<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------------------
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-8714
TAMBRANDS INC.
-----------------
(Exact name of registrant as specified in its charter)
Delaware 13-1366500
-------- ----------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
777 Westchester Avenue, White Plains, New York 10604
- - ---------------------------------------------- -----
(Address of principal executive offices) (Zip code)
Registrant's telephone number,
including area code (914) 696-6000
--------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X . No _____.
-----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Common Stock, par value $.25 per share: 36,623,772 shares
as of July 29, 1994
Index to Exhibits is set forth at page 10.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
TAMBRANDS INC. AND SUBSIDIARIES
Consolidated Statements of Earnings and Retained Earnings
Three and Six Months Ended June 30, 1994 and 1993
(in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30 Six Months Ended June 30
--------------------------- ---------------------------
1994 1993 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales $165,624 $149,041 $304,797 $303,389
Cost of products sold 52,590 48,096 96,511 97,314
-------- -------- -------- --------
Gross profit 113,034 100,945 208,286 206,075
Selling, administrative and general expenses:
Marketing, selling and distribution 65,251 56,434 109,573 96,811
Administrative and general 13,557 17,091 27,572 31,402
Restructuring and other charges - 30,042 - 30,042
-------- -------- -------- --------
78,808 103,567 137,145 158,255
-------- -------- -------- --------
Operating income (loss) 34,226 (2,622) 71,141 47,820
Interest, net and other (2,468) (618) (4,392) 38
-------- -------- -------- --------
Earnings (loss) before provision for
income taxes and cumulative
effect of accounting change 31,758 (3,240) 66,749 47,858
Provision for income taxes 11,751 147 24,698 19,054
-------- -------- -------- --------
Earnings (loss) before cumulative
effect of accounting change 20,007 (3,387) 42,051 28,804
Cumulative effect of accounting change - - - (10,252)
-------- -------- -------- --------
Net earnings (loss) 20,007 (3,387) 42,051 18,552
Retained earnings at beginning of period 437,112 440,264 430,822 433,851
-------- -------- -------- --------
457,119 436,877 472,873 452,403
-------- -------- -------- --------
Dividends 15,375 14,531 31,184 29,424
Net issuance of treasury stock 352 953 297 1,586
-------- -------- -------- --------
15,727 15,484 31,481 31,010
-------- -------- -------- --------
Retained earnings at end of period $441,392 $421,393 $441,392 $421,393
======== ======== ======== ========
Per share:
Earnings (loss) before cumulative
effect of accounting change $0.54 ($0.09) $1.13 $0.74
Cumulative effect of accounting change - - - (0.26)
-------- -------- -------- --------
Net earnings (loss) $0.54 ($0.09) $1.13 $0.48
======== ======== ======== ========
Dividends per share $0.42 $0.38 $0.84 $0.76
======== ======== ======== ========
Average number of shares outstanding 36,781 38,534 37,284 38,810
</TABLE>
See accompanying notes to consolidated financial statements on page 5.
-2-
<PAGE>
TAMBRANDS INC. AND SUBSIDIARIES
Consolidated Balance Sheets
June 30, 1994 and December 31, 1993
(in thousands)
<TABLE>
<CAPTION>
1994
ASSETS (Unaudited) 1993
- - ------ ----------- ---------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $15,208 $15,298
Marketable securities - 639
Accounts receivable, less allowance
for doubtful accounts of $1,500
in 1994 and $1,453 in 1993 92,573 75,592
Inventories:
Raw materials 9,728 10,140
Finished goods 31,468 27,860
---------- ---------
41,196 38,000
Deferred taxes on income 20,427 20,427
Prepaid expenses and other current assets 22,055 23,806
---------- ---------
Total Current Assets 191,459 173,762
Property, Plant and Equipment 294,060 275,349
Less accumulated depreciation (103,299) (94,953)
---------- ---------
190,761 180,396
Brands, Trademarks, Patents and
Other Intangibles, Net 7,571 8,240
---------- ---------
Total Assets $389,791 $362,398
========== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
- - ------------------------------------
Current Liabilities:
Short-term borrowings $94,850 $64,368
Accounts payable 27,519 25,793
Accrued expenses 91,011 81,083
Taxes on income 22,213 15,137
---------- ---------
Total Current Liabilities 235,593 186,381
Medium-Term Notes Payable 59,979 30,000
Deferred Taxes on Income 17,494 17,119
Other Liabilities 13,868 13,873
---------- ---------
Total Liabilities 326,934 247,373
Shareholders' Equity:
Common Stock 10,887 10,887
Retained earnings 441,392 430,822
Cumulative foreign currency translation adjustment (15,628) (20,659)
Treasury stock (371,419) (303,948)
Unamortized value of restricted stock and pension costs (2,375) (2,077)
---------- ---------
Total Shareholders' Equity 62,857 115,025
---------- ---------
Total Liabilities and Shareholders' Equity $389,791 $362,398
========== =========
</TABLE>
See accompanying notes to consolidated financial statements on page 5.
-3-
<PAGE>
TAMBRANDS INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Six Months Ended June 30, 1994 and 1993
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
Cash Flows from Operating Activities:
Net earnings $42,051 $18,552
Adjustments to reconcile Net earnings to Net
Cash Provided by Operating Activities:
Depreciation and amortization 11,424 9,185
Deferred income taxes 65 (57)
Cumulative effect of accounting change - 10,252
Restructuring and other (6,301) 26,201
Change in:
Accounts receivable (14,656) (2,311)
Inventories (2,007) (6,205)
Prepaid expenses and other current assets 2,487 (550)
Taxes on income 6,874 (10,329)
Accounts payable and accrued expenses 14,144 1,274
-------- --------
Net Cash Provided by Operating Activities 54,081 46,012
-------- --------
Cash Flows from Investing Activities:
Capital expenditures (18,866) (25,212)
Proceeds from sales of property, plant
and equipment 1,750 1,163
Proceeds from sales of marketable securities 639 334
-------- --------
Net Cash Used in Investing Activities (16,477) (23,715)
-------- --------
Cash Flows from Financing Activities:
Payment of dividends (31,184) (29,424)
Purchase of shares for treasury (68,458) (48,719)
Short-term debt changes 30,482 35,917
Issuance of Medium-Term Notes 29,979 -
Proceeds from exercise of stock options and other 961 4,371
-------- --------
Net Cash Used in Financing Activities (38,220) (37,855)
-------- --------
Effect of Exchange Rate Changes on Cash 526 615
-------- --------
Net Decrease in Cash and Cash Equivalents (90) (14,943)
Cash and Cash Equivalents at Beginning
of Period 15,298 21,987
-------- --------
Cash and Cash Equivalents at End of Period $15,208 $7,044
======== ========
</TABLE>
See accompanying notes to consolidated financial statements on page 5.
-4-
<PAGE>
Notes to Consolidated Financial Statements
- - ------------------------------------------
1. The financial statements reflect all adjustments that, in the opinion of
management, are necessary for a fair presentation of the information
contained therein, and are subject to audit and adjustment at the end of
the fiscal year, with the exception of the Consolidated Balance Sheet at
December 31, 1993, which has been derived from the audited financial
statements at that date.
2. The 1993 Statements of Earnings and Retained Earnings and Statement of Cash
Flows have been restated to reflect the cumulative effect of the adoption
of Statement of Financial Accounting Standards (SFAS) No. 112, "Employers'
Accounting for Postemployment Benefits," effective January 1, 1993.
Item 2. Management's Discussion and Analysis of Financial Condition and
- - ------- ---------------------------------------------------------------
Results of Operations
---------------------
Results of Operations
- - ---------------------
Second-quarter Net sales increased 11.1% compared with the same period of the
prior year. The increase was primarily due to higher unit sales in the United
States driven by the stabilization of retail trade inventories after significant
reductions in recent quarters, particularly in the second quarter of 1993. For
the six months ended June 30, Net sales were up .5% from the first six months of
the prior year. Sales volume increases in the United States, Russia, Ukraine and
China were somewhat offset by shipment declines in Europe, principally due to
the continuing competitive environment. Additionally, sales volume gains were
mitigated somewhat by foreign exchange translations.
Gross profit as a percent of Net sales was 68.2% and 68.3% for the second
quarter and six months of 1994 versus 67.7% and 67.9% for the corresponding
periods of 1993. Current-year results reflect increased volume, the Company's
continued support of its worldwide manufacturing efficiency programs and capital
expenditures for productivity improvements.
Marketing, selling and distribution expenses were up 15.6% and 13.2% for the
second quarter and six months of 1994, respectively, compared with the prior
year. The higher spending was the result of increased advertising and
promotions principally in the United States in support of the TAMPAX tampon
franchise. For the second quarter and first six months of 1994, the tampon
category in the United States grew, supported by the Company's advertising
campaign. However, the Company's market share continued to be below both the
six-month and second-quarter periods of last year due primarily to heavy
promotional activity of competitors.
-5-
<PAGE>
Exclusive of 1993 Restructuring and other charges, Operating income for the
second quarter increased from 1993 by 24.8%, but for the six months ended June
30 decreased from 1993 by 8.6%. The second-quarter increase in Operating income
was principally attributable to higher sales combined with the effect of
overhead reduction programs, partially offset by the increased brand support
discussed above. Operating income for the six-month period was below the
comparable period of the prior year due primarily to higher marketing expenses
as the Company continues to invest in the core tampon business.
Interest, net and other reflected a significant increase in expense for the
second quarter and six months over the same periods of the prior year. Foreign
exchange transactions resulted in costs in the current year versus gains in
1993. Additionally, interest expense was higher as a result of an increase in
the Company's debt level and higher average interest rates.
The six months' effective tax rate was 37% compared with 39.8% for the same
period in 1993. The higher effective tax rate in 1993 was due to the
Restructuring and other charges, the cost of which was not fully deductible for
tax purposes.
