to $400.8 million in both fiscal 1999 and 1998. The
European Group sales growth in all markets was offset by the effects of the
weakening Euro.
In Germany, core denture and oral care businesses and recent depilatory and
mouthwash acquisitions contributed to sales growth. In France, growth in denture
fixatives and Sensodyne(Registered trademark) contributed to an overall sales
increase of 6%. The sales growth of Strep(Registered trademark) depilatory brand
primarily contributed to the overall sales growth in Italy. Total U.K. sales
were up by 6% due to sales of Sensodyne(Registered trademark),
Poli-Grip(Registered trademark) and Nytol(Registered trademark) brands.
The Asia Group sales increased by 11%. Improving economic conditions and the
strengthening Yen had an overall positive impact on sales in Japan.
Parodontax(Registered trademark) toothpaste brand continues to positively impact
business growth in Korea. The Company acquired the balance of certain marketing
rights to Parodontax(Registered trademark) in Korea during the fiscal year.
Other Income and Operating Expenses:
Interest, dividends and other income of $30 million increased 7% from $28
million in the prior year. The increase was primarily due to gains in Brazil of
$5.3 million from foreign currency swaps in fiscal 2000, which were offset by a
$3.3 million gain from the sale of three household products during fiscal 1999.
Cost of goods sold percentage to sales of 36.8% was even compared to fiscal
1999, and 36.4 % in fiscal 1998. (Freight and shipping costs have been
reclassified from Selling, General and Administrative to Cost of Goods in
accordance with EITF 00-10, "Accounting for Shipping and Handling Fees and
Costs.")
- 12 -
<PAGE>
Item 7. Management's Discussion and Analysis of Operating Results and Financial
Condition (Cont'd)
Americas Division cost of sales was 40.3%, 37.6% and 38.0% for fiscal 2000, 1999
and 1998, respectively. Current year cost of sales were higher partially due to
increased freight and shipping costs. Fiscal 1999 cost of sales were lower,
primarily due to the divestiture of household products.
International Division cost of sales were 33.4%, 35.9% and 34.5% for fiscal
2000, 1999 and 1998, respectively. The fluctuations in cost of sales percentages
were primarily due to mix of products sold.
Selling, general and administrative expenses represented 57.2%, 58.3% and 57.0%
of sales in fiscal 2000, 1999 and 1998, respectively. The major portion is
related to advertising and promotional activities. These expenses reflect major
spending programs to meet significant competition and to build brand equities.
In fiscal 2000, Selling, General and Administrative expenses as a percentage of
sales were lower due to reduced level of spending in advertising and promotional
expenses in the International Division.
Interest expense increased to $14,859,000 in fiscal 2000 from $13,528,000 in the
prior fiscal year. The increase was attributable to several factors including a
somewhat higher average debt level, rising short-term interest rates and the
conversion of some short-term debt to long term debt.
The Company's interest rate exposures result from financing activity in the
form of short and long-term variable rate debt and from investments in long-term
fixed rate securities. The Company uses interest rate cap agreements and an
interest rate swap agreement to manage the exposures resulting from variable
rate debt (See Note 5). The notional amount of such agreements at March 31, 2000
was $202,193,000. Investments in long-term fixed income securities are typically
available for sale, and fluctuations in their market value, which are included
in Accumulated Other Comprehensive Loss, are not hedged.
The Company's foreign exchange exposures derive primarily from the activities of
its foreign subsidiaries, which sell products to customers generating receivable
balances both in their own and other currencies. Certain subsidiaries,
principally manufacturing locations in the United Kingdom, Ireland and Brazil,
also incur significant costs denominated in currencies other than their
functional currency. Additionally, the Company is exposed to the risk that the
results of operations of its foreign affiliates may translate to lower than
expected net income for inclusion in the Company's consolidated results.
An interest rate swap agreement, interest rate cap agreements and foreign
currency options are the types of derivatives used by the Company for risk
management. The costs and benefits derived from the interest rate caps are taken
into income over the term of the agreements, to the extent the notional value of
such agreements corresponds to variable rate loan balances. Costs associated
with notional amounts in excess of loan balances are expensed in the period
during which the excess occurs. Contracts are marked to market and the change in
market value is included in period results. No benefits were derived from
interest rate cap agreements during fiscal 2000 or 1999 (See Note 5).
- 13 -
<PAGE>
Item 7. Management's Discussion and Analysis of Operating Results and Financial
Condition (Cont'd)
The Company manages its most significant foreign currency exposures, principally
inventory purchases, by purchasing average rate currency options that protect
against the fiscal year average value of each currency declining more than an
acceptable amount from the prior year average. Put options acquired after the
end of fiscal 2000 were combined in zero cost collar structures such that they
were paid for with the proceeds of sale of call options that obligate the
Company to pay counter parties in the event that the foreign currency
strengthens against the U.S. dollar by other than a pre-determined amount.
Currencies that are highly correlated to the U.S. dollar and those to which the
Company has a modest exposure are not hedged. Affiliates whose functional
currencies are illiquid or have high interest rates (and therefore high hedging
cost) do not hedge with options, but may instead maintain significant cash
balances in U.S. dollars. Thus, if the affiliate's functional currency declines
in value against the U.S. dollar, the value (in the unit's functional currency)
of this U.S. dollar cash balance increases producing incremental income and
thereby offsetting the declining value of the affiliate's results included in
the Company's consolidated net income.
The cost of foreign currency options whose notional amount corresponds to
trading activity of the subsidiary owning the options is expensed over the
period to which they relate. Costs relating to additional notional amounts are
expensed during the period in which the options are acquired. Any benefits, to
the extent the options are deemed effective hedges, are treated as an adjustment
to the related costs of inventory purchased (See Note 5).
Worldwide Earnings by Division (Dollars in Thousands)
2000 1999 1998
Americas $64,086 $71,754 $71,583
International 50,067 32,016 47,975
--------- -------- --------
Total Operating Income 114,153 103,770 119,558
General Corporate
Expenses(Net) (38,815) (36,273) (49,947)
---------- ---------- ---------
$75,388 $67,497 $69,611
====== ====== ======
- 14 -
<PAGE>
Item 7. Management's Discussion and Analysis of Operating Results and Financial
Condition (Cont'd)
Operating income in fiscal 2000 for the Americas division decreased 10.7%
primarily due to the divestiture of household products. US operating income
increased 1.5% primarily due to mix of products sold. Latin America operating
income decreased 55.9% due to significant currency devaluation in Brazil,
economic softness in Argentina and divestiture of household products.
International operating income increased 56.4% primarily due to a reduced
spending level of advertising and promotional expenses. In addition, newly
acquired products, improving economic conditions in Asia and the strengthening
Yen were key factors for the increase in operating income.
Excluding restructuring and re-engineering credits, income before income taxes
was 7.7% of sales in fiscal 2000 as compared to 6.7% in fiscal 1999. In fiscal
1998, income before income taxes was 8.1% of sales.
The effective tax rates of 24.7%, 23.5% and 25.6% in fiscal 2000, 1999 and 1998,
respectively, reflect tax exempt interest from government securities and income
from the lower tax areas of Puerto Rico and Ireland. In fiscal 2000, the
effective tax rate was slightly higher due to lower operating income in lower
taxed countries. The fiscal 1998 effective tax rate was higher, primarily due to
a change in taxability of certain Puerto Rico securities.
It is difficult to predict future exchange movement. If exchange rates continue
at fiscal 2000 levels, management does not anticipate any major material effects
on the Company's future financial condition or liquidity.
Although inflation has been moderate throughout fiscal 2000, 1999 and 1998, the
Company continues to utilize selective price increases and budgetary monitoring
of advertising, personnel and other expenses to control its operating margins.
In February 1997, the Company announced the consolidation of its manufacturing
operations by planning to close six of its twelve production facilities in
various parts of the world over a two year period. The worldwide manufacturing
restructuring and re-engineering program resulted in a pre-tax charge of $72.5
million ( $55.7 million net of tax), or $2.60 per share after taxes in fiscal
1997. As of March 31, 1999, the Company identified additional excess amounts of
$7.6 million due to additional favorable experiences in calculating final
severance payments and settlement of post-closing adjustments in connection with
the sale of one of its plants. In addition, as a result of favorable fixed asset
disposals, a gain of $5.1 million was generated. Consequently, the Company
recorded a restructuring credit of $12.7 million in its income statement for the
year ended March 31, 1999.
During fiscal 2000, the Company sold the three remaining facilities that were
identified for disposal under the program.
- 15 -
<PAGE>
Item 7. Management's Discussion and Analysis of Operating Results and Financial
Condition (Cont'd)
As of March 31, 2000, the Company has completed the program resulting in an
excess amount of $8.6 million due to early termination of the contractual
obligations to produce a product for another entity. Accordingly, the Company
recorded a restructuring credit of $8.6 million in its statement of income for
the year ended March 31, 2000. (See Note 13).
During the fiscal year, the Company acquired Chlorhexamed(Registered trademark),
a medicated mouthwash brand in Germany. In Latin America, the Company acquired
Silidron(Registered trademark) and Espasmo Silidron(Registered trademark), two
anti-gas medicines sold in Brazil, and the Pelo Libre(Registered trademark) line
of pediculicides in Argentina. In the U.K., the Company acquired the Louis
Marcel(Registered trademark) depilatory brand, and Interdens(Registered
trademark), a professional dental product. In Spain, the Company acquired the
Marie Yvonne(Registered trademark) depilatory brand. The aggregate amount spent
on these acquisitions was $54.5 million. Goodwill recorded in connection with
these product acquisitions amounted to $47 million.
In the third quarter of fiscal 2000, the Company's Board of Directors authorized
the repurchase of up to 500,000 shares of the Company's Class A Common Stock
(See Note 10).
Year 2000:
Since transitioning into the year 2000, the Company (including each of its
operating subsidiaries) has not experienced any major disruptions to its
business nor has it experienced any Y2K related disruptions impacting its
customers and suppliers. Furthermore, the Company did not experience any
material impact on inventories. The Company will continue monitoring its
critical systems but does not anticipate any significant impact due to Y2K
exposure.
The Company estimated that costs would reach a total of $17.5 million to address
its Y2K efforts as well as other business information requirements. The Company
accomplished its goal within the estimated $17.5 million.
Euro Currency Adoption:
As result of the European Economic and Monetary Union, a single currency (the
"Euro") will replace the national currencies of many of the European countries
in which the Company conducts business. The conversion rates between the Euro
and the participating nations' currencies were fixed as of January 1, 1999 with
the participating national currencies scheduled to be removed from circulation
between January 1, and June 30, 2002, and replaced by Euro notes and coinage.
During the transition period from January 1, 1999, through December 31, 2001,
public and private entities as well as individuals may pay for goods and
services using either checks, drafts or wire transfers denominated in Euros or
the participating country's national currency. We do not expect the Euro
conversion to have a material negative impact on operations in fiscal 2001. All
affiliates can operate within the Euro market.
We are continuing to upgrade our computer systems to operate more efficiently
within the Euro market in fiscal 2001.
- 16 -
<PAGE>
Item 7. Management's Discussion and Analysis of Operating Results and Financial
Condition (Cont'd)
Liquidity and Capital Resources: result of the issuance of debt. Cash and
cash equivalents decreased to $42 million at March 31, 2000 from $48 million at
March 31, 1999 and $56 million at March 31, 1998.
Net cash flows from operating activities were $64 million in fiscal 2000,
$33 million less than the prior year. The decrease in operating cash flows was
due to an increase in accounts receivable and a decrease in accounts payable,
partially offset by an increase in income taxes payable and in the provision for
customer credits and doubtful accounts. In fiscal 1999, net cash flows from
operating activities were $97 million, a slight decline from the prior year. The
decrease was mostly due to an increase in accounts receivable and other current
assets, partially offset by a decreases in inventories. Accounts receivable at
year-end 2000, 1999, 1998, represent 2.3, 2.2, and 2.0 average months of sales,
respectively.
Net cash used in investing activities in fiscal 2000 was $58 million,
compared to net cash used of $93 million in fiscal 1999. In fiscal 2000,
additions to property, plant and equipment, payments for products acquired and
purchases of marketable securities more than offset the proceeds from the sale
of securities, proceeds from product divestitures and proceeds from the sale of
property plant and equipment. In fiscal 1999, cash was invested primarily in
property, plant and equipment and in product acquisitions. In fiscal 1998, the
net cash outflow for investing activity was $114 million.
Net capital expenditures of $17 million for fiscal 2000 show a decrease of
$18 million from fiscal 1999. Domestically, major projects over the three-year
period include a substantial investment in computer modernization and R & D
laboratories. The production and warehouse facilities in Memphis, Tennessee and
in Puerto Rico have undergone expansion and modernization projects as a result
of the Company's Production Optimization Project.
The Company's foreign facility in Dungarvan, Ireland was expanded in fiscal
1998. The Dungarvan facility has continued to undergo expansion as a result of
the Company's Production Optimization Project. The Company anticipates future
capital spending to approximate 5% of net sales, and expects to fund
modernization and expansions through internally generated funds and through
short-term borrowings as appropriate.
Net cash utilized by financing activities was $10 million in fiscal 2000,
with a net outflow of $13 million in fiscal 1999, compared to net cash of $38
million provided in fiscal 1998. The financial outflows in fiscal 2000 arose
from the payment of dividends to shareholders and the repurchase of common
shares, partially offset by the net proceeds from debt. The financial outflows
in fiscal 1999 were the result of payments of dividends to shareholders and the
retirement of short-term debt, which was funded by the proceeds from the sale of
the Household Products group and with the proceeds from the issuance of a $50
million ten year note. The financial inflows in fiscal 1998 were the result of
the issuance of debt.
- 17 -
<PAGE>
Item 7. Management's Discussion and Analysis of Operating Results and Financial
Condition (Cont'd)
An overall strengthening of the U.S. Dollar in relation to foreign currencies
resulted in net foreign currency translation losses of $18 million in fiscal
2000. In fiscal 1999, net foreign currency translation gains were $4 million.
These amounts were recorded in the shareholders' equity section in the balance
sheet as a component of accumulated other comprehensive loss.
The Company has classified all long-term securities as "available for sale."
These long-term securities are reported at fair market value resulting in
unrealized holding losses of $4,019,000 as of March 31, 2000. Unrealized holding
gains were $4,222,000, net of taxes of $1,083,000, as of March 31, 1999.
The Company anticipates that sufficient funds will be provided from operations
and borrowing capabilities for capital expenditures, dividend payments and other
cash needs in fiscal 2001. The Company has uncommitted lines of credit totaling
$305 million and $341 million at March 31, 2000 and 1999, respectively (See Note
6).
New Accounting Standards:
During 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities" and in 2000 it issued SFAS No. 138,
"Accounting for Certain Derivative Instruments and Hedging Activities - an
amendment of FASB Statement No. 133". These standards must be adopted by the
Company by April 1, 2001. They require that all derivative financial instruments
be recorded on consolidated balance sheets at fair value. Changes in the fair
value of derivatives will be recorded each period in earnings or other
comprehensive income, depending on whether a derivative is designated as part of
a hedge transaction and, if it is, the type of hedge transactions and the extent
to which the hedge is effective in mitigating the exposure. Gains and losses on
derivative instruments reported in other comprehensive income will be
reclassified as earnings in the periods in which earnings are affected by the
hedged item. The Company is evaluating the impact, if any, of those statements
on its fiscal 2002 financial position, results of operations and disclosures.
Subsequent Events:
On June 6, 2000, the Company announced it retained Goldman Sachs to assist in a
review of strategic alternatives for enhancing shareholder value.
In April, Block Drug Company Canada acquired the Spectro(Registered trademark)
line of over-the-counter dermatology products, including soapless hand and face
cleansers and an antifungal antiseptic cleanser for approximately $9 million.
The Company has adopted a formal written Audit Committee charter which complies
with Nasdaq's Marketplace Rules. The Audit Committee will review and assess the
adequacy of the charter on an annual basis (See Exhibit 99).
- 18 -
<PAGE>
Item 7. Management's Discussion and Analysis of Operating Results and Financial
Condition (Cont'd)
Information Concerning Forward-Looking Statements:
The Company has made, and may continue to make, various forward-looking
statements with respect to its financial position, business strategy, projected
costs, projected savings, and plans and objectives of management. Such
forward-looking statements are identified by the use of forward-looking words or
phrases such as "anticipates", "intends," " expects," "plans," "believes,"
"estimates," or words or phrases of similar import. These forward-looking
statements are subject to numerous assumptions, risks, and uncertainties, and
the statements looking forward beyond fiscal 2000 are subject to greater
uncertainty because of the increased likelihood of changes in underlying factors
and assumptions. Actual results could differ materially from those anticipated
by the forward-looking statements.
The Company's forward-looking statements represent its judgement only on the
dates such statements are made. By making any forward-looking statements, the
Company assumes no duty to update them to reflect new, changed, or unanticipated
events or circumstances.
Item 7A. Market Risk
The Company's primary market risk exposures consist of interest rate risk and
foreign currency exchange risk. See Note 5 "Financial Instruments" to the
Consolidated Financial Statement for the Company's objectives and strategies for
managing potential exposures related to these risks. Management primarily uses
two types of financial instruments, interest rate cap agreements and foreign
currency put options, to hedge exposures to certain foreign currency
fluctuations and interest rate variability as described in Note 5.
Gains and losses on foreign currency put options are offset by the effects of
currency movements on respective underlying hedged transactions. Therefore, with
respect to financial instruments outstanding at March 31, 2000, a change of 10
percent in currency rates, compared to fiscal 2000 rates, would not have a
material effect on the Company's consolidated financial position, liquidity,
cash flows or results of operations.
The Company holds certain instruments, primarily debt obligations, which are
sensitive to changes in market interest rates. At March 31, 2000, the majority
of the Company's variable rate debt consisted of bank borrowings which are
subject to changes in market interest rates. However, at March 31, 2000 a change
of 1 percent in interest rates, compared to fiscal 1999 rates, would not have a
material effect on the Company's consolidated financial position, liquidity,
cash flows, results of operations or the fair value of the Company's debt.
- 19 -
<PAGE>
Item 8. Financial Statements and Supplementary Data
Report of Independent Accountants
To the Board of Directors and
Shareholders of Block Drug Company, Inc.
In our opinion, based on our audits and the reports of other auditors,
the consolidated financial statements listed in the index appearing under item
14(a)(1) on page 57 present fairly, in all material respects, the financial
position of Block Drug Company, Inc. and subsidiaries at March 31, 2000 and
1999, and the results of their operations and their cash flows for each of the
three years in the period ended March 31, 2000 in conformity with accounting
principles generally accepted in the United States. In addition, in our opinion,
the financial statement schedule listed in the index appearing under item
14(a)(3) on page 57 presents fairly, in all material respects, the information
set forth therein when read in conjunction with the related consolidated
financial statements. These financial statements and financial statement
schedule are the responsibility of the Company's management; our responsibility
is to express an opinion on these financial statements and financial statement
schedule based on our audits. We did not audit the financial statements of
certain foreign wholly-owned subsidiaries and a certain foreign branch, which
statements reflect total assets constituting approximately 17 percent and 15
percent as of March 31, 2000 and 1999, respectively, and total revenues
constituting approximately 34 percent, 30 percent and 33 percent for each of the
three years in the period ending March 31, 2000. Those statements were audited
by other auditors whose reports thereon have been furnished to us, and our
opinion expressed herein, insofar as it relates to the amounts included for
Block Drug Company, Inc. and subsidiaries, is based solely on the reports of the
other auditors. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States, which require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits and the reports of other
auditors provide a reasonable basis for the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
New York, New York
June 6, 2000
- 20 -
<PAGE>
<TABLE>
BLOCK DRUG COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
MARCH 31,
2000 1999
ASSETS
<S> <C> <C>
Current Assets:
Cash and cash equivalents........................................................... $ 41,645,000 $ 48,363,000
Marketable securities ......................................................... 23,557,000 29,994,000
Accounts receivable, less allowances of $9,494,000 (2000)
and $4,750,000 (1999) ................................................ 162,173,000 151,492,000
Inventories......................................................................... 144,740,000 135,947,000
Other current assets................................................................ 44,213,000 41,867,000
Total current assets............................................................. 416,328,000 407,663,000
Property, plant and equipment, less
accumulated depreciation......................................................... 229,156,000 252,270,000
Long-term securities ........................................................ 259,705,000 257,082,000
Goodwill and other intangible assets, less
accumulated amortization of $26,392,000 (2000) and
and $21,217,000 (1999) .............................................. 260,424,000 239,818,000
Other assets........................................................................ 11,318,000 7,952,000
Total assets..................................................................... $1,176,931,000 $1,164,785,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes and bonds payable.......................................................... $ 155,157,000 $ 133,381,000
Accounts payable and accrued expenses............................................ 154,717,000 173,196,000
Income taxes payable............................................................. 17,241,000 13,532,000
Dividend payable................................................................. 5,618,000 5,521,000
Total current liabilities 332,733,000 325,630,000
Notes and bonds payable............................................................. 105,308,000 107,012,000
Deferred income taxes............................................................... 13,733,000 8,155,000
Deferred compensation and other liabilities......................................... 42,784,000 40,103,000
Total liabilities 494,558,000 480,900,000
Contingencies
Shareholders' equity:
Class A common stock non-voting par value $.10-20,000,000
shares authorized, 14,538,000 (2000) and 14,456,000 (1999)
shares issued and outstanding.................................................... 1,454,000 1,445,000
Class B common stock, par value $.10-40,000,000 shares
authorized, 8,671,000 (2000) and 8,419,000 (1999)
shares issued and outstanding.................................................... 867,000 842,000
Capital in excess of par value...................................................... 319,693,000 306,433,000
Retained earnings................................................................... 396,381,000 384,952,000
Accumulated other comprehensive loss................................................ (36,022,000) (9,787,000)
Total shareholders' equity.......................................................... 682,373,000 683,885,000
Total liabilities and shareholders' equity....................................... $1,176,931,000 $1,164,785,000
See notes to consolidated financial statements.
</TABLE>
- 21 -
<PAGE>
<TABLE>
BLOCK DRUG COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
INCOME AND RETAINED EARNINGS
<CAPTION>
For the Years Ended March 31, 2000 1999 1998
<S> <C> <C> <C>
Revenues:
Net sales................................................ $ 864,320,000 $ 821,101,000 $ 863,057,000
Interest, dividends and other income..................... 29,898,000 27,984,000 25,882,000
894,218,000 849,085,000 888,939,000
Cost and Expenses:
Cost of goods sold....................................... 318,121,000 301,845,000 313,848,000
Selling, general and administrative...................... 494,427,000 478,888,000 491,586,000
Interest expense......................................... 14,859,000 13,528,000 13,894,000
Manufacturing, restructuring and
re-engineering credits .............................. (8,577,000) (12,673,000) -
818,830,000 781,588,000 819,328,000
Income before income taxes.................................. 75,388,000 67,497,000 69,611,000
Income Taxes:
Current.................................................. 20,248,000 11,194,000 14,868,000
Deferred................................................. (1,619,000) 4,681,000 2,951,000
18,629,000 15,875,000 17,819,000
Net Income.................................................. 56,759,000 51,622,000 51,792,000
Retained earnings at beginning of year...................... 384,952,000 377,595,000 377,202,000
Less: Cash dividends - $1.28 (2000), $1.27
(1999) and $1.25 (1998)
per share of Class A common stock (18,475,000) (17,864,000) (17,087,000)
Cash dividends $0.444 (2000), $0.441 (1999) and
$.435 (1998) per share
of Class B common stock.................................... (3,765,000) (3,634,000) (3,503,000)
Stock dividends 3% (2000, 1999, and 1998)
to Class A shareholders
payable in Class A common stock.......................... (14,599,000) (14,385,000) (19,441,000)
Stock dividends 3% to Class B
shareholders payable in Class B
common stock (2000, 1999, and 1998)....................... (8,491,000) (8,382,000) (11,368,000)
Retained earnings at end of year............................ $396,381,000 $ 384,952,000 $ 377,595,000
Earnings per common share - basic and diluted $2.42 $2.19 $2.20
</TABLE>
See notes to consolidated financial statements.
- 22 -
<PAGE>
<TABLE>
BLOCK DRUG COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
<CAPTION>
For the Years Ended March 31, 2000 1999 1998
<S> <C> <C> <C>
Net income.................................................. $56,759,000 $51,622,000 $51,792,000
Other comprehensive (loss) income:
Foreign currency translation adjustments*. (17,994,000) 4,232,000 (20,285,000)
Unrealized holding (losses) gains on marketable
securities, net of taxes.............................. (8,241,000) 530,000 3,141,000
(26,235,000) 4,762,000 (17,144,000)
Comprehensive income........................................ $30,524,000 $56,384,000 $34,648,000
</TABLE>
See Note 15 for Accumulated Other Comprehensive Loss.
*The Company does not provide for U.S. income taxes on foreign currency
translation adjustments because it does not provide for such taxes on
undistributed earnings of foreign subsidiaries.
See notes to consolidated financial statements.
- 23 -
<PAGE>
<TABLE>
BLOCK DRUG COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
<CAPTION>
For the Years Ended March 31, 2000 1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C> <C>
Net income........................................................... $ 56,759,000 $ 51,622,000 $ 51,792,000
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization.................................. 30,372,000 26,110,000 24,670,000
Deferred income tax provision.................................. (1,619,000) 4,681,000 2,951,000
Deferred compensation provision................................ 6,021,000 1,338,000 4,310,000
Gain on product divestiture.................................... (960,000) - -
Restructuring and re-engineering
payments...................................................... - (3,202,000) (15,016,000)
Manufacturing restructuring credits............................ (8,577,000) (12,673,000) -
Employee savings plan provision................................ 612,000 1,745,000 1,879,000
Provision for doubtful accounts................................ 4,744,000 304,000 (58,000)
Other, net..................................................... 997,000 (30,000) (849,000)
Loss (gain)on sale of property, plant
..................................................and equipment 4,190,000 152,000 (3,557,000)
Changes in assets and liabilities that
provided (used) cash, net of effects from
purchase of products acquired:
Accounts receivable............................................ (15,425,000) (6,557,000) 12,161,000
Inventories.................................................... ( 9,041,000) 6,559,000 (7,169,000)
Other current assets........................................... 4,851,000 (4,158,000) 4,751,000
Other assets................................................... 1,130,000 (395,000) (1,230,000)
Accounts payable and accrued expenses.......................... (10,312,000) 29,710,000 19,036,000
Income taxes payable........................................... 3,709,000 2,561,000 (1,113,000)
Deferred compensation and
other noncurrent liabilities................................. (3,340,000) (1,248,000) 4,388,000
Net cash flow from operating activities.............................. 64,111,000 96,519,000 96,946,000
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from product divestitures,
net of cash expenses.............................................. 19,000,000 28,475,000 -
Additions to property, plant and equipment........................... (28,042,000) (39,754,000) (45,822,000)
Proceeds from sale of property, plant
and equipment..................................................... 10,964,000 5,163,000 7,970,000
(Increase) decrease in marketable
securities, net................................................... 19,099,000 3,030,000 (100,000)
Dispositions of long-term securities................................. 30,844,000 54,515,000 46,457,000
Purchase of long-term securities..................................... (55,565,000) (75,390,000) (84,234,000)
Payments for products acquired,
primarily goodwill................................................ (54,511,000) (69,011,000) (38,173,000)
Net cash used in investing activities................................ (58,211,000) (92,972,000) (113,902,000)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid to shareholders....................................... (22,240,000) (21,498,000) (20,590,000)
Net proceeds from debt............................................... 22,436,000 8,839,000 58,890,000
Common shares repurchased............................................ (10,410,000) - -
Net cash provided by (used in)
financing activities.............................................. (10,214,000) (12,659,000) 38,300,000
Effects of exchange rates on cash and cash
equivalents ...................................................... (2,404,000) 1,144,000 (3,898,000)
(Decrease) increase in cash and cash
equivalents....................................................... (6,718,000) (7,968,000) 17,446,000
Cash and cash equivalents, beginning of year......................... 48,363,000 56,331,000 38,885,000
Cash and cash equivalents, end of year............................... $ 41,645,000 $ 48,363,000 $ 56,331,000
</TABLE>
See notes to consolidated financial statements.
- 24 -
<PAGE>
<TABLE>
BLOCK DRUG COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)
<CAPTION>
For the Years Ended March 31, 2000 1999 1998
SUPPLEMENTAL CASH FLOW DATA
<S> <C> <C> <C>
Cash Paid During the Year:
Interest.......................................................... $14,577,000 $12,127,000 $14,076,000
Income Taxes...................................................... $17,133,000 $10,257,000 $12,350,000
</TABLE>
See notes to consolidated financial statements.
- 25 -
<PAGE>
BLOCK DRUG COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
Note 1. Significant Accounting Policies:
Basis of consolidation:
The accompanying consolidated financial statements include the accounts of the
Company and its domestic and foreign subsidiaries and branches, all of which are
wholly-owned. With the exception of the March 31 year-end accounts of Germany
and Colombia branches, all other accounts of foreign subsidiaries have been
included on the basis of fiscal years ended December 31 in order to be available
for inclusion in the consolidation. All material intercompany transactions and
balances have been eliminated in consolidation.
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported. Actual amounts are not
expected to differ materially from those estimates. Certain prior year amounts
have been reclassified to conform with current year presentation. Freight and
shipping costs have been reclassified from selling, general and administrative
to cost of goods in accordance with FASB Emerging Issues Task Force ("EITF")
00-10, "Accounting for Shipping and Handling Fees and Costs."
Revenue Recognition:
The Company recognizes revenue from product sales when the goods are shipped to
the customer.
Foreign currency translation:
All assets and liabilities, other than those of highly inflationary countries,
are translated at year-end exchange rates. In such cases, translation gains and
losses are recorded as a separate component of shareholders' equity and are not
included in the determination of net income. For subsidiaries that are
considered to be operating in highly inflationary countries (Brazil for fiscal
year 1998 and Mexico for 1999 and 1998), the functional currency is the US
dollar. Certain assets and liabilities are translated at historical exchange
rates and resulting translation gains and losses are included in the
determination of net income. Income statements are translated each month into US
dollars at the weighted average exchange rates during the period. In all cases,
foreign currency transaction gains and losses are included in the determination
of net income.
Net foreign exchange gains/(losses) of $4,807,000, ($1,369,000), and
($2,523,000) , were included in selling, general and administrative expenses in
the determination of net income for fiscal years 2000, 1999, and
1998, respectively.
2000 1999 1998
================================= ============= ============ ============
Transaction gains/(losses) $ 4,807,000 $ (737,000) $(2,339,000)
Translation losses relating to
highly inflationary countries - (632,000) (184,000)
Total $ 4,807,000 $(1,369,000) $(2,523,000)
================================= ============= ============ ============
CUMULATIVE TRANSLATION
ADJUSTMENT RECONCILIATION 2000 1999 1998
================================= ============= =========== =============
Balance -Beginning $(14,009,000) $(18,241,000) $ 2,044,000
Translation Adjustment (17,994,000) 4,232,000 (20,285,000)
Balance-Ending $(32,003,000) $(14,009,000) $(18,241,000)
================================= ============= =========== =============
Advertising:
Costs associated with advertising are expensed in the year incurred. Advertising
expenses, which are comprised primarily of television and print media, were
$203,867,000, $205,099,000, and $201,653,000 in fiscal 2000, 1999 and 1998,
respectively.
- 26 -
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Cash and Cash Equivalents:
Cash equivalents include primarily demand deposits, certificates of deposit and
time deposits with maturity periods of three months or less when purchased.
Inventories:
Inventories are stated at the lower of cost or market. Cost is computed using
standard cost which approximates actual cost on a first-in, first-out basis in
the U.S. Internationally, inventory is valued at actual cost on a first-in,
first-out basis.
Property, plant and equipment:
Property, plant and equipment is recorded at cost. Depreciation is provided over
estimated lives using the straight-line method for book purposes and accelerated
methods for tax purposes. Average useful lives are 40 years for buildings and
building additions, 12 years for equipment and 5 years for computers. The cost
of maintenance, repairs and minor renewals of property, plant and equipment are
charged to operations; major renewal and betterments are capitalized.
Goodwill and other intangible assets:
Goodwill and other intangible assets represent the excess of cost over the fair
value of net tangible assets of companies or products purchased. Such assets
consist primarily of goodwill and trademarks. At March 31, 2000, the carrying
values of these assets were $183 million and $77 million, respectively. At March
31, 1999, these respective carrying values were $169 million and $71 million,
respectively. Goodwill acquired prior to October 31, 1970 is not being
amortized since, in management's opinion, its value, approximately
$14.1 million, has not diminished. Goodwill acquired subsequent to that
date is being amortized using the straight-line method over the years
estimated to be benefited, but not to exceed 40 years. Other intangible assets
are recorded at cost and amortized over their estimated useful lives on
the straight line method. The Company periodically evaluates whether
current events or circumstances warrant adjustments to the carrying
value or estimated useful lives of its intangible assets in accordance with
SFAS 121; "Accounting for the Impairment of Long-Lived Assets", and APB 17,
"Intangible Assets".
Amortization of goodwill and other intangible assets was $7,712,000, $5,258,000
and, $5,019,000 in the years ended March 31, 2000, 1999 and 1998, respectively.
Marketable and long-term securities, and financial instruments:
Marketable securities classified as current assets include debt instruments with
less than one year remaining until maturity, are treated as available for sale
and are recorded at market value. Long-term securities are also treated as
available for sale and are recorded at market value. Unrealized holding gains
and losses on securities classified as available for sale are recorded in a
separate component of shareholders' equity. The fair values of such securities
are determined by published market prices, independent pricing services and/or
securities dealers.
The Company utilizes certain financial instruments to manage its foreign
currency and interest rate exposures. To qualify as a hedge, the Company must be
exposed to currency or interest rate risk and the financial instrument must
reduce the exposure and be designated as a hedge. Additionally, for hedges of
anticipated transactions, the significant characteristics and expected terms of
the anticipated transaction must be identified and it must be probable that the
anticipated transaction will occur. Financial instruments qualifying for hedge
accounting must maintain a high correlation between the hedging instrument and
the item being hedged, both at inception and throughout the hedged period. Any
gains or losses would be recognized in interest, dividends and other income if
anticipated transactions were not to occur.
The Company uses foreign currency options to mitigate its foreign currency
exposure. The corresponding gains and losses on those contracts are deferred and
included in the basis of the underlying hedged transactions when settled. Option
premiums on options used to hedge anticipated exposures, principally inventory
purchases, are recorded as other current assets on the consolidated balance
sheets and amortized to expense over the lives of the related options. The
values of options, excluding their time values, are recognized as adjustments to
the related hedged items when the related transaction occurs.
The Company uses interest rate cap agreements and an interest rate swap
agreement to mitigate its interest rate exposure related to variable rate
borrowings. These agreements cover periods similar to the third party debt
which they are intended to hedge. The premiums on the cap agreements are
amortized to interest expense over the lives of the related agreements, or
immediately if the related debt does not remain outstanding.
- 27 -
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
During 1998 the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities" and in 2000 it has issued SFAS No. 138,
"Accounting for Certain Derivative Instruments and Hedging Activities - an
amendment of FASB Statement No. 133". These standards must be adopted by the
Company by April 1, 2001. They require that all derivative financial instruments
be recorded on the consolidated balance sheets at their fair value. Changes in
the fair value of derivatives will be recorded each period in earnings or other
comprehensive earnings, depending on whether a derivative is designated as part
of a hedge transaction and, if it is, the type of hedge transactions and the
extent to which the hedge is effective in mitigating the exposure. Gains and
losses on derivative instruments reported in accumulated other comprehensive
loss will be reclassified as earnings in the periods in which earnings are
affected by the hedged item. The Company does not anticipate that adoption of
SFAS Nos. 133 and 138 will have a material effect on its financial position or
results of operations.
Retirement plans and deferred compensation agreements:
Pension costs recorded as charges to operations include actuarially determined
current service costs and an amount equivalent to amortization of prior service
costs in accordance with the provisions set forth in SFAS No. 87, "Employer's
Accounting for Pensions." It is the Company's policy to fund pension costs in
accordance with the Internal Revenue Service full funding limitation.
The Company accounts for postretirement benefits other than pensions in
accordance with SFAS No. 106, "Employers Accounting for Postretirement Benefits
Other Than Pensions." The Company accounts for the cost of these benefits, which
are for health care, by accruing them during the employee's active working
career. The Company has elected to amortize the unfunded obligation existing at
April 1, 1993 (transition obligation) over a period of 20 years.
The Company has agreements with certain key executives which provide deferred
compensation depending on length of service and average salary level. Benefits
payable in the future to these executives under these agreements are charged to
operations on an actuarially determined basis over the attribution period which
equals the estimated period of active employment of such executives.
Concentration of Credit Risk:
The Company sells a broad range of products in many countries of the world.
Concentrations of credit risk with respect to trade receivables are limited due
to the large number of customers comprising the Company's customer base. Ongoing
credit evaluations of customer's financial condition are performed and,
generally, no collateral is required. The Company maintains reserves for
potential credit losses.
Research and development expenditures:
Research and development expenditures are charged to operations as incurred. The
charges for the years ended March 31, 2000, 1999 and 1998 were $25,416,000,
$23,508,000, and $25,849,000, respectively.
Risks and Uncertainties:
The Company markets products in highly competitive fields. For many of its
products, its competitors include significantly larger corporations with
substantially greater resources. The high degree of trademark recognition and
goodwill associated with many of the Company's brand names is an important
factor in its ability to compete effectively. While larger competitors are able
to commit significantly greater revenues to national advertising, the Company
believes its advertising and marketing expertise enables it to compete
effectively.
The primary competitive factors affecting proprietary over-the-counter brands
are product formulation, reputation, advertising and consumer promotions.
- 28 -
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Note 2. Inventories:
Major classes of inventories are
summarized as follows: March 31
2000 1999
Raw and packaging materials............... $ 41,845,000 $ 30,997,000
Finished goods............................ 102,895,000 104,950,000
Total.................................. $144,740,000 $135,947,000
Note 3. Property, Plant and Equipment:
Major classes of property, plant and
equipment are summarized as follows: March 31
2000 1999
Land...................................... $ 12,565,000 $ 16,467,000
Building and related improvements......... 133,991,000 146,921,000
Machinery and equipment................... 136,338,000 150,421,000
Furniture and fixtures .................. 68,729,000 61,128,000
Construction in progress.................. 12,002,000 12,594,000
363,625,000 387,531,000
Less: Accumulated depreciation 134,469,000 135,261,000
Total $229,156,000 $252,270,000
Depreciation expense for the years ended March 31, 2000, 1999 and 1998 was
$22,660,000, $20,852,000, and $19,651,000, respectively. Certain of the above
properties are pledged as collateral for long term debt (Note 6).
Note 4. Marketable and Long-Term Securities:
The Company accounts for securities in accordance with SFAS No. 115
"Accounting for Certain Investments in Debt and Equity Securities". The Company
classifies its marketable and long-term securities as available-for-sale.
The Company's marketable and long-term securities, both current and noncurrent,
as of March 31, 2000 consisted of the following:
<TABLE>
<CAPTION>
Unrealized Holding
Security Type Amortized Cost Fair Value Gains Losses
<S> <C> <C> <C> <C>
U.S. government & its agencies $ 44,109,000 $ 42,032,000 $ 121,000 $ 2,198,000
Mortgage backed securities 112,510,000 111,042,000 508,000 1,976,000
State and municipal 119,750,000 118,713,000 536,000 1,573,000
Hedge funds 10,912,000 11,475,000 563,000 -
Total $287,281,000 $283,262,000 $1,728,000 $5,747,000
</TABLE>
The above unrealized holding gains and losses are reflected as a component of
"Accumulated other comprehensive loss" in shareholders' equity.