Earnings per share for the six months ended June 30, 1994 were $1.13 in
comparison to $.74 in the same period of last year, giving effect to the
Restructuring and other charges but before the cumulative effect of the adoption
of SFAS No. 112. Including the cumulative effect of the accounting change,
second-quarter 1993 Earnings per share were $.48. The increase in Earnings per
share was greater than that of Net earnings because fewer shares were
outstanding on average due to the Company's share repurchase program.
Outlook
- - -------
The Company believes that the trend by retailers and distributors to reduce
inventories and the related adverse impact on shipments will continue in future
periods. However, the rate of inventory reduction in future periods is expected
to be less than the rate of reduction previously experienced and therefore
shipments are expected to more closely match retail sales. Management expects
that highly competitive conditions will continue, including higher levels of
promotional activities and new product introductions by competitors and
continued activity in the private label tampon sector. The Company intends to
continue the increased advertising and promotional activities in the United
States and Europe to provide support for the TAMPAX tampon franchise. In 1994,
such expenditures will substantially exceed 1993 spending levels. In addition,
new product introductions are planned by the Company for the second half of 1994
in both the United States and Europe.
-6-
<PAGE>
Financial Condition
- - -------------------
At June 30, 1994, there was a working capital deficit of $44.1 million compared
with a deficit of $12.6 million at December 31, 1993. The net reduction in
working capital primarily reflects increased short-term borrowings utilized for
the Company's share repurchase program. Additionally, higher accounts
receivable balances on strong sales in the current period were partially offset
by increased brand support accruals, driven by heavy advertising and promotional
activity.
Cash flows from operating activities for the six months of 1994 were $54.1
million versus $46.0 million in the prior year, reflecting an improvement in
operating working capital management. Capital expenditures of $18.9 million
relate primarily to the Company's continued investment in equipment to improve
productivity and reduce costs.
The Company anticipates that its future cash requirements will continue to be
met by its cash flows from operations and the ability to borrow from a variety
of sources.
At June 30, 1994, total Shareholders' equity was $62.9 million compared with
$115.0 million at December 31, 1993. The net increase in Retained earnings of
$10.6 million was offset by $69.4 million related to the acquisition of Common
Stock under the share repurchase program.
-7-
<PAGE>
PART II - OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings
- - ------- -----------------
The Company or a subsidiary is a defendant in a small number of pending product
liability lawsuits based on allegations that toxic shock syndrome ("TSS") was
contracted through the use of tampons. One TSS lawsuit, served on the Company in
July 1994, purports to be a class action on behalf of all women who have
contracted TSS through the use of tampons. The Company does not believe that
class certification is warranted, and intends to vigorously contest any motion
for class certification filed by the plaintiffs, as well as the allegations
contained in the plaintiffs' complaint. A small number of pre-suit claims
involving similar TSS allegations have also been asserted. The damages alleged
vary from case to case and often include claims for punitive damages.
The Company and certain of its present and former officers have been named as
defendants in certain shareholder lawsuits that have been filed in the United
States District Court for the Southern District of New York and that have been
consolidated under the caption In Re Tambrands Inc. Securities Litigation. The
------------------------------------------
consolidated lawsuit purports to be a federal securities fraud class action on
behalf of all purchasers of the Company's common stock during the period
December 14, 1992 through June 2, 1993. The complaint alleges that the
Company's disclosures during the alleged class period contained material
misstatements and omissions concerning its anticipated future earnings. The
complaint seeks an unspecified amount of damages on behalf of the purported
class.
The Company is a nominal defendant in three purported shareholder derivative
lawsuits that have been filed in the Supreme Court of the State of New York for
Westchester County and that have been consolidated into a single action. Named
collectively in the consolidated complaint as individual defendants are the
Company's directors (and certain of its former directors) and two of its former
officers. The complaint alleges that the officer-defendants exposed the Company
to liability in the purported shareholder class action described in the
preceding paragraph and misappropriated corporate opportunities by trading in
the Company's stock on the basis of nonpublic information. One of the former
officers is also alleged to have received improper reimbursements from the
Company for alleged personal expenses. The director-defendants are alleged to
have acquiesced in the aforesaid alleged violations. The complaint seeks to
recover on behalf of the Company an unspecified amount of damages from the
individual defendants. No relief is sought against the Company.
The Company is involved in certain other legal proceedings incidental to the
normal conduct of its business.
-8-
<PAGE>
While it is not feasible to predict the outcome of these legal proceedings and
claims with certainty, management is of the belief that any ultimate liabilities
for damages either are covered by insurance, are provided for in the Company's
financial statements or, to the extent not so covered or provided for, should
not individually or in the aggregate have a material adverse effect on the
Company's financial position.
Item 4. Submission of Matters to a Vote of Security Holders
- - ------- ---------------------------------------------------
At the Annual Meeting of Shareholders held on April 26, 1994, the shareholders
of the Company elected 11 directors for a one-year term and approved an
amendment to the Company's 1992 Directors Stock Incentive Plan to reflect the
postponement by the Securities and Exchange Commission of the effective date of
certain amendments to Rule 16(b)-3 under the Securities Exchange Act of 1934.
The number of votes cast at such meeting with respect to each of these matters
is as follows:
<TABLE>
<CAPTION>
Votes Votes Votes Broker
Matter For Against Withheld Abstentions Non-Votes
- - --------------------- ----------- ---------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Election of
Directors
- - ---------------------
Lilyan H. Affinito 30,446,982 307,920
Charles J. Chapman 30,435,831 319,071
Paul S. Doherty 30,455,335 299,567
Floyd Hall 30,452,116 302,786
Robert P. Kiley 30,454,762 300,150
John Loudon 30,427,342 327,560
Ruth M. Manton 30,446,755 308,147
John A. Meyers 30,452,999 301,903
H. L. Tower 30,456,565 298,337
Howard B. Wentz, Jr. 30,458,135 296,767
Robert M. Williams 30,451,105 303,797
Amendment to 1992
Directors Stock
Incentive Plan 28,509,071 2,043,321 202,510
- - ------------------
</TABLE>
Further information regarding these matters is set forth in the Company's proxy
statement, dated March 11, 1994, and is incorporated herein by reference.
Items 2, 3 and 5 of Part II have been omitted since either the Company's
response to the Item would be negative or the Item is inapplicable.
-9-
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
- - ------ --------------------------------
a) Exhibits
--------
Exhibit
Number Description
------- -----------
4(1) Description of the rights of
security holders set forth in the
Certificate of Incorporation of the
Company, as amended through April
28, 1987, filed April 30, 1987 as
Exhibit 4(a) to the Company's Form
S-8 Registration Statement (Reg.
No. 33-13902), incorporated herein
by reference.
4(2) Description of the rights of
security holders set forth in the
Certificate of Amendment of
Certificate of Incorporation of the
Company, dated April 28, 1992,
filed May 15, 1992 as Exhibit 4(2)
to the Company's Form 10-Q Report
for the quarter ended March 31,
1992, incorporated herein by
reference.
4(3) Rights Agreement between the
Company and First Chicago Trust
Company of New York, as Rights
Agent, dated as of October 24,
1989, which includes the Form of
Right Certificate as Exhibit A and
the Summary of Rights to Purchase
Common Shares as Exhibit B, filed
October 27, 1989 as Exhibit 1 to
the Company's Form 8-A Registration
Statement, incorporated herein by
reference.
4(4)(a) Indenture dated as of December 1,
1993 between the Company and
Citibank, N.A., as trustee,
relating to the Company's Medium-
Term Note Program, filed March 31,
1994 as Exhibit 4(4)(a) to the
Company's Form 10-K Report for the
year ended December 31, 1993,
incorporated herein by reference.
-10-
<PAGE>
4(4)(b) Form of Floating Rate Debt
Security, filed December 16, 1993
as Exhibit 4-a to the Company's
Report on Form 8-K, incorporated
herein by reference.
4(4)(c) Form of Fixed Rate Debt Security,
filed December 16, 1993 as Exhibit
4-b to the Company's Report on Form
8-K, incorporated herein by
reference.
10(1) Letter Agreement between the
Company and Mr. Edward T. Fogarty,
dated as of April 25, 1994, filed
herewith.
10(2) Employment Protection Agreement
between the Company and Mr. Edward
T. Fogarty, dated as of May 31,
1994, filed herewith.
10(3) Restricted Stock Agreement between
the Company and Mr. Edward T.
Fogarty, dated May 31, 1994, filed
herewith.
10(4) Stock Option Agreement between the
Company and Mr. Edward T. Fogarty,
dated May 31, 1994, filed herewith.
10(5) Resolution of the Board of
Directors of the Company with
respect to the compensation of the
Chairman of the Board, adopted on
June 28, 1994, filed herewith.
10(6) Supplemental Executive Retirement
Plan, effective July 1, 1986, as
amended and restated effective July
1, 1994, filed herewith.
10(7) Fourth Amendment to the Tambrands
Inc. 1992 Directors Stock Incentive
Plan, effective as of April 28,
1994, filed herewith.
12 Computation of Ratio of Earnings to
Fixed Charges, filed herewith.
Exhibits 2, 11, 15, 18, 19, 22, 23, 24 and 99 have been omitted as inapplicable.
Exhibit 27 is not currently required to be filed.
-11-
<PAGE>
b) Reports on Form 8-K
-------------------
The Company filed a Report under Item 5 of Form 8-K on April 27, 1994 in order
to file two press releases, issued by the Company on April 26, 1994, one of
which contained the Company's first-quarter 1994 results, and one of which
announced the appointment of Mr. Edward T. Fogarty as President and Chief
Executive Officer of the Company, effective May 31, 1994.
-12-
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
TAMBRANDS INC.
---------------------------
(Registrant)
/s/ Raymond F. Wright
---------------------------
Raymond F. Wright
Senior Vice President -
Chief Financial Officer
and Authorized Signatory
Date: August 10, 1994
---------------
10Q2ND.94
-13-
<PAGE>
EXHIBIT 10.1
April 25, 1994
Mr. Edward T. Fogarty
15 Canoe Trail
Darien, Connecticut 06820
Dear Mr. Fogarty:
We are pleased to confirm the terms of your proposed employment with
Tambrands Inc. (the "Company").
1. Duties. You will become an employee of the Company on May 31, 1994
------
(the "Commencement Date"). Effective as of the Commencement Date, you will be
the Chief Executive Officer and President of the Company and a member of the
Board of Directors. You will devote all of your skill, knowledge and full
working time (reasonable vacation time and absence for sickness or disability
excepted) solely and exclusively to the conscientious performance of your duties
hereunder.
2. Base Salary. As compensation for the duties to be performed by you
-----------
under the terms of this letter agreement, the Company will pay you a base salary
in the amount of $525,000 per annum, payable in semi-monthly installments at the
same time as the Company pays salary to its other executive employees and
subject to all applicable deductions or reductions therein made pursuant to your
elections under the Company's compensation plans or programs. It is
contemplated that the Company will review your base salary from time to time
and, at the discretion of the Board of Directors, may increase your base salary
based upon your performance, then generally prevailing industry salary scales
and other relevant factors, including, without limitation, the Company's general
compensation practices for its executive officers. (Such annual base salary, as
it may hereafter be increased, will be referred to as your "Base Salary").
<PAGE>
3. Incentive Bonus. While you are providing services pursuant to this
---------------
letter, you will be entitled to participate in the Company's Annual Incentive
Plan (the "AIP") as in effect from time to time. Your annual bonus opportunity
under the AIP at the target level of performance will be equal to 60% of your
Base Salary. Under the terms of the AIP, you may receive more or less than 60%
of your Base Salary if performance exceeds or falls short of target levels. Any
bonus payable to you under the AIP will be paid to you at the same time as
bonuses are paid to other executives under the AIP and subject to the terms and
conditions of the AIP. Notwithstanding the foregoing, in no event shall the
amount payable to you as an annual bonus in respect of 1994 services be less
than 60% of the base salary payable to you for 1994 services.
4. Stock Options. Effective as of the Commencement Date, you will be
-------------
granted a stock option having a ten-year term for 125,000 shares of the
Company's common stock (the "Option") under the terms of the Company's 1991
Stock Option Plan (the "1991 Plan"). The Option will be exercisable in three
approximately equal annual installments on each of the first three anniversaries
of the Commencement Date, but will become exercisable earlier upon the date, if
any, on which a Change of Control (as defined in the 1991 Plan) occurs or on
which your employment terminates due to your (i) death, (ii) Disability (as
- --
defined in the 1991 Plan), (iii) retirement prior to age 65 with the consent of
---
the committee responsible for administering the 1991 Plan or (iv) retirement at
--
age 65. The per share exercise price for the shares subject to the Option will
be determined in accordance with the following schedule:
Number of Shares Exercise Price
- - ---------------- --------------
60,000 Fair market value of a share on the Commencement Date
as determined under the 1991 Plan (hereafter referred
to as the "Fair Market Value").
21,666 The greater of (i) Fair Market Value plus $5.00 or (ii)
- --
$45.00.
21,667 The greater of (i) Fair Market Value plus $10.00 or
-
(ii) $50.00.
--
2
<PAGE>
21,667 The greater of (i) Fair Market Value plus $15.00 or
-
(ii) $55.00.
--
All other terms of the Option will be as provided in the 1991 Plan and the
agreement relating to such grant.
You shall be eligible to receive future awards under the 1991 Plan (or
any successor thereto) at a level commensurate with your position and in
accordance with the Company's compensation practices and policies generally
applicable to the Company's executive officers as in effect from time to time,
provided that you will not receive any additional stock option grants in 1994
- - -------- ----
(except to the extent that you choose to participate in the Company's Exchange
Option Program, if made available to executives generally during 1994). At
current Company stock prices and under the
Company's current executive compensation practices, the level of option award
for the Chief Executive Officer position is approximately 42,000 shares per
year.
5. Restricted Stock. Effective as of the Commencement Date, you will
----------------
be granted 13,500 restricted shares of the Company's common stock (the "Award")
which will vest if you are continuously employed by the Company from the
Commencement Date until the date set forth in the following schedule:
Number of Shares Vesting Date
- - ---------------- ------------
4,500 Third anniversary of the Commencement Date
4,500 Fourth anniversary of the Commencement Date
4,500 Fifth anniversary of the Commencement Date
Notwithstanding the foregoing, the shares subject to the Award will become fully
vested on the date, if any, on which a Change of Control (as defined in the 1989
Restricted Stock Plan (the "1989 Plan")) occurs or on which your employment
terminates due to your (i) death, (ii) Disability (as defined in the 1989 Plan),
- --
(iii) retirement prior to age 65 with the consent of the committee responsible
---
for administering the 1989 Plan or (iv) retirement at age 65. You may vote
--
these shares and will be entitled to receive any dividends payable thereon. If
your employment with the
3
<PAGE>
Company terminates prior to the time at which all of the shares subject to the
Award become vested, all unvested shares will be forfeited on the date of such
termination. All other terms and conditions of this Award will be as provided
in the 1989 Plan and the agreement relating to the Award.
6. Change of Control Agreement. As of the Commencement Date, you and
---------------------------
the Company will enter into an "Employment Protection Agreement" substantially
in the form attached hereto as Exhibit A.
7. Employee Benefits. While you are providing services pursuant to
-----------------
this letter agreement, you will be eligible to participate in the employee
benefit plans and programs generally available to the Company's employees
(including, but not limited to, coverage under the Company's medical, dental,
life and disability insurance plans and participation in the Company's Pension
Plan and Savings Plan) as in effect from time to time on the same basis as the
Company's other employees, subject to the terms and provisions of such plans and
programs. You will receive four weeks paid vacation per annum.
You will not be designated as an Executive Participant or a
Designated Participant for purposes of the Company's Supplemental Executive
Retirement Plan (the "SERP"). You will be eligible to participate in the SERP
to the extent that the benefits that you may accrue, or the compensation that
may be taken into account in calculating the benefits that you may accrue, under
the Company's Pension Plan are affected by any limitation required for the
Pension Plan to satisfy the applicable requirements of the Internal Revenue
Code. Under the SERP, in the event that your employment with the Company is
"Involuntarily Terminated" within two years following the occurrence of a
"Change of Control" (as each such term is defined in the SERP), your benefits
accrued thereunder shall be calculated as though you had two additional years of
service and you shall be deemed to be fully vested in such benefits.
8. Executive Perquisites. You will be eligible to receive the
---------------------
perquisites and other personal benefits made available to the Company's senior
executives from time to time, including, without limitation, payment of or
reimbursement for up to $10,000 per annum for personal tax and financial
planning.
4
<PAGE>
9. Expenses. The Company will reimburse you for all reasonable
--------
expenses incurred by you in connection with your performance of services under
this letter agreement in accordance with the Company's policies, practices and
procedures.
10. Termination of Employment. If the Company terminates your
-------------------------
employment prior to age 65 for any reason other than Cause or Disability or you
terminate your employment as a result of a Termination for Good Reason:
(i) the Company will pay you severance benefits in an aggregate amount
-
equal to three (3) times your then current Base Salary in two lump sum
payments over two calendar years, unless you specifically request and the
Company agrees to accelerate the payment of all or any portion of the
second payment into the preceding calendar year; and
(ii) if you are not otherwise vested in the retirement benefits
--
accrued on your behalf under the Company's Pension Plan and SERP through
the date of your termination of employment (your "Accrued Benefit"), the
Company shall provide you with a retirement benefit equal to your Accrued
Benefit, payable at the same time and subject to the same terms and
conditions as would apply under the Pension Plan to a participant whose
employment terminates after having attained five years of service, but
before qualifying for early retirement.
In the event your employment terminates (i) due to your death or
-
Disability or after age 65, (ii) is terminated by the Company for Cause or (iii)
-- ---
is terminated by you other than as a result of a Termination for Good Reason,
you will be entitled to receive the compensation and benefits payable to you
under the Company's otherwise applicable employee benefit plans or programs.
Any benefits payable to you pursuant to this paragraph 10 will be in
full satisfaction of all liabilities to you under this agreement and with
respect to any other claim you may have in conjunction with your termination of
employment (excluding any vested benefits you may have under the terms of the
Company's SERP, Pension Plan or Savings Plan, but including, without limitation,
any claim for benefits under the Company's Executive Severance Program). These
benefits will not be subject to any offset, mitigation
5
<PAGE>
or other reduction as a result of your receiving salary or other benefits by
reason of your securing other employment.
For purposes of this paragraph 10, the following terms will have the
meanings set forth below:
"Cause" means (i) your willful failure to perform substantially your
-
duties as an officer and employee of the Company (other than due to
physical or mental illness), (ii) your engaging in serious misconduct that
--
is injurious to the Company, (iii) your having been convicted of, or
---
entered a plea of nolo contendere to, a crime that constitutes a felony, or
---- ----------
(iv) your unauthorized disclosure of confidential information (other than
--
to the extent required by an order of a court having competent jurisdiction
or under subpoena from an appropriate government agency) that has resulted
or is likely to result in material economic damage to the Company.
"Disability" means that, as a result of your incapacity due to
physical or mental illness, you have been absent from your duties to the
Company on a substantially full-time basis for 180 days in any twelve-month
period.
"Termination for Good Reason" means a voluntary termination of your
employment which occurs within 90 days following the occurrence of any of
the following events without your prior written consent: (i) any assignment
-
to you of any duties which are significantly different from, and result in
a diminution of, the duties you are to perform as Chief Executive Officer
of the Company pursuant to this letter agreement, (ii) your removal or any
--
failure to reelect or redesignate you to the position of Chief Executive
Officer of the Company, except in connection with a termination of your
employment by the Company for Cause or (iii) a material reduction in your
---
Base Salary.