- 29 -
<PAGE>
<TABLE>
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The marketable securities, both current and non-current, as of March 31, 1999
consisted of the following:
<CAPTION>
Unrealized Holding
Security Type Amortized Cost Fair Value Gains Losses
<S> <C> <C> <C> <C>
U.S. government & its agencies $ 39,843,000 $ 39,958,000 $ 267,000 $152,000
Mortgage backed securities 86,770,000 88,455,000 1,835,000 150,000
State and municipal 151,158,000 154,561,000 3,417,000 14,000
Hedge funds 4,000,000 4,102,000 102,000 -
Total $281,771,000 $287,076,000 $5,621,000 $316,000
</TABLE>
The above unrealized holding gains and losses, net of income taxes of
$1,083,000, are reflected as a component of "Accumulated other
comprehensive income" in shareholders' equity.
The maturities of the Company's investment in debt securities, at fair value,
as of March 31, 2000 and 1999 were as follows:
2000 1999
Within 1 year $ 23,557,000 $ 29,994,000
After 1 year through 5 years 52,901,000 55,188,000
After 5 years through 10 years 88,609,000 107,614,000
After 10 years 106,720,000 90,178,000
Total $271,787,000 $282,974,000
For the years ended March 31, 2000, 1999 and 1998 the proceeds from the
sales of long-term securities including normal principal payments on government
agency obligations, bond redemptions and maturities were $30,844,000,
$54,515,000 and $46,457,000 respectively. Net realized gains from these
transactions were $177,000 for 2000, $283,000 for 1999, and $987,000 for 1998
respectively. The costs of long-term marketable securities sold were determined
by specific identification.
Note 5. Financial Instruments
The Company uses interest rate swaps, interest rate caps and foreign
currency exchange options to reduce exposures to market risks from
fluctuations in interest rates and foreign exchange rates.
The Company had interest rate cap agreements with notional amounts of
$100,000,000 and 100,000,000 Euros ($99,920,000) at March 31, 2000 and
$100,000,000 at March 31, 1999. The US dollar denominated caps limit the
Company's interest rate costs on its variable rate debt through June 1, 2002 if
the 90 day LIBOR rate exceeds 9%. The Euro denominated caps limit interest
expense during the period from October 29, 1999 to October 31, 2001 if the 90
day EURIBOR rate exceeds 4.5% and from October 31, 2001 through October 29, 2004
if the 90 day EURIBOR rate exceeds 5.5%. No benefits were derived from these cap
agreements during the current fiscal year. Costs associated with notional
amounts in excess of loan balances are expensed in the period during which the
excess occurs. Contracts are marked to market and the change in market value is
included in period results. The Company also had an interest rate swap agreement
with a notional value of $2,273,000 and $2,562,000 at March 31, 2000 and 1999,
respectively. The swap agreement fixes the interest rate on that amount of debt
at 6.1% until maturity on July 2, 2001.
- 30 -
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
At the end of fiscal years 2000 and 1999, the Company held foreign currency
options to reduce the impact of fluctuations in certain foreign currencies
- principally the Japanese Yen, Euro, British pound sterling, Australian
dollar and Canadian dollar - on anticipated transactions, primarily
inventory purchases. The aggregate notional amount of these options at the
end of fiscal year 2000, which expire in fiscal years 2001, approximated
$71,500,000 and had a weighted average maturity of 366 days. The notional
value of contracts expiring in fiscal 2000 and 2001 as of March 31, 1999
was $137,755,000 with a weighted average maturity of 465 days.
The estimated fair values of unexpired foreign currency options held, which
represents the amount the Company would receive if it terminated the
agreements, at the end of fiscal 2000 and 1999 were $1,279,000 and
$1,415,000, respectively. Realized net gains (losses) from foreign currency
options were $72,000 and ($2,165,000) for fiscal 2000 and 1999,
respectively.
The fair value of the interest rate cap agreements represents the estimated
amount that the Company would pay to terminate the agreements. At March 31,
2000 and 1999, the Company would have paid $1,398,000 and $1,367,000 to
terminate these agreements.
The Company realized gains during fiscal 2000 of $5,267,000 from foreign
currency swaps between the Brazilian Real and U.S. dollar, but did not hold
any such swaps at year-end.
The Company is exposed to potential loss in the event of nonperformance by
the counter-parties to its financial instruments. However, the Company does
not anticipate nonperformance by the counter-parties, which are major
financial institutions. The Company diversifies its exposure among
counter-parties to reduce credit exposure to any one counter-party.
Note 6. Notes and Bonds Payable:
Short-term notes payable consist primarily of borrowings from various banks
at interest rates ranging from 2.9% to 13.0% with a weighted average of
4.68% and 5.47% for the fiscal years ended March 31, 2000 and 1999,
respectively. At March 31, 2000 and 1999, the Company maintained
uncommitted bank lines of credit aggregating $304,598,000 and $341,046,000,
respectively. Of these amounts, $143,648,000 and $211,620,000 were unused
at March 31, 2000 and 1999, respectively. The fair value of the short-term
notes payable approximates book value due to the relatively short maturity
of these loans.
Long-term notes and bonds payable are comprised of the following:
<TABLE>
<CAPTION>
March 31
2000 1999
<S> <C> <C>
Variable rate Spanish Peseta notes (currently 3.63%)........ $ 3,035,000 $ -
Variable rate mortgage notes (currently 3.91%) due
fiscal 2002................................................ 2,273,000 2,562,000
6.47% Senior notes due fiscal 2006.......................... 50,000,000 50,000,000
6.46% Senior notes due fiscal 2009.......................... 50,000,000 50,000,000
Variable rate bonds (currently 3.1%), due
fiscal 2010.............................................. - 4,450,000
$105,308,000 $107,012,000
</TABLE>
Long-term notes and bonds payable maturing in the next five fiscal years and
thereafter are as follows:
<TABLE>
<CAPTION>
March 31
2000 1999
<S> <C> <C>
F'2001...................................................... $ - $ -
F'2002 Variable rate notes.................................. 2,728,000 2,562,000
F'2003 Variable rate notes.................................. 759,000 -
F'2004 Variable rate notes.................................. 910,000 -
F'2005 Variable rate notes.................................. 911,000 -
F'2006 and later............................................ $100,000,000 $104,450,000
</TABLE>
Certain properties of the Company (approximate book value $3,359,000) are
pledged as collateral for the mortgage notes. The requirements of the bond
indentures include the maintenance by the Company of specified financial
ratios and tests including a maximum ratio of indebtedness to total
capitalization and a minimum interest coverage ratio.
- 31 -
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Interest expense on all borrowings was charged to expense and
aggregated $14,859,000 in fiscal 2000, $13,528,000 in fiscal 1999 and
$13,894,000 in fiscal 1998.
The fair value of the senior notes at March 31, 2000 was $99,598,500.
The fair value of the senior notes at March 31, 1999 was $98,625,000.
The fair value of the remaining long-term debt approximates book
value.
Note 7. Accounts Payable and Accrued Expenses:
Accounts payable and accrued expenses are comprised of the following:
<TABLE>
<CAPTION>
March 31
2000 1999
<S> <C> <C>
Accounts payable - trade.............................................................. $ 53,477,000 $ 52,970,000
Accrued salaries, wages, vacation pay and bonuses..................................... 20,876,000 23,934,000
Accrued advertising and selling expenses.............................................. 48,154,000 48,286,000
Restructuring and re-engineering...................................................... - 9,200,000
Accrued legal......................................................................... 17,300,000 20,066,000
Other current liabilities............................................................. 14,910,000 18,740,000
</TABLE>
<TABLE>
<CAPTION>
$154,717,000 $173,196,000
Note 8. Income Taxes:
Income taxes consisted of:
Current Deferred Total
<S> <C> <C> <C>
For the year ended March 31, 2000
Federal....................................................... $ 4,163,000 $ 404,000 $ 4,567,000
Foreign....................................................... 15,899,000 (2,058,000) 13,841,000
State......................................................... 186,000 35,000 221,000
$20,248,000 $ (1,619,000) $18,629,000
For the year ended March 31, 1999
Federal....................................................... $ 3,679,000 $ (1,586,000) $ 2,093,000
Foreign....................................................... 7,179,000 6,403,000 13,582,000
State......................................................... 336,000 (136,000) 200,000
$11,194,000 $ 4,681,000 $15,875,000
For the year ended March 31, 1998
Federal....................................................... $ 3,741,000 $ 752,000 $ 4,493,000
Foreign....................................................... 11,353,000 2,135,000 13,488,000
State......................................................... (226,000) 64,000 (162,000)
$14,868,000 $ 2,951,000 $17,819,000
</TABLE>
Deferred income tax expenses result from temporary differences in the
recognition of revenue and expense for tax and financial statement
purposes.
The source and the tax effect of these differences were as follows:
<TABLE>
<CAPTION>
2000 1999 1998
<S> <C> <C> <C>
For the year ended March 31:
Depreciation........................................................ $(1,476,000) $1,794,000 $(1,996,000)
Expenses (not) currently deductible for
tax purposes........................................................ (48,000) 2,702,000 6,376,000
Other ............................................................ (95,000) 185,000 (1,429,000)
............................................................ ($1,619,000) $4,681,000 $2,951,000
</TABLE>
A reconciliation of the provision for income taxes and the amount that would
be computed using statutory federal income tax rates on income before income
taxes for the years ended March 31 is as follows:
<TABLE>
<CAPTION>
(In millions)
<S> <C> <C> <C>
2000 1999 1998
For the year ended March 31:
Tax at U.S. Federal statutory rate of 35%............................ $26.4 $23.6 $24.4
Tax benefit on Puerto Rico investment income
related primarily to tax-exempt bonds.............................. (2.5) (2.6) (2.7)
Irish operating income taxed at lower rate.......................... (8.3) (0.3) (5.7)
Reduction in taxes resulting from Puerto Rico
source income subject to lower tax rate........................... (1.4) (5.0) (2.8)
Foreign tax rate differential....................................... 3.4 1.8 4.2
Other............................................................... 1.0 (1.6) .4
Total............................................................... $18.6 $15.9 $17.8
</TABLE>
- 32 -
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The Company's subsidiaries in Puerto Rico have agreements which commenced
in fiscal 1988 and expire in 2012, which provide for a 90% exemption from income
taxes on operating income. The Company's subsidiary in Ireland has a 10% tax
rate on export sales. The Company has not accrued U.S. federal income taxes on
cumulative undistributed earnings of foreign subsidiaries of $249,144,000 as of
March 31, 2000, since the majority of such earnings are expected to be
permanently reinvested abroad. Where it is the intention to remit earnings, the
related U.S. income taxes on these earnings, after giving effect to available
tax credits, would not be material. The Company believes that the determination
of the liability for the amount of unrecognized deferred taxes for temporary
differences related to investments in foreign subsidiaries that are permanent in
duration is not practicable.
Deferred tax assets and liabilities consisted of the following:*
March 31,
Deferred tax assets: 2000 1999
Coupon accrual, sales discounts,
and workers compensation.............. $ 3,194,000 $ 3,386,000
Employee benefits..................... 9,050,000 6,754,000
Accrual on vacation................... 1,035,000 1,329,000
Deferred compensation................. 4,067,000 3,968,000
Capital gain.......................... 11,970,000 10,471,000
Accrued restructuring................. - 3,496,000
Other................................. 8,842,000 4,250,000
$38,158,000 $33,654,000
Deferred tax liabilities:
Property, plant and equipment......... $16,144,000 $17,784,000
SFAS No. 115 adjustment............... - 1,083,000
Other................................. 15,841,000 10,233,000
$31,985,000 $29,100,000
* As of March 31, 2000 and 1999, recoverable income taxes reflected in
the balance sheet in "Other current assets" included current deferred
tax assets of $19,906,000 and $12,709,000, respectively. The remaining
deferred tax liabilities, net of deferred tax assets, were reflected in
the balance sheet as "Deferred income taxes".
Note 9. Retirement and Deferred Compensation Plans:
In fiscal 1999, the Company adopted SFAS No. 132, "Employers' Disclosures
about Pensions and Postretirement Benefits," which standardizes the disclosure
requirements for pensions and other postretirement benefits. The Statement
addresses disclosure only. It does not address liability measurement or expense
recognition. There was no effect on financial position or net income as a result
of adopting SFAS No. 132.
The Company and its subsidiaries have several pension plans covering
substantially all domestic employees and certain employees in foreign countries.
The Company makes annual contributions to the plans equal to the amounts
allowable under the Internal Revenue Service maximum full funding limitation.
The domestic plan benefits are primarily based upon the employee's compensation
during the sixty highest consecutive months of the last 120 months of employment
and the number of years of service.
In addition to providing pension benefits the Company provides certain
retiree health care benefits, presented as "Other Benefits", for substantially
all non-union employees (excluding Puerto Rico) who reach retirement age while
working for the Company. Health care benefits are provided by Blue Cross Blue
Shield of New Jersey and selected Health Maintenance Organizations. The Company
reserves the right to change or discontinue these benefits in whole or in part
at any time.
The following tables provide a reconciliation of changes in domestic plan
obligations and fair values of plan assets at March 31, 2000 and 1999, and a
statement of the funded status of the domestic plans at March 31, 2000 and 1999,
respectively:
<TABLE>
<CAPTION>
Pension Benefits Other Benefits
2000 1999 2000 1999
Change in Benefit Obligation
<S> <C> <C> <C> <C>
Benefit Obligation at Beginning of Year........................ $64,440,000 $74,756,000 $9,042,000 $8,554,000
Service Cost................................................... 4,173,000 4,261,000 335,000 329,000
Interest Cost.................................................. 4,602,000 4,352,000 634,000 607,000
Settlement..................................................... - (17,075,000) - -
Special Termination Benefits................................... - 931,000 - -
Amendments..................................................... - 913,000 - -
Curtailments................................................... - (394,000) - -
Employee Contributions......................................... - - 21,000 15,000
Actuarial(Gain)/Loss........................................... (9,515,000) 2,761,000 (1,486,000) (279,000)
Benefit Payments............................................... (5,721,000) (6,065,000) (357,000) (184,000)
Benefit Obligation at End of Year.............................. $57,979,000 $64,440,000 $8,189,000 $9,042,000
Change in Plan Assets
Fair Value of Assets at Beginning of Year...................... $62,102,000 $77,492,000 - -
Settlement..................................................... - (17,075,000) - -
Actual Return on Assets........................................ 3,958,000 4,523,000 - -
Employer Contribution.......................................... 266,000 3,227,000 336,000 $169,000
Employee Contribution.......................................... - - 21,000 15,000
Benefits Payments.............................................. (5,721,000) (6,065,000) (357,000) (184,000)
Fair Value of Assets at End of Year............................ $60,605,000 $62,102,000 $ - $ -
</TABLE>
- 33 -
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
<TABLE>
<CAPTION>
Pension Benefits Other Benefits
2000 1999 2000 1999
Statement of the Funded Status
<S> <C> <C> <C> <C>
Funded Status.................................................. $ 2,626,000 $ (2,338,000) $( 8,189,000) $(9,043,000)
Unrecognized (Gain)............................................ (24,538,000) (15,690,000) (2,523,000) (1,054,000)
Unrecognized Prior Service Cost................................ 3,835,000 4,304,000 - -
Unrecognized Transition Obligation............................. - (564,000) 3,649,000 3,930,000
Accrued Benefit Cost........................................... $(18,077,000) $(14,288,000) $ (7,063,000) $(6,167,000)
</TABLE>
As of March 31, 2000 and 1999, accrued pension and other benefits costs are
reflected in the balance sheet in "Deferred Compensation and Other Liabilities".
The projected benefit obligation, accumulated benefit obligation, and fair
value of plan assets for the pension plans with accumulated benefit obligations
in excess of plan assets were $6,036,000, $2,309,000 and zero, respectively as
of March 31, 2000 and $6,377,000, $4,288,000 and zero, respectively as of March
31, 1999.
The following table provides the amounts recognized in the balance sheet as
of March 31, 2000 and 1999:
<TABLE>
<CAPTION>
Pension Benefits Other Benefits
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Prepaid Benefit Costs.......................................... $ 5,089,000 $ 4,615,000 $ - $ -
Accrued Benefit Liability...................................... (23,166,000) (20,122,000) (7,063,000) (6,167,000)
Intangible Asset............................................... - 1,219,000 - -
Net Amount Recognized.......................................... $(18,077,000) $(14,288,000) $(7,063,000) $(6,167,000)
</TABLE>
The following table provides the components of net periodic benefit cost
for the domestic plans at March 31, 2000, 1999, and 1998.
<TABLE>
<CAPTION>
Pension Benefits Other Benefits
2000 1999 1998 2000 1999 1998
<S> <C> <C> <C> <C> <C> <C>
Service Cost....................... $4,173,000 $4,261,000 $ 3,592,000 $ 334,000 $ 328,000 $ 286,000
Interest Cost...................... 4,602,000 4,353,000 4,515,000 634,000 607,000 622,000
Expected Return on
Plan Assets...................... (4,626,000) (4,402,000) (5,268,000) - - -
Amortization of
(Gain) Loss...................... - (52,000) (4,935,000) (17,000) - -
Amortization of Prior
Service Cost..................... 469,000 403,000 403,000 - - -
Amortization of
Transition Obligation............ (564,000) (567,000) (684,000) 281,000 281,000 281,000
Annual Net Periodic
Benefit Cost..................... 4,054,000 3,996,000 (2,377,000) 1,232,000 1,216,000 1,189,000
Change in (gain) loss
recognition .................... - - (1,447,000) - - -
Voluntary Retirement
Incentive Program................ - - - - - -
Curtailment Gain................... - (394,000) - - - -
Settlement Gain.................... - (2,807,000) - - - -
Special Termination
Benefits......................... - 931,000 3,924,000 - - -
Total Pension Cost................. $4,054,000 $1,726,000 $ 100,000 $1,232,000 $1,216,000 $1,189,000
</TABLE>
As a result of a workforce reduction program, the Company offered special
enhanced benefits to potential retirees in fiscal years 1999 and 1998. As
required under SFAS No. 88, charges of approximately $.9 million and $3.9
million in fiscal years 1999 and 1998, respectively, related to these enhanced
benefits, were recognized immediately. In addition, in fiscal year 1999, the
Company recognized a curtailment gain of $.4 million and a settlement gain of
$2.8 million related to these reductions.
During fiscal year 1998, the Company changed the methodology for
recognizing gains and losses. The recognition methodology went from the minimum
amortization approach stated under SFAS No. 87 to a methodology that accelerates
the recognition of gains. The impact of this change resulted in a gain of
approximately $1.4 million.
The assumptions used in measuring the Company's benefit plan obligations
are as follows:
Benefits Obligation at Beginning of Year
Pension Benefits Other Benefits
2000 1999 2000 1999
Discount Rate...................... 8.25% 7.25% 8.25% 7.25%
Expected Return on
Plan Assets...................... 9.00 9.00 - -
Salary Scale....................... 5.00 5.00 - -
- 34 -
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Health Care Trend Rates
A 6.5% annual rate of increase in the per capita costs of covered health
care benefits was assumed for 1999. The rate was assumed to decrease gradually
to 5.5% for 2001 and remain at that level thereafter. Increasing the assumed
health care cost trend rates by one percentage point in each year would increase
the Accumulated Postretirement Benefit Obligation as of March 31, 2000 by
approximately $240,000 and the aggregate of the service and interest cost
components of net periodic postretirement benefit cost for the year then ended
by approximately $20,000. Similarly, decreasing the assumed health care cost
care trend rates by one percentage point in each year would decrease the
Accumulated Postretirement Benefit Obligation as of March 31, 2000 by
approximately $266,000 and the aggregate of the service and interest cost
components of net periodic postretirement benefit cost for the year then ended
by approximately $23,000.
The domestic plans are fully funded. Domestic Plan assets consist primarily
of government bonds, corporate bonds and common stocks.
The Company has a Special Stock Unit Plan (the "Plan") whereby selected
participants receive the right to deferred compensation based on the growth in
the Company's average earnings per share, as defined in the Plan, and the value
of the awards is adjusted to reflect the dilutive effect of stock dividends.
Charges under the Plan for the years ended March 31, 2000, 1999 and 1998 were
$1,024,000, $495,000 and $2,894,000, respectively.
The Company has employment contracts with four executives of the Company.
These contracts specify the payment of benefits to the individual or beneficiary
upon the termination of employment or death. Deferred compensation payable
includes $3,651,000 at March 31, 2000 and $3,338,000 at March 31, 1999,
respectively.
Note 10. Shareholders' Equity:
The two classes of the Company's Common Stock are identical in all respects
except that (a) all voting rights are held by the owners of Class B Common Stock
and (b) holders of Class A Common Stock are entitled to receive dividends, when
and if declared by the Board of Directors whether or not dividends are declared
in respect of the Class B Common Stock, but in the event of the declaration of a
dividend in respect of the Class B Common Stock, a dividend of at least the same
amount must be declared in respect of the Class A Common Stock. The Company's
Certificate of Incorporation provides that upon an affirmative vote of the
holders of two-thirds of the outstanding Class B Common Stock, all shares of
Class A Common Stock will be converted into Class B Common Stock. The conversion
terms are one share of Class A Common Stock for one share of Class B Common
Stock subject to certain antidilutive or other capital reorganization
provisions.
On December 7, 1999, the Company announced that it may repurchase up to
500,000 shares of its Class A Common Stock on the open market or in privately
negotiated transactions depending on market conditions and other factors. To
date, the Company has repurchased and retired 370,000 Class A shares at an
average price of $28.03 which represents 2.5% of total outstanding Class A
shares. It is the Company's practice to purchase shares in the open market equal
in number to shares issued pursuant to the exercise of options under the
Company's Stock Option Plan. Accordingly, 7,000 shares were purchased during
fiscal 2000 (See Note 14).
On October 26, 1999, the Company declared an increased cash dividend of
$.32 on the Class A Common Stock and an extra Common Stock dividend of 3% on
both the Class A and Class B Common Stock, and an increased cash dividend of
$0.11 1/8 per share on the Class B Common Stock, payable on January 3, 2000 to
shareholders of record as of December 1, 1999.
On November 3, 1998, the Company declared an increased cash dividend of
$.3175 on the Class A Common Stock and an extra Common Stock dividend of 3% on
both the Class A and Class B Common Stock, and an increased cash dividend of
$0.11 1/16 per share on the Class B Common Stock, payable on January 4, 1999 to
shareholders of record as of December 1, 1998.
On November 4, 1997, the Company declared an increased cash dividend of
$.315 on the Class A Common Stock and an extra Common Stock dividend of 3% on
both the Class A and Class B Common Stock, and an increased cash dividend of
$.11 per share on the Class B Common Stock, payable on January 2, 1998 to
shareholders of record as of December 1, 1997.
Earnings per share of common stock has been restated to reflect the current
and prior years' stock dividends.
- 35 -
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
<TABLE>
Changes in Class A Common Stock, Class B Common Stock and capital in excess
of par value during fiscal 2000, 1999 and 1998 were as follows:
<CAPTION>
CLASS A CLASS B
COMMON STOCK COMMON STOCK
Capital in
Issued Issued Excess of
Shares Amount Shares Amount Par Value
<S> <C> <C> <C> <C> <C>
Balance, March 31, 1997.................. 13,544,000 $1,354,000 7,936,000 $794,000 $249,375,000
3% Stock Dividend........................ 407,000 41,000 238,000 23,000 30,744,000
Savings Incentive Plan(1)................ 40,000 4,000 - - 1,874,000
Balance, March 31, 1998.................. 13,991,000 1,399,000 8,174,000 817,000 281,993,000
3% Stock Dividend........................ 421,000 42,000 245,000 25,000 22,700,000
Savings Incentive Plan(1)................ 44,000 4,000 - - 1,740,000
Balance, March 31, 1999.................. 14,456,000 1,445,000 8,419,000 842,000 306,433,000
3% Stock Dividend........................ 434,000 44,000 252,000 25,000 23,021,000
Savings Incentive Plan(1)................ 18,000 2,000 - - 612,000
Stock Options Exercised.................. 7,000 1,000 - - 277,000
Stock Repurchase......................... (377,000) (38,000) - - (10,650,000)
Balance, March 31, 2000.................. 14,538,000 $1,454,000 8,671,000 $867,000 $319,693,000
</TABLE>
(1) The Company has a voluntary savings incentive plan for eligible
domestic employees. Company contributions to this 401(K) plan are used to
purchase the Company's Class A Common Stock.
Note 11. Legal Proceedings:
The Company is involved in various routine litigation incidental to its
continuing and previously discontinued operations. While the significance of
these matters cannot be fully assessed at this time, management, on advice of
counsel, does not believe that any additional liability that may arise from
these proceedings will have a material adverse impact on the Company's
consolidated financial position, results of operations or liquidity.
Note 12. Earnings Per Common Share:
Basic earnings per share is computed by dividing net income for the period
by the weighted average number of common shares outstanding. Diluted earnings
per share is computed by dividing net income for the period by the weighted
average number of common shares outstanding and dilutive common stock
equivalents. The difference between the number of shares used in the basic
earnings per share calculation compared to the diluted earnings per share
calculation is due primarily to the dilutive effect of outstanding stock
options. Stock options totaling 214,904 and zero were not included in the
computation of diluted earnings per share for the years ending March 31, 2000
and 1999, respectively, as the exercise prices were greater than the average
market price of the common stock. Additionally, stock options were not granted
prior to March 31, 1998.
The following table reconciles the number of shares utilized in the
earnings per share calculations:
Year Ended March 31,
(In Thousands, Except Per Share Data)
2000 1999 1998
Net income............................... $56,759 $51,622 $51,792
Earnings per common share-basic.......... $2.42 $2.19 $2.20
Earnings per common share-diluted........ $2.42 $2.19 $2.20
Number of shares (in thousands):
Weighted average common shares-basic.... 23,481 23,538 23,492
Effect of dilutive securities:
Stock options.......................... . 4 5 -
Weighted average common shares-diluted.... 23,485 23,543 23,492
Note 13. Restructuring and Re-engineering Provision (Credit):
In the fourth quarter of fiscal 1997, the Company approved a program (the
"Program") to consolidate its manufacturing operations by closing six of its
twelve production facilities in various parts of the world. The facilities to be
exited were located in Belgium, the United Kingdom, Australia, Canada, the U.S.
and Argentina. Significant components of the Program involved the termination of
approximately 450 manufacturing employees (23% of its manufacturing workforce),
the cleanup, closing and sale of plants, and the physical disposition of
inventory and equipment.
- 36 -
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following table displays a rollforward of the liabilities for the
manufacturing restructuring from inception to March 31, 2000:
(In Thousands)
<TABLE>
<CAPTION>
Amount Amount Re-
Original Amounts Amount Amount Amount Ending Utilized Reversed maining
Provision Utilized Remaining Utilized Remaining Utilized Reversed Balance in Fiscal in Fiscal Balance
Type of Cost Fiscal in Fiscal Balance in Fiscal Balance in Fiscal in Fiscal 3-31-99* 2000 2000 3-31-2000
1997 1997 3-31-97 1998 Other 3-31-98 1999 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Employee severance
and related costs $15,454(a) - $15,454 ($7,516)($3,300) $4,638 ($2,637) ($2,001) - - - -
Plant closing and
related asset
write-offs 32,978(b)$(24,468) 8,510 - (8,510) - - - - - - -
Re-engineering 7,184(c) (7,184) - - - - - - - - - -
Contractual
obligations 16,834(d) (5,042) 11,792 (7,500) 11,110 15,402 (562) (5,640) $9,200 ($623) ($8,577) -
& other
$72,450 $(36,694) $35,756 ($15,016) ($700)$20,040 ($3,199) ($7,641) $9,200 ($623) ($8,577) -
</TABLE>
*The balance at the end of the year is classified as a current liability.
(a) Represents severance costs for approximately 450 production employees
at six facilities. Estimates were based on calculations derived by attorneys who
considered the local labor laws at each location.
(b) Represents estimated impairment losses on land and buildings to be sold
($15 million) and machinery and equipment to be disposed ($14 million). Also
included is the estimate of site cleanup costs ($4 million). Estimates were
based principally on appraisals from third-party appraisers.
(c) Principally represents consulting costs, as well as limited training
and maintenance costs, which were expensed during 1997.
(d) Represents consulting and legal fees and other costs.
In 1997, the Company re-engineered certain major systems and processes. The
non-recurring, incremental costs of the re-engineering aggregated to $7.2
million, and included primarily consulting costs and training costs. These
amounts have been classified and presented within the Manufacturing
restructuring and re-engineering provision caption on the fiscal 1997 income
statement.
During fiscal 1998, the Company sold three facilities at aggregate sales
prices substantially in excess of its original estimates, and continued to
actively market the three remaining facilities located in Canada, Argentina and
the U.S. As a result of the realization of sales prices for the facilities sold
in excess of amounts originally anticipated, in 1998 the Company reclassified
approximately $8.5 million from its plant closing liability and related asset
write-offs to its contractual obligations and other liability (as discussed
below). In addition, with the exception of a limited group of employees
(approximately 56) at the Company's U.S. facility, all manufacturing employees
included in the initial restructuring plan have been severed (392 employees). As
of March 31, 1998, the aggregate cost of the Company's severance program was
$3.3 million less than initially anticipated, principally due to favorable labor
negotiations. Accordingly, during fiscal 1998, the Company reclassified $3.3
million from its employee severance and related costs liability to its
contractual obligations and other liability (as discussed below).
As of March 31, 1998, the Company had discontinued substantially` all
production at the U.S. location to be closed. The remaining production at the
facility was due to a contractual agreement with the purchaser of the Company's
ethical pharmaceutical products division, which was sold in fiscal 1996. In
connection with the original restructuring plan, management believed that the
facility would either be sold to the entity to which the Company was obligated
for production or to another entity, whom it expected would assume
responsibility for the production. As of March 31, 1998, the restructuring
provision was increased to cover production costs remaining under the contract.
As of March 31, 1999, the Company identified additional excess amounts of
$7.6 million due to additional favorable experiences in calculating final
severance payments and settlement of post-closing adjustments in connection with
the sale of one of its plants. In addition, as a result of favorable fixed asset
disposals, which are not presented in the above table, a gain of $5.1 million
was generated. Consequently, the Company recorded a restructuring credit of
$12.7 million in its income statement for the year ended March 31, 1999.
The liability balance, $9.2 million, at March 31, 1999, represents the
production costs remaining under the contract with the third party.
- 37 -
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
During the current fiscal year, the Company transferred the production
equipment from the U.S. facility to an unrelated party's facility and was
relieved of its contractual obligation to produce a certain product.
The Company sold the Canadian facility and the Argentinean facility in June
1999 and July 1999, respectively. In the third quarter, the Company sold the
remaining manufacturing facility at a price that approximates its net book
value. The sale of the facility completed the activities required under the
Company's Program. Accordingly, the Company has reversed the remaining liability
and recorded a restructuring credit of $8.6 million in its statement of income
for the year ended March 31, 2000.
Note 14. Stock Option Plan
In June, 1998 the Company implemented its Stock Option Plan (the "Plan")
whereby incentive and nonqualified options to purchase shares of the Company's
Class A Common Stock, par value $0.10 per share, may be granted to employees of
the Company and its subsidiaries. The aggregate number of shares of common stock
for which options may be granted under the Plan is 1,000,000. The fair market
value of the Company's common stock is determined on the date of grant as quoted
on the NASDAQ National Market. Stock options expire ten years from the date they
are granted and vest over service periods of three years, although early vesting
may occur in cases of death, disability or normal retirement.
The following tables summarize activity regarding stock options for the
years ended March 31, 2000 and 1999:
Options Weighted Average
Outstanding* Exercise Price*
Balance at March 31, 1998 - -
Options granted 107,367 $35.79
Options exercised - -
Options cancelled/forfeited (2,920) 37.06
Balance March 31, 1999 104,447 35.83
Options granted 185,720 37.70
Options exercised (7,451) 37.32
Options cancelled/forfeited (3,462) 38.74
Balance at March 31, 2000 279,254 37.00
There were stock options exercisable with respect to 6,770 and 7,182 shares at
March 31, 2000 and 1999 respectively.
Options Options Remaining
Outstanding at Exercisable at Contractual
Exercise Price* March 31, 2000* March 31, 2000* Life in Years
$36.23 41,187 691 8.2
37.32 4,397 4,397 8.2
34.88 6,685 - 8.2
32.28 18,034 - 8.5
37.01 17,160 - 8.7
37.38 8,241 - 8.9
40.41 5,841 - 9.2
42.23 103,104 1,682 9.2
41.26 4,315 - 9.2
37.56 23,974 - 9.5
28.81 3,263 - 9.7
25.00 21,120 - 9.7
25.38 2,128 - 9.7
29.75 2,895 - 10.0
28.69 16,910 - 10.0
279,254 6,770
*Adjusted to reflect 3% stock dividends with the exception of options
that were cancelled/forfeited.
- 38 -
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The Company applies Accounting Principles Board Opinion No. 25 "Accounting for
Stock Issued to Employees," ("APB 25")and related interpretations in
accounting for its Plan. During the year ended March 31, 2000, the Company did
not recognize compensation expense for options granted to employees as the
option exercise price per share of Class A Common Stock was equal to the
closing sale price of the stock on the date of grant as quoted on the NASDAQ
National Market. The Company estimates that it will recognize compensation
expense in an aggregate amount of $0 in future years as options vest for
grants made during fiscal 2000.
Had compensation expense for options granted to employees been determined
based upon the fair value at the date of grant of awards under the Plan
consistent with the methodology prescribed under SFAS No. 123, "Accounting for
Stock Based Compensation," ("SFAS 123"), the Company's net income and income
per share for the year ended March 31, 2000 and 1999 would have decreased by
approximately $631,000 or $0.03 per share and $159,000 or $0.01 per share,
respectively.
The fair value of options granted to employees during the years ended March
31, 2000 and 1999 have been determined on the date of the respective grants
using the Black-Scholes option pricing model based on the following weighted
average assumptions:
2000 1999
Risk-free rate 6.37% 5.19%
Volatility 48.3% 25.0%
Expected life 5 years 5 years
Dividend yield 4.64% 3.50%
Using the Black-Scholes model, the average fair value of options granted in
fiscal years 2000 and 1999 was $13.60 and $7.99 respectively.
Note 15. Accumulated Other Comprehensive Loss:
Components of accumulated other comprehensive loss consist of the following:
(Dollars in Thousands)
Accumulated
Foreign Unrealized Other
Currency Gains/(Losses) Comprehensive
Translation on Securities Loss
March 31, 1998 $(18,241) $3,692 $(14,549)
Change in fiscal 1999 4,232 530 4,762
March 31, 1999 (14,009) 4,222 (9,787)
Change in fiscal 2000 (17,994) (8,241) (26,235)
March 31, 2000 $(32,003) $(4,019) $(36,022)
Note 16. Segment Information:
The Company has adopted SFAS No. 131, "Disclosure about Segments of a
Business Enterprise and Related Information," which requires reporting certain
financial information according to the "management approach." This approach
requires reporting information regarding operating segments on the basis used
internally by management to evaluate segment performance.
The accounting policies of the segments are the same as those described in
Note 1, "Significant Accounting Policies". Segments are determined based on
geographic area. The Company evaluates the performance of its segments based
on operating profit, excluding interest expense, other income and expense,
certain unallocated expenses, the effects of nonrecurring items, and income
tax expense.
The Company was managed until last fiscal year in three operating segments:
United States; Europe, Africa and the Middle East; and Latin America, Canada,
and Asia/Pacific. During fiscal 2000, the operations were divided into two
geographic areas: Americas, covering USA, Canada and Latin America, and
International, covering Europe, Asia/Pacific, Africa and Middle East. Prior
year data has been restated for comparability purposes.
- 39 -
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
<TABLE>
The following table presents information concerning the Company's continuing
operations by geographic area for the years ended March 31, 2000, 1999 and
1998.
<CAPTION>
2000 1999 1998
<S> <C> <C> <C>
(in thousands)
GEOGRAPHIC AREA Net Sales:
Americas............................................................. $ 424,317 $ 420,426 $ 462,231
International........................................................ 440,003 400,675 400,826
Consolidated net sales............................................... $ 864,320 $ 821,101 $ 863,057
Operating Income:
Americas............................................................. $ 64,086 $ 71,754 $ 71,583
International........................................................ 50,067 32,016 47,975
Total operating income............................................... 114,153 103,770 119,558
General corporate expenses, net (1).................................. (38,815) (36,273) (49,947)
Consolidated income before income taxes.............................. $ 75,388 $ 67,497 $ 69,611
Assets:
Americas............................................................. $ 496,987 $ 507,308 $ 484,153
International........................................................ 355,037 324,016 329,369
Total identifiable assets............................................ 852,024 831,324 813,522
General corporate assets (2)......................................... 324,907 335,439 273,550
Consolidated assets.................................................. $1,176,931 $1,166,763 $1,087,072
Depreciation and Amortization:
Americas............................................................. $ 20,302 $ 18,209 $ 16,634
International........................................................ 10,070 7,901 8,036
Consolidated depreciation and amortization........................... $ 30,372 $ 26,110 $ 24,670
Capital Expenditures:
Americas............................................................. $ 18,984 $ 30,324 $ 28,545
International........................................................ 8,594 9,430 17,277
Consolidated capital expenditures.................................... $ 27,578 $ 39,754 $ 45,822
</TABLE>
(1) General corporate expenses include administrative expenses, translation
losses relating to highly inflationary countries, interest expense less
investment income and manufacturing restructuring provision and credits.
(2) General corporate assets include cash and cash equivalents, marketable
and long-term securities.
Note 17. Contingency Payments:
The Company is conditionally liable for additional milestone payments of $29
million related to the Atridox(Registered trademark) acquisition if certain
future events occur. The timing of such future occurrences cannot currently be
estimated.
Note 18. Subsequent Event:
In April, Block Drug Company Canada acquired the Spectro(Registered
trademark) line of over-the-counter dermatology products, including soapless
hand and face cleansers and an antifungal antiseptic cleanser for
approximately $9 million.
- 40 -
<PAGE>
QUARTERLY FINANCIAL INFORMATION
(Unaudited)
<TABLE>
The following is a tabulation of quarterly results of operations for the
years ended March 31, 2000 and 1999:
<CAPTION>
Fiscal 2000 Quarters
First Second Third(2) Fourth
<S> <C> <C> <C> <C>
Net sales........................................... $ 200,895,000 $ 214,868,000 $ 209,461,000 $ 239,096,000
Gross profit........................................ 132,144,000 139,186,000 132,663,000 142,206,000
Income Before Income Taxes.......................... 18,284,000 18,335,000 19,052,000 19,717,000
Net Income ..................................... 13,147,000 13,878,000 13,615,000 16,119,000
Earnings per share of Common Stock.................. $.56 $.59 $.57 $.69
(Basic and Diluted)(1)
Fiscal 1999 Quarters
First Second Third Fourth(2)
Net sales........................................... $189,447,000 $204,063,000 $ 194,485,000 $233,106,000
Gross profit........................................ 125,270,000 133,479,000 116,775,000 143,732,000
Income Before Income Taxes.......................... 16,194,000 16,910,000 17,639,000 16,754,000
Net Income ......................................... 11,935,000 12,794,000 12,313,000 14,580,000
Earnings per share of Common Stock
(Basic and Diluted)(1)............................. $.51 $.54 $.52 $.62
</TABLE>
(1) Restated to reflect the three percent stock dividends (See Note 10).
(2) Reflects a credit of $8,577,000 and $12,673,000 for the fiscal years
2000 and 1999, respectively, in connection with a restructuring and
re-engineering. See Note 13 to the Consolidated Financial Statements.
Item 9. Changes In and Disagreements with Accountants on Accounting and
Financial Disclosure
Not applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant:
(a) Directors of the Registrant
The following is a list of each director of the Company, the date
their present terms of office will expire and all other positions presently
held with the Company unless otherwise noted:
<TABLE>
<CAPTION>
Date of Date Term Other Positions Held
Name Age Appointment Expires (or principal occupation)
==================================== ============ ==================== ================= ==========================================
<S> <C> <C> <C> <C>
Leonard Block 88 9/48 6/01 Senior Chairman of the Board
James A. Block 63 4/63 6/01 Chairman of the Board
Thomas R. Block 55 7/70 6/01 President
Peter M. Block 33 5/97 6/01 President, International Division
Michael P. Danziger 36 1/98 6/01 President, The Steppingstone
Foundation
Peggy Danziger 60 5/89 6/01 Private Investor
Dominick P. DePaola, 57 10/97 6/01 President & Director, Forsyth Institute
D.D.S., Ph.D. Boston, MA
William T. Golden 90 7/70 6/01 Corporate Director and Trustee
Melvin Kopp 70 12/78 6/01 Senior Vice President
Peter C. Mann 58 3/96 6/01 President, Americas Division
John E. Peters 58 10/88 6/01 Senior Vice President, General Counsel
and Secretary
Peter J. Repetti 82 3/76 6/01 Member, Fulbright & Jaworski L.L.P.
(Retired)
Mary C. Tanner 50 9/95 6/01 Financial Consultant
==================================== ============ ==================== ================= ==========================================
</TABLE>
- 41 -
<PAGE>
Item 10. Directors and Executive Officers of the Registrant: (Continued)
(a) Directors of the Registrant (Continued)
The following family relationships exist among the Directors of the
Company: Leonard Block is the father of Thomas R. Block and Peggy Danziger, the
uncle of James A. Block, great uncle of Peter M. Block and the grandfather of
Michael P. Danziger. James A. Block is the father of Peter M. Block. Thomas R.
Block and Peggy Danziger are brother and sister and are first cousins of James
A. Block. Michael P. Danziger is the son of Peggy Danziger, grandson of Leonard
Block, and nephew of Thomas R. Block.
Each Director of the Company has been employed by the Company for the
past five years except for (i) William T. Golden who is a director and trustee
of Verde Exploration Ltd, (ii) Peter J. Repetti, an attorney and a retired
member of the New York law firm of Fulbright & Jaworski L.L.P., (iii) Peggy
Danziger, who is a private investor, (iv) Michael P. Danziger, President, The
Steppingstone Foundation, (v) Mary C. Tanner, a Financial Consultant, and (vi)
Dominick P. DePaola, DDS, Ph.D, President & Director, Forsyth Institute.
The Executive Committee consists of Leonard N. Block, James A. Block,
Thomas R. Block and Peter M. Block.
The Audit Committee consists of Thomas R. Block, William T. Golden and Mary
Tanner.
The Compensation Committee consists of William T. Golden and Peter
J.Repetti.
None of the Directors serve on the Boards of Directors of any other public
corporation, except for (i) William T. Golden who serves on the Board of
Directors of Verde Exploration Ltd. and General American Investors.
On October 31, 1977, Leonard Block and James A. Block executed a document
setting forth their mutual intent concerning the representation of the Melvin
Block family group and the Leonard Block family group on the Board of
Directors of the Company. Melvin Block (deceased) is the father of James A.
Block and brother of Leonard Block. They stated their intention as
shareholders and not as directors to maintain equal representation of the
Melvin Block family group and the Leonard Block family group on the Board of
Directors. On January 8, 1998, Leonard Block and James A. Block executed a
letter expressing their mutual intent to add another Leonard Block family
group member to the Board of Directors of the Company. The letter authorizes
the Melvin Block family group to add a fourth representative to the Board of
Directors. They further stated their awareness that the sentiments expressed
in such letters did not constitute a binding agreement between them and that
all actions taken in the future by them in whatever capacity to elect
directors must and would be those which, in their judgment, would be in the
best interest of the Company. At present, the Melvin Block family group has
three (3) representatives on the Board of Directors: James A. Block, Peter M.
Block, and Peter J. Repetti (attorney); and the Leonard Block family group has
four (4) representatives on the Board of Directors: Leonard Block, Thomas
Block, Peggy Danziger and Michael P.
Danziger.
(b) Executive Officers of the Registrant
The following is a list of each executive officer of the Company, the
date his present term of office will expire, and all other positions presently
held with the Company:
- 42 -
<PAGE>
<TABLE>
Item 10. Directors and Executive Officers of the Registrant: (Continued)
<CAPTION>
Date of Date Term
Name Age Appointment Expires Positions
=============================== ========== ===================== ================= ============================================
<S> <C> <C> <C> <C>
Leonard Block 88 10/88 6/01 Senior Chairman of the Board (1)
James A. Block 63 10/88 6/01 Chairman of the Board(1)
Thomas R. Block 55 10/88 6/01 President(1)
Peter M. Block 33 5/97 6/01 President, International
Division(1)
Peter Anderson 45 5/99 6/01 Senior Vice President, Chief
Financial Officer (2)
Claus E. Blach 61 5/98 6/01 Senior Vice President,
Continental Group(2)(3)
Rodger Bogardus 59 1/99 6/01 Senior Vice President, Research
and Technology(2)
Melvin Kopp 70 10/72 6/01 Senior Vice President(2)(3)
Peter C. Mann 58 11/79 6/01 President, Americas Division(1)(3)
John E. Peters 58 12/78 6/01 Senior Vice President, General
Counsel and Secretary(2)(3)
James S. Rigby 49 5/98 6/01 Senior Vice President, UK
Group(2)(3)
Gilbert Seymann 61 5/84 6/01 Senior Vice President,
Worldwide Operations(2)(3)
William G. Whiteside 59 5/98 6/01 Senior Vice President, Canada,
Japan, N. Asia Group(2)(3)
=============================== ========== ===================== ================= ============================================
</TABLE>
Leonard Block is Senior Chairman of the Board of Directors, a Member of the
Executive Committee and the Office of the Chief Executive.
James A. Block is Chairman of the Board, a Member of the Executive
Committee, the Office of the Chief Executive, and is directly responsible for
U.S. marketing, sales, corporate development, research and development and
corporate quality.
Thomas R. Block is President of the Company, a Member of the Executive
Committee, the Office of the Chief Executive, and is directly responsible for
all operations, including manufacturing, engineering and corporate, financial
and administrative functions.
(1) Member - Office of the Chief Executive
(2) Consultant - Office of the Chief Executive
(3) Covered under the Change in Control Agreement described in Item 13.
- 43 -
<PAGE>
Item 10. Directors and Executive Officers of the Registrant: (Continued)
Peter M. Block is President, International Division, a Member of the
Office of the Chief Executive, and is responsible for the Company's businesses
in Europe, Africa, the Middle East and Asia.
Peter Anderson is Senior Vice President and Chief Financial Officer.
Claus E. Blach, Senior Vice President, International is responsible for the
Company's businesses in Continental Europe.
Rodger Bogardus, Senior Vice President, Research & Technology is
responsible for all research, development and corporate quality activities.
Melvin Kopp is Senior Vice President of the Company.
Peter C. Mann, President, Americas Division,a Member of the Office of the
Chief Executive, is responsible for all U.S. marketing, sales and corporate
development and is responsible for the Company's businesses in Canada and
Latin America.
John E. Peters, Senior Vice President, General Counsel and Secretary, is
the Chief Legal Officer of the Company.
James S. Rigby, Senior Vice President, International , is responsible for
the Company businesses in the U.K., the Middle East, Africa and certain
European markets.
Gilbert Seymann, Senior Vice President - Worldwide Operations, is
responsible for manufacturing and corporate engineering activities worldwide.
William G. Whiteside, Senior Vice President, International is responsible
for the Company's businesses in Japan, Korea and Austral/Asia.
All executive officers of the Company have been employed by the Company
in the same or similar capacities for at least the last five years except for
Mr. Bogardus and Mr. Anderson who joined the Company on 1/4/99 and 5/18/99
respectively.
- 44 -
<PAGE>
Item 11. Executive Compensation
The following table sets forth information in respect of compensation for
the fiscal years ended March 31, 2000, 1999 and 1998, for the five most highly
compensated executive officers of the Company based upon total annual salary
and bonus for the fiscal year ended March 31, 2000 (the "Named Executives").
<TABLE>
<CAPTION>
Long Term Compensation
================================
Annual Compensation Awards Payouts
======================================== ======================= ======== ============
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Other Restricted
Annual Stock Options LTIP All Other**
Name and Principal Fiscal Salary Bonus Compen- Award(s) /SARs Payouts Compensation
Position Year $ $ sation ($) ($) ($) ($) ($)
Leonard Block 2000 394,556 90,500 * * * * 26,228
Senior Chairman of the 1999 394,556 90,700 35,588
Board 1998 382,031 153,700 35,480
James A. Block 2000 377,355 131,900 * * * * 10,983
Chairman of the Board 1999 367,064 86,300 13,607
1998 357,083 148,900 13,527
Thomas R. Block 2000 377,355 132,300 * * * * 8,250
President 1999 367,064 92,800 8,076
1998 357,083 151,400 7,574
Peter M. Block 2000 321,154 61,700 * * * * 5,479
President, International Division 1999 245,585 39,300 5,066
1998 209,308 28,200 4,988
Peter C. Mann 2000 415,385 135,700 * * * 137,659*** 8,417
President, Americas Division 1999 343,743 162,500 68,448*** 9,802
1998 322,146 153,900 144,220*** 9,709
================================== ====== ======= ======= ======== ======= ======= ========== =======
</TABLE>
* None to be reported.
** Other compensation includes the value of the Company's matching
contribution for the 401-K and group life insurance imputed income.
*** Payments made pursuant to awards under the Special Stock Unit Plan as
follows: The 2000 payout is based upon two awards, one granted in December 1994
and the other granted in February 1995. The 1999 payout is based upon one award
granted in December, 1993. The 1998 payout is based upon two awards granted in
January 1993.
- 45 -
<PAGE>
Employment Agreements
On January 1, 1981, the Company entered into an Employment Agreement with
Leonard N. Block, which was amended on April 29, 1997 to run through April 30,
2007. The agreement provides for a minimum annual base salary of $209,242.00,
which will be adjusted in accordance with certain economic factors. Mr. Block
may, for a period not to exceed twenty years, elect to perform his services on a
reduced basis at a reduced level of compensation. The agreement provides for
payment of an amount (based upon an average of Mr. Block's salary for the three
years in which the highest salary was paid) to certain designated beneficiaries
for a period not to exceed twenty years. Leonard Block has been employed by the
Company since 1933.
On September 1, 1984, the Company entered into an Employment Agreement with
James A. Block, which was amended on April 29, 1997 to run through April 30,
2007. The agreement provides for a minimum annual base salary of $164,792.00,
which will be adjusted in accordance with certain economic factors. The terms of
this employment agreement are substantially identical to the above described
employment agreement with Leonard Block. James A. Block has been employed by the
Company since 1959.
On May 1, 1987, the Company entered into an Employment Agreement with
Thomas R. Block, which was amended on April 29, 1997 to run through April 30,
2007. Pursuant to the agreement, Thomas R. Block's annual base salary is to be
no less than $234,451.00, which will be adjusted in accordance with certain
economic factors. The terms of this employment agreement are substantially
identical to the above described employment agreement with Leonard Block. Thomas
R. Block has been employed by the Company since 1968.
Effective November 1, 1997, the Company entered into an Employment
Agreement with Peter M. Block to run through April 30, 2007. Pursuant to the
agreement, Peter M. Block's annual base salary is to be no less than $225,000,
which shall be adjusted annually by the same factor used by the Company to
increase the salaries of Company executives who are not in salary ranges, which
is the salary administration policy used to regulate the salaries of the
majority of employees, and additionally as deemed appropriate by the Company's
Office of the Chief Executive to reflect additional assignments and enhanced
responsibilities. Peter M. Block has been employed by the Company since 1991.
Effective May 1, 1997, the Company entered into the following agreements
with Melvin Kopp, Senior Vice President: (i) a Consulting Agreement which
expires on February 28, 2005. Under the Consulting Agreement, Mr. Kopp, now
retired, will continue to provide the Company with his services for a minimum of
one hundred days annually. Mr. Kopp's compensation for each day of service as a
Consultant will be equivalent to the daily cost to the Company if he continued
as an employee after his retirement in 1995. His compensation will be adjusted
annually in accordance with the Company's salary administration policy, (ii) a
Change in Control Agreement (CIC) which mirrors the provisions of the CICs
entered into with key executives of the Company, and (iii) Deferred Compensation
Agreements, the provisions of which mirror the terms of the Company's Special
Stock Unit Plan, including issuing replacement awards that mirror the terms of
the Company's Stock Option Plan.
On January 1, 1998 Stafford-Miller Limited, a wholly owned subsidiary of
Block Drug Company, Inc. entered into an Employment Agreement with James Rigby,
the Managing Director of Stafford-Miller Limited and a Director of the Company.
The Agreement provides for a minimum annual base salary of no less than Sterling
Pounds 175,590, which will be adjusted in accordance with certain economic
factors. The Agreement shall continue for an indefinite period but may be
terminated without cause by either party upon three months prior written notice;
(however, the Agreement contains certain Change-in-Control provisions). Jim
Rigby has been employed with the Company since 1976.
- 46 -
<PAGE>
Employment Agreements (Cont'd)
On January 30, 1990, Stafford-Miller Continental (a wholly owned subsidiary
of Block Drug Company, Inc.) entered into an Employment Agreement with Claus E.
Blach, Manager Director of Stafford-Miller Continental. The Agreement provides
for an annual salary of DM 325,000. The Agreement is for an indefinite term.
Claus Blach is also covered under a Change-of-Control Agreement.
The Company's compensation program for nonemployee directors provides that
each nonemployee director receive an annual fee of $8,500, payable in quarterly
installments. During the 1999 calendar year, nonemployee directors also received
$1,250 for each board of directors meeting attended. This attendance fee was
increased to $1,350 for the 2000 calendar year. In addition, during the 1999
calendar year, members of the audit committee and compensation committee receive
fees of $900 and $450, respectively, for each committee meeting attended. These
fees were increased to $950 and $475, respectively for the 2000 calendar year.
With the exception of Melvin Kopp, employees of the Company receive no
additional compensation for acting as a director or member of a committee of the
board of directors. The Company also reimburses directors for expenses incurred
in connection with meetings of the board of committees.
The Company maintains defined benefit pension plans under which annual
costs are actuarially computed based on the overall assets in these plans and
the actuary's estimates of the present value of overall benefits. The following
table sets forth benefits that will be received under these plans based on the
participants' final average compensation and payable on retirement years of
service:
2000 Proxy Statement Table of
Annual Pension Benefits by Final
Average Compensation and Service Classifications
================================================================================
Years of Service at Age 65
Final Average
Compensation
=============
10 20 30 40
========== ========== ========== ==========
$ 50,000 $ 5,251.80 $10,503.60 $15,755.40 $22,506.00
100,000 12,438.60 24,877.20 37,315.80 51,462.00
150,000 19,938.60 39,877.20 59,815.80 81,462.00
200,000 27,438.60 54,877.20 82,315.80 111,462.00
250,000 34,938.60 69,877.20 104,815.80 135,000.00*
300,000 42,438.60 84,877.20 127,315.80 135,000.00*
350,000 49,938.60 99,877.20 135,000.00* 135,000.00*
======== ========== ========== =========== ===========
* Maximum permissible benefit under IRC Sec. 415, effective January 1, 2000.
The Company's domestic pension expense for the fiscal years ended March 31,
2000 and 1999 was $4,054,000 and $1,726,000 respectively.
The compensation covered by these plans is the total regular salary
excluding any bonuses, overtime or other special compensation. (The "Final
Average Compensation")
- 47 -
<PAGE>
Employment Agreements (Cont'd)
Benefits payable from these plans are based on the Final Average
Compensation for the 60 highest consecutive months of the last 120 months of
employment, the years of service as a member of these plans and the primary
federal social security benefit.
With respect to the figures of the table on page 45, the accrual of pension
benefits is estimated using only the individual's base salary calculated on a
calendar rather than a fiscal year basis. The base salaries used for the
estimation of pension benefits for the individuals listed in the table are:
James A. Block ($374,475.72); Thomas R. Block ($374,475.72); Peter M. Block
($298,969.18); and Peter C. Mann ($398,897.04).
Leonard Block reached age 65 in December, 1976. In accordance with the
terms of this plan, he elected to receive a lump sum benefit. The actuarial
equivalent of his pension at that time as adjusted through December 31, 1980 was
segregated into a separate account. No additional benefits have accrued for
Leonard Block since December 31, 1980. Upon retirement or death, the balance in
the segregated account will be distributed to him or his designated
beneficiaries subject to limitations set forth in the provisions of Section 415
of the Internal Revenue Code.
As of March 31, 2000, the four (4) employees described in Item 11 had the
following credited years of service in these plans: James A. Block, 38 years;
Thomas R. Block, 30 years; Peter M. Block, 8 years; and Peter C. Mann, 27 years.
- 48 -
<PAGE>
Special Stock Unit Plan
This plan is intended to provide greater motivation and incentive for those
eligible employees of the Company and its Subsidiaries who are making and can
continue to make significant contributions to the success of the business, to
attract and to retain employees of outstanding caliber and competence and to
enhance the identity of interests between the shareholders of the Company and
the employees who are participants in this plan. With the May 27, 1998 adoption
of the Company's Stock Option Plan, all new eligible employees may become
participants in only the Stock Option Plan. Current Special Stock Unit
participants may irrevocably elect to receive any future awards in Stock Options
(new, not replacement awards) instead and, as of March 31, 2000, approximately
59% had so elected.
The purpose of the plan is to provide supplemental income, at intervals
specified in the plan, to participants during their employment and to provide
deferred compensation, which is considered as qualified retirement benefits, to
participants upon their retirement.
Under this plan, units (the value of which is based on a formula, the key
component of which is a multiple of earnings per share of Class A Common Stock)
may be awarded from time to time to employees by the Committee administering
this plan, which consists of Leonard Block, James Block, Thomas Block and Peter
Block, who do not participate in the Plan. The participant (or beneficiary in
the case of death) will be entitled to receive, subject to certain conditions,
an amount reflecting the maximum appreciation in value (not subject to
reduction) of such units (as determined under this plan) between the date of the
award and the dates provided in this plan for valuing units. As of March 31,
2000, the units were valued at $106.14.
Subject to certain conditions participants are required to make an
irrevocable decision whether to receive payment of the compensation amount when
the special stock units become fully vested or to defer payment to a subsequent
date.
Awards become fully vested on the fifth anniversary of the award provided
the participant is still employed with the Company. When there is termination of
employment of a participant due to death, disability, or normal retirement, all
special stock units become fully vested, irrespective of the length of the
period between the award date and the date of termination of employment.
When a compensation payment is made, a replacement award equal to the
original dollar value of the award for which payment is made is issued, at the
election of the participant either in the form of special stock units or stock
options under the Company's Stock Option Plan. Once a stock option replacement
award is elected, any future replacement awards arising from that award will be
in the form of stock options. A replacement Special Stock Unit award becomes
fully vested in five years and does not take the place of additional awards
which can be made at the discretion of the Committee. The issuance of
replacement awards is contingent upon participant's employment with the Company.
The Company has not established, nor is it required to establish a special or
separate fund or has it segregated assets to assure or secure payment nor does
the Company guarantee payment of the compensation amount.
The total number of units which may be credited to all participants in this
plan at any one time, exclusive of units awarded to former employees, cannot
exceed five percent of the total number of the then outstanding shares of all
classes of Common Stock.
- 49 -
<PAGE>
Special Stock Unit Plan (Cont'd)
As of March 31, 2000, a total of 266,056 units had been awarded having an
average value of $98.26 per unit. Of those 266,056 units, 33,330 units at an
average value of $106.81 per unit were awarded during the past fiscal year.
During fiscal year 2000, the following units were awarded to Peter C. Mann;
1,385 units at $108.32 per unit and 2,373 units at $105.37 per unit.
During the year ended March 31, 2000, an aggregate amount of $1,910,604.34
was paid in lump sum payments to the participants in the Special Stock Unit
plan.
<TABLE>
<CAPTION>
Long-Term Incentive Plans - Awards In Last Fiscal Year
Estimated Future Payouts Under Non-Stock
Price-Based Plans
<S> <C> <C> <C> <C> <C>
Performance or
No. of Shares, Other Period ** *** No
Units or Other Until Maturity Threshold Target Maximum
Name Rights or Payout ($) ($) ($)
========================= =================== ===================== ================= =============== =================
Peter C. Mann 1,385* 5 Years 71 92,000 -
========================= ===================== =================
2,373* 0 153,000
=================== ================= ===============
</TABLE>
* During fiscal year 2000, the following units were awarded to executives:
1,385 units at $108.32 per unit and 2,373 units at $105.37 per unit to Peter C.
Mann.
** Minimum vested value as of March 31, 2000
*** Projected value at maturity, based on assumed 10% annual compounded
Earnings Per Share increase over the five-year period from inception of the
award to maturity. Note: See accompanying description of Plan above.
Stock Option Plan
On May 27, 1998, the Company's Stock Option Plan was adopted by the
Company. This Plan affords to its Participants the right to purchase, from time
to time, pursuant to the terms and conditions of the Plan and options granted
thereunder, Class A Common Stock, $.10 par value per share, of the Company. The
purpose of this Plan is to provide greater motivation and incentive for those
eligible employees of the Company and its Subsidiaries who are making and can
continue to make significant contributions to the Company's success, and to
attract and retain employees of outstanding caliber and competence and enhance
the common interests of stockholders and employees. The aggregate number of
shares available for issuance pursuant to options is equal to ten percent of the
total number of outstanding shares of all classes of common stock of the
Company. Currently 1,000,000 shares have been registered for issuance under the
Plan. The Committee administering this Plan is comprised of Leonard Block, James
Block, Thomas Block and Peter Block, who do not participate in the Plan. Options
vest in three years, although early vesting may occur in cases of death,
disability or normal retirement and later vesting may be required in certain
foreign countries and generally expire ten years after grant. In June 1998, the
first options under the plan were issued. Options granted during fiscal 2000
and 1999, were 107,367 at a weighted average price of $35.79 and 185,720 at a
weighted average price of $37.70, respectively. Currently, there are 279,254
options outstanding. Vested options as of March 31, 2000 and 1999, were 6,770
and 7,182, respectively.
- 50 -
<PAGE>
Item 12. Securities Ownership of Certain Beneficial Owners and Management
(a) Securities ownership of certain beneficial owners:
The following table sets forth, as of June 6, 2000, each person who owns of
record, or is known by the Company to beneficially own more than 5% of the
outstanding Class B Common Stock of the Company, which stock is the only class
of voting securities of the Company.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Name and Address Amount and Nature Percent
Title of Class of Beneficial Owner of Beneficial Ownership of Class
======================== =========================================== ============================= ====================
Class B Common Leonard Block, Representative 4,335,686 (1) 50%
Leonard Block Family Shareholders'
Agreement dated April 18, 1991
257 Cornelison Avenue
Jersey City, N.J. 07302-9988
Class B Common James A. Block, Trustee 4,335,686 (2) 50%
Voting Trust Agreement
dated January 11, 1990
257 Cornelison Avenue
Jersey City, N.J. 07302-9988
======================== =========================================== ============================= ====================
</TABLE>
(1) Pursuant to a shareholders' agreement, dated April 18, 1991,
Leonard Block has sole voting power with respect to these shares. The
following shares are beneficially owned by the Leonard Block Trust,
433,796; the Thomas Block Trust, 1,950,945 and the Peggy Danziger
Trust, 1,950,945.
(2) James A. Block has sole voting power with respect to these
shares as a result of a Voting Trust Agreement entered into as of January
11, 1990. The voting trust agreement grants the trustee the power to vote
the shares which are subject to the agreement. The Voting Trust Agreement
is for a 21 year term. James A. Block is a co-trustee of the trusts which
are parties to the Voting Trust Agreement and pursuant to these trusts,
James A. Block has sole investment power with respect to these shares.
James A. Block disclaims beneficial ownership to all 2,167,843 shares held
in trust for the benefit of Susan B. Stearns.
(b) Securities ownership of management:
The following table sets forth, as of June 6, 2000, the securities
ownership of all directors and Named Executives, individually, and all
Directors and Officers of the Company, as a group.
- 51 -
<PAGE>
Item 12. Securities Ownership of Certain Beneficial Owners and Management
(Cont'd)
<TABLE>
BLOCK DRUG COMPANY, INC.
SECURITIES BENEFICIALLY OWNED
<CAPTION>
Class B Common
Stock Beneficially
Owned
Class A Common Stock Beneficially Owned
Name of Beneficial No Shared Shared 401(k)
Owner Investment Investment Plan Percentage
Power Power Holdings Owned
<S> <C> <C> <C> <C> <C>
Leonard Block 1,177,243 - 1,024 8% 4,335,686-50%
(1) (4) (7)
James A. Block 2,737,978 - 2,689 19% 4,335,686-50%
(2) (3) (5)
Thomas Block 72,766 2,490,791 1,921 18% -
(4) (7)
Peter M. Block 1,352,529 - 756 9% -
(2) (5)
Peter Anderson - - - - -
Claus Blach 350 - - * -
Rodger Bogardus 2,000 - 29 * -
Michael P. Danziger 87,008 1,066,893 - 8% -
(6) (7)
Peggy Danziger 78,826 1,322,833 - 10% -
(4) (6) (7) (9)
Dominick P. DePaola - - - - -
Gordon J. Girvin - - 1,481 * -
William T. Golden 6,795 23,982 - * -
Melvin Kopp 4,343 - - * -
Peter C. Mann 1,519 115 2,447 * -
John E. Peters - 3,282 2,142 * -
Peter J. Repetti (8) 290 - - * -
James S. Rigby - - - - -
Gilbert M. Seymann 1,163 - 2,018 - -
Mary C. Tanner - - - - -
William G. Whiteside 303 - - * -
All Directors and - - - 53% -
Officers as a Group
(21 persons)
============================= ============== ============ ============== ==============
</TABLE>
* Represents less than one percent (1%) of Class A Common Stock of the
Company.
- 52 -
<PAGE>
Item 12. Securities Ownership of Certain Beneficial Owners and Management
(Cont'd)
(1) Leonard Block owns 339,335 shares (not including 401(k) Plan Holdings);
is deemed to be the beneficial owner of but disclaims ownership of: 833,401
shares owned by Adlen Corporation, of which Leonard Block is the sole
shareholder; 4,507 shares owned by Adele Block, his wife.
(2) James A. Block owns 125 shares (not including 401(k) Plan Holdings); is
deemed to be the beneficial owner of: 189,304 shares owned by a trust for the
benefit of James A. Block of which he is a co-trustee (with Peter and Valerie
Block, his children) and has sole investment powers with respect to the shares
held by such trust; 981,147 shares owned by a trust for the benefit of James A.
Block of which he is a co-trustee (with Susan B. Stearns, his sister, and Peter
and Valerie Block, his children); 182,000 shares held in an L.L.C. for the
benefit of James A. Block, and Peter and Valerie Block, his children. James A.
Block has sole investment powers with respect to the shares held by such trusts
and the L.L.C. For the purpose of reporting shares for which a beneficial owner
has sole investment power in the tabular presentation on page 52, all 1,352,451
shares of these two trusts and the L.L.C. have been included in the total number
of shares reported for both James A. Block and Peter Block, and as a result such
shares have been reported twice; and 1,385,402 shares owned by two trusts for
the benefit of Susan B. Stearns of which James A. Block is the co-trustee (with
Susan B. Stearns, his sister) and has sole investment powers with respect to the
shares held by such trusts. James A. Block disclaims ownership to all 1,385,402
Class A shares and 2,167,843 Class B shares owned by the trusts for the benefit
of Susan B. Stearns of which he is a trustee or co-trustee. In computing the
percentage of Class A shares owned by a beneficial owner, 1,352,451 shares
(representing the total number of shares owned by the two trusts in which Peter
Block is a co-trustee with James A. Block and the shares held in the L.L.C.)
were allocated to James A. Block and 1,352,451 shares were allocated to Peter
Block, and as a result, the percentage of Class A shares owned has been
attributed to both parties. In computing the aggregate number of shares owned by
directors and officers as a group, the 1,352,451 shares owned by these two
trusts and the L.L.C. were counted only once.
(3) James A. Block has sole voting power with respect to the Class B shares
as a result of voting trust agreement entered into as of January 11, 1990. The
voting trust agreement grants the trustee the power to vote the shares which are
subject to the agreement. The voting trust agreement is for a 21 year term.
James A. Block is a co-trustee of the trusts which are parties to the voting
trust agreement and pursuant to these trusts, James A. Block has sole investment
power with respect to the Class B shares. James A. Block disclaims beneficial
ownership to all 2,167,843 shares held in trust for the benefit of Susan B.
Stearns, his sister who is not active in the business.
(4) Thomas Block is deemed to be the beneficial owner but disclaims
ownership of: 27,733 shares owned by Marilyn Friedman, his wife; 45,033 shares
held by Marilyn Friedman, as Custodian under the New York State Uniform Gifts to
Minors Act for Jonathan Block and Alison Block, the children of Thomas Block;
180,913 shares owned by two trusts for the benefit of Jonathan Block and Alison
Block, his children, of which Thomas Block is a co-trustee (with Marilyn
Friedman, his wife) and shares investment powers with respect to the shares held
by such trusts; 2,031,614 shares owned by a trust for the benefit of Thomas
Block of which Thomas Block is a co-trustee (with Adele Block, his mother, and
Peggy Danziger, his sister) and shares investment powers with respect to the
shares held by such trust; 278,264 shares owned by four trusts of which Thomas
Block is a co-trustee (with Peggy Danziger, his sister) and shares investment
powers with respect to the shares held by such trusts; for the purposes of
reporting shares for which a beneficial owner shares investment power in the
tabular presentation on page 52, all 278,264 shares of these four trusts have
been included in the total number of shares reported for Thomas Block and Peggy
Danziger, and as a result have been reported twice. In computing the
- 53 -
<PAGE>
Item 12. Securities Ownership of Certain Beneficial Owners and Management
(Cont'd)
percentage of Class A shares owned by a beneficial owner, 278,264 shares
(representing the total number of shares owned by the four trusts) were
allocated to Thomas Block and 278,264 shares were allocated to Peggy Danziger
and as a result the percentage of Class A shares owned has been attributed to
both parties.
In computing the aggregate number of shares owned by directors and officers
as a group, the 278,264 shares owned by these four trusts were counted only
once. Thomas Block disclaims ownership of those shares in which he shares
investment powers with Peggy Danziger.
(5) Peter Block owns 78 shares (not including 401(k) Plan Holdings);
1,170,451 shares owned by two trusts for the benefit of James A. Block of which
Peter Block is co- trustee; and 182,000 shares held in an L.L.C. for the benefit
of James A. Block, Peter Block and Valerie Block. James A. Block has sole
investment powers with respect to the shares held by such trusts and the shares
held in the L.L.C. For the purpose of reporting shares for which a beneficial
owner has no shared investment power in the tabular presentation on page 52, all
1,352,451 shares of these two trusts and the L.L.C. have been included in the
total number of shares reported for James A. Block and Peter Block, and as a
result such share have been reported twice. In computing the percentage of Class
A shares owned by a beneficial owner, 1,352,451 shares (representing the total
number of shares owned by the two trusts in which Peter Block is a co-trustee
with James A Block and the shares held in the L.L.C.) were allocated to James A.
Block and 1,352,451 shares were allocated to Peter Block. In computing the
aggregate number of shares owned by directors and officers as a group, the
1,352,451 shares owned by these two trusts and the L.L.C. were counted only
once.
(6) Michael P. Danziger owns 3,356 shares, is deemed to be the beneficial
owner but disclaims ownership of 3,698 shares owned by Elizabeth Danziger, his
wife; 15,094 shares held by Michael P. Danziger as Custodian under the
Massachusetts Uniform Gifts to Minors Act for James, Robert and Charles
Danziger, his children; 64,860 shares held in trust for Michael P. Danziger,
beneficiary of such trust; 26,895 shares owned by a trust for the benefit of
Michael P. Danziger of which Michael P. Danziger is a co-trustee (with Richard
Danziger, his father, and Katherine Danziger Horowitz, his sister) and shares
investment powers with respect to the shares held by such trust; 1,039,998
shares owned by a trust for the benefit of Peggy Danziger of which Michael P.
Danziger is a co-trustee (with Peggy Danziger, his mother, and Katherine
Danziger Horowitz, his sister) and shares investment power with respect to the
shares held by such trust; for the purpose of reporting shares for which a
beneficial owner shares investment power in the tabular presentation on page 52,
all 1,039,998 shares of such trust have been included in the total number of
shares reported for Michael P. Danziger and Peggy Danziger, and as a result have
been reported twice. In computing the percentage of Class A shares owned by a
beneficial owner, 1,039,998 shares (representing the total number of shares
owned by said trust) were allocated to Michael P. Danziger and 1,039,998 shares
were allocated to Peggy Danziger. In computing the aggregate number of shares
owned by directors and officers as a group, the 1,039,998 shares owned by such
trust were counted only once.
Michael P. Danziger disclaims ownership to those shares in which he shares
investment powers with Peggy Danziger.
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<PAGE>
Item 12. Securities Ownership of Certain Beneficial Owners and Management
(Cont'd)
(7) Peggy Danziger owns 78,826 shares; 4,571 shares owned by two
testamentary trusts of which Richard Danziger, her husband, is a co-trustee with
another party having shared investment powers with respect to the shares held by
such trusts; 1,039,998 shares owned by a trust for the benefit of Peggy Danziger
of which she is a co-trustee (with Michael P. Danziger, her son, and Katherine
Danziger-Horowitz, her daughter) and of which she shares investment powers with
respect to the shares held by such trusts; for the purpose of reporting shares
for which a beneficial owner shares investment power in the tabular presentation
on page 52, all 1,039,998 shares of such trust have been included in the total
number of shares reported for Peggy Danziger and Michael P. Danziger, and as a
result have been reported twice. In computing the percentage of Class A shares
owned by a beneficial owner, 1,039,998 (representing the total number of shares
owned by said trust) were allocated to Peggy Danziger and 1,039,998 shares were
allocated to Michael P. Danziger and as a result, the percentage of Class A
shares owned has been attributed to both parties. In computing the aggregate
number of shares owned by directors and officers as a group, the 1,039,998
shares owned by said trust were counted only once; 278,264 shares owned by four
trusts of which Peggy Danziger is a co-trustee (with Thomas Block, her brother)
and shares investment powers with respect to the shares held by such trusts; for
the purpose of reporting shares for which a beneficial owner shares investment
power in the tabular presentation on page 52, all 278,264 shares of these four
trusts have been included in the total number of shares reported for Thomas
Block and Peggy Danziger, and as a result such shares have been reported twice;
in computing the percentage of Class A shares owned by a beneficial owner,
278,264 shares (representing the total number of shares owned by the four trusts
in which Peggy Danziger is a co-trustee with Thomas Block) were allocated to
Thomas Block and 278,264 shares were allocated to Peggy Danziger and as a
result, the percentage of Class A shares owned has been attributed to both
parties. In computing the aggregate number of shares owned by directors and
officers as a group, the 278,264 shares owned by these four trusts were counted
only once.
Peggy Danziger disclaims beneficial ownership of one-half of the shares for
which she is co-trustee.
(8) Peter J. Repetti disclaims beneficial ownership of 290 shares owned by
his wife.
(9) Peggy Danziger disclaims beneficial ownership to all 4,571 shares of
which Richard M. Danziger, her husband is co-trustee with a third party.
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<PAGE>
Item 13. Certain Relationships and Related Transactions
On January 26, 1994, the Company entered into an agreement with Peter Mann,
President, Americas Division, under which the minimum value of the 1991 special
stock unit award to Mr. Mann, and only the 1991 special stock unit award, under
the Company's Special Stock Unit Plan would, (i) be guaranteed to be no less
than $83.30 per special stock unit, and (ii) payment on the 1991 award would not
be made until Peter Mann reaches age 65 or his employment with the Company
ceases for any reason, whichever occurs first.
On April 14, 1999, Peter C. Mann, President, Americas Division, entered
into a Loan Agreement with the Company for the amount of $440,000. The loan is
collateralized by a mortgage on certain real estate owned by Mr. Mann. The
principal of the loan is due on or before April 14, 2005. Interest on the unpaid
principal balance accrues at 1% over the Prime Rate, as published in the Wall
Street Journal, and shall be adjusted semi-annually on July 1 and January 1 of
each year. The loan agreement provides for immediate repayment of the unpaid
principal balance upon the occurrence of any one of a number of events.
Change in Control Agreement
Claus Blach, Melvin Kopp, Peter C. Mann, John E. Peters, James S. Rigby,
Gilbert Seymann and William Whiteside have entered into a Change-In-Control
Agreement (CIC) with the Company to assure continuity in management in the event
the Block family divests itself of more than fifty percent (50%) of the
Company's voting stock.
The Agreements were created to provide a continuing rolling five year term
with automatic three year extensions, subject to termination upon the covered
executive's sixty-fifth birthday with the exception of Mr. Kopp whose CIC would
terminate December 31, 2001 or upon the termination of his consulting agreement
with the Company, whichever is earlier. The Agreements define the formula by
which a covered Executive's severance, compensation and benefits will be
calculated and paid in the event Executive's employment is either: terminated
within one year of the change in control; if circumstances of Executive's
employment are changed within three (3) years of the change in control; or if
the Executive's employment is terminated 180 days prior to the execution of an
agreement which, if concluded, will activate the CIC.
On June 6, 2000, in connection with the Company's retention of Goldman
Sachs to assist in a review of strategic alternatives for enhancing shareholder
value, the Company's Board of Directors retained a compensation consultant and
authorized consideration of certain modifications and enhancements to the
arrangements with the Company's senior executives and other employees.
Compensation Committee Interlocks and Insider Participation
The Company does not have a Compensation and Benefits Committee which
determines the compensation of its Executive Officers. The Company utilizes the
services of independent expert compensation consultants to evaluate the total
compensation of the Company's Executive Officers. The consultants'
recommendations are submitted to the members of Office of the Chief Executive
for consideration. During fiscal year 2000, Leonard Block, James A. Block,
Thomas R. Block and Peter M. Block were members of the Office of the Chief
Executive.
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<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) The following documents are filed as a part of this report:
1. Financial Statements and Supplementary Data:
Report of PricewaterhouseCoopers LLP, dated June 6, 2000.
Consolidated Balance Sheets - March 3l, 2000 and 1999,
Consolidated Statements of Income and Retained Earnings for the
Years ended March 3l, 2000, 1999 and 1998,
Consolidated Statements of Comprehensive Income for the Years
ended March 31, 2000, 1999 and 1998,
Consolidated Statements of Cash Flows for the Years ended
March 3l, 2000, 1999 and 1998,
Notes to Consolidated Financial Statements
Supplementary Data:
Selected unaudited quarterly data for the two years ended
March 3l, 2000.
2. Additional Financial Statement Data:
Supplemental Independent Auditors' Reports
3. Financial Statement Schedule: II
Schedules other than those listed above are omitted because they are not
required or not applicable.
4. Index to Exhibits:
Exhibit 3(a) Restated Certificate of Incorporation, as amended June 14,
1971, December 10, 1985, October 9, 1987 and October 31, 1990, incorporated by
reference from Exhibit 4.1 in the Company's Form S-8 filed with the Securities
and Exchange Commission on June 3, 1998.
Exhibit 3(b) Amended and Restated By-Laws, as amended through January 8,
1998, incorporated by reference from Exhibit 4.2 in the Company's Form S-8 filed
with the Securities and Exchange Commission on June 3, 1998.