11. Binding Effect. This letter agreement will inure to the benefit
--------------
of and be enforceable by your personal or legal representatives, executors,
administrators, heirs, distributees, devisees and legatees. If you should die
while any amounts would still be payable to you under this letter agreement if
you had continued to live, all such amounts, unless otherwise provided herein,
will be paid in accordance with the terms of this letter agreement to your
6
<PAGE>
personal or legal representatives, executors, administrators, heirs,
distributees, devisees, legatees or estate, as the case may be.
12. Indemnification. The Company agrees to indemnify you to the
---------------
fullest extent permitted under its By-laws as in effect from time to time.
13. General Provisions. No provisions of this letter agreement may
------------------
be modified, waived or discharged unless such modification, waiver or discharge
is approved by the Company's Board of Directors and is agreed to in a writing
signed by you and such Company officer as may be specifically designated by the
Board. No waiver by either party hereto at any time of any breach by the other
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party will be deemed a waiver of similar
or dissimilar provisions or conditions at the same or at any prior or subsequent
time.
No agreements or representations, oral or otherwise, express or
impled, with respect to the subject matter hereof have been made by either party
which are not set forth expressly in this letter agreement. The invalidity or
unenforceability of any one or more provisions of this letter agreement will not
affect the validity or enforceability of any other provision of this letter
agreement, which will remain in full force and effect. This letter agreement
may be executed in one or more counterparts, each of which will be deemed to be
an original but all of which together will constitute one and the same
instrument.
7
<PAGE>
All amounts payable to you hereunder will be paid net of any and all
applicable income or employment taxes required to be withheld therefrom under
applicable Federal, State or local laws or regulations.
The validity, interpretation, construction and performance of this
letter agreement will be governed by the laws of the State of New York, without
giving effect to its conflict of laws provisions.
* * * *
If the foregoing accurately sets forth the terms of your employment
with the Company, please so indicate by signing below and returning one signed
copy of this letter agreement to me.
Sincerely,
TAMBRANDS INC.
/s/Howard B. Wentz, Jr.
-----------------------------
Howard B. Wentz, Jr.
Chairman
ACCEPTED AND AGREED
as of this 25th day
of April, 1994
/s/Edward T. Fogarty
- - ----------------------------
Edward T. Fogarty
8
<PAGE>
EXHIBIT 10.2
EMPLOYMENT PROTECTION AGREEMENT
-------------------------------
THIS AGREEMENT between Tambrands Inc., a Delaware corporation (the
"Corporation"), and Edward T. Fogarty (the "Executive"), dated as of this 31st
day of May 1994.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Corporation and the Executive have agreed to enter into an
agreement providing the Corporation and the Executive with certain rights upon
the occurrence of a Change of Control (as defined below) to assure the
Corporation of continuity of management in the event of any Change of Control;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is hereby agreed by and between the Corporation and the
Executive as follows:
1. Operation of Agreement. The effective date of this Agreement shall
----------------------
be the date on which a Change of Control occurs (the "Effective Date"), provided
that if the Executive is not employed by the Corporation on the Effective Date
this Agreement shall be void and without effect. This Agreement shall terminate
on May 31, 1997, provided that the termination date of this Agreement shall be
extended for one additional year on June 1, 1995 and each subsequent June 1,
unless the Executive shall have received written notice from the Corporation
prior to the March 1 immediately preceding such June 1 that the Board of
Directors of the Corporation (the "Board") has determined that the termination
date of this Agreement shall not be so extended. Notwithstanding the foregoing,
this Agreement shall not terminate on the date determined in accordance with the
preceding sentence if a Change of Control shall have occurred prior to such
date.
2. Definitions. (a) Change of Control. For purposes of this
----------- -----------------
Agreement, a "Change of Control" shall be deemed to have occurred if: (i) any
---
person (as defined in Section 3(a)(9) of the Securities Exchange Act of 1934, as
amended from time to time (the "Exchange Act"), and as used in Sections 13(d)
and 14(d) thereof)), excluding the Corporation, any majority owned subsidiary
of the Corporation (a "Subsidiary") and any employee benefit plan sponsored or
maintained by the Corporation or any Subsidiary (including any trustee of such
plan acting as trustee), but including a "group" as defined in Section 13(d)(3)
of the Exchange Act (a "Person"), becomes the beneficial owner of shares of the
Corporation having at least 20% of the total number of votes that may be cast
for the election of directors of the Corporation (the "Voting Shares") provided,
however, that such an event shall not constitute a Change of Control if the
acquiring Person has entered into an agreement with the Corporation approved by
the Board which materially restricts the right of such Person to direct or
influence the management or policies of the Corporation; (ii) the shareholders
----
of the Corporation shall approve any merger or other business combination of the
Corporation, sale of the Corporation's assets or combination of the foregoing
transactions (a "Transaction") other than a Transaction involving only the
Corporation and one or more of its Subsidiaries, or a Transaction immediately
following which the shareholders of the Corporation immediately prior to the
Transaction continue to have a majority of the voting power in the resulting
entity excluding for this purpose any shareholder owning directly or indirectly
more than 10% of the shares of the other company involved in the Transaction, or
(iii) within any 24-month period beginning on or after May 31, 1994, the persons
- - -----
who
<PAGE>
were directors of the Corporation immediately before the beginning of such
period (the "Incumbent Directors") shall cease (for any reason other than death)
to constitute at least a majority of the Board or the board of directors of any
successor to the Corporation, provided that any director who was not a director
as of May 31, 1994 shall be deemed to be an Incumbent Director if such director
was elected to the Board by, or on the recommendation of or with the approval
of, at least two-thirds of the directors who then qualified as Incumbent
Directors either actually or by prior operation of this Section 2(a)(iii).
(b) Participation by Executive. Notwithstanding the foregoing, no
--------------------------
Change of Control shall be deemed to have occurred for purposes of this
Agreement by reason of any actions or events in which the Executive participates
in a capacity other than in his capacity as the Executive (or as a director of
the Corporation or a Subsidiary, where applicable).
3. Employment Period. If the Executive is employed on the Effective
-----------------
Date, the Corporation agrees to continue the Executive in its employ, and the
Executive agrees to remain in the employ of the Corporation, for the period
(the "Employment Period") commencing on the Effective Date and ending on the
earliest to occur of (i) the second anniversary of the Effective Date, (ii) the
--- ----
Executive's normal retirement date under the Corporation's retirement plans as
in effect from time to time and (iii) the date of any termination of the
-----
Executive's employment in accordance with Section 6 of this Agreement.
4. Position and Duties. (a) No Reduction in Position. During the
------------------- ------------------------
Employment Period, the Executive's position (including titles), authority and
responsibilities shall be at least commensurate with the highest of those held,
exercised and assigned at any time during the 90-day period immediately
preceding the Effective Date.
(b) Business Time. From and after the Effective Date, the Executive
-------------
agrees to devote his full business time during normal business hours to the
business and affairs of the Corporation and to use his best efforts to perform
faithfully and efficiently the responsibilities assigned to him hereunder, to
the extent necessary to discharge such responsibilities, except for
(i) reasonable time spent in serving on corporate, civic or charitable
boards or committees approved by the Board, in each case only if and
to the extent not substantially interfering with the performance of
such responsibilities, and
(ii) periods of vacation and sick leave to which he is entitled.
It is expressly understood and agreed that the Executive's continuing to serve
on any boards and committees on which he is serving or with which he is
otherwise associated with the consent or approval of the Corporation immediately
preceding the Effective Date shall not be deemed to interfere with the
performance of the Executive's services to the Corporation.
5. Compensation. (a) Base Salary. During the Employment Period, the
------------ -----------
Executive shall receive a base salary ("Base Salary") at a monthly rate at least
equal to the monthly salary paid to the Executive by the Corporation and any of
its affiliated companies immediately prior to the Effective Date. The Base
Salary shall be reviewed at least once each year after the Effective Date, and
may be increased (but not decreased) at any time and from time to time by action
of the Board or any committee thereof or any individual having authority to take
such action in accordance with the Corporation's regular practices. Neither
payment of the Base Salary nor payment of any increased Base Salary after the
Effective
-2-
<PAGE>
Date shall serve to limit or reduce any other obligation of the Corporation
hereunder. For purposes of the remaining provisions of this Agreement, the
term "Base Salary" shall mean Base Salary as defined in this Section 5(a) or, if
increased after the Effective Date, the Base Salary as so increased.
(b) Annual Bonus. In addition to the Base Salary, the Executive shall
------------
be awarded for each fiscal year of the Corporation ending during the Employment
Period an annual bonus (either pursuant to a bonus plan or program of the
Corporation or otherwise) in cash at least equal to the last annual bonus
(annualized, if awarded in respect of a partial year) awarded to the Executive
under the Annual Incentive Plan of the Corporation prior to the Effective Date
("Annual Bonus"). If a fiscal year of the Corporation begins, but does not end,
during the Employment Period, the Executive shall receive an amount with respect
to such fiscal year at least equal to the amount of the Annual Bonus multiplied
by a fraction, the numerator of which is the number of days in such fiscal year
occurring during the Employment Period and the denominator of which is 365.
Each amount payable in respect of the Executive's Annual Bonus shall be paid not
later than the last day of March of the year next following the year for which
the Annual Bonus (or prorated portion) is earned or awarded, unless electively
deferred by the Executive pursuant to any deferral programs or arrangements that
the Corporation may make available to the Executive, in which event such
deferred amount shall be payable in accordance with the terms of such deferral
program or arrangement. Neither the Annual Bonus nor any bonus amount paid in
excess thereof after the Effective Date shall serve to limit or reduce any other
obligation of the Corporation hereunder.
(c) Incentive and Savings Plans and Retirement Programs. In addition
---------------------------------------------------
to the Base Salary and Annual Bonus payable as hereinabove provided, during the
Employment Period, the Executive shall be entitled to participate in all
incentive and savings plans and programs, including stock option plans and other
equity based compensation plans, and in all retirement plans, on a basis
providing him with the opportunity to receive compensation (without duplication
of the amount payable as an Annual Bonus) and benefits equal to those provided
by the Corporation to the Executive on an annualized basis under such plans and
programs as in effect at any time during the 90-day period immediately preceding
the Effective Date.
(d) Benefit Plans. During the Employment Period, the Executive and his
-------------
family shall be entitled to participate in or be covered under all welfare
benefit plans and programs of the Corporation and its affiliated companies,
including all medical, dental, disability, group life, accidental death and
travel accident insurance plans and programs, as in effect at any time during
the 90-day period immediately preceding the Effective Date.
(e) Expenses. During the Employment Period, the Executive shall be
--------
entitled to receive prompt reimbursement for all reasonable expenses incurred by
the Executive in accordance with the policies and procedures of the Corporation
as in effect at any time during the 90-day period immediately preceding the
Effective Date.
(f) Vacation and Fringe Benefits. During the Employment Period, the
----------------------------
Executive shall be entitled to paid vacation and fringe benefits in accordance
with the policies of the Corporation as in effect at any time during the 90-day
period immediately preceding the Effective Date.
(g) Office and Support Staff. During the Employment Period, the
------------------------
Executive shall be entitled to an office or offices of a size and with
-3-
<PAGE>
furnishings and other appointments, and to secretarial and other assistance, at
least equal to the most favorable of the foregoing provided to the Executive at
any time during the 90-day period immediately preceding the Effective Date.
6. Termination. (a) Death, Disability or Retirement. Subject to the
----------- -------------------------------
provisions of Section 1 hereof, this Agreement shall terminate automatically
upon the Executive's death or attainment of normal retirement age under the
Corporation's retirement plans as in effect from time to time, provided that,
after the Effective Date, the normal retirement age may not be lowered for
purposes of this Agreement without the Executive's consent. The Corporation
may terminate this Agreement, after having established the Executive's
Disability, by giving the Executive written notice of its intention to terminate
his employment, and his employment with the Corporation shall terminate
effective on the 90th day after receipt of such notice if, within 90 days after
such receipt, the Executive shall fail to return to full-time performance of his
duties. For purposes of this Agreement, "Disability" means disability which,
after the expiration of more than 26 weeks after its commencement, is determined
to be total and permanent by a physician selected by the Corporation or its
insurers and acceptable to the Executive or his legal representatives (such
agreement to acceptability not to be withheld unreasonably).
(b) Voluntary Termination. Notwithstanding anything in this Agreement
---------------------
to the contrary, the Executive may, upon not less than 30 days' written notice
to the Corporation, voluntarily terminate employment during the Employment
Period for any reason (including early retirement under the terms of the
Corporation's retirement plan as in effect from time to time), provided that any
termination by the Executive pursuant to Section 6(d) of this Agreement on
account of Good Reason (as defined therein) shall not be treated as a voluntary
termination under this Section 6(b).
(c) Cause. The Corporation may terminate the Executive's employment
-----
during the Employment Period for Cause. For purposes of this Agreement, "Cause"
means (i) an act or acts of dishonesty or gross misconduct on the Executive's
---
part which result or are intended to result in material damage to the
Corporation's business or reputation or (ii) repeated material violations by the
----
Executive of his obligations under Section 4 of this Agreement which violations
are demonstrably willful and deliberate on the Executive's part.
(d) Good Reason. The Executive may terminate his employment during the
-----------
Employment Period for Good Reason. For purposes of this Agreement, "Good
Reason" means
(i) a good faith determination by the Executive that, without his prior
written consent, the Corporation or any of its officers has taken or failed
to take any action (including, without limitation, (A) exclusion of the
---
Executive from consideration of material matters within his area of
responsibility, (B) statements or actions which undermine the Executive's
---
authority with respect to persons under his supervision or reduce his
standing with his peers, (C) a pattern of discrimination against or
---
harassment of the Executive or persons under his supervision and (D) the
---
subjection of the Executive to procedures not generally applicable to other
similarly situated executives) which changes the Executive's position
(including titles), authority or responsibilities under Section 4 of this
Agreement or reduces the Executive's ability to carry out his duties and
responsibilities under Section 4 of this Agreement;
(ii) any failure by the Corporation to comply with any of the
provisions of Section 5 of this Agreement, other than an insubstantial or
inadvertent failure remedied by the Corporation promptly
-4-
<PAGE>
after receipt of notice thereof from the Executive;
(iii) the Corporation's requiring the Executive to be employed at any
location more than 50 miles further from his principal residence than the
location at which the Executive was employed immediately preceding the
Effective Date; or
(iv) any failure by the Corporation to obtain the assumption of and
agreement to perform this Agreement by a successor as contemplated by
Section 14(b) of this Agreement, provided that the successor has had actual
written notice of the existence of this Agreement and its terms and an
opportunity to assume the Corporation's responsibilities under this
Agreement during a period of 10 business days after receipt of such notice.
(e) Notice of Termination. Any termination by the Corporation for
---------------------
Cause or by the Executive for Good Reason during the Employment Period shall be
communicated by Notice of Termination to the other party hereto given in
accordance with Section 15(c) of this Agreement. For purposes of this
Agreement, a "Notice of Termination" means a written notice given, in the case
of a termination for Cause, within 10 business days of the Corporation's having
actual knowledge of all of the events giving rise to such termination, and in
the case of a termination for Good Reason, within 180 days of the Executive's
having actual knowledge of the events giving rise to such termination, and which
(i) indicates the specific termination provision in this Agreement relied upon,
- - ---
(ii) sets forth in reasonable detail the facts and circumstances claimed to
- - ----
provide a basis for termination of the Executive's employment under the
provision so indicated, and (iii) if the termination date is other than the date
-----
of receipt of such notice, specifies the termination date of this Agreement
(which date shall be not more than 15 days after the giving of such notice).
The failure by the Executive to set forth in the Notice of Termination any fact
or circumstance which contributes to a showing of Good Reason shall not waive
any right of the Executive hereunder or preclude the Executive from asserting
such fact or circumstance in enforcing his rights hereunder.
(f) Date of Termination. For purposes of this Agreement, the term
-------------------
"Date of Termination" means (i) in the case of a termination for which a Notice
---
of Termination is required, the date of receipt of such Notice of Termination
or, if later, the date specified therein and (ii) in all other cases, the actual
date on which the Executive's employment terminates during the Employment
Period.
7. Obligations of the Corporation upon Termination. (a) Death. If
----------------------------------------------- ------
the Executive's employment is terminated during the Employment Period by reason
of the Executive's death, this Agreement shall terminate without further
obligations to the Executive's legal representatives under this Agreement other
than those obligations accrued hereunder at the date of his death, including,
for this purpose (i) the Executive's full Base Salary through the Date of
---
Termination, (ii) the product of the Annual Bonus and a fraction, the numerator
----
of which is the number of days in the current fiscal year of the Corporation
through the Date of Termination, and the denominator of which is 365 (the "Pro-
rated Bonus Obligation"), (iii) any compensation previously deferred by the
-----
Executive (together with any accrued earnings thereon) and not yet paid by the
Corporation and (iv) any other amounts or benefits owing to the Executive under
----
the then applicable employee benefit plans or policies of the Corporation (such
amounts specified in clauses (i), (ii), (iii) and (iv) are hereinafter referred
to as "Accrued Obligations"). Unless otherwise directed by the Executive (or,
in the case of any employee benefit plan qualified (a "Qualified Plan") under
Section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code"), as
may be required by such plan), all such Accrued Obligations shall be paid to the
Executive's legal representatives
-5-
<PAGE>
in a lump sum in cash within 30 days of the Date of Termination. Anything in
this Agreement to the contrary notwithstanding, the Executive's family shall be
entitled to receive benefits at least equal to the most favorable level of
benefits available to surviving families of executives of the Corporation and
its affiliates under such plans, programs and policies relating to family death
benefits, if any, of the Corporation and its affiliates in effect at any time
during the 90-day period immediately preceding the Effective Date.
(b) Disability. If the Executive's employment is terminated by reason
----------
of the Executive's Disability, the Executive shall be entitled, after the Date
of Termination until the date when the Employment Period would otherwise have
terminated, to continue to participate in or be covered under the benefit plans
and programs referred to in Section 5(d) of this Agreement or, at the
Corporation's option, to receive equivalent benefits by alternate means at least
equal to those provided in accordance with Section 5(d) of this Agreement.
Unless otherwise directed by the Executive (or, in the case of any Qualified
Plan, as may be required by such plan), the Executive shall also be paid all
Accrued Obligations in a lump sum in cash within 30 days of the Date of
Termination. Anything in this Agreement to the contrary notwithstanding, the
Executive shall be entitled to receive disability and other benefits at least
equal to the most favorable level of benefits available to disabled employees
and/or their families in accordance with the plans, programs and policies main-
tained by the Corporation or its affiliates relating to disability at any time
during the 90-day period immediately preceding the Effective Date.
(c) Cause and Voluntary Termination. If, during the Employment Period,
-------------------------------
the Executive's employment shall be terminated for Cause or voluntarily
terminated by the Executive (other than on account of Good Reason), the
Corporation shall pay the Executive the Accrued Obligations other than the Pro-
rated Bonus Obligation. Unless otherwise directed by the Executive (or, in the
case of any Qualified Plan, as may be required by such plan), the Executive
shall be paid all such Accrued Obligations in a lump sum in cash within 30 days
of the Date of Termination and the Corporation shall have no further obligations
to the Executive under this Agreement.