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<PAGE>
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(Cont'd)
Exhibit 3(c) Certified Resolution dated June 23, 2000 of the Board of
Directors Resolutions dated June 8, 1999 amending the Company's Certificate of
Incorporation and updating the Company's By-Laws, filed with this document.
Exhibit3(d) Restated Certificate of Incorporation, as amended June 14,
1971, December 10, 1985, October 9, 1987, October 31, 1990 and June 8, 1999,
filed with this document.
Exhibit3(e) Amended and Restated By-Laws, as amended through June 8, 1999,
filed with this document.
Exhibit 10(a) Block Drug Company, Inc. Stock Option Plan, dated May 27,
1998, incorporated by reference to Exhibit 99.1 to the Company's Form S-8 filed
with the Securities and Exchange Commission on June 3, 1998.
Exhibit 10(b) Block Drug Company, Inc.'s Special Stock Unit Plan, amended
and restated as of January 31, 1997, incorporated by reference to Form 10-K for
the fiscal year ended March 31, 1998.
Exhibit 10(c) Block Drug Company, Inc.'s Restated Excess Benefit Pension
Plan, effective May 31, 1983, incorporated by reference to Form 10-K for the
fiscal year ended March 31, 1998.
Exhibit 10(d) Employment Agreement effective November 1, 1997, between
Block Drug Company, Inc. and Peter M. Block, President European Division,
incorporated by reference to Exhibit 10(e) to Form 10-K for the fiscal year
ended March 31, 1998.
Exhibit 10(e) Consulting Agreement effective May 1, 1997, between Block
Drug Company, Inc. and Melvin Kopp, Senior Vice President, incorporated by
reference to Exhibit 10(f) Form 10-K for the fiscal year ended March 31, 1998.
Exhibit 10(f) Form of Award Letter under the Stock Option Plan, with
changes required by laws of foreign jurisdictions relating to local labor law
consideration and tax matters, incorporated by reference to Exhibit 10(g) to
Form 10-K for the fiscal year ended March 31, 1998.
Exhibit 10(g) Form of Award Letter under the Stock Option Plan for
replacement awards, with changes required by laws of foreign jurisdictions
relating to local labor law consideration and tax matters, filed with this
document.
Exhibit 10(h) Block Drug Company, Inc's Special Stock Unit Plan, amended
and restated as of April 1, 1999, filed with this document.
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<PAGE>
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(Cont'd)
Exhibit 10(i) Employment Agreement effective September 1, 1984, as amended
as of April 29, 1997, between Block Drug Company, Inc. and James Block
President, filed with this document.
Exhibit 10(j) Employment Agreement effective May 1, 1987, amended as of
April 29, 1997, between Block Drug Company, Inc. and Thomas R. Block, Executive
Vice President and Treasurer, filed with this document.
Exhibit 10(k) Employment Agreement effective January 1, 1981, as amended as
of April 29, 1987, between Block Drug Company, Inc. and Leonard Block, Chairman
of the Board, filed with this document.
Exhibit 10(l) Employment Agreement effective January 1, 1998 between
Stafford- Miller Limited (a wholly owned subsidiary of Block Drug Company, Inc.)
and James Rigby, Managing Director of Stafford-Miller Limited and Director of
Block Drug Company, Inc., filed with this document.
Exhibit 10(m) Employment Agreement effective January 30, 1990 between
Stafford- Miller Continental (a wholly owned subsidiary of Block Drug Company,
Inc.) and Claus E. Blach, Managing Director of Stafford-Miller Continental, and
Change in Control Agreement dated June 25, 1998, filed with this document.
Exhibit 10(n) Form of Change-in-Control Agreement covering those employees
identified in Item 13, filed with this document.
Exhibit 10(o) Extraordinary Deferred Compensation Agreement, dated May 1,
1997, between Block Drug Company, Inc. and Melvin Kopp, filed with this
document.
Exhibit 10(p) Extraordinary Deferred Compensation Agreement #2, dated May
24, 2000, between Block Drug Company, Inc. and Melvin Kopp, filed with this
document.
Exhibit 21 Subsidiaries of the Company, filed with this document.
Exhibit 27 The Financial Data Schedule, filed with this document.
Exhibit 99 Audit Committee Charter, filed with this document.
(b) Reports on Form 8-K.
No reports on Form 8-K have been filed during the last quarter
of the period covered by this report.
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<PAGE>
RECONTA ERNST & YOUNG
Report of Independent Auditors
The Board of Directors and Shareholders
Stafford Miller S.r.l.
We have audited the accompanying balance sheets of Stafford Miller S.r.l. as
of December 31, 1999 and 1998, and the related statements of operations and
retained earnings and cash flows for each of the three years in the period
ended December 31, 1999 (not presented separately herein). These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Stafford Miller S.r.l. at
December 31, 1999 and 1998, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1999, in
conformity with accounting principles generally accepted in the United States
of America.
As discussed in Note 1, the accompanying financial statements have been
restated for 1998 and 1997 due to understatements of advertising and promotion
expenses.
Reconta Ernst & Young SpA
Milan, Italy
May 26, 2000
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<PAGE>
ERNST & YOUNG
Report of Independent Auditors
The Management
Block Drug Company, Inc.
Ratingen Branch
We have audited the accompanying balance sheets of Block Drug Company, Inc.,
Ratingen Branch, as of March 31, 2000 and 1999 and the related statements of
operations and retained earnings and cash flows for each of the three years in
the period ended March 31, 2000 (not presented separately herein). These
financial statements are the responsibility of the Branch's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Block Drug Company, Inc.,
Ratingen Branch, as of March 31, 2000 and 1999, and the results of its
operations and its cash flows for each of the three years in the period ended
March 31, 2000, in conformity with accounting principles generally accepted in
the United States of America.
Our audits have been made primarily for the purpose of expressing an opinion
on the basic financial statements taken as a whole. The accompanying
supplementary information (pages 1 to 16) is presented for purposes of
additional analysis and is not a required part of the basic financial
statements. The supplementary information has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
Ernst & Young
Deutsche Allgemeine Treuhand AG
Wirtschaftsprufungsgesellschaft
Beyer Lewe
Wirtschaftsprufer Wirtschaftsprufer
(Independent Public (Independent Public
Accountant) Accountant)
Dusseldorf,
April 19, 2000
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<PAGE>
Ernst & Young
Wirtschaftsprufungs- und
Steuerberatungsgesellschaft m.b.H.
Praterstra e 23
(Postfach 290)
A-1021 Wien
REPORT OF INDEPENDENT AUDITORS
We have audited the accompanying balance sheets of Block Austria GmbH as of
December 31, 1999 and 1998, and the related statements of income, retained
earnings and cash flows for the years then ended (not included herein). These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Block Austria GmbH as of
December 31, 1999 and 1998, and the results of its operations and its cash
flows for the years then ended, in conformity with accounting principles
generally accepted in the United States of America.
ERNST & YOUNG
WIRTSCHAFTSPRUFUNGS- UND
STEUERBERATUNGSGESELLSCHAFT MBH
(Rolf Kapferer) (Elfriede Sixt)
Certified Public Accountants
Date: February 11, 2000
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<PAGE>
Ernst & Young
Bedrijfsrevisoren
Reviseurs d'Entreprises
J. Englishstraat 52
2140 Borgerhout (Antwerpen)
To the Board of Directors of
STAFFORD-MILLER CONTINENTAL NV
Nijverheidsstraat 9
2260 OEVEL-WESTERLO
Dear Sirs,
We have audited the accompanying balance sheets of Stafford-Miller Continental
NV as of December 31, 1999 and 1998, and the related statements of operations,
retained earnings and cash flows for each of the three years in the period
ended December 31, 1999 (not presented separately herein). These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
Generally accepted accounting principles require that a Company's financial
statements be consolidated with those of its subsidiaries. The accompanying
financial statements of Stafford Miller Continental NV are not consolidated
with those of its subsidiary Laboratoires Stafford-Miller S.a.r.l.
In our opinion, except for the effects of not consolidating the financial
statements of a subsidiary referred to in the preceding paragraph and
described in Note 1, the financial statements referred to above present fairly
in all material respects the financial position of Stafford-Miller Continental
NV at December 31, 1999 and 1998 and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1999
in conformity with accounting principles generally accepted in the United
States of America.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying additional information
is presented for purposes of additional analysis and is not a required part of
the basic financial statements. Such additional information has been subjected
to the auditing procedures applied in the audits of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
April 10, 2000
Ernst & Young
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<PAGE>
ERNST & YOUNG
ACCOUNTANTS
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
Stafford Miller Nederland B.V.
We have audited the accompanying balance sheets of Stafford Miller Nederland
B.V. at December 31, 1999 and 1998, and the statements of income and retained
earnings and cash flows for the three years 1999, 1998 and 1997 drawn up for
Group purposes. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Stafford Miller Nederland
B.V. at December 31, 1999 and 1998, and the results of its operations and its
cash flows for years 1999, 1998 and 1997 in conformity with accounting
principles generally accepted in the United States of America.
Our audits have been made primarily for the purpose of expressing an opinion
on the basic financial statements taken as a whole. The accompanying
additional information is presented for purposes of additional analysis and is
a not required part of the basic financial statements. Such additional
information has been subjected to the auditing procedures applied in the
audits of the basic financial statements and, in our opinion, is fairly stated
in all material respects in relation to the basic financial statements taken
as a whole.
April 27, 2000 Ernst & Young Accountants
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<PAGE>
ERNST & YOUNG
ENTREPRENEURS
Immeuble Ariane
2, rue Jacques Daguerre
92565 Rueil-Malmaison
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders of
Laboratoires Stafford Miller, S.A.R.L.
We have audited the accompanying balance sheets of Laboratoires Stafford
Miller, S.A.R.L. (the Company) at December 31, 1999 and 1998, and the related
statements of income and retained earnings and cash flows for the three years
in the period ended December 31, 1999 (not presented separately herein). These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Laboratoires Stafford Miller,
S.A.R.L. at December 31, 1999 and 1998, and the results of its operations and
its cash flows for each of the three years in the period ended December 31,
1999, in conformity with accounting principles generally accepted in the
United States of America.
Our audits have been made primarily for the purpose of forming an opinion on
the basic financial statements taken as a whole. The accompanying additional
information is presented for purposes of additional analysis and is a not
required part of the basic financial statements. Such additional information
has been subjected to the auditing procedures applied in our audits of the
basic financial statements mentioned above and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
ERNST & YOUNG Entrepreneurs
Departement d'E&Y Audit
Christian Colineau
February 10, 2000
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<PAGE>
ARTHUR
ANDERSEN
A Member Firm of
Andersen Worldwide SC
Report of Independent Public Accountants
To the Board of Directors of
Block Drug Company (Japan), Inc.:
We have audited the accompanying balance sheets of Block Drug Company
(Japan), Inc. (a Japanese corporation) as of December 31, 1999 and 1998, and
the related statements of operations, stockholder's equity and cash flows for
each of the three years in the period ended December 31, 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards in the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit include
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Block Drug Company
(Japan), Inc. as of December 31, 1999 and 1998, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1999 in conformity with accounting principles generally accepted
in the United States of America.
Arthur Andersen
Osaka, Japan
March 28, 2000
- 66 -
<PAGE>
SGV & CO
SyCip Gorres Velayo & Co
An Arthur Andersen Member Firm
6760 Ayala Avenue
1226 Makati City Philippines
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Stockholders and the Board of Directors
Block Drug Co. (Philippines), Inc.
We have audited the accompanying balance sheets of Block Drug Co.
(Philippines), Inc. (a wholly owned subsidiary of Block Drug Company, Inc.) as
of December 31, 1999 and 1998, and the related statements of income and
retained earnings and cash flows for each of the three years in the period
ended December 31, 1999. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with United States generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Block Drug Co. (Philippines),
Inc. As of December 31, 1999 and 1998, and the results of its operations and
its cash flows for each of the three years in the period ended December 31,
1999 in conformity with United States generally accepted accounting
principles.
Our audits have been made primarily for the purpose of expressing an opinion
on the basic financial statements taken as a whole. The supplementary
information accompanying the financial statements are presented for purposes
of additional analysis and are not a required part of the basic financial
statements. The supplementary information has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
SyCip, Gorres, Velayo & Co.
Makati City, Philippines
February 11, 2000
- 67 -
<PAGE>
<TABLE>
BLOCK DRUG COMPANY, INC. AND SUBSIDIARIES
Valuation and Qualifying Accounts
Years Ended March 31, 2000, 1999 and 1998
<CAPTION>
<S> <C> <C> <C> <C>
Additions
Balance at Charged to Balance at
Beginning of Costs and End of
Description Period Expenses Deductions Period
=========================================== =================== =================== ===================== ======================
2000
Allowances for discounts,
doubtful accounts and returns $4,750,000 $33,605,000 $28,861,000 $9,494,000
============================================ =================== =================== ===================== ======================
1999
Allowances for discounts,
doubtful accounts and returns $4,446,000 $24,787,000 $24,483,000 $4,750,000
============================================ =================== =================== ===================== ======================
1998
Allowances for discounts,
doubtful accounts and returns $4,504,000 $27,095,000 $27,153,000 $4,446,000
============================================ =================== =================== ===================== ======================
</TABLE>
- 68 -
<PAGE>
EXHIBIT 21
Subsidiaries of Registrant
The following list shows the Company and its subsidiaries, all of which
(except as indicated) are wholly owned and included in the Consolidated
Financial Statements in this report.
Jurisdiction
Identification of Incorporation
Block Drug Company, Inc. New Jersey
Stafford-Miller International, Inc. New Jersey
Reedco, Inc. Delaware
Dentco, Inc. Delaware
Block Drug Company (Puerto Rico), Inc. Puerto Rico
Block Drug Corporation New Jersey
Block Austria Gmbh Austria
Block Uruguay, S.A. Uruguay
Block Drug Company (Canada) Limited Ontario, Canada
Block Drug Company (Japan), Inc. Japan
Block Drug Company (Philippines), Inc. Manila, Philippines
Block Drug Company (Thailand) Limited Thailand
Block Drug Company (Korea) Limited Korea
Laboratoires Stafford-Miller S.A.R.L. (a) France
Stafford Miller Argentina S.A. Argentina
Stafford Miller Chile Limitada Chile
Stafford-Miller Continental, NV-SA Belgium
Stafford-Miller de Espana, S.A. Spain
Stafford-Miller de Mexico, S.A. de C.V. Mexico
Stafford-Miller Industria Ltda. Brazil
Stafford-Miller Foreign Sales Corporation St. Thomas, Virgin Islands
Stafford-Miller (Ireland) Limited Ireland
Stafford-Miller Limited Great Britain
Stafford-Miller Nederland B.V. Netherlands
Stafford-Miller (N.Z.) Limited New Zealand
Stafford-Miller (Portugal) Quimico-Farmaceutica,
Lda. Portugal
Stafford-Miller RE Limited (b) Great Britain
Stafford-Miller S.r.l. Italy
Stafford-Miller Scandinavia Aktiebolag Sweden
(a) Wholly-owned subsidiary of Stafford-Miller Continental, NV-SA.
(b) Wholly-owned subsidiary of Stafford-Miller (Ireland) Limited.
- 69 -
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized on the 29th day of
June, 2000.
BLOCK DRUG COMPANY, INC.
(Registrant)
PETER ANDERSON
BY Peter Anderson
Senior Vice President, Chief Financial Officer
Pursuant to the requirements of Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on the 29th day of June, 2000.
Principal Executive Officer:
JAMES A. BLOCK
James A. Block
Chairman of the Board
Principal Financial and Accounting Officer:
PETER ANDERSON
Peter Anderson
Senior Vice President, Chief Financial Officer
Directors:
LEONARD BLOCK JAMES A. BLOCK
Leonard Block James A. Block
THOMAS R. BLOCK PETER M. BLOCK
Thomas R. Block Peter M. Block
MICHAEL P. DANZIGER PEGGY DANZIGER
Michael P. Danziger Peggy Danziger
DOMINICK P. DEPAOLA WILLIAM T. GOLDEN
Dominick P. DePaola, D.D.S., Ph.D. William T. Golden
MELVIN KOPP PETER C. MANN
Melvin Kopp Peter C. Mann
JOHN E. PETERS PETER J. REPETTI
John E. Peters Peter J. Repetti
MARY C. TANNER
Mary C. Tanner
- 70 -
<PAGE>
Exhibit 3(c)
RESOLUTION
I, John E. Peters, Hereby Certify that I am the duly elected and acting
Senior Vice President General Counsel and Secretary of Block Drug Company, Inc.
a New Jersey corporation, and that the following is a true and correct copy of a
Resolution adopted by the Board of Directors of said corporation on June 8,
1999:
RESOLVED, that the officers of this Corporation be, and they hereby
are, authorized and directed to take all things and execute all
writings required or advisable to amend the Certificate of
Incorporation of this Corporation to authorize additional shares of
Class A (non-voting) Common Stock and Class B (voting) Common Stock so
that the total amount of authorized shares shall be increased from
Fifteen Million (15,000,000) to Twenty Million (20,000,000) Class A
(non-voting) Common Shares, and from Thirty Million (30,000,000) to
Forty Million (40,000,000) Class B voting)Common Shares.
RESOLVED, that all amendments to the Certificate of Incorporation be
consolidated and the Amended and Restated Certificate of Incorporation
be revised, updated, and filed with the New Jersey Secretary of State,
in the form attached hereto.
RESOLVED, that the updated and amended Bylaws of Block Drug Company,
Inc., are hereby authorized, approved and adopted, in the form attached
hereto.
In witness whereof, I have hereunto set my hand and the seal of
the Corporation this 23rd day of June, 2000.
By /s/ John E. Peters_______________
Senior Vice President
General Counsel and Secretary
<PAGE>
Exhibit 3(d)
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
BLOCK DRUG COMPANY, INC.
Pursuant to the provisions of Section 14A:9-5 of the New Jersey
Business Corporation Act, the undersigned corporation adopts the following
Amended and Restated Certificate of Incorporation:
FIRST: The name of the corporation is: Block Drug Company, Inc.
SECOND: The purposes for which this corporation is organized are to engage in
any activity within the purposes for which corporations may be organized
under the New Jersey Business Corporation Act. THIRD: The total authorized
capital stock of the corporation shall consist of Sixty Million
(60,000,000) shares, divided into the following classes:
(i) Twenty Million (20,000,000) shares of Class
A Common Stock with a par value of Ten Cents
($.10) per share; and
(ii) Forty Million (40,000,000) shares of Class B
Common Stock, with a par value of Ten Cents
($.10) per share.
The relative rights, preferences and limitations of the two
classes of capital stock which the corporation is authorized
to issue, are as follows:
A. Voting - Except as otherwise expressly provided by
the laws of the State of New Jersey, the holders of the Class
A Common Stock shall possess no voting power and shall not
have the right to participate in any meeting of the
shareholders or to receive notice thereof, and the holders of
the Class B Common Stock shall exclusively possess the voting
power of the shareholders of the corporation.
B. Dividends - Dividends may be declared and paid
upon or set aside for the Class B Common Stock, as and when
declared by the Board of Directors, out of any assets
available for the payment of dividends pursuant to the laws of
the State of New Jersey; provided, however, that no dividends
may be declared and paid upon or set aside for the Class B
Common Stock unless a dividend is, at the same time, declared
and paid upon or set aside for the Class A Common Stock in an
amount per share at least equal to the per share dividend upon
the Class B Common Stock. Dividends may be declared and paid
upon or set aside for the Class A Common Stock, as and when
declared by the Board of Directors, out of any assets
available for the payment of dividends pursuant to the laws of
the State of New Jersey, although no dividend is, at that
time, declared and paid upon or set aside for the Class B
Common Stock.
C. Issuance of Shares - Class A Common Stock may be
issued for such consideration as may be fixed from time to
time by the Board of Directors, without shareholder approval.
Class B Common Stock may be issued for such consideration as
may be fixed from time to time by the Board of Directors;
provided, however, that no action of the Board of Directors
authorizing the issuance of shares of Class B Common Stock
shall be effective and binding upon the corporation unless
approved by the holders of two-thirds (2/3) of the outstanding
shares entitled to vote.
The corporation shall not subdivide or combine, or issue
securities as a dividend or distribution on, the outstanding
shares of either class of Common Stock of the corporation
unless a substantially equivalent subdivision, combination,
dividend or distribution of securities is made with respect to
the outstanding shares of the other class of Common Stock, so
that the relative rights and interests of the holders of each
of such classes are not adversely affected.
D. Conversion - Class A Common Stock shall be
convertible into Class B Common Stock, at the conversion ratio
hereinafter provided, at the option of the corporation, which
option shall be exercised by the Board of Directors; provided,
however, that no action of the Board of Directors authorizing
the conversion of the Class A Common Stock shall be effective
and binding upon the corporation unless approved by the
holders of two-thirds (2/3) of the outstanding shares entitled
to vote; and provided also, that any such conversion shall be
of all, and not less than all, of the shares of Class A Common
Stock at the time issued and outstanding.
The conversion ratio shall be one (1) share
of Class B Common Stock for each share of Class A Common Stock
issued and outstanding; provided, however, that in the event
of a stock dividend, stock split, or other capital
reorganization or reclassification of the Class A Common Stock
or Class B Common Stock, or in the event of a merger or
consolidation of the corporation (by sale of all or
substantially all of its assets or otherwise) with and into
another company, each share of Class A Common Stock shall be
convertible into that number of shares of Class B Common
Stock, or other securities or property resulting from such
reorganization, reclassification, merger or consolidation, as
the case may be, which would be issuable had the Class A
Common Stock been converted to Class B Common Stock
immediately prior to such reorganization, reclassification,
merger or consolidation.
In the event of the conversion of the Class
A Common Stock into Class B Common Stock, as herein provided,
notice of the conversion shall be given by the corporation to
every holder of record of the Class A Common Stock by mailing
the notice to such holders at their respective addresses, as
the same shall appear on the stock transfer books of the
corporation, not less than thirty (30) days nor more than
sixty (60) days prior to the date designated in such notice as
the conversion date. Such notice shall state that the Class A
Common Stock shall be converted into Class B Common Stock at
the aforementioned conversion ratio, and on the date specified
in said notice, upon the surrender, at the place designated in
said notice, of certificates representing the shares of Class
A Common Stock to be
1
<PAGE>
converted, properly endorsed in blank for transfer or
accompanied by proper instrument of assignment or transfer in
blank and bearing all necessary transfer tax stamps thereto
affixed and canceled. On and after the date specified in said
notice, each holder of the Class A Common Stock shall be
entitled, upon presentation and surrender, at the place
designated in such notice, of the certificates representing
shares of Class A Common Stock held by such holder, properly
endorsed in blank for transfer or accompanied by proper
instrument of assignment or transfer in blank, and bearing
thereto affixed and canceled all transfer tax stamps required
under applicable laws or regulations, to receive from the
corporation, as soon thereafter as practicable, a certificate
or certificates issued to said holder, or in accordance with
such holder's written order, representing the number of shares
of Class B Common Stock issuable upon the conversion of such
Class A Common Stock. All shares of Class A Common Stock shall
be deemed to have been converted on the conversion date
specified in said notice, whether or not said shares have been
presented and surrendered for conversion; and the holders of
shares of Class A Common Stock shall, from and after the
conversion date, be deemed holders of the number of shares of
Class B Common Stock issuable upon said conversion,
notwithstanding any delay in the delivery of the certificate
or certificates for shares of Class B Common Stock.
E. Liquidation or Dissolution - In the event of any
liquidation, dissolution or winding up of the corporation,
whether voluntary or involuntary, the holders of the Class A
Common Stock and the Class B Common Stock shall be entitled,
after the debts of the corporation shall have been paid, to
receive the remaining assets and funds of the corporation,
share and share alike, ratably according to the number of
shares held. The consolidation or merger of this corporation
with any other corporation or corporations shall not be deemed
a liquidation, dissolution or winding up of the corporation
within the meaning of this paragraph.
FOURTH: Subject to the limitations contained in the Bylaws of the corporation,
the Directors shall have the power, without the consent of the
shareholders, to make, revoke and alter the Bylaws of the corporation.
FIFTH: One or more or all the Directors may be removed, with or without cause,
by the affirmative vote of the majority of the votes cast by holders of
shares entitled to vote for the election of Directors. The Board of
Directors shall have the power to remove Directors for cause and to suspend
Directors pending a final determination that cause exists for removal.
SIXTH: The address of this corporation's current registered agent is 257
Cornelison Avenue, Jersey City, New Jersey 07302, and the name of the
corporation's current registered agent at such address is John E. Peters.
2
<PAGE>
SEVENTH: The names and addresses of the thirteen (13) persons currently serving
as said Directors are set forth below:
Name Address
Leonard N. Block...................................257 Cornelison Avenue
Jersey City, New Jersey 07302
James A. Block.....................................257 Cornelison Avenue
Jersey City, New Jersey 07302
Thomas R. Block....................................257 Cornelison Avenue
Jersey City, New Jersey 07302
Peter M. Block.....................................257 Cornelison Avenue
Jersey City, New Jersey 07302
Michael P. Danziger................................The Steppingstone Foundation
126 High Street
Boston, Massachusetts 02110
Peggy B. Danziger..................................155 East 69th Street
New York, New York 10021
Dominick P. DePaola, D.D.S., Ph.D................. The Forsyth Institute
140 The Fenway
Boston, Massachusetts 02115
William T. Golden..................................40 Wall Street
42nd Floor, Room 4201
New York, New York 10005
Melvin Kopp........................................257 Cornelison Avenue
Jersey City, New Jersey 07302
Peter C. Mann......................................257 Cornelison Avenue
Jersey City, New Jersey 07302
John E. Peters ....................................257 Cornelison Avenue
Jersey City, New Jersey 07302
Peter J. Repetti, Esq..............................80 Falmouth Street
Short Hills, New Jersey 07078
Mary C. Tanner.....................................109 East 91st Street
New York, New York 10285
3
<PAGE>
EIGHTH: The corporation shall indemnify any Director, Officer, employee
or agent of the corporation to the fullest extent permitted under the New Jersey
Business Corporation Act, as the same shall be amended from time to time. The
indemnification provided by this Paragraph Eighth shall not be deemed exclusive
of any other rights to which such persons may be entitled as a matter of law or
which may be lawfully granted under the Bylaws, an agreement or otherwise.
NINTH: To the fullest extent permitted by the New Jersey Business
Corporation Act, Directors and Officers of the corporation shall not be
personally liable to the corporation or its shareholders for damages for breach
of any duty owed to the corporation or its shareholders, except that the
provisions of this Paragraph Ninth shall not relieve a Director or Officer from
liability for any breach of duty based upon an act or omission (a) in breach of
such person's duty of loyalty to the corporation or its shareholders, (b) not in
good faith or involving a knowing violation of law or (c) resulting in receipt
by such person of any improper personal benefit. If the New Jersey Business
Corporation Act is amended after the date hereof to authorize corporate action
further eliminating or limiting the personal liability of Directors or Officers,
the liability of a Director or Officer of the corporation shall be eliminated or
limited to the fullest extent permitted by the New Jersey Business Corporation
Act, as amended.
TENTH: Whenever any vote of the holders of the outstanding shares
entitled to vote is required by law to amend, alter, repeal or rescind any
provision of this Amended and Restated Certificate of Incorporation, then, in
addition to any affirmative vote required by applicable law, such alteration,
amendment, repeal or rescission of any such provision must be approved by the
affirmative vote of the holders of at least a majority of the outstanding shares
entitled to vote; provided, however, that if any such alteration, amendment,
repeal or rescission relates to Section C or Section D of Article THIRD and this
Article TENTH hereof, such alteration, amendment, repeal or rescission must also
be approved by the affirmative vote of the holders of two-thirds (2/3) of the
outstanding shares entitled to vote.
This Amended and Restated Certificate of Incorporation was executed on
behalf of the corporation this 8th day of June, 1999.
John E. Peters
Senior Vice President
General Counsel and Secretary
CERTIFICATE
(Pursuant to NJSA 14A:9-5 (5))
4
<PAGE>
A. The name of the corporation is Block Drug Company, Inc.
B. The Amended and Restated Certificate of Incorporation to which this
certificate is attached was approved by the Board of Directors and adopted by
the shareholders entitled to vote thereon on June 8, 1999.
C. On the date of adoption of the Amended and Restated Certificate of
Incorporation, the following shares of authorized capital stock were
outstanding, entitled to vote thereon, by class or otherwise, and did vote in
favor of the adoption of the Amended and Restated Certificate of Incorporation:
Voted
Class Entitled For Against
Designation Outstanding to Vote Adoption Adoption
Class B Common Stock
($.10 par value) . . . . 8,418,808 8,418,808 8,418,808 -0-
This Certificate was executed on behalf of Block Drug Company, Inc. this 8th day
of June, 1999.
Block Drug Company, Inc.
By: John E. Peters
Senior Vice President
General Counsel and Secretary
5
<PAGE>
Exhibit 3(e)
Bylaws
of
Block Drug Company, Inc.
Amended as of June 8, 1999
<PAGE>
Bylaws
of
Block Drug Company, Inc.
TABLE OF CONTENTS
ARTICLE I
OFFICES
PAGE
SECTION 1.1. Registered Office.................................1
SECTION 1.2. Other Offices.....................................1
ARTICLE II
SHAREHOLDERS
SECTION 2.1. Annual Meeting....................................1
SECTION 2.2. Special Meetings..................................1
SECTION 2.3. Place and Time of Meeting.........................1
SECTION 2.4. Notice of Meeting.................................1
SECTION 2.5. Fixing of Record Date.............................2
SECTION 2.6. Quorum............................................2
SECTION 2.7. Proxies...........................................2
SECTION 2.8. Voting of Shares..................................2
SECTION 2.9. Waiver of Notice..................................2
SECTION 2.10. Votes Required....................................2
SECTION 2.11. Election of Directors.............................3
SECTION 2.12. Procedure at Meetings.............................3
<PAGE>
Bylaws
of
Block Drug Company, Inc.
TABLE OF CONTENTS
(continued...)
ARTICLE III
DIRECTORS
PAGE
SECTION 3.l. General Powers....................................3
SECTION 3.2. Number, Tenure and Qualifications.................3
SECTION 3.3. Annual Meetings, Regular Meetings.................3
SECTION 3.4. Special Meetings..................................3
SECTION 3.5. Quorum............................................3
SECTION 3.6. Manner of Acting..................................4
SECTION 3.7. Action Without Meeting............................4
SECTION 3.8. Vacancies.........................................4
SECTION 3.9. Compensation......................................4
SECTION 3.10. Executive Committee; Other Committees.............4
SECTION 3.11. Waiver of Notice..................................5
ARTICLE IV
OFFICERS
SECTION 4.1. Number............................................5
SECTION 4.2. Election, Term and Removal........................5
SECTION 4.3. Powers and Duties.................................6
SECTION 4.4. Salaries..........................................6
SECTION 4.5. Loans.............................................6
SECTION 4.6. Acquisitions......................................6
SECTION 4.7. Office of the Chief Executive.....................6
ii
<PAGE>
Bylaws
of
Block Drug Company, Inc.
TABLE OF CONTENTS
(continued...)
ARTICLE V
CERTIFICATES FOR SHARES AND THEIR TRANSFER
PAGE
SECTION 5.1. Certificates for Shares...........................7
SECTION 5.2. Transfer of Shares................................7
SECTION 5.3. Lost, Stolen or Destroyed Certificates............7
ARTICLE VI
INDEMNIFICATION AND INSURANCE
SECTION 6.1. Right to Indemnification..........................7
SECTION 6.2. Right of Claimant to Bring Suit...................8
SECTION 6.3. Non-Exclusivity of Rights.........................8
SECTION 6.4. Insurance.........................................8
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. Fiscal Year.......................................9
SECTION 7.2. Corporate Seal....................................9
SECTION 7.3. Amendments........................................9
SECTION 7.4. Notices...........................................9
iii
<PAGE>
Bylaws
of
Block Drug Company, Inc.
ARTICLE I
OFFICES
SECTION 1.1. Registered Office. The registered office of the
corporation shall be located at 257 Cornelison Avenue, Jersey City, Hudson
County, New Jersey, or such other address within the State of New Jersey as the
Board of Directors may by resolution provide.
SECTION 1.2. Other Offices. The corporation may have other offices
within or without the State of New Jersey at any time.
ARTICLE II
SHAREHOLDERS
SECTION 2.1. Annual Meeting. The annual meeting of shareholders for the
purpose of electing Directors and for the transaction of such other business as
may properly come before the meeting shall be held on the third Monday in May of
each year, or on such other date as may be fixed by the Board of Directors.
SECTION 2.2. Special Meetings. Special meetings of the shareholders,
for any purpose or purposes, unless otherwise prescribed by statute, may be
called by the Chairman of the Board, the President, or by the Board of
Directors, and shall be called by the President at the written request of the
holders of not less than ten percent (10%) of all the outstanding shares
entitled to vote at the meeting.
SECTION 2.3. Place and Time of Meeting. The Board of Directors may
designate the time and place, either within or without the State of New Jersey,
as the time and place of meeting for any annual meeting or for any special
meeting called by the Board of Directors. If no designation is made, or if a
special meeting is called other than by the Board of Directors, the place of the
meeting shall be the registered office of the corporation in the State of New
Jersey.
SECTION 2.4. Notice of Meeting. Written or printed notice stating the
place, day and hour of any meeting of the shareholders, and the purpose or
purposes for which the meeting is called, shall be given, personally or by mail,
to each shareholder of record entitled to vote at the meeting not
<PAGE>
less than ten (10) nor more than thirty (30) days before the meeting, except as
otherwise permitted or required by law or the Certificate of Incorporation.
<PAGE>
SECTION 2.5. Fixing of Record Date. For the purpose of determining the
shareholders entitled to notice of, or to vote at, any meeting of shareholders
or any adjournment thereof, the Board of Directors may fix a date not more than
sixty (60) days nor less than ten (10) days before the date of such meeting as
the record date for any such determination of shareholders. When a determination
of shareholders of record for a shareholders' meeting has been made as provided
herein, such determination shall apply to any adjournment thereof, unless the
Board of Directors fixes a new record date under this Bylaw for the adjourned
meeting. For the purpose of determining the shareholders entitled to receive
payment of any dividend or allotment of any right, or in order to make a
determination of shareholders for any other proper purpose, the Board of
Directors may fix a date, which shall not be more than sixty (60) days before
any such payment, allotment or other action, as the record date for any such
determination of shareholders.
SECTION 2.6. Quorum. The holders of not less than a majority of the
outstanding shares entitled to vote at any shareholders' meeting, represented in
person or by proxy, shall constitute a quorum for the transaction of business at
such meeting, except as otherwise provided by the New Jersey Business
Corporation Act or the Certificate of Incorporation. If less than a quorum are
represented at the meeting, the holders of a majority of the outstanding shares
entitled to vote so represented may adjourn the meeting from time to time
without further notice. At such adjourned meeting at which a quorum shall be
present or represented, any business may be transacted which might have been
transacted at the meeting as originally notified. The shareholders present in
person or by proxy at a duly organized meeting may continue to do business until
adjournment, notwithstanding the withdrawal of enough shareholders to leave less
than a quorum.
SECTION 2.7. Proxies. Every shareholder entitled to vote at a meeting
of shareholders or to express consent or dissent without a meeting may authorize
another person or persons to act for them by proxy in accordance with the New
Jersey Business Corporation Act and any other applicable law. Every proxy should
be executed in writing by the shareholder or such shareholder's agent and shall
be filed with the secretary of the meeting before or at the time of the meeting;
except that a proxy may be given by a shareholder or such shareholder's agent
personally or by mail, telegram or by any means of electronic communication
which results in a writing.
SECTION 2.8. Voting of Shares. Each outstanding share shall be
entitled to one vote on each matter submitted to a vote at a meeting of
shareholders, unless otherwise provided in the Certificate of Incorporation.
SECTION 2.9. Waiver of Notice. Notice of a meeting need not be given to
any shareholder who signs a waiver of such notice, in person or by proxy,
whether before or after the meeting. The attendance of any shareholder at a
meeting, in person or by proxy, without protesting prior to the conclusion of
the meeting the lack of notice of such meeting, shall constitute a waiver of
notice by such shareholder.
SECTION 2.10. Votes Required. Whenever any action, other than the
election of Directors, is to be taken by vote of the shareholders, it shall be
authorized by a majority of the votes cast at a meeting of shareholders by the
holders of shares entitled to vote thereon, unless a greater vote is required by
the Certificate of Incorporation, the New Jersey Business Corporation Act or
these Bylaws.
<PAGE>
SECTION 2.11. Election of Directors. Directors shall be elected by a
plurality of the votes cast. At each election of Directors every shareholder
entitled to vote at such election shall have the right to vote the number of
shares owned by such shareholder for as many persons as there are Directors to
be elected and for whose election such shareholder has a right to vote.
SECTION 2.12. Procedure at Meetings. The Senior Chairman of the Board
of the corporation shall preside as the chairman of the shareholders' meetings
or shall designate a substitute to preside as chairman and shall designate
someone to serve as secretary of the meeting. The chairman of each shareholders'
meeting at which Directors are to be elected shall appoint two inspectors of
election. The inspectors shall take and subscribe an oath or affirmation
faithfully to execute the duties of inspectors at such meeting, with strict
impartiality and according to the best of their ability, and shall take charge
of the polls and shall make, after the ballot, a certificate of the result of
the vote taken.
ARTICLE III
DIRECTORS
SECTION 3.1. General Powers. The business and affairs of the
corporation shall be managed by its Board of Directors, except insofar as such
management is delegated by resolution of the Board of Directors to an Executive
Committee or one or more other committees as provided in these Bylaws.
SECTION 3.2. Number, Tenure and Qualifications. The Board of Directors
of the corporation shall consist of not less than six nor more than fifteen (15)
persons, as shall be determined from time to time by the shareholders. At each
annual meeting of shareholders, Directors shall be elected to hold office until
their successors shall have been elected and qualified.
SECTION 3.3. Annual Meetings, Regular Meetings. A meeting of the Board
of Directors shall be held without other notice than this Bylaw immediately
after, and at the same place as, the annual meeting of shareholders. Additional
regular meetings may be held at such times and places as the Board of Directors
may provide and no notice of such meetings shall be required.
SECTION 3.4. Special Meetings. Special meetings of the Board of
Directors may be called by or at the request of any member of the Office of the
Chief Executive, and shall be called by the Secretary of the corporation upon
the written request of the majority of the Directors, and shall be held at such
time and place as shall be specified in the call of the meeting. Notice of each
special meeting shall be given to each member of the Board, personally or by
mail, telegram, or by any means of electronic communication which results in a
writing, at least three (3) days before the meeting.
SECTION 3.5. Quorum. A majority of the number of Directors who are or
would be in office if there were no vacancies shall constitute a quorum for the
transaction of business at any meeting of the Board of Directors. If less than a
quorum is present at a meeting, a majority of the Directors present may adjourn
the meeting from time to time without further notice if the adjournment does not
exceed ten (10) days for any one (1) adjournment. If an adjournment is for more
than ten (10) days, notice of the adjourned meeting will be given to each member
of the Board personally or by mail,
<PAGE>
telegram, or by any means of electronic communication which results in a
writing, at least three (3) days before the meeting.
SECTION 3.6. Manner of Acting. The act of the majority of the Directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors unless a greater number is required by the Certificate of
Incorporation. Any and all Directors may participate in a meeting of the Board
or a committee of the Board by means of conference, telephone or any means of
communication by which all persons participating in the meeting are able to hear
each other, unless otherwise provided by law.
SECTION 3.7. Action Without Meeting. Any action required or permitted
to be taken pursuant to authorization voted at a meeting of the Board of
Directors may be taken without a meeting if, prior to or subsequent to such
action, all members of the Board of Directors consent thereto in writing and
such written consents are filed with the minutes of the proceedings of the Board
of Directors. Such consent, which may be executed in counterparts, shall have
the same effect as a unanimous vote of the Board of Directors for all purposes.