(d) Termination by Corporation other than for Cause or Disability and
------------------------------------------------------------------
Termination by Executive for Good Reason. (i) Lump Sum Payment. If, during
- - ---------------------------------------- ----------------
the Employment Period, the Corporation terminates the Executive's employment
other than for Cause or Disability, or the Executive terminates his employment
for Good Reason, the Corporation shall pay to the Executive in a lump sum in
cash within 15 days after the Date of Termination the aggregate of the following
amounts:
(A) if not theretofore paid, the Executive's Base Salary through the
Date of Termination at the rate specified in Section 5(a) of this Agreement;
(B) a cash amount equal to three times the sum of
(1) the Executive's annual Base Salary at the rate specified in
Section 5(a) of this Agreement;
(2) the Annual Bonus; and
(3) the present value, calculated using the annual federal short-
term rate as determined under Section 1274(d) of the Code, of (without
duplication) (x) the annual cost to the Corporation (based on the
---
premium rates or other costs to it) of obtaining coverage equivalent to
the coverage under the plans and programs described in Section 5(d) of
this Agreement, and (y) the annual-
---
-6-
<PAGE>
ized value of the fringe benefits described under Section 5(f) of this
Agreement;
provided, however, that in no event shall the Executive be entitled to
receive under this clause (B) more than the product obtained by multiplying
the amount determined under this clause by a fraction whose numerator shall
be the number of months (including fractions of a month) which at the Date
of Termination remain until the Executive's normal retirement date under
the Corporation's retirement plan or any successor plan as in effect from
time to time and whose denominator shall be 24, and provided further that,
with respect to the life and medical insurance coverage referred to in
Section 5(d) of this Agreement, at the Executive's election made prior to
the Date of Termination, the Corporation shall use its best efforts to
secure conversion coverage and shall pay the cost of such coverage in lieu
of paying the lump sum amount attributable to such life or medical insurance
coverage; and
(C) a cash amount equal to any amounts (other than amounts payable to
the Executive under any Qualified Plans) described in Sections 7(a)(iii) and
(iv) of this Agreement.
(ii) Discharge of Corporation's Obligations. Subject to the performance
--------------------------------------
of its obligations under this Section 7(d), the Corporation shall have no
further obligations to the Executive in respect of any termination by the
Executive for Good Reason or by the Corporation other than for Cause or
Disability, except to the extent expressly provided under any of the plans
referred to in Section 5(c) or 5(d) of this Agreement.
8. Non-exclusivity of Rights. Nothing in this Agreement shall prevent
-------------------------
or limit the Executive's continuing or future participation in any benefit,
bonus, incentive or other plan or program provided by the Corporation or any of
its affiliated companies and for which the Executive may qualify, nor shall
anything herein limit or otherwise prejudice such rights as the Executive may
have under any stock option or other plans or agreements with the Corporation or
any of its affiliated companies. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan or program of the
Corporation or any of its affiliated companies at or subsequent to the Date of
Termination shall be payable in accordance with such plan or program.
9. Certain Additional Payments by the Corporation.
----------------------------------------------
(a) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any payment or distribution by the Corporation
to or for the benefit of the Executive (whether paid or payable or distributed
or distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this Section
9) (a "Payment") would be subject to the excise tax imposed by Section 4999 of
the Code (or any successor provision) or any interest or penalties are incurred
by the Executive with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Executive shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by the
Executive of all taxes with respect to the Gross-Up Payment (including any
interest or penalties imposed with respect to such taxes), including, without
limitation, any income taxes (and any interest and penalties imposed with
respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon
the Payments.
-7-
<PAGE>
(b) Subject to the provisions of Section 9(c), all determinations
required to be made under this Section 9, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made by KPMG Peat
Marwick or other firm then auditing the accounts of the Corporation (the
"Accounting Firm") which shall provide detailed supporting calculations both to
the Corporation and the Executive within 15 business days of the receipt of
notice from the Executive that there has been a Payment, or such earlier time as
is requested by the Corporation. In the event that the Accounting Firm is
serving as accountant or auditor for the individual, entity or group effecting
the Change of Control, or is unwilling or unable to perform its obligations
pursuant to this Section 9, the Executive shall appoint another nationally
recognized accounting firm to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accounting Firm hereunder).
All fees and expenses of the Accounting Firm shall be borne solely by the
Corporation. Any Gross-Up Payment, determined pursuant to this Section 9, shall
be paid by the Corporation to the Executive within five days of the receipt of
the Accounting Firm's determination. Any determination by the Accounting Firm
shall be binding upon the Corporation and the Executive. As a result of the
potential uncertainty in the application of Section 4999 of the Code (or any
successor provision) at the time of the initial determination by the Accounting
Firm hereunder, it is possible that Gross-Up Payments which will not have been
made by the Corporation should have been made ("Underpayment"), consistent with
the calculations required to be made hereunder. In the event that the
Corporation exhausts its remedies pursuant to Section 9(c) and the Executive
thereafter is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Corporation to or for the benefit of
the Executive.
(c) The Executive shall notify the Corporation in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Corporation of the Gross-Up Payment. Such notification shall be given as
soon as practicable but no later than 10 business days after the Executive is
informed in writing of such claim and shall apprise the Corporation of the
nature of such claim and the date on which such claim is requested to be paid.
the Executive shall not pay such claim prior to the expiration of the 30-day
period following the date on which he gives such notice to the Corporation (or
such shorter period ending on the date that any payment of taxes with respect to
such claim is due). If the Corporation notifies the Executive in writing prior
to the expiration of such period that it desires to contest such claim, the
Executive shall:
(i) give the Corporation any information reasonably requested by the
Corporation relating to such claim,
(ii) take such action in connection with contesting such claim as the
Corporation shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Corporation,
(iii) cooperate with the Corporation in good faith in order effectively
to contest such claim, and
(iv) permit the Corporation to participate in any proceedings relating
to such claim;
-8-
<PAGE>
provided, however, that the Corporation shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on a after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses. Without limiting the
foregoing provisions of this Section 9(c), the Corporation shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct the Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and the Executive agrees
to prosecute such contest to a determination before any administrative tribunal,
in a court of initial jurisdiction and in one or more appellate courts, as the
Corporation shall determine; provided, however, that if the Corporation directs
the Executive to pay such claim and sue for a refund, the Corporation shall
advance the amount of such payment to the Executive, on an interest-free basis,
and shall indemnify and hold the Executive harmless, on an after-tax basis, from
any Excise Tax or income tax (including interest or penalties with respect
thereto) imposed with respect to such advance or with respect to any imputed
income with respect to such advance; and further provided that any extension of
the statue of limitations relating to payment of taxes for the taxable year of
the Executive with respect to which such contested amount is claimed to be due
is limited solely to such contested amount. Furthermore, the Corporation's
control of the contest shall be limited to issues with respect to which a Gross-
Up Payment would be payable hereunder and the Executive shall be entitled to
settle or contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount advanced by the
Corporation pursuant to Section 9(c), the Executive becomes entitled to receive
any refund with respect to such claim, the Executive shall (subject to the
Corporation's complying with the requirements of Section 9(c)) promptly pay to
the Corporation the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Corporation pursuant to Section 9(c), a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Corporation does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of 30 days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be paid.
10. Full Settlement. The Corporation's obligation to make the payments
---------------
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Corporation may have against the Executive or others whether by reason of
the subsequent employment of the Executive or otherwise. In no event shall the
Executive be obligated to seek other employment by way of mitigation of the
amounts payable to the Executive under any of the provisions of this Agreement,
and no amount payable under this Agreement shall be reduced on account of any
compensation received by the Executive from other employment. In the event that
the Executive shall in good faith give a Notice of Termination for Good Reason
and it shall thereafter be determined by mutual consent of the Executive and the
Corporation or by a tribunal having jurisdiction over the matter that Good
Reason did not exist, the employment of the Executive shall, unless the
-9-
<PAGE>
Corporation and the Executive shall otherwise mutually agree, be deemed to have
terminated, at the date of giving such purported Notice of Termination, by
mutual consent of the Corporation and the Executive and, except as provided in
the last preceding sentence, the Executive shall be entitled to receive only
those payments and benefits which he would have been entitled to receive at such
date otherwise than under this Agreement.
11. Legal Fees and Expenses. In the event that a claim for payment of
-----------------------
benefits under this Agreement is disputed, the Corporation shall pay all
reasonable legal fees and expenses incurred by the Executive in pursuing such
claim, provided that the Executive is successful as to at least part of the
disputed claim by reason of litigation, arbitration or settlement.
12. Confidential Information. The Executive shall hold in a fiduciary
------------------------
capacity for the benefit of the Corporation all secret or confidential
information, knowledge or data relating to the Corporation or any of its
affiliated companies, and their respective businesses, (i) obtained by the
---
Executive during his employment by the Corporation or any of its affiliated
companies and (ii) not otherwise public knowledge (other than by reason of an
----
unauthorized act by the Executive). After termination of the Executive's
employment with the Corporation, the Executive shall not, without the prior
written consent of the Corporation, unless compelled pursuant to an order of a
court or other body having jurisdiction over such matter, communicate or
divulge any such information, knowledge or data to anyone other than the
Corporation and those designated by it. In no event shall an asserted
violation of the provisions of this Section 12 constitute a basis for deferring
or withholding any amounts otherwise payable to the Executive under this
Agreement.
13. Employment Contract or Severance Benefits. Notwithstanding
-----------------------------------------
anything else in this Agreement to the contrary, any amount payable to the
Executive hereunder on account of his termination of employment shall be reduced
on a dollar for dollar basis by each dollar actually paid to the Executive with
respect to such termination under the terms of any employment contract between
the Executive and the Corporation or under any severance program or policy
applicable to the Executive. Nothing in this Agreement shall be construed to
require duplication of any compensation, benefits or other entitlements provided
to the Executive by the Corporation under the terms of any employment contract
which may address similar matters.
14. Successors. (a) This Agreement is personal to the Executive and,
----------
without the prior written consent of the Corporation, shall not be assignable by
the Executive otherwise than by will or the laws of descent and distribution.