SECTION 3.8. Vacancies. Any vacancy occurring in the Board of
Directors, however caused, including a vacancy to be filled by reason of an
increase in the number of Directors, shall be filled by a vote of the holders of
two-thirds (2/3) of the outstanding shares entitled to vote for the election of
Directors. Any Director elected pursuant to this Section 3.8 shall hold office
until the next succeeding annual meeting of shareholders and until such
Director's successor shall have been elected and qualified.
SECTION 3.9. Compensation. By resolution of the Board of Directors, the
Directors may be paid their expenses, if any, of attendance at each meeting of
the Board of Directors, and may be paid a fixed salary for attendance at each
meeting of the Board of Directors or a stated salary as Director. No such
payment shall preclude any Director from serving the corporation in any other
capacity and receiving compensation therefor.
SECTION 3.10. Executive Committee; Other Committees. The Board of
Directors, by resolution adopted by a majority of the entire Board, may appoint
from among its members an executive committee and one or more other committees,
each of which shall consist of at least three (3) members, and shall act only
upon consent of a majority of all members. Any such committee may make its own
rules of procedure and shall meet where and as provided by such rules, or by a
resolution of the Directors. Each such committee shall have and may exercise all
of the authority of the Board of Directors to the fullest extent provided in
such resolution and permissible under the laws of the State of New Jersey.
Actions taken at a meeting of any such committee shall be reported to the Board
of Directors at its next meeting following such committee meeting. The Board of
Directors, by resolution adopted by a majority of the entire Board, may fill any
vacancy in any such committee, however caused, appoint one or more Directors to
serve as alternate members of any such committee to act in the absence or
disability of any member of such committee with all of the powers of such absent
or disabled members, abolish any such committee at pleasure, and remove any
Director from membership on such committee at any time, with or without cause.
Notwithstanding anything to the contrary contained in the preceding sentence,
with respect to the executive committee established by the
<PAGE>
Board of Directors, the Board of Directors may not, without the consent of the
holders of two-thirds (2/3) of the outstanding shares entitled to vote on the
election of Directors, fill any vacancy in such committee, appoint one or more
Directors to serve as alternate members of such committee to act in the absence
or disability of any member of such committee with all of the powers of such
absent or disabled members or remove any Director from membership on such
committee without cause.
SECTION 3.11. Waiver of Notice. Notice of any meeting of the Board or
any committee need not be given to any Director who signs a waiver of notice,
whether before or after the meeting. The attendance of any Director at a Board
or committee meeting without protesting prior to the conclusion of the meeting
the lack of notice of such meeting shall constitute a waiver of notice by any
such Director. Neither the business to be transacted at, nor the purpose of, any
meeting of the Board or any committee need be specified in the notice or waiver
of notice of such meeting.
ARTICLE IV
OFFICERS
SECTION 4.1. Number. The Officers of the corporation shall consist of
the Office of the Chief Executive, a Senior Chairman of the Board, a Chairman of
the Board, a President, one or more Division Presidents, one or more Senior Vice
Presidents, one or more Vice Presidents, a Secretary and a Treasurer, each of
whom, other than the Senior Chairman of the Board, the Chairman of the Board,
the President and the President - International Division, if any, shall be
elected by the Board of Directors. The Senior Chairman of the Board, the
Chairman of the Board, the President and the President - International Division,
if any, shall be elected by the holders of two-thirds (2/3) of the outstanding
shares entitled to vote for the election of Directors. The Board of Directors
may elect such other Officers, assistant officers or agents as it shall deem
necessary or desirable, which Officers, assistant officers or agents shall have
such authority and shall perform such duties as the Board of Directors may from
time to time prescribe.
Any two or more offices may be held by the same person.
SECTION 4.2. Election, Term and Removal. Unless otherwise provided by
resolution of the Board of Directors, at the time of their election, the term of
office of all Officers shall be until the first meeting of the Board of
Directors following the next annual meeting of shareholders and until their
respective successors are elected and qualify, but any Officer, elected by the
Board, may be removed from office, either with or without cause, at any time, by
the affirmative vote of a majority of the members of the Board of Directors then
in office. Any vacancy occurring among the Officers of the corporation elected
by the Board shall be filled by the Board of Directors. Any Officer required to
be elected by the shareholders shall only be removed from office, either with or
without cause, at any time, by the affirmative vote of the holders of two-thirds
(2/3) of the outstanding shares entitled to vote on the election of Directors,
but his or her authority to act as an Officer may be suspended by the Board of
Directors for cause. Any vacancy occurring among the Officers of the corporation
required to be elected by the shareholders shall be filled by the shareholders.
SECTION 4.3. Powers and Duties. The Chairman of the Board shall, when
<PAGE>
present, preside at all meetings of the shareholders and of the Board of
Directors. In the absence of the Chairman of the Board, or in the event of his
death, inability or refusal to act, the President and the
President-International Division, if any, shall jointly perform the duties of
the Chairman of the Board, and when so acting, shall have all the powers of and
be subject to all the restrictions upon the Chairman of the Board. Except as
aforesaid, the Officers of the corporation shall have such powers and duties as
they generally pertain to their respective offices as well as and subject to
powers and duties as may be prescribed by the Board or these Bylaws.
SECTION 4.4. Salaries. The salaries of the Officers shall be fixed from
time to time by the Board of Directors and no Officer shall be prevented from
receiving such salary by reason of the fact that they are also a Director of the
corporation.
SECTION 4.5. Loans. The corporation may lend money to or guarantee any
obligation of, or otherwise assist, any Officer or other employee of the
corporation or of any subsidiary, whenever, in the judgment of the Directors,
such loan, guarantee or assistance may reasonably be expected to benefit the
corporation; provided, however, if such Officer or employee is also a Director
of the corporation, such loan must be authorized and approved by the executive
committee and subsequently ratified and confirmed by a majority of the Board of
Directors. The vote of a Director who would receive the loan, guarantee or
assistance from the corporation shall not be included in the majority necessary
for ratification.
SECTION 4.6. Acquisitions. The acquisition of property, rights, or
privileges by the corporation for which the total consideration, in whatever
form, exceeds an amount equal to 10% of the corporation's total shareholders'
equity, shall require the authorization of the Board of Directors. Total
shareholders' equity shall be determined from the corporation's consolidated
balance sheet from the corporation's most recent certified financial statement.
SECTION 4.7. Office of the Chief Executive. The Office of the Chief
Executive shall consist of not less than three (3) nor more than five (5)
members, as shall be determined from time to time by the Board of Directors;
provided, however, that the members of the Office of the Chief Executive shall
only consist of the Senior Chairman of the Board, the Chairman of the Board, the
President, the President-International Division, if any, and the President
Americas Division, if any. Each member of the Office shall report directly to
the Board of Directors. The decision of a majority of the members of the Office
of the Chief Executive shall constitute the decision of the Office. When the
Senior Chairman of the Board is no longer serving on the Board of Directors, the
position of Senior Chairman of the Board shall be eliminated.
Any member of the Office who dissents from a decision approved or made
by the majority of its members shall have the right, by acting forthwith, to
call a special meeting of the entire Board of Directors for the purpose of
reviewing said decision, in which event any such decision by the Office of the
Chief Executive shall not become effective until reviewed and approved by the
Board.
<PAGE>
ARTICLE V
CERTIFICATES FOR SHARES AND THEIR TRANSFERS
SECTION 5.1. Certificates for Shares. Certificates representing
shares of the corporation shall be in such form as shall be determined by the
Board of Directors, in conformity with the laws of the State of New Jersey.
SECTION 5.2. Transfer of Shares. Shares of the corporation shall be
transferable in accordance with the provisions of Chapter 8 of the Uniform
Commercial Code as adopted in New Jersey (N.J.S.A. ss.12A:8-101 et seq.) as
amended from time to time, and as provided in the New Jersey Business
Corporation Act.
SECTION 5.3. Lost, Stolen or Destroyed Certificates. The Board of
Directors may authorize the issuance of a new certificate in place of any
certificate theretofore issued by the corporation, alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of such loss, theft or
destruction by the owner thereof or their legal representative, and the Board of
Directors may, in its discretion, require such owner or legal representative to
give the corporation a bond indemnifying the corporation and the transfer agents
and registrars against all loss, cost and damage which may arise from the
issuance of a new certificate in place of the original certificate.
ARTICLE VI
INDEMNIFICATION AND INSURANCE
SECTION 6.1. Right to Indemnification. Each person who was or is made a
party or is threatened to be made a party to or is involved in any pending,
threatened or completed civil, criminal, administrative or arbitrative action,
suit or proceeding, or any appeal therein or any inquiry or investigation which
could lead to such action, suit or proceeding (a "proceeding"), by reason of his
or her being or having been a Director, Officer, employee, or agent of the
corporation or of any constituent corporation absorbed by the corporation in a
consolidation or merger, or by reason of his or her being or having been a
Director, Officer, trustee, employee or agent of any other corporation (domestic
or foreign) or of any partnership, joint venture, sole proprietorship, trust,
employee benefit plan or other enterprise (whether or not for profit), serving
as such at the request of the corporation or of any such constituent
corporation, or the legal representative of any such Director, Officer, trustee,
employee or agent, shall be indemnified and held harmless by the corporation to
the fullest extent permitted by the New Jersey Business Corporation Act, as the
same exists or may hereafter be amended, from and against any and all reasonable
costs, disbursements and attorneys' fees, and any and all amounts paid or
incurred in satisfaction of settlements, judgments, fines and penalties,
incurred or suffered in connection with any such proceeding, and such
indemnification shall continue as to a person who has ceased to be a Director,
Officer, trustee, employee or agent and shall inure to the benefit of his or her
heirs, executors, administrators and assigns. The right
<PAGE>
to indemnification conferred in this Section 6.l. shall be a contract right and
shall include the right to be paid by the corporation the expenses incurred in
connection with any proceeding in advance of the final disposition of such
proceeding as authorized by the Board of Directors; provided, however, that, if
the New Jersey Business Corporation Act so requires, the payment of such
expenses in advance of the final disposition of a proceeding shall be made only
upon receipt by the corporation of an undertaking, by or on behalf of such
Director, Officer, employee, or agent to repay all amounts so advanced unless it
shall ultimately be determined that such person is entitled to be indemnified
under this Section 6.1. or otherwise.
SECTION 6.2. Right of Claimant to Bring Suit. If a claim under Section
6.1. of these Bylaws is not paid in full by the corporation within thirty (30)
days after a written request has been received by the corporation, the claimant
may at any time thereafter apply to a court for an award of indemnification by
the corporation for the unpaid amount of the claim and, if successful on the
merits or otherwise in connection with any proceeding, or in the defense of any
claim, issue or matter therein, the claimant shall be entitled also to be paid
by the corporation any and all expenses incurred or suffered in connection with
such proceeding. It shall be a defense to any such action (other than an action
brought to enforce a claim for the advancement of expenses incurred in
connection with any proceeding where the required undertaking, if any, has been
tendered to the corporation) that the claimant has not met the standard of
conduct which makes it permissible under the New Jersey Business Corporation Act
for the corporation to indemnify the claimant for the amount claimed, and the
burden of proving such defense shall be on the corporation. Neither the failure
of the corporation (including its Board of Directors, independent legal counsel
or its shareholders) to have made a determination prior to the commencement of
such proceeding that indemnification of the claimant is proper in the
circumstances because he or she has met the applicable standard of conduct set
forth in the New Jersey Business Corporation Act, nor an actual determination by
the corporation (including its Board of Directors, independent legal counsel or
its shareholders) that the claimant has not met such applicable standard of
conduct, nor the termination of any proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent shall be a
defense to the action or create a presumption that the claimant has not met the
applicable standard of conduct.
SECTION 6.3. Non-Exclusivity of Rights. The right to indemnification
and advancement of expenses provided by or granted pursuant to this Article VI
shall not exclude or be exclusive of any other rights to which any person may be
entitled under a Certificate of Incorporation, Bylaw, agreement, vote of
shareholders or otherwise, provided that no indemnification shall be made to or
on behalf of such person if a judgment or other final adjudication adverse to
such person establishes that such person has not met the applicable standard of
conduct required to be met under the New Jersey Business Corporation Act.
SECTION 6.4. Insurance. The corporation may purchase and maintain
insurance on behalf of any Director, Officer, employee or agent of the
corporation or another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise against any expenses incurred in any proceeding
and any liabilities asserted against him or her by reason of such person's being
or having been such a Director, Officer, employee or agent, whether or not the
corporation would have the power to indemnify such person against such expenses
and liabilities under the provisions of this Article VI or otherwise.
ARTICLE VII
<PAGE>
MISCELLANEOUS
SECTION 7.1. Fiscal Year. The fiscal year of the corporation shall
be the year beginning April 1st and ending March 31st, unless the Board of
Directors shall otherwise direct.
SECTION 7.2. Corporate Seal. The corporation shall have a corporate
seal which shall be in such form as the Board of Directors may determine. In
lieu of the corporate seal, when so authorized by the Board of Directors or a
duly empowered committee thereof, a facsimile of the seal may be impressed or
affixed or reproduced.
SECTION 7.3. Amendments. The provisions of Sections 2.6., 3.2., 3.8.,
3.10. (last sentence only), 4.1., 4.2. and 7.3. of these Bylaws may be altered
or repealed only by the holders of two-thirds (2/3) of the outstanding shares
entitled to vote on the subject matter. Subject to the foregoing sentence, the
Board of Directors shall have the power to alter or repeal the Bylaws of the
corporation or adopt new Bylaws.
SECTION 7.4. Notices. In computing the period of time for the giving of
any notice required or permitted for any purpose, the day on which the notice is
given shall be excluded and the day on which the matter noticed is to occur
shall be included. If notice is given by mail or telegram, the notice shall be
deemed to be given when deposited in the mail or telegram office, addressed to
the person to whom it is directed at their last address as it appears on the
records of the corporation, with postage or charges prepaid thereon, provided,
however, such notice must be given by telegram, personal service or by
personally advising the person orally when, as may be authorized by these
Bylaws, less than three (3) days' notice is given. Notice to a shareholder shall
be addressed to the address of such shareholder as it appears on the stock
transfer records of the corporation.
<PAGE>
Exhibit 10(g)
[date]
[name]
c/o Block Drug Company, Inc.
257 Cornelison Avenue
Jersey City, NJ 07302
RE: Option Award Letter
Dear [name]:
On May 27, 1998, the Executive Committee of the Board of Directors of
Block Drug Company, Inc. (the "Company") and the voting shareholders of the
Company authorized and approved the Stock Option Plan of the Company (the
"Plan"). The Plan provides for the grant of options to certain key employees of
the Company and its subsidiaries. A copy of the Plan was attached to the
Prospectus dated June 3, 1998 that was given to you and shall be deemed a part
of this agreement as if fully set forth herein. Unless the context otherwise
requires, all terms defined in the Plan shall have the same meaning when used
herein.
As you have irrevocably elected to cash-in your Special Stock Unit
Award dated [date of original award] and to receive all future replacement
awards stemming from that[date of original award] Award in the form of Stock
Options, the Company hereby grants to you, as a matter of separate inducement
and not in lieu of any salary or other compensation for your services, the
option (the "Option") to purchase, in accordance with the terms and conditions
set forth in the Plan, an aggregate of[# of shares] shares of Common Stock at a
price of [$exercise price] per share, such option price being, in the judgment
of the Committee, not less than one hundred percent (100%) of the fair market
value of such share at the date hereof. Subject to the modifications and
limitations provided in the Plan, because this particular Option is a
replacement award, upon the exercise or expiration of this Option, and any
subsequent replacement Option, you will receive a new replacement Option based
on the original dollar value of the[date of original award] Special Stock Unit
Award. That amount is [original award dollar value].
The Option is not intended to qualify as an "incentive stock option"
within the meaning of Section 422 of the United States Internal Revenue Code of
1986, as amended.
<PAGE>
Subject to the modifications and limitations provided in the Plan, this
Option may be exercised by you during the period commencing on the third
anniversary of the date of grant of this Option and terminating at the close of
business on [10 years from date of letter], after which the unexercised portion
of the Option granted herein will automatically terminate and become null and
void. In the event your employment with the Company or any subsidiary is
terminated prior to the close of business on [3 years from date of letter], this
Option shall only be exercisable thereafter to the extent provided in the Plan,
and shall otherwise terminate and become null and void.
In no event shall you exercise this Option for a fraction of a share or
for less than five hundred (500) shares (unless the number purchased is the
total balance for which the Option is then exercisable).
This Option is not transferable by you otherwise than by will or the
laws of descent and distribution, and is exercisable, during your lifetime, only
by you (or by your legal representative appointed in the event of your
Disability). This Option may not be assigned, transferred (except by will or the
laws of descent and distribution), pledged or hypothecated in any way, except to
the extent necessary to comply with any cashless exercise procedure coordinated
by the Company with one or more brokerage firms. Any attempted assignment,
transfer, pledge, hypothecation or other disposition of this Option contrary to
the provisions hereof, and the levy of any attachment or similar proceeding upon
the Option, shall be null and void and without effect.
During your lifetime, you may not transfer your Option. In the event
you die holding an unexercised Option which has not expired, the Option, as an
asset of your estate, may be exercised by your legal representative on behalf of
your estate upon presentation of such representative of letters testamentary or
equivalent proof (satisfactory to the Committee) of the right of such person to
exercise such Option. You should consult your tax and estate planning advisors
as to how the Option should be handled in your estate.
Any exercise of this Option shall be substantially in the form attached
hereto. Please note that the attached form provides that the purchase price may
also be paid on your behalf pursuant to a "cashless exercise" arrangement that
has been established by the Company with Merrill Lynch Private Client Services.
The Company reserves the right to limit or modify the methods of exercise to
facilitate Plan administration.
As provided in the Plan, the Company may withhold from sums due or to
become due to you from the Company an amount necessary to satisfy its obligation
to withhold taxes incurred by reason of the issuance or disposition of shares
pursuant to this Option, or may require you to reimburse the Company in such
amount. The Company may hold the stock certificate to which you are entitled
upon the exercise of this Option as security for the payment of withholding tax
liability, until cash sufficient to pay such liability has been accumulated.
This agreement is subject to all terms, conditions, limitations and
restrictions contained in the Plan, which shall be controlling in the event of
any conflicting or inconsistent provisions.
You acknowledge that you are receiving the grant of a stock option
under the Company's Stock Option Plan and have received and understood a
description of this Plan. You further
<PAGE>
understand that the Company has reserved the right to amend or terminate the
Plan at any time and that the grant of an option in one year or at one time does
not in any way obligate the Company to make a grant in any future year or in any
given amount. You also acknowledge and understand that the grant is wholly
discretionary in nature and is not to be considered part of your normal or
expected compensation subject to severance, resignation, redundancy or similar
pay.
Please indicate your acceptance of all the terms and conditions of this
Option and the Plan by signing and returning a copy of this letter within 30
days.
Very truly yours,
BLOCK DRUG COMPANY, INC.
By:
Thomas Block
President
By:____________________________
John E. Peters
Senior Vice President, General
Counsel & Secretary
ACCEPTED:
-----------------------------
Signature of Employee
-----------------------------
Name of Employee-Please Print
Date:________________________
<PAGE>
Exhibit 10(h)
SPECIAL STOCK UNIT PLAN
AS AMENDED, APRIL 1, 1999
BLOCK DRUG COMPANY, INC.
(U.S. and International Employees)
A. PURPOSES:
The Plan is intended to provide greater motivation and incentive for
those eligible employees of the Company and its Subsidiaries who are making and
can continue to make significant contributions to the success of the business,
to attract and to retain employees of outstanding caliber and competence and to
enhance the identity of interests between the stockholders of the Company and
the employees who are Participants in the Plan.
In furtherance of the foregoing it is the express purpose of the Plan
to provide Participants with: Retirement income; Deferred compensation;
Supplemental income; and To have all payments from the Plan considered
qualified retirement benefits as set forth in paragraph
5 of Section L of this Plan.
B. DEFINITIONS:
1. As used in this Plan, the following terms shall have the meanings
set forth below:
(a) "Award Date" shall mean the date on which an award, or replacement
award, of one or more Special Stock Units is made to a Participant.
(b) "Base Period Earnings Per Share" shall mean four (4) times the
average of the Quarterly Earnings Per Share of the twelve (12) consecutive
completed Calendar Quarters next preceding the Award Date: PROVIDED, HOWEVER,
that if the sum of the Quarterly Earnings Per Share of any four (4) consecutive
Calendar Quarters [within such period of three (3) years] is less than the sum
of the Quarterly Earnings Per Share of the immediately preceding four (4)
consecutive Calendar Quarters, there shall be substituted, for each of such
succeeding four (4) Calendar Quarters, the net earnings per share fixed by the
Committee.
(c) "Base Period Value Per Unit" shall mean an amount equal to fifteen
(15) times the Base Period Earnings Per Share multiplied by two (2).
(d) "Calendar Quarter" shall mean the quarter-annual periods ending on
June 30, September 30, December 31 and March 31.
(e) "Committee" shall mean the committee having control of the
administration of the Plan as provided for in Section C of this Plan.
<PAGE>
(f) "Common Stock" shall mean the Class A Common Stock of the Company,
or any class of common stock of the Company issued in exchange or substitution
therefor.
(g) "Company" shall mean Block Drug Company, Inc., or any successor
thereto.
(h) "Disability" and "Disabled" shall have the meaning given those
terms in the Block Drug Retirement Plan, as amended from time to time.
(i) "Deferred Compensation Amount" shall mean the amount payable to a
Participant, Participant's designated beneficiaries or Participant's estate
which shall be determined in the manner provided for in Section G of this Plan.
(j) "Election" shall mean Participant's required irrevocable decision,
within sixty (60) days after an Award Date, as evidenced by a form provided by
the Company and signed by Participant, to receive payment of the Deferred
Compensation Amount when the Special Stock Units become fully vested, or to
defer payment to any subsequent year after the Special Stock Units become fully
vested, but subject to the provisions of Section H paragraph 1 and the
restrictions in Section H paragraph 2. If Participant decides to defer payment,
Participant shall have the choice of designating whether payment of the Deferred
Compensation Amount shall be made on February 15, or August 15, in the year in
which Participant elects to receive payment ("the Elected Payment Day"). Thus,
the Termination Earnings Per Share Date will be either the 31st of December or
the 30th of June of that year whichever immediately precedes the date
Participant elected to receive payment.
(k) "Hardship" shall mean an extreme financial emergency or need for
which funds are not reasonably available from other sources. These needs include
extraordinary medical expenses not covered by insurance, purchase of a primary
residence, burdensome family educational expenses or any other extraordinary
financial need.
(l) "Interest" shall mean the annual rate of interest equal to the
prime rate of interest as published in the Wall Street Journal on the day which
necessitates payment is to be made, minus the percentage obtained by multiplying
said prime rate by the percentage amount of the maximum Federal and the
effective New Jersey corporate income tax rates applicable to the Company. In
its sole and nonreviewable discretion, the Committee shall determine whether and
to what extent, if any, adjustments should be made to the rate of interest to be
paid, if there are fluctuations in the tax rates applicable to the Company.
(m) "International Participant" shall mean a Participant whose domicile
is other than the United States. (n) "Normal Retirement Date" shall
mean the first day of the month coincident with or next following
a Participant's sixty-fifth (65th) birthday; PROVIDED, HOWEVER, that the
Committee, in its sole and nonreviewable discretion, and upon such criteria as
the Committee may consider appropriate, may treat the date of the Termination of
Employment of any living, nondisabled Participant over the age of sixty-two (62)
years as his Normal Retirement Date, in
<PAGE>
which event such Participant's Termination of Employment shall be deemed to have
occurred by reason of Participant's retirement on Participant's Normal
Retirement Date for all purposes hereunder.
(o) "Participant" shall mean an employee of the Company or a Subsidiary
to whom one or more Special Stock Units are awarded under this Plan.
(p) "Participant's Account" shall mean the record established by the
Company for each Participant showing the number of Special Stock Units awarded
to Participant by the Committee from time to time, and the Base Period Value Per
Unit and Award Date of each such Special Stock Unit.
(q) "Plan" shall mean the Special Stock Unit Plan of the Company, as
described herein, or as amended from time to time.
(r) "Quarterly Earnings Per Share" shall mean the Calendar Quarter net
earnings per share of Common Stock reported by the Company to the Securities and
Exchange Commission, as adjusted, by the Committee, or as restated by the
Company, if the Committee, in its sole and nonreviewable discretion, shall deem
it appropriate, by, but not limited to:
(i) Eliminating or restating any one or more items of income, expense,
gain or loss, of whatever nature, and/or:
(ii) Restating net earnings per share to reflect a material reduction
or increase in the number of outstanding shares of the common stock of the
Company, of whatever class, and/or:
(iii) Limiting the Quarterly Earnings Per Share for any Calendar
Quarter to an amount equal to one hundred and fifteen percent (115%) of the
Quarterly Earnings Per Share of the comparable Calendar Quarter in the
immediately preceding Calendar Year, after adjusting the earnings of each such
prior year's quarter by the increase in the cost-of-living for the twelve (12)
month period succeeding such prior year's quarter. Such cost-of-living
adjustment shall be based upon the Consumer Price Index for All Urban Consumers
published by the U.S. Department of Labor, Bureau of Labor Statistics or its
equivalent.
In the event that the net earnings per share of any one or more prior
Calendar Quarters shall be adjusted, as provided for herein, the Committee, in
its sole and nonreviewable discretion, shall determine whether and to what
extent, if any, such prior period adjustments should be reflected in the
computation of Base Period Earnings Per Share and/or Termination Earnings Per
Share and whether the number of Special Stock Units credited to each
Participant's Account should be adjusted.
(s) "Special Stock Unit" shall mean the equivalent of two (2) shares of
the Common Stock having a value equal to its Base Period Value Per Unit.
(t) "Special Stock Units Awarded" shall mean the number of Special
Stock Units originally awarded and adjusted to reflect stock dividends paid on
the Common Stock or as otherwise adjusted by the Committee.
<PAGE>
(u) "Stock Option" or "Option" shall mean any option to purchase a
share or shares of the Company's Class A Common Stock, or any class of Company
common stock issued in exchange or substitution thereof, pursuant to the Stock
Option Plan.
(v) "Stock Option Plan" shall mean the Stock Option Plan of the
Company, as amended from time to time.
(w) "Subsidiary" shall mean any corporation of which more than fifty
percent (50%) of the total combined voting stock, of all classes, is owned by
the Company and/or another corporation or entity which directly or indirectly
controls, is controlled by, or is under control of the Company.
(x) "Termination of Employment" shall mean the cessation of any
Participant's employment with the Company and any and all Subsidiaries for any
reason, including death or disability.
(y) "Termination Date" shall mean the first to occur of (a) the
Participant's Normal Retirement Date, or (b) the effective date of the
Termination of Employment of a Participant from the Company and any and all
Subsidiaries, irrespective of the cause or reason for such termination.
(z) "Termination Earnings Per Share" shall mean four (4) times the
average of the highest Quarterly Earnings Per Share of any twelve (12)
consecutive Calendar Quarters starting with the first Calendar Quarter used to
compute the Participant's Base Period Earnings Per Share and ending with the
last completed Calendar Quarter on or before the date Participant is entitled to
receive payment.
(aa) "Termination Value Per Unit" shall mean an amount equal to fifteen
(15) times the Termination Earnings Per Share multiplied by two (2).
C. ADMINISTRATION:
1. The Board of Directors of the Company shall appoint a Committee of
two (2) or more individuals, who shall serve at the pleasure of the Board of
Directors, to administer the Plan. The Committee shall elect one of the members
thereof to serve as Chairman at the pleasure of the Committee. No award of
Special Stock Units shall be made to an employee of the Company or any
Subsidiary while and so long as that employee shall be a member of the
Committee.
2. The Committee, among other things, shall determine, in its sole
discretion, subject to the provisions of this Plan:
(a) The employees of the Company and/or its Subsidiaries who shall
participate in this Plan from time to time; (b) The time or times when Special
Stock Units shall be awarded to any and all Participants; and
<PAGE>
(c) The number of Special Stock Units which shall be awarded to
each and every Participant.
3. The Committee shall construe and interpret the meaning and
application of all provisions of this Plan, and all such constrictions and
interpretations shall be binding and conclusive on all persons having any
interest therein.
4. The Committee shall hold meetings upon such notice, at such place or
places, and at such time or times as the members shall determine from time to
time. The Committee may delegate ministerial duties to one or more employees of
the Company or its Subsidiaries, and may authorize one or more of their number
as an agent to execute or deliver any instrument or make any payment on behalf
of the Committee, and may employ or engage such persons as may be reasonably
required or desirable in carrying out the provisions of this Plan.
5. A majority of the members of the Committee at the time in office
shall constitute a quorum for the transaction of business. All resolutions or
other actions taken by the Committee shall be by the vote of a majority of the
Committee, but resolutions may be adopted or other actions taken by the
Committee without a meeting upon the written consent signed by a majority of the
members of the Committee.
6. No member of the Committee shall receive any compensation for
services rendered as such, nor shall such member be liable for any act done or
omitted or determination made in good faith.
7. The Company shall bear all costs and expenses incident to the
administration of the Plan.
D. ELIGIBILITY:
1. Any employee of the Company or its Subsidiaries, including an
employee who also may be an officer or director of the Company or any Subsidiary
(excepting only any employee who is a member of the Committee while and so long
as such employee is a member) shall be eligible to receive an award of one or
more Special Stock Units.
E. AWARD OF SPECIAL STOCK UNITS:
1. The Committee, from time to time, may award one or more Special
Stock Units to a Participant. Each such award shall be made as of a month and
day designated by the Committee.
2. All Special Stock Units awarded to a Participant shall be credited
to Participant's Account as of the Award Date. Within sixty (60) days following
such credit, the Committee shall issue a non-negotiable certificate to the
Participant setting forth the number of Special Stock Units awarded to
Participant, the Base Period Value Per Unit and the Award Date of each of such
Special Stock Units.
<PAGE>
3. The aggregate number of Special Stock Units credited to all
Participants at any one time shall not exceed two and one-half percent (2.5%) of
the total number of the then outstanding shares of all classes of common stock
of the Company. In computing such aggregate number of Special Stock Units, there
shall not be included Special Stock Units awarded to any and all Participants
whose Termination of Employment has occurred but, pursuant to paragraph 5 of
Section H of this Plan, the Deferred Compensation Amount has not yet been paid.
4. The Committee at any time and from time to time, with the consent of
a Participant, may cancel all or any number of Special Stock Units theretofore
awarded to Participant and make an award of one or more Special Stock Units in
lieu thereof.
F. VESTING:
1. Except as otherwise provided in paragraphs 2 of this Section,
one-twentieth (1/20) of the Special Stock Units Awarded to a Participant and
credited to Participant's Account, as of a particular Award Date, shall become
vested at the end of such successive period of three (3) full months following
such Award Date, provided that during such period, the Participant shall be
employed by the Company or a Subsidiary: thus, all Special Stock Units Awarded
to a Participant on any one Award Date shall become fully vested on the fifth
(5th) anniversary of such Award Date, provided that on such fifth (5th)
anniversary Participant is employed by the Company or a Subsidiary and had been
so employed continuously during the period between the said Award Date and the
fifth (5th) anniversary thereof.
2. In any case when there is termination of employment of a Participant
due to death or disability, or if the Participant's Normal Retirement Date is
reached, (i) all Special Stock Units in Participant's Account shall be fully
vested on the date of the occurrence of such event, irrespective of the length
of the period between the Award Date of any or all Special Stock Units and the
date of such termination of employment, or Normal Retirement Date (ii) no
additional Special Stock Units shall be awarded to Participant, (iii) the value
of said Special Stock Units in Participant's Account will no longer appreciate
and (iv) the Deferred Compensation Amount will be paid in accordance with the
provisions of paragraph 5 of Section H of the Plan.
G. DETERMINATION OF DEFERRED COMPENSATION AMOUNT:
1. When Participant's Termination Date is reached, then, solely with
respect to that number of Special Stock Units Awarded and credited to
Participant's Account which are vested on the Termination Date (in accordance
with the provisions of Section F of this Plan) or when payments are to be made
in accordance with Section H of this plan, Participant shall be entitled to
receive as the Deferred Compensation Amount the excess, if any, of:
<PAGE>
(a) The Termination Value Per Unit of the aggregate number of Special
Stock Units Awarded which are vested:
OVER
(b) The aggregate Base Period Value Per Unit of such vested Special
Stock Units awarded: PROVIDED, HOWEVER, in computing the Deferred Compensation
Amount, there shall not be taken into account any one Award where the aggregate
Base Period Value Per Unit exceeds the Termination Value Per Unit of the
aggregate number of Special Stock Units Awarded.
H. PAYMENT OF DEFERRED COMPENSATION AMOUNT:
1. Subject to the provisions of paragraph 2 of this Section,
Participants who have not made an Election to defer payment of their Deferred
Compensation Amount shall be paid the Deferred Compensation Amount on the
thirtieth (30th) day following the date on which Participant's Special Stock
Units become fully vested in accordance with the provisions of this Plan.
Participants who have made an Election to defer payment shall be paid their
Deferred Compensation Amount on the Elected Payment Day. Participants receiving
payment under the provisions of this paragraph, shall receive replacement
awards, at Participant's option, either in Special Stock Units or Stock Options,
as provided in paragraph 5 of this Section.
2. Regardless of when vesting occurs, payments will not be made during
the period commencing with Participant's 60th birthday and ending with
Participant's Normal Retirement Date, except when there is Termination of
Employment.
3. In the case of Hardship, any Participant may request the Committee
for payment of Participant's Deferred Compensation Amount with respect to any or
all of those Special Stock Units credited to Participant's Account which are
fully vested as of the date of such request. Such request must be made in
writing at least thirty (30) days prior to the proposed date of payment. If the
Committee, in the exercise of its sole and nonreviewable discretion, shall
consent to the request for such payment, then the Deferred Compensation Amount
to which the Participant is entitled with respect to such fully vested Special
Stock Units shall be determined and then paid on the thirtieth (30th) day
following the date of the request, with a replacement award to be issued in the
manner provided in paragraph 4 of this Section.
4. When a Participant is paid a Deferred Compensation Amount (i) due to
Participant's Normal Retirement Date having been reached, or (ii) due to
Participant's Termination of Employment no replacement award shall be issued.
5. When Special Stock Unit Awards are scheduled to be replaced,
Participants will have an irrevocable option to elect whether that replacement
award will be in Special Stock Units or be in Stock Options. Regardless of the
choice, the replacement value will be equal to the dollar value of the original
award which is being replaced.
<PAGE>
If Participant elects to replace the Special Stock Unit award with
Stock Options, all future replacement awards attributed to that original award
will be in the form of Stock Options. As other Special Stock Unit awards become
fully vested, the Participant will be given the option to elect whether those
awards will be replaced with Special Stock Units or Stock Options. Once
Participant elects Stock Options as a replacement that is an irrevocable
decision with respect only to that Award and any replacement awards stemming
from it.
Except as set forth in paragraph 4 of this Section, when the Stock
Option replacement award is exercised or expires, a Stock Option replacement
award will be issued with a dollar value equal to that of the original award
which is being replaced.
The Participant will be notified at least sixty (60) days prior to the
date scheduled for the issuance of a replacement award and within thirty (30)
days of such notice Participant must then elect whether the replacement award
will be in the form of Special Stock Units or Stock Options.
6. Upon Participant's tender of the certificate(s) covering those
Special Stock Units for which payment is made the Special Stock Units will be
cancelled and a new award, equal to the original dollar value of the award(s)
being cancelled, will be issued. The Award Date of the replacement Special Stock
Units will be that date which is thirty (30) days prior to the date payment is
due. The replacement Special Stock Units will fully vest in five (5) years and
will not take the place of normally scheduled awards. The issuance of
replacement Special Stock Units shall be contingent upon Participant's
employment by the Company or any Subsidiary on the date payment is made.
7. Subject to the restrictions set forth in paragraph 2 of this
Section, International Participants are permitted to request the Company to pay
the fully vested amount of the awards and to receive replacement units either in
the form of Stock Options or Special Stock Units. Such request must be in
writing at least thirty (30) days prior to the proposed date of payment. If the
Company, in the exercise of its sole and nonreviewable discretion, shall consent
to the request for such payment, then the fully vested amount will be paid and
replacement awards will be issued in accordance with the Plan.
8. When there is Termination of Employment of a Participant, or if the
Participant's Normal Retirement Date is reached, the Deferred Compensation
Amount shall be paid within one (1) year from the date the event occurs. In the
event the termination of employment of a Participant shall be occasioned by
Participant's death or disability, the Deferred Compensation Amount shall be
paid, in the case of a disabled Participant, to the Participant, or otherwise as
Participant may in writing direct, or else to a duly appointed committee,
guardian or conservator, if any, or in the case of a deceased Participant, to
the beneficiary or beneficiaries most recently designated by the Participant in
a writing filed with the Committee, or if no such
<PAGE>
designation shall have been made, or if all designated beneficiaries shall die
before all payments have been made, then any remaining payments shall be made to
the Participant's estate.
9. In all instances when the Deferred Compensation Amount is not paid
on the thirtieth (30th) day succeeding the event which necessitates payments
being made, Interest on the unpaid amount shall accrue as of the thirty-first
(31st) day after the event until the Deferred Compensation Amount is paid.
I. ADJUSTMENT OF SPECIAL STOCK UNITS:
1. If there shall be a material change in the character or number of
the outstanding shares of the Common Stock by reason of any split-up, stock
dividend, combination, recapitalization, merger, consolidation or any redemption
or exchange of shares, or otherwise, the Committee shall make adjustments to (a)
the Base Period Value Per Unit of each of the Special Stock Units previously
awarded, or (b) the number of Special Stock Units credited to each Participant
Account, or both, as is necessary to assure that they will reflect the same
proportionate value to the Participant after any such corporate action as
before.
J. NON-ALIENATION OF BENEFITS:
1. A Participant's rights, interests and benefits under this Plan shall
not be subject to assignment, transfer, pledge, encumbrance or charge, excepting
only that in the case of a Participant's death, Participant's rights, interests
and benefits may pass to Participant's beneficiaries or Participant's estate as
provided for in paragraph 5 of Section H of this Plan.
K. AMENDMENT AND TERMINATION:
1. The Board of Directors of the Company shall have the right to amend
this Plan in any respect from time to time, or to terminate it at any time.
2. Neither any amendment nor the termination of the Plan shall affect
the right of a Participant solely to receive the net increment with respect to
those Special Stock Units credited to Participant's Account which are vested on
the date of such amendment or termination.
L. ADDITIONAL PROVISIONS:
1. Participant's decision to defer, or not to defer, payment of the
Deferred Compensation Amount may result in important tax consequences to
Participant. Participant should consult with an attorney or financial advisor
before making this decision.
<PAGE>
2. The Company and its Subsidiaries shall have the right to deduct from
Participant's wages and from payments of Deferred Compensation Amounts any taxes
or other amounts required by law to be withheld due to increases in the vested
amounts or due to the payment of the Deferred Compensation Amount.
3. Neither the Company or its Subsidiaries has established, nor shall
it be required to establish, any special or separate fund nor has the Company or
its Subsidiaries made any other segregation of assets to assure, or secure, nor
does the Company or its Subsidiaries in any way guarantee the payment of any
Deferred Compensation Amount.
4. No employee of the Company or its Subsidiaries or any other person
shall have the right to become a Participant or have any claim or right to
receive an award of Special Stock Units under this Plan.
5. Neither the existence nor provisions of this Plan nor any action
taken hereunder shall be deemed to give any employee the right to be retained in
the employ or service of the Company or any Subsidiary or to interfere with the
rights of the Company or any Subsidiary to discharge any employee at any time.