This Agreement shall inure to the benefit of and be enforceable by the
Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Corporation and its successors. The Corporation shall require any successor
to all or substantially all of the business and/or assets of the Corporation,
whether direct or indirect, by purchase, merger, consolidation, acquisition of
stock, or otherwise, by an agreement in form and substance satisfactory to the
Executive, expressly to assume and agree to perform this Agreement in the same
manner and to the same extent as the Corporation would be required to perform if
no such succession had taken place.
15. Miscellaneous. (a) Applicable Law. This Agreement shall be
------------- --------------
governed by and construed in accordance with the laws of the State of Delaware,
applied without reference to principles of conflict of laws.
(b) Amendments. This Agreement may not be amended or modified
----------
-10-
<PAGE>
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
(c) Notices. All notices and other communications hereunder shall be
-------
in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Executive: at the address listed below
If to the Corporation: Tambrands Inc.
777 Westchester Avenue
White Plains, New York 10604
Attention: Secretary
(with a copy to the
attention of the
General Counsel)
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notices and communications shall be effective
when actually received by the addressee.
(d) Tax Withholding. The Corporation may withhold from any amounts
---------------
payable under this Agreement such Federal, State or local taxes as shall be
required to be withheld pursuant to any applicable law or regulation.
(e) Severability. The invalidity or unenforceability of any provision
------------
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(f) Captions. The captions of this Agreement are not part of the
--------
provisions hereof and shall have no force or effect.
IN WITNESS WHEREOF, the Executive has hereunto set his hand and the
Corporation has caused this Agreement to be executed in its name on its behalf,
and its corporate seal to be hereunto affixed and attested by its Treasurer, all
as of the day and year first above written.
-11-
<PAGE>
ATTEST: TAMBRANDS INC.
/s/Martha B. Lindsay By /s/Kevin J. Paradise
- - ------------------------- --------------------------------
Treasurer Title: Vice President -
Human Resources
(Seal)
EXECUTIVE: Edward T. Fogarty
/s/Edward T. Fogarty
----------------------------------
Address:
Tambrands Inc.
777 Westchester Avenue
White Plains, New York 10604
FOGARTY.EPA
-12-
<PAGE>
EXHIBIT 10.3
[LETTERHEAD OF TAMBRANDS]
May 31, 1994
Mr. Edward T. Fogarty
Tambrands Inc.
777 Westchester Avenue
White Plains, New York 10604
Restricted Stock Agreement
--------------------------
Dear Mr. Fogarty:
We are pleased to advise you that you have been selected as a participant
in the Tambrands Inc. Restricted Stock Plan. This letter will confirm the
following agreement made as of the date of this letter between you and Tambrands
Inc. (the "Company") pursuant to the Plan, a copy of which is attached hereto
and made a part hereof. All capitalized terms used herein shall have the
meanings ascribed to them by the Plan.
1. Number of Shares of Restricted Stock; Date of Grant. The Company has
---------------------------------------------------
granted you 13,500 shares of Restricted Stock as of May 31, 1994. A stock
certificate representing these shares will be held by the Company for
safekeeping until such time as the Restricted Period lapses with respect to all
or any portion of such shares. At that time, a stock certificate representing
your shares will be forwarded to you for that number of shares as to which the
Restricted Period has lapsed.
2. Restriction on Transfer. The shares of Restricted Stock granted to you
-----------------------
hereunder may not be sold, assigned, transferred, pledged or otherwise
encumbered until the dates determined pursuant to the following schedule:
<TABLE>
<CAPTION>
Restrictions Lapse As To The
Date Following Number of Shares
---- ----------------------------
<S> <C>
May 31, 1997 4,500
May 31, 1998 4,500
May 31, 1999 4,500
</TABLE>
Notwithstanding the foregoing schedule, the restrictions on the shares of
Restricted Stock shall lapse on such earlier date as shall otherwise be
determined under the terms of the Plan and this agreement.
3. Forfeiture of Restricted Stock. Except as otherwise provided in
------------------------------
paragraph 4 hereof or the Plan, if your employment with the Company and its
Subsidiaries terminates for any reason prior to the time at which the
restrictions described in paragraph 2 lapse as to all of the shares of
Restricted Stock granted hereunder, any shares which are then subject to such
restrictions shall be cancelled without any payment to you and you shall cease
to have any rights with respect to such shares of Restricted Stock.
4. Termination of Employment By Reason of Death, Disability or Retirement.
----------------------------------------------------------------------
If your employment with the Company and its Subsidiaries terminates prior to the
end of the Restricted Period by reason of your death, your disability (as
determined in accordance with the Company's policies), your retirement at or
after age 65, or your early retirement with the consent of the Committee prior
to attaining age 65, the Restricted Period shall lapse
<PAGE>
Page 2
Mr. E.T. Fogarty
May 31, 1994
with respect to all of the Restricted Stock granted hereunder upon your
termination of employment.
5. Change of Control. The Restricted Period shall lapse with respect to
-----------------
all of the Restricted Stock granted hereunder upon the occurrence of a Change of
Control of the Company.
6. Rights as a Shareholder. You shall have all the rights of a
-----------------------
shareholder of Common Stock with respect to the Restricted Stock granted
hereunder, including the right to vote and the right to receive dividends.
7. Adjustment. In the event the Restricted Stock granted hereunder is
----------
exchanged for or converted into securities other than Common Stock or in the
event that any distribution is made with respect to such Restricted Stock either
in Common Stock or in other property, the securities or other property that you
receive shall be subject to the same restrictions as apply to such Restricted
Stock.
8. Other Terms. All applicable terms and provisions of the Plan shall be
-----------
deemed to be included herein by reference and shall be controlling in the event
of any conflict or inconsistency between the Plan and this agreement.
Please indicate your acceptance of the terms and conditions of this
agreement and of the Plan by signing and returning the enclosed copy of this
letter.
Very truly yours,
Tambrands Inc.
By /s/Kevin J. Paradise
-----------------------
Kevin J. Paradise
Vice President -
Human Resources
Accepted:
/s/Edward T. Fogarty Date: 6/12/94
- - ------------------------- -----------------------
Employee Signature
Enclosure:
1. 1989 Restricted Stock Plan
<PAGE>
EXHIBIT 10.4
[LETTER HEAD OF TAMBRANDS]
May 31, 1994
Mr. Edward T. Fogarty
Tambrands Inc.
777 Westchester Avenue
White Plains, New York 10604
Stock Option Agreement
----------------------
Dear Mr. Fogarty:
We are pleased to inform you that, effective May 31, 1994, you have been granted
Options to purchase 125,000 shares of Common Stock of the Company (the
"Options") pursuant to the Tambrands Inc. 1991 Stock Option Plan (the "Plan").
The Options are not intended to be "incentive stock options" as that term is
defined in section 422 of the Internal Revenue Code.
This letter will confirm the following agreement between you and the Company
pursuant to the Plan, a copy of which is attached hereto and made a part hereof.
Capitalized words used in this letter are as defined in the Plan. The Options
may be exercised upon the terms and conditions of the Plan, as supplemented by
this agreement, and not otherwise.
1. Number and Price of Options
---------------------------
You shall have Options to purchase from the Company 125,000 shares of
Common Stock of the Company at the per share prices determined in
accordance with the following schedule:
<TABLE>
<CAPTION>
Number of Shares Price Per Share
---------------- ---------------
<S> <C>
60,000 $35.50
21,666 $45.00
21,667 $50.00
21,667 $55.00
</TABLE>
2. Exercisability Dates
--------------------
Except as otherwise provided by this paragraph 2 or paragraph 4 hereof or
under Sections 6(a)(iv) and 7 of the Plan, the Options granted to you
hereby shall become exercisable as follows:
<TABLE>
<CAPTION>
Number of Shares at Each Date
Exercise Price Exercisable
------------------------ ------------
<S> <C> <C> <C> <C>
$35.50 $ 45.00 $ 50.00 $ 55.00
------- ------- -------
20,000 7,222 7,222 7,222 May 31, 1995
20,000 7,222 7,222 7,222 May 31, 1996
20,000 7,222 7,223 7,223 May 31, 1997
- - -------------- ------- ------- -------
60,000 21,666 21,667 21,667
</TABLE>
Upon (i) your death while an employee of the Company, (ii) your retirement
- --
at or after age 65 or your early retirement (with the Committee's consent)
or (iii) the termination of your employment by reason of disability (within
---
the meaning of section 22(e)(3) of the
<PAGE>
Page 2
Mr. E.T. Fogarty
May 31, 1994
Internal Revenue Code), all Options shall immediately become exercisable.
All Options that have become exercisable may be exercised, and if exercised
in part, the unexercised Options shall remain outstanding and exercisable
according to their terms, through the end of their period of exercisability
as described in paragraph 3 hereof.
3. Termination of Options That Have Become Exercisable
---------------------------------------------------
Any unexercised Options shall in all events terminate on May 31, 2004. Any
unexercised Options that have not previously terminated shall terminate
prior to May 31, 2004 upon the expiration of (i) five years after any
termination of employment due to your retirement at or after age 65 or your
early retirement (with the Committee's consent), your death while an
employee of the Company or the termination of your employment by reason of
disability (as defined in paragraph 2 hereof) (each, a "Special
Termination") or (ii) three months after any termination of employment for
any reason other than a Special Termination. Notwithstanding the
foregoing, any unexercised Options shall terminate immediately upon (i) the
termination of your employment by you in violation of any agreement between
you and the Company, (ii) the termination of your employment for cause (as
defined in Section 7(c) of the Plan) or (iii) the discovery by the Company
after your separation from service that you had engaged in conduct that
would have justified termination of your employment for cause.
Notwithstanding anything else contained herein to the contrary, any Option
that has not become exercisable in accordance with paragraph 2 or paragraph
4 hereof on or before the date your employment terminates shall terminate
at the close of business on the date of your termination of employment.