It is the Company's intent to provide retirement income to Participant and to
have all payments under the Plan be considered qualified retirement benefits
under the law. By paying Participant's Deferred Compensation Amounts prior to
Participant's Termination of Employment, the Company may lose certain rights.
Therefore, the Company may request the Participant sign a waiver acknowledging
the intent of the Company and Participant to consider any such payment(s) to be
part of Participant's qualified retirement benefit and the lack of such right by
the Participant to be retained by the Company.
6. By action of their respective Boards of Directors, Subsidiaries may
adopt this Plan for Participants who are employees of such Subsidiaries. In such
event, such Subsidiaries shall assume the payment liability of the Deferred
Compensation Amount for their Participant employees.
7. This Plan and all requirements thereunder shall be construed in
accordance with and governed by the laws of the State of New Jersey, United
States of America.
M. EFFECTIVE DATE:
1. The effective date of this Plan is May 25, 1976, as amended February
14, 1989, April 1, 1991, January 31, 1997, and as further amended April 1, 1999.
<PAGE>
EXHIBIT 10(i)
AMENDMENT TO EMPLOYMENT AGREEMENT
BETWEEN
JAMES BLOCK
AND
BLOCK DRUG COMPANY, INC.
TheEmployment Agreement dated September 1, 1984, as amended April 29, 1987,
between James Block (hereinafter called "Executive") and Block Drug Company,
Inc. (hereinafter called "company"), is hereby amended by deleting Paragraph
1.(a) and substituting the following paragraph in lieu thereof.
1.(a) The Company hereby employs Executive until April 30, 2007, or
until such later date as Executive's employment may be terminated in
accordance with the provisions of subsection (b) of this Section.
In all other respects, the provisions of the Agreement remain the same.
IN WITNESS WHEREOF, the Company has caused this Amendment to be executed by
its duly authorized officers and its corporate seal to be affixed and
Executive has signed, sealed and delivered this Amendment as of this 29th day
of April, 1997.
ATTEST:
BLOCK DRUG COMPANY, INC.
________________________ By:___________________________
John E. Peters Thomas Block
Secretary President
WITNESS:
By:__________________
James Block
<PAGE>
AMENDMENT TO EMPLOYMENT AGREEMENT
BETWEEN
JAMES BLOCK
AND
BLOCK DRUG COMPANY, INC.
TheEmployment Agreement dated September 1,.1984 between James Block
(hereinafter called "Executive") and Block Drug Company, Inc. (hereinafter
called "Company"), is hereby amended by deleting Paragraph 1.(a) on page 2
and substituting the following paragraph in lieu thereof.
1.(a) The Company hereby employs Executive until April 30, 1997,
or until such later date as Executive's employment may be
terminated in accordance with the provisions of subsection (b) of
this Section.
In all other respects, the provisions of the Agreement remain the same.
IN WITNESS WHEREOF, the Company has caused this Amendment to be executed by
its duly authorized officers and its corporate seal to be affixed and
Executive has signed, sealed and delivered this Amendment as of this 29th
day of April, 1987.
ATTEST:
BLOCK DRUG COMPANY, INC.
____________________ BY:____________________
James Block
Chairman of the Board
WITNESS:
_____________________ BY:_____________________
Thomas Block
<PAGE>
EMPLOYMENT AGREEMENT
September 1, 1984 is the effective date of this EMPLOYMENT AGREEMENT
between BLOCK DRUG COMPANY, INC., a corporation of the State of New Jersey
(hereinafter called "Company"), having its principal office at 257 Cornelison
Avenue, Jersey City, New Jersey 07302, and JAMES BLOCK (hereinafter called
"Executive") residing in the City, County and State of New York.
WHEREAS, Executive has served as a major executive of the Company for many
years and presently is serving as the President of the Company; and
WHEREAS, the Company and Executive entered into an Employment Agreement
dated January 1, 1981;
and
WHEREAS, the Company has determined that it would be in the best interests
of the Company and its stockholders that the Company change certain provisions
of the January 1, 1981 Employment Agreement and assure itself of the continued
services of Executive and his specialized knowledge and unusual abilities with
respect to the business and affairs of the Company; and
W I T N E S S E T H:
WHEREAS, Executive is willing to enter into a new Agreement with the
Company for his exclusive services as a management executive on a full-time
basis or as an employee performing special management services with respect to
the business and affairs of the Company; and
WHEREAS, the Executive Committee of the Board of Directors of the Company
has approved the terms and conditions respecting the Executive's employment
set forth herein and has authorized the execution and delivery of this
Agreement.
NOW, THEREFORE, in consideration of the premises, the mutual covenants
hereinafter contained and other good and valuable consideration, the Company
and Executive hereby agree as follows:
1. (a) The Company hereby employs Executive until December 31, 1990, or
until such later date as Executive's employment may be terminated in
accordance with the provisions of subsection (b) of this Section.
(b) Executive, at any time that he is serving the Company as a
management executive on a full time basis (i) may give the Company written
notice, effective as of the first date of the month specified in such notice
that Executive shall thereafter be employed as an executive of the Company
rendering advice and counsel to the senior officers and the Executive
Committee of the Company and handling special assignments (herein such role is
referred to as "a special management executive"); or (ii) if his physical or
mental condition shall preclude his performing the duties of a management
executive on a full time basis, Executive shall thereafter serve as a special
management executive. Executive shall be employed as such special management
executive for a period of years, not in excess of twenty, equal to one-half of
the number of full years that Executive was employed by the Company (including
any predecessor) on a full time basis as a management executive, or until the
death of Executive, if such death shall occur prior to the end of such period
of years.
2. When he is serving as a full time management executive:
(a) The duties required of Executive shall be of a management
executive nature similar in type and character to those duties heretofore and
now being performed by him and shall include specifically domestic and foreign
travel and maintenance of Company, employee, industry, trade and customer
relations, including
<PAGE>
such entertainment in accordance with Executive's position and
responsibilities as may be appurtenant to the performance of such duties.
(b) Executive will be permitted vacation periods each year similar to
those taken in the past and as are customary for executives holding a position
of similar status and responsibility.
(c) Executive will devote his entire time and attention during usual
business hours to the business of the Company, subject to the following
exceptions:
(i) During vacation periods and periods of illness or other
incapacity.
(ii) Executive shall have the right to make and supervise his and
his family's personal investments or to serve as: (A) an officer or director
of any other company, corporation or business organization, provided that the
same is non-competitive in any substantial respect with the business engaged
in by the Company; (B) a fiduciary of an estate or a trust for the benefit of
a member of his or his wife's family or a friend; or (C) an officer or
director of, and/or to render services to, any civic, charitable, educational,
eleemosynary or similar organizations of activity.
3. When he is serving as a special management executive, Executive shall
only be required to perform such duties as his health permits. Among other
things, Executive shall be available to serve, if appointed, as a member of
the Executive Committee of the Company and any committees administering
incentive and retirement plans for employees of the Company, and to study,
evaluate and make recommendations with respect to the Company's marketing
plans, advertising campaigns, and proposed acquisitions. While Executive is
employed as a special management executive he shall not be required to be
present at any office of the Company on a regular basis, and he shall have the
right to vacation and to travel as he sees fit so long as when he is absent
from the Metropolitan New York, New Jersey area, he is available for
consultation by telephone, telegram, or cable and materials and documents can
be sent to him for his review and consideration.
4. Executive will be provided at all times, whether he is employed on a
full time basis or as a special management executive, with suitable executive
office space and secretarial services and staff assistance.
5. Executive hereby accepts the employment contemplated in this Agreement
and agrees to perform the duties required of him hereunder. If elected
thereto, Executive will serve as an officer or director of the Company without
additional compensation, except that in the event that any such company shall
pay fees to the management members of its Board of Directors or fees to any
members of any committee of such directors of which Executive may be a member,
then Executive shall be entitled to retain the same.
6. (a) Commencing September 1, 1984 the Company will pay to Executive an
annual salary of $213,671 (Two Hundred Thirteen Thousand Six Hundred Seventy
One Dollars) in equal monthly installments on the first day of each month. It
is understood that the annual salary payable to Executive may be adjusted from
time to time, in the sole discretion of the Company; provided, that in no
event will such annual salary be less than $164,792 (One Hundred Sixty Four
Thousand Seven Hundred Ninety Two Dollars) [before reflecting any "Economic
Factor", as hereinafter defined, or cost-of-living increase as provided for
subsection (c) of this Section].
(b) The annual salary payable to Executive for his services as a
special management executive shall be one-quarter of the rate of annual salary
payable to Executive for his services as a full time management executive as
of the date that the nature of Executive's employment shall change from that
of a full time
<PAGE>
management executive to a special management executive.
(c) Commencing as of September 1, 1985, and continuing on September 1
of each subsequent year, there shall be examined the Consumer Price Index For
All Urban Consumers (U.S. City Average) as published by the U.S. Department of
Labor (the "Index"). It shall be determined if there is an increase or
decrease in the Index as of July 1 of any year as compared to the Index for
July 1984 (311.7). Also commencing as of September 1, 1985, and continuing on
September 1 of each subsequent year, the Company's Economic Factor ("Factor")
shall be determined. The Factor is that percentage approved in writing by the
Company's Office of the Chief Executive at its regularly scheduled meeting and
which percentage governs salary increases for all domestic non-union employees
of the Company in effect as of September 1. Executive's annual salary on
September 1, 1985 shall be increased by an amount determined by multiplying
the greater of (a) the Factor or (b) the percentage increase in the Index, by
the annual salary in effect on September 1, 1984. However, thereafter, as of
September 1 of each ensuing year, using Executive's salary on September 1,
1984 as the base, two (2) cumulative earnings totals, one from the application
of the percentage increase or decrease in the Index and one from the
application of each year's Factor to the annual salary shall be maintained and
compared. Executive's annual salary will be increased or decreased commencing
September 1, 1986 and on each September 1st thereafter, so that Executive's
cumulative salary from September 1, 1984 will be the higher of such amount
resulting from the cumulative increase or decrease in the Index or the
cumulative increase or decrease after the application of each year's Factor.
7. Anything to the contrary hereinbefore stated notwithstanding, if the
Company continues or adopts any plan or plans of any sort or nature including
but without limiting the generality of the foregoing, pension plans, profit
sharing plans, bonus plans, stock option plans or insurance plans by the terms
of which Executive would be eligible to participate therein, then Executive,
in whichever capacity he is employed by the Company, shall have the right to
participate therein and shall be entitled to receive all emoluments or
benefits as may be provided thereunder, in addition to all of Executive's
other rights and benefits hereunder.
8. The Company recognizes that Executive has made and will make out
of his own personal funds certain minor expenditures for entertainment
and the like necessary in carrying out his duties hereunder.
Notwithstanding this recognition by the Company of the necessity thereof,
Executive agrees that the Company will not reimburse him for such
expenditures made by him personally.
9. On December 31, 1990, if Executive is then living and is still
serving as a full time management executive, he will, in good faith,
first negotiate for the continuation of his employment by the Company
before accepting employment elsewhere.
10. (a) In the event of the death of Executive at any time after the
date of this Agreement, before, on or after December 31, 1990, whether or
not Executive is employed by the Company in any capacity at the time of
his death, the Company will pay the annual amount determined as provided
in subsection (b) of this Section, in equal monthly installments
commencing with the month immediately following that in which Executive's
death shall have occurred, for the period of years computed as provided
in subsection (c) of this Section, to Executive's wife, Barbara Block, if
she shall survive Executive, and upon her death thereafter prior to the
receipt of all payments, or in the event that Barbara Block shall not
survive Executive, such remaining payments or such payments, as the case
may be, shall be made to the acting trustees of the trust for the primary
benefit of Executive's issue under an Indenture of Trust dated as of
November 20, 1970, (or, if the said Trust shall have terminated, to the
persons who shall have succeeded to the principal of such trust, in
proportion to their respective interests in such principal). Executive
shall not have the right to change the payers provided for herein.
(b) The annual amount shall be equal to one-half of the average
annual salary of Executive for those three years of his employment by
the Company in which Executive was paid the highest amount of salary,
not including, however, in the computation of such annual amount any
increase in Executive's salary during those three highest salaried years
other than an increase attributable to the cost-of-living adjustment
provided in subsection (c) of Section 6.
(c) The payments provided for in subsection (a) of this Section
shall continue for a period of years, not in excess of twenty, equal to
one-half of the number of full years that Executive shall have been
employed as a full time management executive by the Company (including
any predecessor). For the purposes of this Agreement, it is acknowledged
and agreed that Executive's employment as a full time management
executive by the Company commenced on June 22, 1959 and has continued
uninterrupted to the date hereof.
11. Executive agrees that, unless the Company shall consent thereto, he will
not at any time during his employment by the Company engage in any activity
which shall be substantially competitive with any business then carried on by
the Company. Executive shall be free, however, without such consent, to purchase
and deal in, as investments or otherwise, stocks or other securities of any
corporation, competitive or otherwise, generally traded in by the public:
provided that Executive's ownership of shares of stock of any such competitive
corporation shall not exceed one per cent of the outstanding shares of capital
stock.
12. Wherever referred to herein, "Company" shall include all corporations
more than fifty percent of the outstanding common stock of which is owned by
<PAGE>
the Company directly and/or through its subsidiaries.
13. This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of the Company upon any liquidation, dissolution or
winding-up of the Company, or upon any sale of all or substantially all of the
Company's assets, or upon any merger or consolidation of the Company with or
into any other corporation, all as though such successors and assigns of the
Company and their respective successors and assigns were the Company.
14. This Agreement contains all of the covenants and agreements between
the parties and all prior understandings and agreements relating to the
subject matter herein as superseded and cancelled by this Agreement. This
Agreement shall not be altered, modified, varied or amended except by an
agreement in writing of like dignity, executed by both parties hereto.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officers and its corporate seal to be
affixed and Executive has signed, sealed and delivered this Agreement as of
the date first above written.
ATTEST:
BLOCK DRUG COMPANY, INC.
BY:_____________________ ___________________
John E. Peters Leonard Block
Secretary Chairman of the Board
WITNESS:
BY:_____________________
James Block
<PAGE>
Exhibit 10(j)
AMENDMENT TO EMPLOYMENT AGREEMENT
BETWEEN
THOMAS BLOCK
AND
BLOCK DRUG COMPANY, INC.
The Employment Agreement dated May 1, 1987, between Thomas Block (hereinafter
called "Executive") and Block Drug Company, Inc. (hereinafter called "Company"),
is hereby amended by deleting Paragraph 1. (a) and substituting the following
paragraph in lieu thereof.
1. (a) The Company hereby employs Executive until April 30, 2007, or
until such later date as Executive's employment may be terminated in
accordance with the provisions of subsection (b) of this Section.
In all other respects, the provisions of the Agreement remain the same.
IN WITNESS WHEREOF, the Company has caused this Amendment to be executed by its
duly authorized officers and its corporate seal to be affixed and Executive has
signed, sealed and delivered this Amendment as of this 29th day of April, 1997.
ATTEST: BLOCK DRUG COMPANY, INC.
_______________________ By:_________________________
James Block
Chairman of the Board
WITNESS:
_______________________ By:__________________________
Thomas Block
EMPLOYMENT AGREEMENT
May 1, 1987 is the effective date of this EMPLOYMENT AGREEMENT between BLOCK
DRUG COMPANY, INC.,
a corporation of the State of New Jersey (hereinafter called "Company"), having
its principal office at 257 Cornelison Avenue, Jersey City, New Jersey 07302,
and THOMAS R. BLOCK (hereinafter called "Executive") residing in the City,
County and State of New York.
WITNESSETH:
<PAGE>
WHEREAS, Executive has served as a major executive of the Company for
many years and presently is serving as the Executive Vice President and
Treasurer of the company; and
WHEREAS, the Company and Executive entered into an Employment Agreement
dated September 1, 1984; and
WHEREAS, the Company has determined that it would be in the best
interests of the Company and its stockholders that the company change certain
provisions of the September 1, 1984 Employment Agreement and assure itself of
the continued services of executive and his specialized knowledge and unusual
abilities with respect to the business and affairs of the Company; and
WHEREAS, Executive is willing to enter into a new Agreement with the Company for
his exclusive services as a management executive on a full time basis or as an
employee performing special management services with respect to the business and
affairs of the Company; and
WHEREAS, the Executive Committee of the Board of Directors of the
Company has approved the terms and conditions respecting the Executive's
employment set forth herein and has authorized the execution and delivery of
this Agreement.
NOW, THEREFORE, in consideration of the premises, the mutual covenants
hereinafter contained and other good and valuable consideration, the Company and
Executive hereby agree as follows:
1. (a) The Company hereby employs Executive until April 30, 1997, or
until such later date as Executive's employment may be terminated in accordance
with the provisions of subsection (b) of this Section.
Executive, at any time that he is serving the Company as management
executive on a full time basis (I) may give the Company written
notice, effective as of the first date of the month specified in such
notice, that Executive shall thereafter be employed as an executive of
the Company rendering advice and counsel to the senior officers and
the Executive Committee of the Company and handling special
assignments (herein such role is referred to as "a special management
executive"); or (ii) if his physical or mental condition shall
preclude his performing the duties of a management executive on a full
time basis, Executive shall thereafter serve as a special management
executive. Executive shall be employed as such special management
executive for a period of years, not in excess of twenty, equal to
one-half of the number of full years that Executive was employed by
the Company (including any predecessor) on a full time basis as a
management executive, or until the death of Executive, if such death
shall occur prior to the end of such period of years.
When he is serving as a full time management executive:
The duties required of Executive shall be of a management nature similar
in type and character to those duties heretofore and now being
performed by him and shall include specifically domestic and foreign
travel and customer relations, including such entertainment in
accordance with Executive's position and responsibilities as may be
appurtenant to the performance of such duties.
Executive will be permitted vacation periods each year similar to those
taken in the past and as are customary for executives holding a
position of similar status and responsibility.
Executive will devote his entire time and attention during usual business
hours to the business of the Company, subject to the following
exceptions:
(i) During vacation periods and periods of illness or Other incapacity.
(ii) Executive shall have the right to make and supervise his and his family's
personal investments or to serve as: (A) an officer or director of any other
company, corporation or business organization, provided that the same is
<PAGE>
non-competitive in any substantial respect with the business engaged in by the
company; (B) a fiduciary of an estate or a trust for the benefit of a member of
his or his wife's family or a friend; or (C) an officer or director of, and/or
to render services to, any civic, charitable, educational. eleemosynary or
similar organization or activity.
When he is serving as a special management executive, Executive shall only be
required to perform such duties as his health permits. Among other things,
Executive shall be available to serve, if appointed, as a member of the
Executive Committee of the Company and any committees administering incentive
and retirement plans for employees of the Company, and to study, evaluate and
make recommendations with respect to the Company's marketing plans, advertising
campaigns. And proposed acquisitions. While Executive is employed as a special
management executive he shall not be required to be present at any office of the
Company on a regular basis, and he shall have the right to vacation and to
travel as he sees fit so long as when he is absent from the Metropolitan New
York, New Jersey area, he is available for consultation by telephone, telegram,
or cable and materials and documents can be sent to him for his review and
consideration.
4. Executive will be provided at all times, whether he is employed on a
full time basis or as a special management executive, with suitable executive
office space and secretarial services and staff assistance.
5. Executive hereby accepts the employment contemplated in this
Agreement and agrees to perform the duties required of him hereunder. If elected
thereto, Executive will serve as an officer r director of the Company without
additional compensation, except that in the event that any such company shall
pay fees to the management members of its Board of Directors or fees to any
members of any committee of such directors of which Executive may be a member,
then Executive shall be entitled to retain the same.
6. (a) Commencing September 1, 1986 the Executive's annual salary was
set at 234,451(Two Hundred Thirty-Four Thousand Four Hundred Fifty-one Dollars)
payable in equal monthly installments on the first day of each month. It is
understood that the annual salary payable to Executive may be adjusted from time
to time, in the sole discretion of the Company; provided that in no event will
such annual salary be less than $234,451(Two Hundred Thirty-Four Thousand Four
Hundred Fifty-one Dollars) [before reflecting any "Economic Factor", as
hereinafter defined, or cost-of-living increase provided as for in subsection
(c) of this Section].
(b) The annual salary payable to Executive for his services as
a special management executive shall be one-quarter of the rate of salary
payable to Executive for his services as a full time management executive as of
the date that the nature of Executive's employment shall change from that of a
full time management executive to a special management executive.
(c) Commencing as of September 1, 1987, and continuing on
September 1 of each subsequent year, there shall be examined the Consumer Price
Index For All Urban Consumers (U.S. City Average) as published by the U.S.
Department of Labor (the "Index"). It shall be determined if there is an
increase or decrease in the Index as of July 1 of any year as compared to the
Index for July 1984 (311.7). Also commencing as of September 1, 1987, and
continuing on September 1 of each subsequent year, the Company's Economic Factor
("Factor") shall be determined. The Factor is that percentage approved in
writing by the Company's Office of the Chief Executive at its regularly
scheduled meeting and which percentage governs salary increases for all domestic
non-union employees of the Company in effect as of September 1. Executive's
annual salary on September 1, 1987 shall be increased by an amount determined by
multiplying the greater of (a) the Factor or (b) the percentage increase in the
Index, by the annual salary in effect on September 1 of each ensuing year, using
Executive's salary on September 1, 1986 as the base, two (2) cumulative earnings
totals, one from the application of the percentage increase or decrease in the
Index and one from the application of each year's Factor to the annual salary
shall be maintained and compared. Executive's annual salary will be increased or
decreased commencing September 1, 1987 and on each September 1st thereafter, so
that Executive's cumulative salary from September 1, 1986 will be the higher of
such amount resulting from the cumulative increase or decrease in the Index or
the cumulative increase or decrease after the application of each year's Factor.
7. Anything to the contrary hereinbefore stated notwithstanding, if the
Company continues or adopts any plan or plans of any sort or nature including
but without limiting the generality of the foregoing, pension plans,
profit-sharing, bonus plans, stock option plans or insurance plans by the terms
of which Executive would be eligible to participate therein, then Executive, in
whichever capacity he is employed by the Company, shall have the right to
participate therein
<PAGE>
and shall be entitled to receive all emoluments to all of Executive's other
rights and benefits hereunder.
8. The company recognizes that Executive has made and will make out of
his own personal funds certain minor expenditures for entertainment and the like
necessary in carrying out his duties hereunder. Notwithstanding this recognition
by the Company of the necessity thereof, Executive agrees that the Company will
not reimburse him for such expenditures made by him personally.
9. On April 30, 1997, if Executive is then living and is still serving
as a full time management executive, he will, in good faith, first negotiate for
the continuation of his employment by the Company before accepting employment
elsewhere.
10. (a) In the event of the death of Executive at any time after the
date of this Agreement, before, on or after April 30, 1997, whether or not
Executive is employed by the Company in any capacity at the time of his death,
the Company will pay the annual amount determined as provided in subsection (b)
of this Section, in equal monthly installments commencing with the month
immediately following that in which Executive's death shall have occurred, for
the period of years computed as provided in subsection (c) of this Section, to
Executive's wife, if any, if she shall survive Executive, and upon her death
thereafter prior to the receipt of all payments, or in the event that
Executive's wife, if any, shall not survive Executive, such remaining payments
be made to the Executive's then living issue, per stirpes; and, in default of
such issue of Executive, to the then living issue of the Executive's sister,
Peggy Block Danzinger, per stirpes. If any such installment, or part thereof,
shall be payable to an individual then under the age of twenty-one years, the
same shall be paid over to a Custodian for such person, under the New Jersey
Uniform Gifts to Minors Act. The Custodian shall be Peggy Block Danzinger; and
if she is unable or fails to qualify, or ceases for any reason to serve, as
Custodian, then Executive's brother-in-law, Richard Danzinger, shall serve as
Custodian in the place and stead of Peggy Block Danzinger; and if neither Peggy
Block Danzinger nor Richard Danzinger shall be acting as such Custodian, then
Manufacturer's Hanover Trust Company shall serve as successor Custodian.
(b) The annual amount shall be equal to one-half of the
average annual salary of Executive for those three years of his employment by
the Company in which Executive was paid the highest amount of salary, not
including, however, in the computation of such annual amount any increase in
Executive's salary during those three highest salaried years other than an
increase attributable to the cost-of-living adjustment provided in subsection
(c) of Section 6.
(c) The payments provided for in subsection (a) of this
Section shall continue for a period of years, not in excess of twenty, equal to
one-half of the number of full years that Executive shall have been employed as
a full time management executive by the Company (including any predecessor). For
the purposes of this Agreement, it is acknowledged and agreed that Executive's
employment as a full time management executive by the Company commenced on May
13, 1968 and has continued uninterrupted to the date hereof.
11. Executive agrees that, unless the Company shall consent thereto, he
will not at any time during his employment by the Company engage in any activity
which shall be substantially competitive with any business then carried on by
the Company. Executive shall be free, however, without such consent, to purchase
and deal in, as investments or otherwise, stocks or other securities of any
corporation, competitive or otherwise, generally traded in by the public,
provided that Executive's ownership of shares of stock of any such competitive
corporation shall not exceed one per cent of the outstanding shares of capital
stock.
12. Wherever referred to herein, "Company" shall include all
corporations more than fifty percent of the outstanding common stock of which is
owned by the Company directly and/or through its subsidiaries.
13. This Agreement shall inure to the benefit f and be binding upon the
successors and assigns of the Company upon any liquidation, dissolution or
winding-up of the Company, or upon any sale of all or substantially all of the
Company's assets, or upon any merger or consolidation of the Company with or
into any other corporation, all as though such successors and assigns of the
Company and their respective successors and assigns were the Company.
14. This Agreement contains all of the covenants and agreements
between the parties and all prior understandings and agreements relating to the
subject matter herein are superseded and cancelled by this Agreement. This
Agreement shall not be altered, modified, varied or amended except by an
agreement in writing of like dignity, executed by both parties hereto.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its
duly authorized officers and
<PAGE>
its corporate seal to be affixed and Executive has signed, sealed and delivered
this Agreement as of the date first above written.
ATTEST: BLOCK DRUG COMPANY, INC.
____________________________ By________________________________
John E. Peters Leonard Block
Secretary Chairman of The Board
WITNESS:
____________________________ By________________________________
Thomas R.Block
<PAGE>
EXHIBIT 10(k)
AMENDMENT TO EMPLOYMENT AGREEMENT
BETWEEN
LEONARD BLOCK
AND
BLOCK DRUG COMPANY, INC.
The Employment Agreement dated January 1, 1981 between Leonard Block
(hereinafter called "Executive") and Block Drug Company, Inc. (hereinafter
called "Company"), is hereby amended by deleting Paragraph 1.(a) on page 2 and
substituting the following paragraph in lieu thereof.
1.(a) The Company hereby employs Executive until April 30,
1997, or until such later date as Executive's employment may
be terminated in accordance with the provisions of subsection
(b) of this Section.
In all other respects, the provisions of the Agreement remain the same.
IN WITNESS WHEREOF, the Company has caused this Amendment to be executed by its
duly authorized officers and its corporate seal to be affixed and Executive
has signed, sealed and delivered this Amendment as of this 29th day of April,
1987.
ATTEST: BLOCK DRUG COMPANY, INC.
____________________ BY:____________________
John E. Peters James Block
Secretary Chairman of the Board
WITNESS:
_____________________ BY:_____________________
Leonard Block
<PAGE>
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT entered into this 1st day of January, 1981 between BLOCR
DRUG COMPANY, INC. a corporation of the State of New Jersey (hereinafter called
"Company"), having its principal office at 257 Cornelison Avenue, Jersey City,
flew Jersey 07302, and LEONARD BLOCK (hereinafter called "Executive"), residing
in the City, County and State of, New York.
W I T N E S S E T H:
WHEREAS Executive has served as a major executive of the Company for many
years and presently is serving as the Chairman of the Board of the Company; and
WHEREAS the Company has determined that it would be in the best interests of the
Company and its stockholders that the Company assure itself of the continued
services of Executive and his specialized knowledge and unusual abilities with
respect to the business and affairs of the Company; and WHEREAS Executive is
willing to enter into an Agreement with the Company for his exclusive services
as a management executive on a full time basis or as an employee performing
special management services with respect to the business and affairs or the
Company; and
WHEREAS the Board of Directors of the Company has approved the terms
and conditions respecting the Executive's employment set forth herein and has
authorized the execution and delivery of this Agreement.
NOW, THEREFORE, in consideration of the premises, the mutual covenants
hereinafter contained and other good and valuable consideration, the Company and
Executive hereby agree as follows:
1. (a) The Company hereby employs Executive during the period
beginning on the date hereof and ending on December 31, 1990, or until such
later date as Executive's employment may be terminated in accordance with the
provisions of subsection (b) of this Section.
(b) Executive, at any time that he is serving the Company as a
management executive on a full time basis (i) may give the Company written
notice, effective as of the first date of the month specified in such notice
that Executive shall thereafter be employed as an executive of the Company
rendering advice and counsel to the senior officers and the Executive Committee
of the Company and handling special assignments (herein such role is referred to
as "a special management executives); or (ii) if his physical or mental
condition shall preclude his performing the duties of a management executive on
a full time basis, Executive shall thereafter serve as a special management
executive. Executive shall be employed as such special management executive for
a period of years, not in excess of twenty, equal to one-half of the number of
full years that Executive was employed by the Company (including any pre
decessor) on a full time basis as a management executive, or until the death of
Executive, if such death shall occur prior to the end of such period of years.
<PAGE>
2. When he is serving as a full time management executive:
(a) The duties required of Executive shall be of a management
executive nature similar in type and character to those duties heretofore and
now being performed by him and shall include specifically domestic and foreign
travel and maintenance of Company, employee, industry, trade and customer
relations, including such entertainment in accordance with Executive's position
and responsibilities as may be appurtenant to the performance of such duties.
(b) Executive will be permitted vacation periods each year
similar to those taken in the past and as are customary for executives holding a
position of similar status and responsibility.
(c) Executive will devote his entire time and attention during
usual business hours to the business of the Company, subject to the following
exceptions:
(i) During vacation periods and periods of illness or other incapacity.
(ii) Executive shall have the right to make and supervise his and his
family's personal investments or to serve as: (A) an officer or director of
any other company, corporation or business organization, provided that the same
is non-competitive in any substantial respect with the business engaged in by
the Company; (B) a fiduciary of an estate or a trust for the benefit of a member
of his or his wife's family or a friend; or (C) an officer or director of,
and/or to render services to, any civic, charitable, educational, eleemosynary
or similar organizations or activity.
3. When he is serving as a special management executive, Executive
shall only be required to perform such duties as his health permits. Among other
things, Executive shall be available to serve, if appointed, as a member of the
Executive Committee of the Company and any committees administering incentive
and retirement plans for employees of the Company, and to study, evaluate and
make recommendations with respect to the Company's marketing plans, advertising
campaigns, and proposed acquisitions. While Executive is employed as a special
management executive he shall not be required to be present at any office of the
Company on a regular basis, and he shall have the right to vacation and to
travel as he sees fit so long as when he is absent from the Metropolitan New
York, New Jersey area, he is available for consultation by telephone, telegram,
or cable and materials and documents can be sent to him for his review and
consideration.
4. Executive will be provided at all times, whether he is employed on
a full time basis or IS a special management executive, with suitable executive
office space and secretarial services and staff assistance.
5. Executive hereby accepts the employment contemplated in this
Agreement and agrees to perform the duties required of him hereunder. If elected
thereto, Executive will serve as an officer or director of the Company without
additional compensation, except that in the event that any such company shall
pay fees to the management members of its Board of Directors or fees to any
members of any committee of such directors of which Executive may be a member,
then Executive shall be entitled to retain the same.
(a) So long as Executive is a full time management executive, the
Company will pay to Executive an annual salary of not less than $209,242 (Two
Hundred Nine Thousand Two Hundred Forty-Two Dollars), in equal monthly
installments on the first day of each month. It is understood that the annual
salary payable to Executive may be adjusted from time to time, in the sole
discretion of the Company; provided, that in no event will such annual salary be
less than $209,242 (Two Hundred Nine Thousand Two Hundred Forty-Two Dollars)
(before reflecting any cost-of-living increase provided for in subsection (c) of
this Section).
(b) The annual salary payable to Executive for his services as a
special management executive shall be one-quarter of the rate of annual salary
payable to Executive for his services as a full time management executive as of
the date that the nature of Executive's employment shall change from that of a
full-time management executive to a special management executive.
(c) The National B.L.S. Index (B.L.S. Consumer Price Index as
published by the Bureau of Labor Statistics, U.S. Department of Labor 1967
equals 100), last issued prior to the date hereof, was 256.2. If during the
employment period the B.L.S. Index shall rise to 269.0, the minimum annual
salary being paid to Executive hereunder for his services as a full time
management executive shall be increased by $10,462 (5% of $209,242) and on each
subsequent increase or decrease of five (5%) percent in such Index, such minimum
annual salary shall be increased or decreased (but not below $209,242) by an
amount equal to five (5%) percent thereof.
7. Anything to the contrary hereinbefore stated notwithstanding, if
the Company continues or adopts any plan or plans of any sort or nature
including but without limiting the generality of the foregoing, pension
plans, profit-sharing plans, bonus plans, stock option plans or insurance
plans by the terms of which Executive would be eligible to participate
therein, then Executive, in whichever capacity he is employed by the Company,
<PAGE>
shall have the right to participate therein and shall be entitled to receive
all emoluments or benefits as may be provided thereunder, in addition to all
of Executive's other rights and benefits hereunder.
8. The Company recognizes that Executive has made and will make out of
his own personal funds certain minor expenditures for entertainment and the like
necessary in carrying out his duties hereunder. Notwithstanding this recognition
by the Company of the necessity thereof, Executive agrees that the Company will
not reimburse him for such expenditures made by him personally.
9. On December 31, 1990, if Executive is then living and is still
serving as a full time management executive, he will, in good faith, first
negotiate for the continuation of his employment by the Company before accepting
employment elsewhere.
10. (a) In the event of the death of Executive at any time after the
date of this Agreement, before, on or after December 31, 1990, whether or not
Executive is employed by the Company in any capacity at the time of his death,
the Company will pay the annual amount determined as provided in subsection (b)
of this Section, in equal monthly installments commencing with the month
immediately following that in which Executive's death shall have occurred, for
the period of years computed as provided in subsection (c) of this Section, in
equal shares to the acting trustees of the trust for the primary benefit of
Executive's daughter, Peggy Block Danziger, and her descendants under an
Indenture of Trust dated August 7, 1957, as amended (or, if the said trust shall
have terminated, to the persons who shall have succeeded to the principal of
such trust, in proportion to their respective interests in such principal), and
to the acting trustees of the trust for the benefit of Executive's son, Thomas
Block, and his descendants under an Indenture of Trust dated August 7, 1957, as
amended (or, if the said trust shall have terminated, to the persons who shall
have succeeded to the principal of such trust, in proportion to their respective
interests in such principal). Executive shall not have the right to change the
payees provided for herein.
(b) The annual amount shall be equal to one-half of the average annual salary
of Executive for those
three years of his employment by the Company in which Executive was paid the
highest amount of salary, not including, however, in the computation of such
annual amount any increase in Executive's salary during those three highest
salaried years other than an increase attributable to the cost-of-living
adjustment provided in subsection (c) of Section 6.
(c) The payments provided for in subsection (a) of this Section
shall continue for a period of years, not in excess of twenty, equal to one-half
of the number of full years that Executive shall have been employed as a full
time management executive by the Company (including any predecessor). For the
purposes of this Agreement, it is acknowledged and agreed that Executive's
employment as a full time management executive by the Company commenced on June
1, 1933 and has continued uninterrupted to the date hereof.
11. Executive agrees that, unless the Company shall consent
thereto, he will not at any time during his employment by the Company engage in
any activity which shall be substantially competitive with any business then
carried on by the Company. Executive shall be free, however, without such
consent, to purchase and deal in, as investments or otherwise, stocks or other
securities of any corporation, competitive or otherwise, generally traded in by
the public; provided that Executive's ownership of shares of stock of any such
competitive corporation shall not exceed one per cent of the outstanding shares
of capital stock.
12. Wherever referred to herein, "Company" shall include all
corporations more than fifty percent of the outstanding common stock of which is
owned by the Company directly and/or through its subsidiaries.
13. This Agreement shall inure to the benefit of and be binding
upon the successors and assigns of the Company upon any liquidation, dissolution
or winding-up of the Company, or upon any sale of all or substantially all of
the Company's assets, or upon any merger or consolidation of the Company with or
into any other corporation, all as though such successors and assigns of the
Company and their respective successors and assigns were the Company.
14. This contract contains all of the covenants and agreements
between the parties and shall not be altered, modified, varied or amended except
by an agreement in writing of like dignity, executed by both parties hereto.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officers and its corporate seal to be affixed
and Executive has signed, sealed and delivered this Agreement as of the date
first above written.
ATTEST: BLOCK DRUG COMPANY, INC.
__________________________ By:________________________
John E. Peters James Block
Secretary President
<PAGE>
WITNESS:
___________________________ By:_________________________
John E. Peters Leonard Block
<PAGE>
EXHIBIT 10(l)
DATED January 1998
(1) STAFFORD-MILLER LIMITED
(2) JAMES RIGBY
EMPLOYMENT AGREEMENT
Baker & McKenzie
100 New Bridge Street
London EC4V 6JA
(0171) 919 1000
<PAGE>
CONTENTS
Page
1. Appointment..................................................... 1
2. Commencement and Duration of Employment......................... 2
3. Duties.......................................................... 2
4. Exclusivity of Service.......................................... 3
5. Remuneration.................................................... 4
6. Expenses........................................................ 5
7. Car............................................................. 5
8. Place of Work................................................... 5
9. Holidays........................................................ 6
10. Incapacity...................................................... 6
11. Pension......................................................... 7
12. Reasonableness of Restrictions.................................. 8
13. Confidentiality................................................. 8
14. Intellectual Property........................................... 9
15. Grievances and Discipline....................................... 9
16. Summary Termination............................................. 10
17. Office Holdings.................................................. 10
18. Non Interference................................................. 11
19. Notice of Termination............................................ 12
20. Severance Entitlements........................................... 13
21. Termination due to Change of Control............................. 13
22. Change of Control................................................ 14
23. Further Provisions Regarding Change of Control................... 16
24. Effect of Termination............................................ 17
25. Severability..................................................... 17
26. Earlier Agreements............................................... 18
27. Notices.......................................................... 18
28. Governing Law.................................................... 18
<PAGE>
THIS AGREEMENT is made on the __ day of January 1998
BETWEEN
(1) STAFFORD-MILLER LIMITED, a company registered in England, whose
registered office is at Broadwater Road, Welwyn Garden City, Herts
AL7 3SP, ("the Company"); and
(2) JAMES RIGBY of Whitespar, Queen Hoo Lane, Tewin, Herts AL6 OLT ("the
Executive");
WHEREAS, the Company is a wholly-owned subsidiary of Block Drug Company, Inc.,
257 Cornelison Avenue, Jersey City, New Jersey 07302, USA ("Block").
WHEREAS, the Executive is the Managing Director of the Company and a member of
the Company's Board of Directors ("the Board").
WHEREAS, the Company's Managing Director reports directly to Block's President
Europe.
WHEREAS, the Board and Block's Office of the Chief Executive respectively have
approved the terms of this Agreement.
IT IS HEREBY AGREED as follows:-
1. Appointment
This Agreement confirms and records the terms and conditions of service on which
the Company employs the Executive and the Executive serves the Company as its
Managing Director ("the Employment").
<PAGE>
2. Commencement and Duration of Employment
2.1 The Employment commenced on 22 March 1976, and the Executive was
appointed as the Managing Director of the Company on 1 September
1991.
2.2 The Employment shall continue hereafter until terminated by either
party in accordance with the provisions of this Agreement.
3. Duties
3.1 The Executive shall be employed in the post of Managing Director of
the Company in which capacity he shall devote all his time, attention
and skill to his duties hereunder, and shall faithfully and
diligently perform such duties and exercise such powers consistent
therewith for the benefit of the Company as may from time to time be
assigned to or vested in him by the Board or the President Europe.
3.2 The Company reserves the right to assign to the Executive duties of a
different nature, either additional to or instead of those referred
to in Clause 3.1 above, as part of the Employment, it being
understood that he will not be assigned duties which he cannot
perform or which are not reasonably commensurate with the duties of a
senior management executive. This provision is subject to any rights
which the Executive may have in the circumstances of a Change of
Control pursuant to Clause 23(1)(a) below.
3.3 The Executive shall obey the reasonable and lawful orders of the
Board and/or the President Europe, and shall comply with all the
Company's rules, regulations, policies and procedures applicable to
its senior executives from time to time in force.
3.4 The Executive may be required in pursuance of his duties to perform
services not only for the Company but also for Block and its
affiliated companies ("Affiliates"), and,
<PAGE>
without further remuneration, to accept any office or position with
Block or any of its Affiliates which is consistent with his position
with the Company, as Block or the Company may from time to time
reasonably require. This provision is subject to any rights which the
Executive may have in the circumstances of a Change of Control
pursuant to Clause 23(1)(a) below.
3.5 The Executive shall work such hours as are reasonably necessary for
the proper performance of the duties of the Employment and to meet
the needs of the Company's business. The Executive shall, as a
minimum, observe the normal daily working times applicable as laid
down by the Company from time to time.
4. Exclusivity of Service
4.1 During the Employment the Executive shall not (without the prior
written consent of the Board or the President Europe) directly or
indirectly, either on his own account or on behalf of any other
person, company, business entity or other organisation, engage in or
be concerned with (whether as an employee, officer, director, agent,
partner, consultant or otherwise) any other business, or accept any
other engagement or public office, save that the Executive may hold
for personal investment purposes up to 5% of any securities in a
company the securities of which are quoted on a recognised Stock
Exchange.
4.2 Subject to any written regulations issued by the Company which are
applicable to him, the Executive or his immediate relatives shall not
be entitled to receive or obtain directly or indirectly any discount,
rebate, commission or other benefit in respect of any business
transacted (whether or not by him) by or on behalf of the Company or
any Affiliate and if he, his immediate relatives or any company or
business entity in which he is interested, shall directly or
indirectly obtain any such discount, rebate, commission or other
benefit he shall forthwith account to the Company or Affiliate for
the amount received or value of the benefit so obtained.
<PAGE>
4.3 The Executive confirms he has disclosed fully to the Company all
circumstances in respect of which there is, or there might be, a
conflict of interest between the Company or any Affiliate, and the
Executive or his immediate relatives, and he agrees to disclose fully
to the Company any such circumstances which may arise during the
Employment.
5. Remuneration
5.1 The Company shall pay to the Executive a base salary of
(pound)172,590.00 (One hundred and seventy-two thousand, five hundred
and ninety pounds) per annum, payable monthly in arrears by equal
instalments. It is understood the annual salary payable to the
Executive may be adjusted from time to time in the sole discretion of
Block and the Company, provided that in no event will such annual
salary be less than the aforesaid amount. The Executive's salary will
be subject to regular reviews in the same manner and applying the
same factors used by the Company when reviewing the salaries of its
other senior executives.
5.2 If the Company adopts or provides any executive or employee benefit
plans of any sort or nature including, but without limiting the
generality of the foregoing, pension, profit sharing, bonus,
disability or other insurance plans, by the terms of which the
Executive would be eligible to participate therein, then during the
Employment hereafter the Executive shall have the right so to
participate and to receive any and all benefits as may be provided
thereunder to other Company senior executives. Further, it is
specifically intended that the Executive's participation in the Block
Drug Executive Incentive Plan and Special Stock Unit Plan, and in the
Company's Medical, Disability Insurance and Death-in Service Life
Assurance Plans shall continue during the Employment, subject always
to the rules and continuance of each such Plan and also to the
provisions of this Agreement. Subject to the above, those benefits in
respect of which the Executive is fully vested shall not be
retrospectively reduced.
<PAGE>
6. Expenses The Company shall reimburse to the Executive (against
receipts or other satisfactory evidence) all reasonable business
expenses properly incurred and defrayed by him in the course of the
Employment, subject to his compliance with the Company's rules and
policies relating to expenses and their approval.
7. Car
7.1 The Executive will have the use of a Company leased 1994 Jaguar XJ6
4.0 motor car for the purpose of the Employment. The Company shall be
responsible for any vehicle and road tax, comprehensively insure the
car, and pay or reimburse the Executive (as appropriate) against
receipts or other appropriate evidence, for all maintenance, repairs
and other running costs thereof and fuel used by it. The Executive
shall be entitled, without charge, to reasonable use of the car for
his private purposes. The Executive's use of the motor car is subject
to his compliance with the Company's car policy and other reasonable
Company requirements relating thereto from time to time in force.
7.2 The motor car may be replaced from time to time with such make and
type of motor car of similar value as the Company shall determine
(after consultation with the Executive), in accordance with the
Company's car policy from time to time in force.
<PAGE>
8. Place of Work The Executive's normal place of work shall be the
Company's offices at Welwyn Garden City, or such other place in the
United Kingdom as the Company may subsequently advise him (whether on
a temporary or permanent basis). If the Executive should be required
to relocate his home in order to work at different Company offices he
will be eligible for relocation assistance in accordance with
applicable Company policy and guidelines in force at such time. In the
performance of his duties hereunder, the Executive will be required to
travel on a regular basis both throughout the United Kingdom and
internationally. This provision is subject to any rights which the
Executive may have in the circumstances of a Change of Control
pursuant to Clause 23(1)(b) below.
9. Holidays
9.1 The Executive shall be entitled, in addition to the normal bank and
public holidays observed in England, to 25 working days' holiday with
normal pay in each year, to be taken at such times and periods as
shall be approved in advance by the President Europe.
9.2 There shall be no entitlement to any carry-over of untaken holiday
leave from one year to the next, or to pay in lieu thereof, save with
the prior and express written consent of the President Europe. Such
consent of the President Europe shall not be unreasonably withheld,
particularly in cases where holiday leave is untaken due to needs of
the business.
9.3 During the final calendar year of the Employment, holiday leave will
accrue pro rata according to completed months of service. The
Executive shall be entitled to be paid in respect of any holidays
accrued during the final calendar year of service but not taken at
the date of termination of his employment hereunder, provided that
such termination
<PAGE>
has not occurred pursuant to Clause 16 below.
10. Incapacity
10.1 In case the Executive shall at any time be prevented by illness or
accident or other incapacity from attending work and/or properly
performing his duties hereunder (and he shall, whenever required,
furnish the President Europe or his designate with satisfactory
medical evidence of such incapacity), he shall be eligible to receive
Company sickness benefit (inclusive of Statutory Sick Pay) according
to the aggregate length of his continuous service with the Company,
for such period as he shall be so incapacitated but not exceeding 10
working days for each year of such continuous service up to a maximum
of 130 working days. Provided always that the Company sickness benefit
for any period of illness, accident or incapacity shall be reduced (a)
by the number of days in respect of which the Executive shall receive
such benefit during the period of twenty-four months immediately
preceding such period of sickness, and (b) by the amount of any State
benefit(s) claimable by the Executive in respect of such absence.
10.2 The continued provision to the Executive of Company sickness benefit
under Clause 10.1 above, or his eligibility to participate in the
Company's Disability Insurance Plan referred to in Clause 5.2 above,
will always be subject to the Company's right to terminate the
Employment at any time and for whatever reason, pursuant either to
Clause 16 or 19 below as the case may be.
10.3 The Company may, at its expense and at any time (whether or not
Executive is then incapacitated) require the Executive to submit to
medical examinations and tests by doctor(s) nominated by the Company.
The Executive hereby authorises such doctor(s) to disclose to and
discuss with the Company, Block and its or their medical adviser(s)
the results of any such examinations and tests. Any such disclosures
shall be contemporaneously provided to the Executive or his doctor.
<PAGE>
11. Pension
11.1 The Employee shall be entitled to remain a member of the
non-contributory Stafford-Miller Ltd Pension Fund, subject always to
the rules and conditions of the Fund.
11.2 There is presently a contracting-out certificate in respect of SERPS
in force in relation to the Employment under UK social security
legislation.
12. Reasonableness of Restrictions The Executive acknowledges that his
senior position within the Company gives him access to and the benefit
of confidential commercial information which is important to the
continued success of the Company and its Affiliates. The Executive
further acknowledges that his senior position gives him direct contact
with customers, suppliers, distributors, agents, officers and
employees of the Company and Affiliates. The Executive therefore
confirms that the provisions contained in or referred to in Clauses
13, 14 and 18 below are reasonable in their application to him, being
reasonable and necessary for the protection of the legitimate business
interests of the Company and its Affiliates both during and after
termination of the Employment.
13. Confidentiality
13.1 The Executive shall neither during the Employment (except in the
proper performance of his duties) nor at any time (without limit)
after the termination thereof, directly or indirectly:
13.1.1 use for his own purposes or those of any other person, company,
business entity or other organisation whatsoever, or
13.1.2 disclose to any person, company, business entity or other organisation
<PAGE>
whatsoever,
any trade secrets or confidential business information relating or
belonging to the Company or any of its Affiliates, including but not
limited to any such information relating to customers, customer lists
or requirements, supplier dealings and arrangements, price lists or
pricing structures, sales and marketing information, business plans
or dealings, employees or officers, source codes and computer
systems, software, financial information and plans, designs,
formulae, prototypes, product lines, services, research activities,
any document marked "Confidential" (or with a similar expression), or
any information which the Executive has been told is confidential or
which he might reasonably expect the Company would regard as
confidential, or any information which he is aware has been given to
the Company or any of its Affiliates in confidence by customers,
suppliers or other persons.
13.2 The obligations contained in Clause 13.1 above shall cease to apply
to any information or knowledge which may subsequently come into the
public domain other than by way of unauthorised disclosure.
14. Intellectual Property The Executive shall promptly disclose to the
Company and keep confidential all inventions, copyright works or
designs conceived or developed by him, acting alone or with others, in
the course of the Employment. The Executive will hold all such
intellectual property in trust for the Company and will do everything
deemed necessary or desirable by the Company, at the Company's
expense, in order to vest the intellectual property fully in the
Company or to secure appropriate forms of protection for the
intellectual property. All decisions as to the exploitation of any
such intellectual property shall be in the absolute discretion of the
Company.
<PAGE>
15. Grievances and Discipline
15.1 If the Executive wishes to seek redress of any grievance or complaint
relating to the Employment he should refer such grievance to the
President Europe in the first instance and, failing satisfactory
resolution, thereafter in writing to the Office of the Chief
Executive of Block.
15.2 Whilst there is no formal disciplinary procedure applicable to the
Executive, he will be expected to demonstrate high and exacting
standards of work performance and ethical conduct both in his
business and personal dealings (in so far as the latter may affect
the Company or its reputation).
16. Summary Termination
16.1 If the Executive shall be guilty of any gross misconduct or any other
serious breach or material non-observance of any of the express or
implied terms and conditions of this Agreement, including material
neglect or material failure or refusal to carry out the duties
properly assigned to him hereunder, or if he shall by his actions or
statements damage the Company's name, business interests or
reputation, then the Company shall be entitled summarily to terminate
the Employment without notice or further payment to the Executive
(beyond remuneration and benefits, including holiday pay, up to the
effective date of such termination).
16.2 If the Executive shall have been absent from work due to ill health
or other incapacity for a period or periods in aggregate totalling 26
weeks in any twelve month period, then the Company shall be entitled
summarily to terminate the Employment without any period of notice or
any payment in lieu thereof.
<PAGE>
17. Office Holdings
17.1 The Executive shall forthwith in writing resign with immediate effect
from all directorships, trusteeships and other offices he may hold
from time to time with the Company or any Affiliate, without
compensation for loss of office, in the event of:
17.1.1 the termination of the Employment; or
17.1.2 either the Company or the Executive serving on the other
notice of termination of the Employment.
17.2 In the event of the Executive failing to comply with his obligations
under Clause 17.1. above, he hereby irrevocably authorises the Board
to appoint some person in his name and on his behalf to sign or
execute any documents and/or do all things necessary or requisite to
give effect to such resignations as referred to in Clause 17.1 above.
18. Non Interference
18.1 Upon the termination of the Employment by either party in accordance
with this Agreement, other than due to the voluntary or compulsory
liquidation of the Company (not being a voluntary liquidation for the
purpose of reconstruction or amalgamation) or the discontinuance by
the Company of its business, the Executive shall not for a period of
twelve months immediately following the effective date of such
termination:
(a) either on his own behalf or on behalf of any other person,
firm or company, seek to obtain orders in respect of goods
or services of a similar description to those dealt in or
provided by the Company or any Affiliate, from any person,
firm or company who at the date of or within the period of
twelve months prior to termination of this Agreement was
to the knowledge of the Executive a
<PAGE>
customer of or in the habit of dealing with the Company or
Affiliate (as the case may be); or
(b) represent himself as being in any way connected or having
formerly been connected with or interested in the business
of the Company (other than for the purpose of prospective
job applications); or
(c) interfere or seek to interfere with the continuance of
supplies to the Company or any Affiliate (or the terms of
such supplies) from any supplier who shall have been
supplying components or materials or services to the
Company or Affiliate at any time during the last twelve
months of the Employment; or
(d) solicit, entice or persuade (or attempt so to do) any
employees of the Company of a managerial, executive, sales
or technical grade to leave the Company's employ, whether
or not any breach of contract is thereby occasioned.
19. Notice of Termination
19.1 Subject to Clause 16 above, the Company is required to give to the
Executive three months' prior written notice to terminate the
Employment, and similarly the Executive is required to give to the
Company three months' prior written notice to terminate the
Employment. Such notice of termination may be given by either party
at any time.
19.2 The Company may also, in its absolute discretion:
(i) give to the Executive compensation for loss of all or part
of any period of notice, whether such notice is given by
the Company or the Executive (See Clause 19.3 below);
(ii) require the Executive not to attend at work during any
period of notice given
<PAGE>
by the Executive or the Company, provided always that the
Company shall continue to pay the Executive's base salary
and provide all contractual benefits during such period.
19.3 If the Company (i) terminates the Employment without giving to the
Executive all or any part of the period of the said three months'
notice which it is required to give, or (ii) exercises its discretion
to give Executive compensation for loss of all or part of any period
of notice given by Executive or the Company, then the Executive will
be entitled to receive a payment of compensation in respect of the
period concerned equal to the sum which would have been payable to
Executive as base salary less regular deductions during such period.
In addition, the Company will maintain the employee benefits
enumerated in Clauses 5.2 and 7 above for such period, subject to the
rules of the respective benefit plans permitting such treatment.
19.4 The provisions of this Clause 19 are without prejudice to the right
of the Company to terminate the Executive's employment without
notice, and without any compensation, in the event that Executive's
employment is terminated pursuant to any provision of Clause 16
above.
<PAGE>
20. Severance Entitlements In addition to any compensation paid pursuant
to Clause 19.3 above, in the event of termination of the Executive's
employment by the Company (excluding termination due to retirement or
because of the Executive's permanent disability as that term is
defined in the Company's Disability Insurance Plan), the Company will
thereafter continue to pay to the Executive at regular intervals as
determined by the Company and less any deductions as are required by
law, termination compensation payments equal to fifty percent (50%) of
the Executive's Base Compensation (as defined below) in effect as of
the effective date of such termination, for a period not to exceed
five years from the effective date of termination, or until the
Executive attains the age of 65, or death, whichever occurs sooner,
provided that (1) no such payments shall be made if the Employment is
terminated pursuant to any provision of Clause 16 above, and (2)
payments under this Clause 20 will cease and no further payments will
be made if following termination of the Employment the Executive shall
act, or engage in or undertake any activity in breach of Clause 18
above.
<PAGE>
21. Termination due to Change of Control If the Employment is terminated
as a result of the circumstances described in Clause 22 below as a
"Change of Control", the Executive will be entitled to receive the
following termination payments and benefits for a period not to exceed
five years from the effective date of such termination, or until the
Executive attains the age of 65, or death, whichever occurs sooner, at
which time such payments and benefits shall cease: (i) termination
compensation payments equal to fifty percent (50%) of the Executive's
Base Compensation (as defined below), (ii) the maintenance of benefits
under any of the employee benefit plans described in Clause 5.2 above,
(subject to the rules and continuation thereof) and (iii) if any
benefits under such plans are not fully vested or exercisable, the
Company or Block will, if permissible under the plan rules, deem such
benefits to be fully vested with any payments being made in accordance
with the provisions of the relevant benefit plan in effect at the time
of vesting. The termination compensation payments under (i) aforesaid
will be made at regular intervals as determined by the Company and
less any deductions as are required by law. Payments under this Clause
21 will cease and no further payments will be made if, following
termination of the Employment as a result of a Change of Control (as
defined below), the Executive shall act or engage in or undertake any
activity in breach of Clause 18 above.
22. Change of Control
22.1 If there is a Change of Control (as defined in this Clause 22) in
relation to the Company or Block at any time after the Effective Date
of this Agreement and the Company or any successor employer
terminates the Employment for any reason (but excluding any
termination under Clause 16 above or as a result of the permanent
disability or retirement of the Executive), or if the Executive
terminates the Employment for Good Reason as defined in this Clause
22, at any time during a period which runs continuously from a date
180 days (including weekends) prior to the completion of the Change
of Control to a date which is three years immediately after the
completion of the said
<PAGE>
Change of Control, then in either such case the Employment will be
deemed to have been terminated because of the Change of Control.
For the purpose of this Agreement:
22.2 (a) "Base Compensation" shall mean the aggregate of the
remuneration paid to the Executive in accordance with this
Agreement during the twelve month period immediately prior
to (i) a Change of Control, or (ii) the termination of the
Employment, whichever is the higher; plus
(b) the average annual Block Executive Incentive Plan
bonus(es) paid to the Executive during the three year
period immediately prior to (i) a Change of Control, or
(ii) the termination of the Employment, whichever is the
higher.
22.3 "Block Group" shall include any direct descendant of Alexander Block
("the Block Family"), any trust created for the benefit of a member
of the Block Family, and any entity or company controlled by the
Block Family and/or in which the Block Family has Voting Control.
22.4 "Change of Control" shall be deemed to occur upon the happening of
any event in which the Block Group ceases to hold beneficially and of
record more than fifty percent (50%) of the Voting Control of Block,
the Company or any successor company, or where all or substantially
all of the assets of Block, the Company, or any successor company are
sold, transferred or otherwise conveyed to an entity in which the
Block Group does not have Voting Control. For the purposes of this
Agreement, Voting Control shall mean the right, in each class of
voting stock, to cast more than fifty percent (50%) of the votes on
each matter for which a shareholder vote is required or permitted.
<PAGE>
22.5 "Good Reason" for termination by the Executive shall be deemed to have
occurred if:
(a) without the express written consent of the Executive, any
of the events listed in Clauses 23.1 below should occur;
and
(b) the Executive promptly serves on the Company a notice of
termination for any of the reasons listed in Clauses 23.1
below, citing any one or more of such events occurring
within the time period set forth in Clause 22.1 above.
22.6 "Effective Date" shall mean the date of this Agreement.
23. Further Provisions Regarding Change of Control
23.1 The events constituting Good Reason as referred to in Clause 22.5(a)
shall be as follows:
(a) assignment to the Executive of duties which are inconsistent with the
Executive's position with the Company or which constitute a
significant reduction in the Executive's authority, responsibilities,
or status, or any demotion of the Executive by the Company from any
office or titled managerial position held by the Executive prior to a
Change of Control or within the time period described in Clause 22.1
above, except if the Employment is terminated pursuant to any
provision of Clause 16 above or as a result of the Executive's
permanent disability or retirement; or
(b) the Company requires the Executive to be based outside a radius of
more than thirty-five (35) miles from the Executive's principal place
of employment on the date of a Change of Control or within the time
period described in Clause 22.1 above; or
<PAGE>
(c) any reduction by the Company in (i) the Executive's Base Compensation
or (ii) the Executive's eligibility to participate in any Company
bonus or other employee benefit plan in which he was entitled to
participate immediately prior to a Change of Control or within the
time period described in Clause 22.1 above (but excluding any such
benefit plan(s) which the Company or Block may terminate or cease
generally for all participants); or
(d) a material reduction in the Executive's bonuses and/or employee
benefits in effect immediately prior to a Change of Control or within
the time period described in Clause 22.1 above. For the purposes of
this subsection, a material reduction in Company bonuses and/or
employee benefits in any year shall be deemed to have occurred if the
aggregate amount of bonuses paid and/or value of employee benefits
provided to Executive in any Block fiscal year is less than
seventy-five percent (75%) of the highest aggregate amount of the
Block Executive Incentive Plan bonuses paid and/or value of employee
benefits received by the Executive during (i) any one of the three
Block fiscal years immediately preceding the completion of a Change of
Control, or (ii) the first complete Block fiscal year following the
completion of a Change of Control.
23.2 If termination of the Employment occurs on a Change of Control (other
than if the Employment is terminated pursuant to Clause 16 above or
as a result of the permanent disability or retirement of the
Executive), the Executive shall be entitled to receive the
termination benefits under the Change of Control Clauses 21 and 22
above, but in such event the Executive shall not be entitled to
receive any severance payments under Clause 20 of this Agreement. For
the avoidance of doubt, any payment under Clauses 21 and 22 above
would be in lieu of and not in addition to payment under Clause 20
above.
<PAGE>
24. Effect of Termination
The termination of the Employment shall not prejudice any claim which either
party may have against the other in respect of any antecedent breach of any
provision hereof, nor shall it prejudice the continuance in force of any
provision hereof which is intended to come into or continue in force on or after
such termination.
25. Severability
The various provisions and sub-provisions of this Agreement are severable, and
if any provision or sub-provision is held to be unenforceable by any court of
competent jurisdiction than such unenforceability shall not affect the
enforceability of the remaining provisions or sub-provisions in this Agreement.
26. Earlier Agreements
This Agreement takes effect in substitution for all previous agreements and
arrangements, whether written, oral or implied, between the Company, Block and
the Executive relating to the services of Executive, all of which agreements and
arrangements shall be deemed to have been terminated by mutual consent as from
the Effective Date of this Agreement.
27. Notices
Any notice to be given hereunder shall be in writing and be sufficiently served
in the case of the Executive by being delivered either personally to him or sent
by first class pre-paid post to his last known residential address, or in the
case of the Company by being sent by registered post or recorded delivery
addressed to its registered office. Any such notice shall be deemed served on
delivery, or if so posted, shall be deemed served 48 hours after it was posted.
<PAGE>
28. Governing Law
This Agreement and the Employment are subject to the laws of England, and its
Courts and Tribunals shall have exclusive jurisdiction in resolving any disputes
arising.
IN WITNESS whereof the parties hereto have executed the Agreement as a Deed the
day and year first above written
SIGNED by ______________________
Director for and on behalf of the Company
and delivered as a Deed
in the presence of:
----------------------------------
SIGNED by the said Executive
-----------------------------------
and delivered as a Deed
in the presence of :
-------------------------------------
<PAGE>
Exhibit 10(m)
CHANGE IN CONTROL AGREEMENT
This change in Control Agreement ("CIC Agreement") is made and entered into this
Twenty-Fifth day of June, 1998 by and between Stafford-Miller Continental NV-SA
(hereinafter referred to as the "Company"), Whose registered office is at
Nijverheidsstraat 9, 2260 Oevel, Belgium and Claus E. Blach ("Executive") having
an address at Kastanienweg 4, 64546 Walldorf, Germany.
STATEMENT OF FACTS
WHEREAS, the company is a wholly-owned subsidiary of Block Drug
Company, Inc., 257 Cornelison Avenue, Jersey City, New Jersey 07302 ("Block").
WHEREAS, on January 30, 1990, the company and the Executive entered
into a written agreement (hereinafter referred to as the "Agreement").
WHEREAS, the Executive has been appointed Managing Director of the
Company.
WHEREAS, the Company is concerned that the possibility of a Change in
Control (as hereinafter defined) might result in the departure of key
individuals, including the Executive, which would be detrimental to the Company.
<PAGE>
WHEREAS, the Company wishes to alleviate the Executive's concerns and
ensure the continued attention, dedication and active participation of the
Executive in the Company.
WHEREAS, the Executive is willing to continue to serve the Company but
desires assurance that in the event of any Change in Control Executive will
continue to have the same responsibility and status in the company.
WHEREAS in order to protect certain rights and benefits of the
Executive in the event of a change in Control, the parties have agreed to enter
into this CIC Agreement to provide for termination payments and benefits to the
Executive upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the promises and mutual agreements
contained herein, the parties hereby agree as follows:
1. Definitions
For the purposes of this CIC Agreement:
1.1 "Affiliate" shall mean any entity which, directly or indirectly, owns
or controls, is owned or controlled by, or is under common ownership
or control with, the
<PAGE>
Company;
"Base Compensation" shall mean the aggregate of:
a) the applicable director's fee, under Article 3 of the
Agreement, paid to the Executive during the twelve (12) month
period immediately prior to (1) a Change in Control, or (2)
the termination of the Agreement, whichever is higher; plus
b) the average annual Executive Incentive Plan bonus(es) (under
Article 4 of the Agreement) paid to the Executive during the
three (3) year period immediately prior to (1) a Change in
Control, or (2) the termination of the Agreement, whichever is
higher; plus
c) an amount equal to the annualized value of the automobile
provided to Executive. Based Compensation excludes all other
benefits and allowances to which the Executive is
contractually entitled and which are not listed above.
1.2 "Block Group" shall include any direct descendant of Alexander Block
("the Block Family"), any trust created for the benefit of a member of
the Block Family
and any entity or company controlled, directly or indirectly, by the
Block Family
<PAGE>
and/or in which the Block Family has Voting Control (as hereinafter
defined).
1.4 "Effective Date" shall mean the date of this CIC Agreement.
1.5 "Voting Control" shall mean the right, in each class of voting stock,
to cast more than fifty (50%) percent of the votes on each matter for
which a shareholder vote is required or permitted.
2. Termination for change in control
2.1 If the Agreement is terminated as a result of a Change in Control as
defined in clause 3.1 below, or deemed terminated because of a Change
in Control under the terms of Clause 3.2 below, the Executive will be
entitled to receive the following termination payments and benefits for
a period of five (5) years from the effective date of such termination
(" Termination Date"), or until the Executive attains the age of
sixty-five (65), or death, whichever occurs sooner, at which time such
payments and benefits shall cease:
a) termination compensation payments equal to fifty percent (50%)
of Executive's Base Compensation; and the maintenance of
benefits under any benefit plan in place within the Company,
including but without limiting the generality of the
foregoing,
<PAGE>
pension, profit sharing, bonus, disability, life, health or
other insurance plans, to extent that the Executive
participated at the Termination Date and subject to the rules
and continuation of these plans.
2.2 If any benefits under the plans listed in 2.1 b) are not fully vested
or exercisable at the Termination Date, the company or Block will, if
permissible under the plan rules, deem such benefits to be fully vested
as of the Termination Date with any payments being made in accordance
with the provisions of the relevant benefit plan in effect at the time
of vesting.
2.3 The termination compensation payments under Clause 2.1 above will be
made at regular intervals as determined by the company, less any
deductions required by law. Payments under this Section 2 will cease
and no further payments will be made or owned if, following termination
of the Agreement in a way that triggers the application of Clause 2.1,
the Executive shall act or engage in or undertake any activity in
breach of Section 6 or 8 below.
2.4 It is understood that this CIC Agreement is not intended to replace the
Agreement and that the termination compensation payments under Clause
2.1 above are inclusive of any termination or severance allowance to
which the Executive would be entitled by law or by the Agreement or any
agreement with the
Company and /or Block other than this CIC Agreement. If such
termination or
<PAGE>
severance allowances would exceed the termination compensation payments
under Clause 2.1 above, no payments will be made under Clause 2.1
above.
3. Change in Control
3.1 For the purposes of this CIC Agreement, "Change in Control" shall mean
the happening of any event in which the Block Group ceases to hold
beneficially and of record, directly or indirectly, more than fifty
(50%) percent of the Voting Control of Block, the Company or any
successor company, or where all or substantially all of the assets of
Block, the Company, or any successor company are sold, transferred or
otherwise conveyed to an entity in which the Block Group does not have
Voting Control, directly or indirectly.
3.2 Notwithstanding Clause 7.1, if there is a Change in Control (as defined
in Clause 3.1) in relation to the Company or Block at any time after
the Effective Date of this CIC Agreement and the Company or any
successor company terminates the Agreement for any reason (but
excluding any termination for Cause, as described in Section 4, or as a
result of the permanent disability or retirement of the Executive), or
if the Executive terminates the Agreement for Good Reason as described
in Section 5 at any time during a period which runs continuously from a
date one hundred and eighty (180) calendar days prior to the completion
of the
<PAGE>
Change in Control to a date which is three (3) years immediately after
the completion of the said Change in Control, then in either such case
the Agreement will be deemed to have been terminated because of the
Change in Control.
3.3 For the purposes of clarification, a change in control of the Company
from one member of the Block group to another member of the Block group
shall not constitute a Change in Control for the purposes of this CIC
Agreement.
4. Termination of Clause
4.1 Termination of the Agreement "for Cause" shall be deemed to have
occurred if the Agreement is terminated by the Company, pursuant to a
notice of termination, for any of the reasons set forth in Clause 4.2
4.2 The termination of the Agreement by the Company for Cause shall be for
nay of the following reasons:
4.2.1 the deliberate and continued failure by the Executive to
devote substantially all the Executive's time and efforts
during regular business hours (other than as a result of
illness, disability, force majeure or participation, directly
or indirectly, in any litigation or other dispute
resolution arising out of or in any way related to Executive's
serving the
<PAGE>
Company) to the performance of the Executive's normal duties
for more than thirty (30) days after a demand for substantial
performance has been made to the Executive. Such demand shall
specifically identify the manner in which the Executive has
not substantially performed such duties; or
4.2.2 the Executive's being found guilty of fraud, embezzlement,
dishonesty or defalcation in connection with his Agreement
with or as a result of any one or more transactions with the
Company; or
4.2.3 any gross misconduct or material neglect, material failure or
refusal to carry out the duties properly assigned to the
Executive; or
4.2.4 the damaging by the Executive of the Company's name, business
interests or reputation through his actions, omissions or
statements; or
4.2.5 the Executive's absence from work due to ill health or other
incapacity for a period or periods in aggregate totaling
twenty-six (26) weeks in any twelve (12) month period.
<PAGE>
5. Termination for Good Reason
5.1 "Good Reason" for termination of the Agreement by the Executive shall
be deemed to have occurred if:
5.1.1 without the express written consent of the Executive, any of
the events listed in Clause 5.2 below should occur; and
5.1.2 the Executive promptly serves on the Company a notice of
termination of the Agreement for any of the reasons listed in
Clause 5.2 below, citing any one or more of such events
occurring within the time period set forth in Clause 3.2
above.
5.2 The events constituting Good Reason as referred to in clause 5.1.1 shall be
as follows:
5.2.1 assignment to the Executive of duties which are inconsistent
with the Agreement or which constitute a significant reduction
in the Executive's authority, responsibilities, or status, or
a revocation of the Executive's mandate as a Managing Director
prior to a Change in Control or within the time period
described in Clause 3.2 above, except if the Agreement is
terminated for Cause, or as a result of the Executive's
permanent disability or retirement; or
<PAGE>
5.2.2 the Company's requiring the Executive to be based outside a
radius of more than two hundred (200) kilometers from the
Company's location on the date of a Change in Control or
within the time period described in Clause 3.2 above; or
5.2.3 any material reduction by the Company in (1) the
Executive's Base Compensation, including but not limited to, the
Executive's eligibility to participate in the Executive Incentive
Plan or the Special Stock Unit Plan or (2) any other benefit plan
in which Executive was entitled to participate immediately prior
to a Change in Control or within the time period described in
Clause 3.2 above. (Such reduction shall not constitute a Good
Reason if occurring as a result of the Company's or Block's
termination or cessation of a plan generally for all
participants) For the purposes of this subsection, a material
reduction in Executive's Base Compensation or any benefit plan in
any year shall be deemed to have occurred if the aggregate amount
of Base Compensation paid and/or value of benefits provided to
Executive in any Block fiscal year is less than seventy-five
percent (75%) of the highest aggregate amount of the Base
Compensation paid and/or value of benefits received by the
Executive during (1) any one of the three
Block fiscal years immediately preceding the completion of a
Change in Control, or (2) the first complete Block fiscal year
following the completion
<PAGE>
of a Change in Control.
6. Non-Competition
6.1 Upon termination of the Agreement by either party for any reason, other
than due to the voluntary or compulsory liquidation of the Company (not
being a voluntary liquidation for the purpose of reconstruction or
amalgamation) or the discontinuance by the Company of its business, the
Executive shall not within any European country for a period of twelve
(12) months immediately following the effective date of such
termination:
6.1.1 either on his own behalf or on behalf of any other person,
firm or company, seek to obtain orders in respect of goods or
services of a similar description to those dealt in or
provided by the Company or any Affiliate, from any person,
firm or company who at the effective date of or within the
period of twelve (12) months prior to the effective date of
such termination was, to the knowledge of the Executive, a
customer of or in the habit of dealing with the Company or any
Affiliate (as the case may be); or
6.1.2 represent himself as being in any way connected or having
formerly been connected with or interested in the business of
the Company (other than for the purpose of prospective job
applications); or
<PAGE>
6.1.3 interfere or seek to interfere with the continuance of
supplies to the Company or any Affiliate (or the terms of such
supplies) from any supplier who shall have been supplying
components or materials or services to the Company or its
Affiliates at any time during the last twelve (12) months of
his Agreement with the Company; or
6.1.4 solicit, entice or persuade (or attempt so to do) any
employees of the Company of a managerial, executive, sales or
technical grade to leave the Company's employ, whether or not
any breach of contract is thereby occasioned.
7. Term
7.1 This CIC Agreement shall commence on the Effective Date and shall
continue thereafter unless and until terminated by either party giving
to the other not less than three (3) month's prior written notice of
termination.
7.2 Notwithstanding Clause 7.1, this CIC Agreement shall automatically
expire on the day that the Executive attains the age of sixty-five (65)
or on the day the Agreement is terminated for Cause or as a result of
the permanent disability or retirement of the Executive.
<PAGE>
8. Confidentiality
8.1 The Executive shall neither while the Agreement is in effect (except in
the proper performance of his duties) nor at any time (without limit)
after the termination of the Agreement, directly or indirectly
a) use for his own purposes or those of any other person,company,
business entity or other organization whatsoever, or disclose to any
person, company, business entity or other organization whatsoever,
any trade secrets or confidential business information relating or
belonging to the Company or any of its Affiliates, including, but not
limited to any such information relating to customers, customer lists
or requirements, supplier dealings and arrangements, price lists or
pricing structures, sales and marketing
information, business plans or dealings, employees or officers, source
codes and computer systems, software, financial information and plans,
designs, formulae, prototypes, product lines, services, research
activities, any document marked "Confidential" (or with a similar
expression), or any information which the Executive has been told is
confidential or which he might reasonably expect the Company would
regard as confidential, or any information which he is aware has
<PAGE>
been given to the Company or any of its Affiliates in confidence by
customers, suppliers or other persons.
8.2 The obligations contained in Clause 8.1 above shall cease to apply to
any information or knowledge which may subsequently come into the
public domain other than by way of unauthorized disclosure.
9. Notices
9.1 Any notice to be given hereunder shall be in writing and be
sufficiently served in the case of the Executive by being delivered
either personally to him or sent by first class pre-paid post to his
last known residential address, or in the case of the Company by being
sent by registered post or recorded delivery addressed to its
registered office. Any such notice shall be deemed served on delivery,
or if so posted, shall be deemed served 48 hours after it was posted.
10. Miscellaneous
10.1 This CIC Agreement is not intended to and shall not affect any
benefits, to which the Executive, his heirs or beneficiaries
is or are entitled to upon death, disability, permanent
disability or retirement except as expressly provided in this
CIC Agreement.
<PAGE>
10.2 Neither this CIC Agreement nor any action taken hereunder
shall be construed as depriving the Company of any right to
terminate the Agreement. The Executive acknowledges that,
absent a Change in Control, the Company may terminate the
Agreement at any time with or without cause, and Executive
shall not be entitled to any of the benefits provided by this
CIC Agreement.
10.3 This CIC Agreement is subject to the laws of Belgium, and its
courts and tribunals shall have exclusive jurisdiction in
resolving any disputes arising.
10.4 The invalidity or unenforceability of any provisions of this
CIC Agreement shall not affect the validity or enforceability
of any other provision of this CIC Agreement, which shall
remain in full force and effect.
10.5 The Executive shall not be required to mitigate any payment or
benefit provided for in this CIC Agreement by seeking
employment or otherwise. No payment or benefit provided for in
this CIC Agreement shall be reduced by any payment or benefit
earned or received by Executive from any other source except
as such reduction may expressly be provided for elsewhere in
this CIC Agreement.
10.6 No provisions of this CIC Agreement may be modified, waived or
discharged unless such modification, waiver or discharge is
expressly agreed to in writing and signed by both the
Executive and the Company. No waiver by the
<PAGE>
Executive or the Company of any breach of the CIC Agreement or
any condition or provision thereof shall be deemed a waiver of
any similar or dissimilar conditions or provisions at the same
or any prior or subsequent time.
<PAGE>
Exhibit 10(n)
CHANGE IN CONTROL AGREEMENT
This Change in Control Agreement ("Agreement") is made and entered into this
_______ day of ____________ by and between Block Drug Company, Inc. (hereinafter
referred to as either "Block" or the "Company") having its principal place of
business at 257 Cornelison Avenue, Jersey City, New Jersey 07302-9988
and____________________ ("Executive") having an
address at ________________.
STATEMENTS OF FACT
A. Block is concerned that the possibility of a Change in Control or
Subsequent Change in Control (as hereinafter defined) might result in the
departure of key employees, includ ing the Executive, which would be detrimental
to the Company and its shareholders.
B. Block wishes to alleviate the Executive's concerns and ensure the
continued attention, dedication and active participation of the Executive in the
Company.
C. The Executive is willing to continue to serve Block but desires
assurance that in the event of any Change in Control or Subsequent Change in
Control he will continue to have the responsibility and status in the Company
that he has earned.
D. In order to protect certain rights and benefits of the Executive in
the event of a Change in Control or a Subsequent Change in Control, the parties
have agreed to enter into this Agreement to provide for severance benefits to
the Executive upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the promises and mutual agreements
contained herein, the parties hereby agree as follows.
1. DEFINITIONS
For the purposes of this Agreement:
1.01 "Base Compensation" shall mean the aggregate of:
(a) the applicable base salary paid to the Executive during
the twelve (12) month period prior to (I) a Change in Control or Subsequent
Change in Control, or (ii) the Executive's termination, whichever is higher;
plus
(b) the average annual bonuses paid to the Executive during
the three (3) year period prior to (I) a Change in Control or Subsequent Change
in Control, or (ii) the Executive's termination, whichever is higher.
1.02 "Beneficial Owner" shall have the same meaning as defined in Rule
13d-3 of the Securities Exchange Act of 1934.
1.03 "Benefit Plans" shall include the Company's Special Stock Unit
Plan plus any employee benefit plan defined under Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended.
1.04 "Block Family" shall include: Leonard Block, Adele Block, James A.