4. Acceleration of Exercisability on Change of Control
---------------------------------------------------
Upon a Change of Control of the Company all Options not previously
exercisable shall become fully exercisable to the same extent and in the
same manner as if they had become exercisable by passage of time in
accordance with the provisions of the Plan relating to periods of
exercisability and to termination of employment.
5. Nontransferability
------------------
The Options shall not be transferable by you otherwise than by will or
under the applicable laws of descent and distribution. Upon any attempt to
transfer, assign, negotiate, pledge or hypothecate any Option, or in the
event of any levy upon any Option by reason of attachment or similar
process, such Option shall immediately become null and void.
6. Procedure for Exercise
----------------------
Any exercise of Options shall be in writing addressed to the Secretary at
the Company's general offices, and shall be substantially in the form
attached hereto and, unless otherwise specified by the Committee, shall be
accompanied by payment in immediately available U.S. funds or a certified
check, bank draft or postal or express money order payable to the order of
the Company, each in the amount of the purchase price of the shares covered
by the exercise. Notwithstanding the foregoing, if the Committee shall on
your written request permit payment of all
<PAGE>
Page 3
Mr. E.T. Fogarty
May 31, 1994
or any portion of such purchase price through the delivery to the Company
of shares of the Company's Common Stock, you shall deliver with the
exercise form certificates for the appropriate number of such shares,
valued at their then Fair Market Value, properly endorsed or accompanied by
a properly completed stock power, with signature guaranteed in either case
by a bank or stock exchange firm. Upon receipt of payment, the Company
shall deliver to you as soon as practicable a certificate or certificates
for the shares purchased. In connection with such exercise, the Company
shall make such provisions as it deems necessary and appropriate to satisfy
its obligation to withhold federal, state or local income taxes and other
taxes incurred by reason of such exercise.
7. Other Terms
-----------
All applicable terms and provisions of the Plan shall be deemed to be
included herein by reference and shall be controlling in the event of any
conflict or inconsistency between the Plan and this agreement.
Please indicate your acceptance of the terms and conditions of this agreement
and of the Plan by signing and returning the enclosed copy of this letter.
Very truly yours,
Tambrands Inc.
By/s/Kevin J. Paradise
-------------------------------------
Kevin J. Paradise
Vice President -
Human Resources
Accepted:/s/Edward T. Fogarty
------------------------------
(Optionee's Signature)
Date: 6/12/94
-----------------------
Enclosures:
1. 1991 Stock Option Plan
2. Form Letter for Option Exercise
<PAGE>
EXHIBIT 10.5
RESOLUTION OF THE BOARD OF DIRECTORS
June 28, 1994
-------------
RESOLVED, that in consideration of his services as Chairman of the Board of
--------
Directors of the Corporation, the Corporation shall pay Howard B. Wentz, Jr. (i)
for the period from May 31, 1994 until August 31, 1994, a cash fee of $2,500 per
diem, in addition to the other compensation otherwise payable to him for his
services as a non-employee director of the Corporation under the Corporation's
standard practices and policies, except that Mr. Wentz shall not receive any per
meeting fees for attendance at meetings of the Board of Directors or any of its
committees, and (ii) for the period from September 1, 1994 until the Annual
Meeting of Shareholders to be held in 1995, such compensation as shall mutually
be agreed hereafter by the Board and Mr. Wentz.
reslbddr.jun
<PAGE>
EXHIBIT 10.6
- - --------------------------------------------------------------------------------
TAMBRANDS INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Effective
July 1, 1986
As Amended and Restated Effective July 1, 1994
- - --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I....................................................................... 1
Introduction............................................................... 1
ARTICLE II...................................................................... 2
Definitions................................................................ 2
ARTICLE III..................................................................... 12
Retirement Income.......................................................... 12
3.1 Retirement Income........................................................ 12
3.2 Normal Retirement Income................................................. 12
3.3 Deferred Retirement Income............................................... 15
3.4 Early Retirement Income.................................................. 15
3.5 Reduction for Benefits Received Under
Other Retirement Plans................................................... 16
3.6 Form of Benefits......................................................... 18
3.7 Vesting of Retirement Benefit............................................ 19
3.8 Involuntary Termination of Employment
Following a Change of Control............................................ 19
ARTICLE IV...................................................................... 20
Death Benefits............................................................. 20
ARTICLE V....................................................................... 22
Administrative and General Provisions...................................... 22
5.1 Administration........................................................... 22
5.2 Claims Procedure......................................................... 23
5.3 Inalienability and Forfeiture of Benefits................................ 24
5.4 Unsecured General Creditor............................................... 25
5.5 Trust.................................................................... 25
5.6 Not a Contract of Employment............................................. 26
5.7 Captions................................................................. 26
5.8 Governing Law............................................................ 26
5.9 Validity................................................................. 27
5.10 Notice................................................................... 27
5.11 Incompetent Participant.................................................. 27
ARTICLE VI...................................................................... 28
Amendment and Termination...................................................... 28
APPENDIX A...................................................................... 28
</TABLE>
<PAGE>
TAMBRANDS INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
ARTICLE I
Introduction
------------
The Tambrands Inc. Supplemental Executive Retirement Plan (the "Plan")
has been adopted to provide supplemental retirement and death benefits to
certain officers and other key employees of Tambrands Inc., its subsidiaries and
its divisions. The purpose of this Plan is to attract and retain in the employ
of Tambrands Inc. and its subsidiaries and divisions officers and other key
employees of superior competence. This Plan was established effective July 1,
1986, and no employee who terminated employment with the Company for any reason
before such date shall have any rights under this Plan. This Plan was amended
and restated effective July 1, 1988, July 1, 1990, and July 1, 1991 and is
hereby amended and restated effective July 1, 1994. Any employee who
terminated employment prior to this amendment and restatement shall have no
rights under this Plan as amended and restated, but shall look solely to the
terms of this Plan prior to this amendment and restatement.
<PAGE>
ARTICLE II
Definitions
-----------
"Actuarial Equivalent" means the equivalent in value, based on an
--------------------
interest rate and mortality tables and other actuarial methods and assumptions
selected from time to time by the Company or an actuary selected by the Company.
"Adjusted" means the cost of living adjustment factor prescribed by
--------
the Secretary of the Treasury under Section 415(d) of the Code, as applied to
such items and in such manner as such Secretary shall provide.
"Affiliate" means the Company and any entity affiliated with the
---------
Company within the meaning of Code Sections 414(b) with respect to controlled
groups of corporations, 414(c) with respect to trades or businesses under
common control with the Company, 414(m) with respect to affiliated service
groups, and any other entity required to be aggregated with the Company pursuant
to regulations under Section 414(o) of the Code. No entity shall be treated as
an Affiliate for any period during which it is not part of the controlled group,
under common control or otherwise required to be aggregated under Code Section
414.
2
<PAGE>
A "Change of Control" shall occur if:
-----------------
(i) any person (as defined in Section 3(a)(9) of the Securities
Exchange Act of 1934, as amended from time to time (the "Exchange Act"), and as
used in Sections 13(d) and 14(d) thereof), excluding the Company, any Affiliate
and any employee benefit plan sponsored or maintained by the Company or any
Affiliate (including any trustee of such plan acting as trustee), but including
a "group" as defined in Section 13(d)(3) of the Exchange Act (a "Person")),
becomes the beneficial owner of shares of the Company having at least 20% of the
total number of votes that may be cast for the election of directors of the
Company (the "Voting Shares") provided, however, that such an event shall not
constitute a Change of Control if the acquiring Person has entered into an
agreement with the Company approved by the Board of Directors which materially
restricts the right of such Person to direct or influence the management or
policies of the Company;
(ii) the shareholders of the Company shall approve any merger or
other business combination of the Company, sale of the Company's assets or
combination of the foregoing transactions (a "Transaction") other than a Trans-
action involving only the Company and one or more of its Affiliates or a
Transaction immediately following which the
3
<PAGE>
shareholders of the Company immediately prior to the Transaction continue to
have a majority of the voting power in the resulting entity excluding for this
purpose any share-holder owning directly or indirectly more than 10% of the
shares of the other company involved in the Transaction; or
(iii) within any 24-month period beginning on or after April 30,
1989, the persons who were directors of the Company immediately before the
beginning of such period (the "Incumbent Directors") shall cease (for any reason
other than death) to constitute at least a majority of the Board of Directors or
the board of directors of any successor to the Company, provided that any
director who was not a director as of May 1, 1989 shall be deemed to be an
Incumbent Director if such director was elected to the Board of Directors by,
or on the recommendation of or with the approval of, at least two-thirds of the
directors who then qualified as Incumbent Directors either actually or by prior
operation of this Section.
"Code" means the Internal Revenue Code of 1986, as amended from time
----
to time.
"Committee" means the Compensation Committee of the Board of Directors
---------
of Tambrands Inc.
"Company" means Tambrands Inc., its successors and assigns and any
-------
company which shall acquire all or substan-
4
<PAGE>
tially all of its assets, and certain of their Affiliates as selected by the
Committee.
"Deferred Retirement Date" means the first day of the month coinciding
------------------------
with or next following the retirement of the Participant after his Normal
Retirement
Date.
"Deferred Retirement Income" means an amount determined, with respect
--------------------------
to any Participant, under Section 3.3.
"Designated Participant" means any executive (i) who immediately
---------------------- -
prior to July 1, 1994, was eligible to have his retirement income hereunder
determined under the formula contained in Subsection 1.1(B) of Appendix A, (ii)
--
who, assuming he remained a Participant until such time, would accrue a greater
benefit under that formula at age 62 than under the benefit formula contained in
Section 3.2(b) and (iii) who the Committee specifically designated as remaining
---
eligible for the benefits under that benefit formula.
"Early Retirement Date" means the first day of the month coinciding
---------------------
with or next following the retirement from the Company and any Affiliate of a
Participant on or after the attainment of his 55th birthday and the completion
of 10 Years of Service.
5
<PAGE>
"Early Retirement