Block, Susan Stearns, individually; Adele Block, Peggy Danziger and Thomas Block
as Trustees under an Indenture of Trust dated August 7, 1957 made by Leonard
Block for the benefit of Peggy Danziger; Adele Block, Peggy Danziger and Thomas
Block, as Trustees under an Indenture of Trust dated August 7, 1957 made by
Leonard Block for the benefit of Thomas Block; James A. Block, as Trustee under
an Indenture of Trust dated December 13, 1961 made by Melvin A. Block
<PAGE>
for the benefit of James A. Block; James A. Block and Susan Stearns, as Trustees
of the Trust under Subdivision A of Article Seventh of the Will of Melvin A.
Block, deceased; James A. Block and Susan Stearns, as Trustees under an
Indenture of Trust dated December 13, 1961 made by Melvin A. Block for the
benefit of Susan Stearns; James A. Block and Susan Stearns, as Trustees of the
Trust under Subdivision B of Article Seventh of the Will of Melvin A. Block,
deceased; James A. Block, as Voting Trustee under a Voting Trust Agreement dated
as of January 11, 1990, among James A. Block, as Trustee under Indenture of
Trust dated December 13, 1961 made by Melvin A. Block for benefit of James A.
Block, James A. Block and Susan Stearns, as Trustees of the Trust under
Subdivision A of Article Seventh of the Will of Melvin A. Block, deceased, James
A. Block and Susan Stearns as Trustees under Indenture of Trust dated December
13, 1961 made by Melvin A. Block for the benefit of Susan Stearns, and James A.
Block and Susan Stearns, as Trustees of the Trust under Subdivision B of Article
Seventh of the will of Melvin A. Block, deceased (the foregoing trusts shall
collectively be referred to as the "Trusts"); any descendent, of any degree, of
either Leonard Block or Melvin A. Block, including both natural born and adopted
children of Leonard Block, Melvin A. Block or any descendent thereof
("Descendent") ; and a custodian or guardian of a minor Descendent, who is an
adult Descendent.
1.05 "Block Group" shall include the Block Family, any trust created
for the benefit of a member of the Block Family and any entity or company
controlled by the Block Family and in which the Block Family has Voting Control.
1.06 "Change in Control" shall be deemed to occur upon the happening of
any event in which the Block Group ceases to hold beneficially and of record
more than fifty (50%) percent of the Voting Control of the Company or any
successor company, or where all or substantially all of the assets are sold,
transferred or otherwise conveyed to an entity in which the Block Group does not
have Voting Control.
1.07 "Chief Executive Officer" shall mean the Office of the Chief
Executive or such other person(s) performing the duties of the Chief Executive.
1.08 "Date of Termination" shall mean the date specified as the
Executive's last day of employment in the Notice of Termination. If the Notice
of Termination is given pursuant to Sec tion 3 of this Agreement, the date
specified in the Notice of Termination shall not be less than thirty (30) days
from the date such notice is given pursuant to subsection 10.09. If the Notice
of Termination is given pursuant to subsection 2.01(a) of this Agreement, the
date specified in the Notice of Termination must be at least one hundred eighty
days (180) from the date on which a Change in Control or a Subsequent Change in
Control occurred but in no event less than sixty (60) days from the date such
notice is given pursuant to subsection 10.09. If the Notice of Termination is
given pursuant to Section 4 of this Agreement, the date specified in the Notice
of Termination shall not be less than sixty (60) days from the date such notice
is given pursuant to subsection 10.09. If the Notice of Termination is given by
the Company for any reason except "for Cause" (as defined in Section 3), the
date specified in the Notice of Termination shall not be less than sixty (60)
days from the date such notice is given pursuant to subsection 10.09. In the
event of a dispute of any Notice of Termination, the Date of Termination shall
be the date determined by dispute resolution in accordance with Section 8 of
this Agreement.
1.09 "Expiration Date" shall mean December 31, 1995 and any subsequent
date to which this Agreement has been extended in accordance with Section 6 of
this Agreement.
1.10 "Notice of Termination" shall mean a written notice setting forth
in reasonable detail the facts and circumstances which are the basis for the
termination given by either
<PAGE>
(a) the Company to the Executive pursuant to Section 3 or for any other
reason or no reason ; or
(b) the Executive to the Company pursuant to either subsection 2.01 or
Section 4. 1.11 "Permanent Disability" shall mean the total and permanent
incapacity of the Executive prior to Retirement that would qualify him to
receive disability benefits under the Federal Social Security Act as of a date
which is within one (1) year after his last day of active employment.
1.12 "Retirement" shall mean voluntary termination in accordance with
the Company's retirement policy, generally applicable to its salaried employees,
or in accordance with any
retirement arrangement between the Executive and the Company.
1.13 "Subsequent Change in Control" shall be deemed to occur upon
(a) a Change in Control, and
(b) any of the following:
(i) Any entity or person (which theretofore was a Beneficial
Owner of less than twenty (20%) percent of each class of voting stock
of the Company) becomes the Beneficial Owner, directly or indirectly,
of twenty (20%) percent or more of the combined voting power of the
Company's then outstanding stocks; or
(ii) The Company's merger or consolidation with or into any other
entity;
or
(iii) The disposal by the Company of a business or division of
the Company pursuant to a partial or complete merger or consolidation
with liquidation of the Company, a sale of assets of the Company, a
sale of assets of the Company or otherwise. Notwithstanding the
foregoing, a Subsequent Change in Control shall only be deemed to have
occurred if (x) the Executive is actually employed in or by the
disposed business or division or (y) such disposed business or
division constitutes more than ten (10%) percent of the assets or
accounts for-more than ten (10%) percent of the revenue of the
Company; or
(iv) Fifty (50%) percent or more of the individuals who
constitute the current Board of Directors were not directors during
the preceding year.
1.14 "Voting Control" shall mean the right, in each class of voting
stock, to cast more than fifty (50%) percent of the votes on each matter for
which a shareholder vote is required or permitted.
1.15 "Year" shall mean twelve consecutive (12) months unless
otherwise defined.
2. ELIGIBILITY
2.01 If a Change in Control or a Subsequent Change in Control shall
have occurred during the term of this Agreement, the Executive shall be eligible
for benefits hereunder if:
(a) within one (1) year of a Change in Control or a Subsequent
Change in Control, unless otherwise provided in subsection 7.01, the Executive
notifies the Company in writing that he is terminating his employment; or
(b) within three (3) years of a Change in Control or a
Subsequent Change in Control, the Executive terminates his employment for "Good
Reason" (as defined in Section 4).
2.02 The Executive shall be eligible for benefits hereunder if the
Company terminates the Executive's employment, unless such termination is
because of death, Retirement, Permanent Disability or "for Cause", (as defined
in Section 3) within any period which commences on a date
<PAGE>
which is one hundred eighty (180) days prior to the execution by the Company of
a definitive agreement, the consummation of which would constitute a Change in
Control or a Subsequent Change in Control under this Agreement and ends on a
date which is three (3) years after a Change in Control or a subsequent Change
in Control.
3. TERMINATION FOR CAUSE
3.01 Termination of the Executive for Cause shall be deemed to have
occurred if: (a) the Executive is terminated by the Company, pursuant
to a Notice of Termination,
for any of the reasons set forth in subsections 3.02(a) or 3.02(b); and
(b) the Board of Directors adopts a resolution setting forth the
particulars of the Executive's conduct, finding him guilty of the conduct set
forth in either subsection 3.02(a) or 3.02(b) and terminating his employment.
Such resolution must be adopted at a meeting of the Board of Directors
specifically called and held for such purpose.
3.02 The Executive's termination by the Company for Cause shall be for
either of the following reasons:
(a) the deliberate and continued failure by the Executive to devote
substantially all the Executive's time and efforts during regular business hours
(other than as a result of illness, disability, force majeure or participation,
directly or indirectly, in any litigation or other dispute resolution arising
out of or in any way related to Executive's employment by the Company) to the
performance of the Executive's normal duties for more than thirty (30) days
after a demand for substantial performance has been made to the Executive by the
Chief Executive Officer. Such demand shall specifically identify the manner in
which the Executive has not substantially performed such duties; or
(b) the Executive being found guilty of fraud, embezzlement,
dishonesty or defalcation in connection with his employment by or as a result of
any one or more transactions with the Company.
3.03 For purposes of this Section 3, no act, or failure to act, on the part of
the Executive shall be considered 'deliberate" unless done, or omitted to
be done, by the Executive in bad faith and without the reasonable belief
that such action or omission was in the best interests of the Company.
4. TERMINATION FOR GOOD REASON
4.01 "Good Reason" for termination by the Executive shall be deemed
to have occurred if:
(a) without the express written consent of the Executive
any of the events listed in subsections 4.02(a) through (e) occur; and
(b) the Executive gives the Company a Notice of Termination
for any of the reasons listed in subsections 4.02(a) through (e) within any of
the time periods set forth in subsec tion 2.02, as the case may be.
4.02 Subject to subsection 4.01 above, the Executive may
terminate his employment for Good Reason upon the occurrence of any of the
following events:
(a) any assignment to the Executive of any duties which are
inconsistent with the Executive's position with the Company or which constitute
a significant reduction in the Executive's authority, responsibilities, or
status, or any demotion of the Executive by the Company from any office or
titled managerial position (other than as a director of the Company) held by the
Executive prior to a Change in Control or a Subsequent Change in Control or
within
<PAGE>
any of the time periods described in subsection 2.02, except in connection with
the termination of the Executive's employment either by the Company for Cause,
or as a result of the Executive's Permanent Disability or Retirement; or
(b) the Company's requiring the Executive to be based more than
thirty-five (35) miles from the Executive's principal place of employment on the
date of a Change in Control or a Subsequent Change in Control or within any of
the time periods described in subsection 2.02; or
(c) any reduction by the Company in (i) the Executive's Base
Compensation or (ii) the Executive's eligibility to participate in any bonus or
other Benefit Plan in which he was entitled to participate immediately prior to
a Change in Control or a Subsequent Change in Control or within any of the time
periods described in subsection 2.02; or (d) a material reduction in the
Executive's benefitsin effect immediately prior to a Change in Control or a
Subsequent Change in Control or within any of the time periods described in
subsection 2.02, or perquisites as a whole, whether or not under any Benefit
Plan of the Company. For the purpose of this subsection, a material reduction in
bonuses and/or other Benefit Plan, in any year shall be deemed to have occurred
if the aggregate amount of bonuses paid and/or value of benefits provided to
Executive in any year is less than seventy-five (75%) percent of the highest
aggregate amount of bonuses paid and/or value of benefits received by the
Executive during (i) any of the three most recent years preceding a Change in
Control or a Subsequent Change in Control, or (ii) any calendar year following a
Change in Control or a Subsequent Change in Control; or
(e) the Company requiring the Executive to travel for business
purposes more than ten (10) weeks in any calendar year.
5. BENEFIT
5.01 Amount and Schedule of Benefit Payments. If the Executive becomes
eligible pursuant to Section 2 of this Agreement, the Company shall provide
severance pay and benefits, as described in subsections (a) through (e) below,
to the Executive.
(a) Accrued Salary. Any accrued salary not yet paid to the Executive
for services performed prior to the Date of Termination shall be paid within
fifteen (15) calendar days fol lowing the Date of Termination.
(b) Vacation Pay. The Executive shall be reimbursed at his base
salary rate in effect immediately prior to the Date of Termination for all
unused vacation and personal days for the twelve month period prior to the Date
of Termination and any and all other accumulated vacation and personal days
carried forward in accordance with Company policy, including any unused vacation
and personal days which would have been carried forward except for a policy
change made (I) after a Change in Control or Subsequent Change in Control or
(ii) within one hundred eighty (180) days prior to a Change in Control or
Subsequent Change in Control. All such amounts shall be paid not later than
fifteen (15) calendar days following the Date of Termination.
(c) Severance Pay. The Executive shall be paid an annual severance
payment equal to one-half the Base Compensation for a period of five (5) years
or until the Executive attains the age of sixty-five, whichever occurs first, at
which time all such payments shall cease. The first annual severance payment
shall be made within fifteen (15) days following the Date of Termination and all
subsequent payments shall be made on the anniversary date thereof. If the
anniversary date falls on a weekend or holiday, the payment shall be made on the
prior business day. In the event that the Executive attains the age of
sixty-five within five (5) years of the first annual severance payment, his
final annual severance payment, payable on the anniversary date
<PAGE>
after he attains the age of sixty-four, shall be prorated based upon the number
of days that will elapse from said anniversary date to the date of his
sixty-fifth birthday over three hundred sixty-five (365) days.
(d) Insurance Benefits.
(i) For five (5) years following the Date of Termination or
until the Executive attains the age of sixty-five, whichever occurs first, the
Company shall either:
(x) maintain in full force and effect for the continued benefit of the
Executive and eligible dependents all life, disability, accident, and health
plans and other employee welfare benefit plans to the extent that the Executive
and/or any eligible dependents participated at the time of termination; or
(y) provide the Executive and such eligible dependents with insured
benefits equal in all material respects to those which he and his eligible
dependents would have been entitled to receive under such employee welfare
benefit plans. The Company shall determine, in its sole discretion, the manner
in which it shall provide insurance benefits to the Executive and eligible
dependents. However, in the event of the Executive's employment by another
employer, the benefits, including the retired employee benefits referred to in
subparagraph (ii) below, shall cease to be provided hereunder to the extent
provided by the new employer.
(ii) The Executive shall, after the time period set forth in
subsection 5.01(d)(I), continue to be eligible for the highest aggregate
benefits provided to retired employees of the Company which either existed
during (x) either of the two most recent years preceding a Change in Control or
a Subsequent Change in Control, or (y) any calendar year following a Change in
Control or a Subsequent Change in Control. (e) Benefit Plans.
(i) In the event the Executive is entitled to any severance pay
benefits under the terms of this Agreement, it is intended that the Executive
receive additional credit under the terms of any Benefit Plans of the Company,
other than the Company's Special Stock Unit Plan, as a result of these severance
payments. In order to accomplish this, a computation of the benefits under each
such benefit plan shall be made as if the Executive had continued as a full-time
employee of the Company, at a compensation rate equal to two times the annual
severance pay rate under this Agreement, paid for a period of five (5) years or
until the Executive attains the age of sixty-five (65), whichever occurs first.
The determination of the additional benefit, if any, shall be made pursuant to
subparagraph (ii) below.
(ii) The additional benefits payable by the Company, if any,
under this subsection 5.01(e) shall be equal to the excess, if any, of (x) the
benefits which would have been paid under such Company benefit plan or plans
determined in accordance with the terms of subparagraph (i) above, less (y) the
actual benefits paid or payable under such benefit plan or plans without regard
to subparagraph (i) above.
(iii) The payment of additional benefits, if any, determined in
accordance with this subsection 5.01(e) shall be made within fifteen (15) days
of such determination.
(f) Vesting of Benefits. For the purposes of this subsection 5.01(f),
"At Risk" shall mean not fully vested, not fully exercisable and/or subject to
forfeiture restrictions. To the extent that any benefit to which the Executive
is entitled under any of the various Benefit Plans of the Company as of the Date
of Termination are At Risk, or become At Risk by virtue of the Executive's
termination, the Company shall deem such benefits to be fully vested and shall
pay the Executive the fair market cash equivalent for all such At Risk benefits.
Such payment shall be made in accordance with the
<PAGE>
terms of each Benefit Plan in existence on the Date of Termination, provided
that such payment terms are no less favorable to the Executive than the terms
existing as of the date of this Agreement. The determination of the cash
equivalent for all At Risk benefits shall be made, in good faith, by the
majority of the entire membership of the Board of Directors then in office.
Notwithstanding the foregoing, to the extent that any benefits referred to in
this subsection 5.01(f) are no longer At Risk as of the Date of Termination,
this subsection shall in no way change, modify or alter such benefits and such
benefits shall only be payable in accordance with the plans by which they are
governed.
6. TERM
6.01 This Agreement shall commence on the date hereof and shall expire
on the Expiration Date or on the day that the Executive attains the age of
sixty-five, whichever occurs first.
6.02 Beginning December 31, 1991 and on each December 31st thereafter,
the term of this Agreement shall automatically be extended for an additional one
(1) year beyond the then Expiration Date unless prior to such date the Company
shall have given the Executive written notice of its election not to extend this
Agreement. By way of example, if the Company has not given written notice to the
Executive by December 31, 1991 that it elects not to extend this Agreement, on
such date the term of this Agreement shall be extended until December 31, 1996.
6.03 If a Change in Control or a Subsequent Change in Control shall
have occurred while this Agreement is in effect, the term of the Agreement shall
automatically be extended for three (3) years beyond the Expiration Date in
effect at the time of the Change in Control or the Subsequent Change in Control.
7. SUCCESSORS; BINDING AGREEMENT
7.01 In the event of a Change in Control or a Subsequent Change in
Control, the Company shall require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company, to expressly assume and agree to maintain
this Agreement, for a minimum period of three (3) years beyond the then
Expiration Date in the same manner and to the same extent that the Company would
be required to maintain this Agreement if no such succession had taken place. If
the Company fails to obtain such assumption agreement by the time of the
effectiveness of any such succession, the time period in which the Executive may
terminate his employment pursuant to subsection 2.01(a) shall be extended to a
period of three (3) years after the date on which any such succession becomes
effective. Any successor to any business and/or assets of the Company which
executes and delivers the assumption agreement provided for in this Section 7 or
which otherwise becomes bound by all the terms and provisions of this Agreement
by the terms hereof or operation of law shall thereafter be included in the term
"Company" as used in this Agreement.
7.02 All rights of the Executive hereunder shall inure to the benefit of
and be enforceable by the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If the Executive should die prior to receiving all amounts of benefits
payable hereunder, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to the Executive's devisee,
legatee, or other designee or, if there be no such designee, to the Executive's
estate. TERMINATION OF DISPUTES
8.01 Either the Company or the Executive may in good faith dispute any
Notice of Termination under this Agreement or any determination of any amount or
benefit payable hereunder. if notice of such dispute is given, the Company shall
continue to pay the Executive's full
<PAGE>
compensation and benefits in effect immediately prior to the Date of Termination
until final resolution of the dispute. Payments or benefits so provided until
such final resolution shall be in addition to all others provided under this
Agreement.
8.02 Any provision regarding dispute resolution notwithstanding, the
Executive may bring a court action for an order for specific performance
requiring the Company to make all payments pursuant to subsection 8.01.
8.03 In order to resolve disputes between the parties effectively,
efficiently, and at the least cost and inconvenience, the parties agree to
resolve all disputes relating to or arising out of this Agreement or its subject
matter as set forth in this Section 8.
8.04 Notice of demand for a meeting of the parties to discuss and
settle a dispute(s) ("Notice of Meeting") may be given by any party. Such notice
shall be in writing. The Notice of Meeting shall set a date at least five (5)
business days but no more than ten (10) business days from the date of the
Notice of Meeting on which the parties shall meet during normal business hours
at the Company's offices in Jersey City, New Jersey. If within five (5) days
after the date of the meeting the parties have not resolved their dispute(s)
then the parties shall proceed pursuant to subsection 8.05.
8.05 Any dispute not otherwise resolved pursuant to the previous
subsections of this Section 8 shall be resolved by means of alternative dispute
resolution, as provided in the New Jersey Alternative Procedure for Dispute
Resolution Act, N.J.S.A. 2A:23A-1 et seq. (the "Act"). The parties expressly
waive the right to resolve all claims, disputes and issues arising out of or
relating to this Agreement by means of traditional litigation, including the
right to appeal except as provided in the Act or in subsection 8.02.
8.06 Notice of a demand for resolution of a dispute under the Act (a
"Notice of Dispute,,) shall be given by either party. Such notice shall be in
writing, and shall specify the issue or issues which are subject to dispute.
8.07 (a) Within fifteen (15) days after a Notice of Dispute is given
each party shall select four (4) prospective umpires from among the persons
listed in subsections (i) through (iv) below. In addition to meeting the
requirements of said subsections, each prospective umpire must also satisfy the
requirements described in subsection 8.07(C) below. Prospective umpires are:
(i) any retired judge of the United States District Courtfor the
District of New Jersey;
(ii) any retired judge of the New Jersey Superior or Supreme
Court; (iii) any attorney licensed to practice in the State of
New Jersey who has actually practiced law for more than
fifteen (15) years and specialized in litigation or
contracts; and (iv) other persons with such qualifications
upon which the parties agree.
(b) Within fifteen (15) days after each party has selected its
prospective umpires the parties shall agree to one (1) umpire from among the
eight (8) prospective umpires to hear the dispute.
(c) In addition to the requirements described in subsection
8.07(a) above, each prospective umpire selected must:
(i) be free of any potential for bias or conflict of interest
with respect to either of the parties, directly or indirectly, or by virtue of
any direct or indirect financial interest, family relationship or close
friendship; and
(ii) be in a position to immediately hear the dispute and render
a resolution within the time specified in subsection 8.11 below.
(d) If an umpire is not selected within the period of time specified
in
<PAGE>
subsections 8.07(a) or 8.07(b) above, each party will designate one of the
prospective umpires; the two prospective umpires designated by the parties
shall, within fifteen (15) days, jointly select the umpire. Such selection shall
be in accordance with the requirements of subsections 8.07(a) and 8.07(c) above.
8.08 The proceeding for the alternative resolution of a dispute
(the "ADR Proceeding") shall be held at a location within the State of New
Jersey selected by the umpire. The ADR Proceeding shall commence no later than
forty (40) days after the Notice of Dispute is given.
8.09 All fees and expenses associated with the ADR Proceeding
(including transcripts, room rental and fees of the umpire) shall be paid by the
Company. The fees payable to the umpire shall be the usual hourly rate of such
umpire for consulting or dispute resolution services.
8.10 Where appropriate under applicable New Jersey substantive
and procedural law, the umpire shall have full and complete authority to award
provisional relief, whether on an ex parte basis or otherwise, upon the
commencement of an ADR Proceeding, in accordance with the provision of the Act.
8.11 The umpire shall render a decision within a reasonable
time, but in no event later than sixty (60) days after the final oral testimony
is taken or the final briefs are filed. Notwithstanding the foregoing, any
decision must be rendered within six (6) months from the date of the Notice of
Dispute.
8.12 Except as otherwise provided in this Agreement, the Act
shall govern the procedures and methods for any ADR Proceeding.
8.13 In order to facilitate the expeditious resolution of
disputes, the parties agree that no party shall object to the other party being
represented by counsel of its choice, whether or not such counsel is admitted to
practice law in New Jersey.
8.14 If the parties mutually agree in writing to extend any
deadline set forth in this Section 8, all other deadlines shall be extended
correspondingly.
9. CONFIDENTIALITY AND NON-DISCLOSURE
9.01 The Executive acknowledges that his relationship with the Company
has been and shall continue to be one of trust and confidence and that during
the period of his employment with the Company, he has been and will continue to
be exposed and permitted access to confidential information concerning the
nature and operation of the Company's business, including but not necessarily
limited to the Company's records of sales, customers, sources of supply,
computer programs, manuals, documentation as well as other technical and
non-technical information. The Executive further acknowledges that all of such
confidential information constitutes a valuable asset of the Company and that
the unauthorized disclosure and/or improper use of such information would cause
irreparable damage and harm to the Company.
9.02 Unless the confidential information was previously known by the
Executive free of any obligation to keep it confidential or has been or is
subsequently made public by the Company or a third party (provided such third
party is not in breach of an obligation not to disclose), the Executive shall
not, during or after his employment, in whole or in part, disclose any of the
confidential information described in subsection 9.01 to any person, firm,
corporation, association, or other entity for any reason or purpose whatsoever;
nor shall the Executive make use of any such information for his own purposes or
for the benefit of any person, firm, corporation, association, or other entity
(except the Company) under any circumstances.
10. MISCELLANEOUS
<PAGE>
10.01 This Agreement is not intended to and shall not affect any
benefits, to which the Executive, his heirs or beneficiaries is or are entitled
to upon death, disability, Permanent Dis ability or Retirement except as
expressly provided in this Agreement.
10.02 The Executive's right to give a Notice of Termination, if he
becomes eligible for benefits during the term hereof pursuant to subsections
2.01, 2.02 or Section 4 of this Agreement, shall expire ninety (90) days after
the Expiration Date.
10.03 Any and all rights and benefits which shall have accrued during
the term of this Agreement, including without limitation, any extensions and
rights under subsection 10.02, shall survive the expiration of this Agreement.
10.04 No amount payable under the Agreement shall be subject to
assignment, transfer, sale, pledge, encumbrance, alienation or charge by the
Executive or the beneficiary of the Executive except as may be required by law.
10.05 Neither this Agreement nor any action taken hereunder shall be
construed as giving the Executive the right to be retained in the employ of the
Company. The Executive acknowledges that absent a Change in Control or a
Subsequent Change in Control, the Company may terminate the Executive's
employment at any time with or without cause, and he shall not be entitled to
any of the benefits provided by this Agreement.
10.06 Payments of benefits under this Agreement shall be made in lieu
of payments of any severance benefits of a type similar to the benefits
described in subsections 5.01(c)(d) and (e) that may be offered under any
written or unwritten severance pay policy maintained by the Company.
10.07 This Agreement shall be governed by and construed in accordance
with the laws of the State of New Jersey without regard to its conflicts of laws
provisions. Except as to matters that are resolved outside of court in
accordance with Section 8, the parties hereby irrevocably submit themselves to
the jurisdiction of the courts of the State of New Jersey and to the juris
diction of the United States District Court for the District of New Jersey, for
the purposes of any suit, action or other proceeding arising out of or based
upon this Agreement. The parties hereby waive and agree not to assert, by way of
motion, as a defense, or otherwise, in any such suit, action or proceeding, any
claim that they are not subject personally to the jurisdiction of the
above-named courts, that their property is exempt or immune from attachment or
execution, that the suit, action or proceeding is brought in an inconvenient
forum, that venue of the suit, action or proceeding is improper. Each of the
parties hereby appoints, the Secretary of State of New Jersey and the Clerk of
the United States District Court for the District of New Jersey as its duly
appointed agents for the receipt and acceptance on their behalf of service of
summonses and other legal process. Service of any legal process upon said
Secretary of State or said Clerk shall be deemed sufficient service of process;
provided, that concurrently with such service of process, notice of any such
suit, action or proceeding is given to Executive and the Company in the manner
set forth in subsection 10.09 herein.
10.08 The invalidity or unenforceability of any provisions of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
10.09 Any notice or other communication provided for in this Agreement
shall be in writing and, unless otherwise expressly stated herein, shall be
deemed to have been given when delivered personally, sent by overnight courier
or mailed by United States registered mail, return receipt requested, postage
prepaid addressed (in the case of the Executive) to the Executive's resi dence
with a copy to the office at which the Executive is employed and (in the case of
the Company) to its principal executive offices, attention of the Chief
Executive Officer.
10.10 The Executive shall not be required to mitigate any payment or
benefit provided for in this Agreement by seeking other employment or otherwise.
No payment or benefit provided for in this Agreement shall be reduced by any
payment or benefit earned or received by Executive from any other source except
as such reduction may expressly be provided for elsewhere in this Agreement.
10.11 No provisions of this Agreement may be modified, waived or
discharged unless such modification, waiver or discharge is expressly agreed to
in writing and signed by both the Executive and the Company. No waiver by the
Executive or the Company of any breach of the Agreement or any condition or
provision thereof shall be deemed a waiver of any similar or dis similar
conditions or provisions at the same or any prior or subsequent time.
10.12 Section and subsection headings contained in the Agreement are for
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the 12th day of April 1991.
WITNESS OR ATTEST: BLOCK DRUG COMPANY, INC.
________________________ By:___________________
----------------- ---------------------
-25-
<PAGE>
EXHIBIT 10(o)
EXTRAORDINARY DEFERRED COMPENSATION AGREEMENT
This Extraordinary Deferred Compensation Agreement ("the 1997 EDCA") is made and
entered into this 1st day of May, 1997 ("the Effective Date"), by and between
Block Drug Company, Inc. (hereinafter referred to as the "Company") having its
principal place of business at 257 Cornelison Avenue, Jersey City, New Jersey
07302-9988, and Melvin Kopp ("Participant") having an address at 17 Weber Road,
West Orange, NJ 07052.
STATEMENTS OF FACT
A. Participant and Company have entered into a consulting agreement as
of the Effective Date ("the 1997 consulting Agreement"), whereby, as part of
Participant's remuneration as a consultant Company has agreed to provide
Participant extraordinary deferred compensation ("EDC") in a manner which
mirrors the Company's Special Stock Unit Plan ("SSUP").
B. Except as provided herein, as used in this 1997 EDCA the capitalized
terms and the referenced Sections shall be the same as those set forth in
Section B of the Company's Special Stock Unit Plan (SSUP), as amended January
31, 1997(Plan).
C. Participant, who is not a Participant in the SSUP, and whose normal
retirement date was February 28, 1995, will receive Extraordinary Deferred
Compensation Awards (" EDCAs") in accordance with the procedures used to issue
Awards to Participants in the SSUP. The deferred compensation amount from the
EDCAs shall be calculated as provided in Section F of the SSUP, and Awards will
vest as provided in Section F of the SSUP. Payment of the deferred compensation
amount shall be paid thirty days after the EDCAs become fully vested. In all
other respects the provisions of the SSUP will apply except for the provision in
Section H paragraph 5 regarding the payment of the deferred compensation amount
when a participant's normal retirement date is reached. [The attached Schedule
"A" lists the EDCA, their value, the number of EDC Units and their effective
date.
D. Company believes Participant has made significant contributions to
the success of its business, and it is in the best interests of the Company to
insure the continued attention, dedication, and active participation of the
Participant in the Company by granting to Participant Extraordinary Deferred
Compensation Awards (hereinafter "EDCA") under certain conditions.
E. The amount of the EDCA will be translated into a hypothetical number
of Special Stock Units called EDCA Units which will appreciate in value as
though the EDCA Units were Special Stock Units.
F. The method of calculating the appreciation in the value of the EDCA
Units will be
<PAGE>
identical to the method used in the Plan for determining the value of Special
Stock Units.
G. The deferred compensation resulting from the appreciation of the
EDCA will be paid upon the earlier of: (a) when the EDCA becomes fully vested in
five (5) years from the effective date of the EDCA, or (b) one (1) year after
the 1997 Consulting Agreement terminates. If subparagraph (b) applies, the
appreciation in value of the EDCA will be calculated only until the date the
1997 Consulting Agreement terminates, thereafter only interest as calculated by
the SSUP will be added to the deferred compensation amount until it is paid.
NOW, THEREFORE, in consideration of the promises and mutual agreements
contained herein, the parties hereby agree as follows:
1. Participant agrees to serve the Company and provide his specialized
knowledge and unusual abilities with respect to the business and affairs of the
Company.
2. The Company hereby grants to Participant EDCAs as follows.
Base
Date of No. Of Period Amount of
Award Units Value Award
2/28/95 6,059 $91.10 $551,900
12/16/95 600 $93.20 $ 55,900
All other terms and conditions of the Special Stock Unit Plan, as
amended January 31, 1997, will remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the 1st day of May, 1997.
_______________________ By:__________________________
Witness Melvin Kopp
Block Drug Company, Inc.
_______________________ By:___________________________
Witness James Block
Chairman of the Board
<PAGE>
Exhibit 10(p)
EXTRAORDINARY DEFERRED COMPENSATION AGREEMENT #2
This Extraordinary Deferred Compensation Agreement ("the 2000 EDCA") is made and
entered into this 24th day of May, 2000 ("the Effective Date"), by and between
Block Drug Company, Inc. (hereinafter referred to as the "Company") having its
principal place of business at 257 Cornelison Avenue, Jersey City, New Jersey
07302-9988, and Melvin Kopp ("MK") having an address at 17 Weber Road, West
Orange, NJ 07052.
STATEMENTS OF FACT
A. On May 1, 1997 the Company and MK entered into that certain
consulting agreement between MK and Company ("the 1997 Consulting Agreement")
whereby, as part of MK's remuneration as a consultant, the Company agreed to
grant to MK Extraordinary Deferred Compensation ("EDC") in a manner which
mirrored the Company's Special Stock Unit Plan ("SSUP").
B. Also on May 1, 1997, the Company and MK entered into an Extraordinary
Deferred Compensation Agreement, as amended whereby Extraordinary Deferred
Compensation
Awards("EDCAs") were awarded to MK as follows:
Base Amount
Date of Award # of Units Present Value of Award*
------------- ---------- ------------- --------
2/28/95 6,059 91.10 $551,975
12/16/95 600 93.2 $55,920
9/14/98 1,967 105.28 $207,086
*Due to rounding these amounts were originally written as $551,900, $55,900 and
$207,000, respectively.
C. On April 1, 1999 the SSUP was amended to allow award recipients to make an
election to receive replacement awards in the same dollar amount as the original
amount of the award in either the form of replacement Special Stock Unit Awards
under the SSUP or in the form of replacement Stock Option Awards under the
Company's Stock Option Plan dated May 27, 1998, and any amendments thereto,
("the SOP").
D. In accordance with the EDCA, the 2/25/95 award to MK became fully
vested as of 3/31/00 and a payment will be made to MK on 6/01/00 in the amount
of $193,658.60, plus interest and less applicable deductions. Mirroring the
SSUP, Mk has elected to receive a replacement award for the 2/25/95 award and
all other EDCAs in a form which mirrors a replacement Option under the
<PAGE>
SOP, and the Company has agreed to provide MK replacement awards for the vested
and paid EDCAs in the form of Extraordinary Deferred Compensation Stock
Appreciation Rights ("the SARs") which shall mirror replacement Options granted
under the SOP.
E. Except as provided herein, as used in this 2000 EDCA the capitalized
terms shall be the same as those set forth in Section B of the SOP.
F. MK, who is not a participant in the SOP, and whose normal retirement
date was February 28, 1995, will receive SARs in accordance with the procedures
used to issue replacement Options to participants in the SSUP who are to receive
replacement Options instead of replacement Special Stock Unit awards. The
deferred compensation amount from the SARs shall be equal to the spread between
the issue price of the SARs and the exercise price when the SARs are vested and
Participant notifies the Company in writing of his decision to exercise his
SARs.
G. The amount of the additional EDC contemplated under this Agreement will be
translated into a hypothetical number of Options called SARs which will vest in
accordance with the terms of the SOP as though the SARs were Options. Each SAR
will be not less than one hundred percent (100%) of the Fair Market Value of the
Company's Class A Common Stock as of the date such SARs are issued as determined
in accordance with the SOP.
H. The SARs will vest in accordance with Section F of the SOP. The SARs will be
exercised once MK notifies the Company in writing of his desire to cash in his
SARs. Upon receipt of such notice the Company will, within thirty (30) days
after receipt, pay to MK in cash an amount equal to the spread between the price
at which the SARs were issued and the Fair Market Value on the day MK notifies
the Company of his intent to exercise such SARs (the "Spread"), less any
applicable tax withholdings.
I. The EDC for the SARs shall equal the Spread and will be paid in accordance
with paragraph H. above.
NOW, THEREFORE, in consideration of the promises and mutual agreements
contained herein, the parties hereby agree as follows:
1. MK agrees to continue to serve the Company and provide his
specialized knowledge and unusual abilities with respect to the business and
affairs of the Company.
2. As MK has irrevocably elected to receive all future replacement
awards stemming from the February 28, 1995 EDCA and all other EDCAs in the form
of SARs, the Company hereby agrees to grant to MK such SARs, as a matter of
separate inducement and not in lieu of any salary or other compensation for MK's
services. Upon the exercise or expiration of SARs granted hereunder, MK will
receive a new replacement SAR based on the original dollar value of the
applicable EDCA. All SARs to be granted to MK will be listed with their value,
number of SAR shares, exercise price and effective date as an Exhibit to this
2000 EDCA.
3. As a replacement award for the February 28, 1995 EDCA, the Company
shall grant to MK SARs based on a value of $551,975 as of June 1, 2000, in
accordance with the terms and conditions set forth in the Plan.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of this 24th day of May, 2000.
_______________________ By:__________________________
Witness Melvin Kopp
Block Drug Company, Inc.
_______________________ By:___________________________
Witness James Block
Chairman of the Board
<PAGE>
EXHIBIT TO THE
EXTRAORDINARY DEFERRED COMPENSATION AGREEMENT #2
DATED THE 24TH DAY OF MAY, 2000 ("the 2000 EDCA")
Effective Date # SAR Shares Exercise Price Original Value
June 1, 2000 19,891 $27.75 $551,975
The above SARs are hereby granted to Melvin Kopp in accordance with and subject
to the terms and conditions of the 2000 EDCA.
Block Drug Company, Inc.
_________________________ By : _______________________________
Witness James Block
Chairman of the Board
Dated : June 1, 2000
<PAGE>
Exhibit 99
AUDIT COMMITTEE CHARTER
PURPOSE
The primary purpose of the Audit Committee (the "Committee") is to
assist the Board of Directors (the "Board") in fulfilling its responsibility to
oversee management's conduct of the Company's financial reporting process.
In discharging its oversight role, the Committee is empowered to
investigate any matter brought to its attention with full access to all books,
records, facilities and personnel of the Company and the power to retain outside
counsel, auditors or other experts for this purpose. The Board and the Committee
are in place to represent the Company's shareholders; accordingly, the outside
auditor is ultimately accountable to the Board and the Committee.
The Committee shall review the adequacy of this Charter on an annual
basis.
MEMBERSHIP
The Committee shall be comprised of not less than three
members of the Board, and the Committee's composition will meet the
requirements of the Audit Committee Policy of the National Association
of Securities Dealers.
Accordingly, all of the members will be directors:
1. Who have no relationship to the Company that may interfere
with the exercise of their independence from management and
the Company; and
2. Who are financially literate or who become financially
literate within a reasonable period of time after appointment
to the Committee. In addition, at least one member of the
Committee will have accounting or related financial management
expertise.
KEY RESPONSIBILITIES
The Committee's job is one of oversight and it recognizes that
the Company's management is responsible for preparing the Company's
financial statements and that the outside auditors are responsible for
auditing those financial statements. Additionally, the Committee
recognizes that financial management, including the internal audit
staff, as well as the outside auditors, have more time, knowledge and
more detailed information on the Company than do Committee members;
consequently, in carrying out its oversight responsibilities, the
Committee is not providing any expert or special assurance as to the
Company's financial statements or any professional certification as to
the outside auditors'
<PAGE>
work.
The following functions shall be the common recurring activities of the
Committee in carrying out its oversight function. These functions are set forth
as a guide with the understanding that the Committee may diverge from this guide
as appropriate given the circumstances.
C The Committee shall review with management and the outside auditors
the audited financial statements to be included in the Company's Annual
Report on Form 10-K (or the Annual Report to Shareholders if
distributed prior to the filing of Form 10-K) and review and consider
with the outside auditors the matters required to be discussed by
Statement of Auditing Standards ("SAS") No. 61 concerning the outside
auditors' judgment about the quality, not just the acceptability, of
the Company's accounting principles.
C The Committee shall, as a whole or through the Committee Chair,
review with the outside auditors the Company's interim financial
results to be included in the Company's quarterly reports to be filed
with Securities and Exchange Commission and the matters required to be
discussed by SAS No. 61; this review will occur prior to the Company's
filing of the Form 10-Q.
C The Committee shall discuss with management and the outside auditors
the quality and adequacy of the Company's internal controls.
C The Committee shall:
C request from the outside auditors annually, a formal written
statement delineating all relationships between the auditor
and the Company consistent with Independence Standards Board
Standard Number 1;
C discuss with the outside auditors any such disclosed
relationships and their impact on the outside auditors'
independence; and
C recommend that the Board take appropriate action to oversee
the independence of the outside auditors.
C The Committee, subject to any action that may be taken by the full
Board, shall have the ultimate authority and responsibility to select
(or nominate for shareholder approval), evaluate and, where
appropriate, replace the outside auditors.
<PAGE>
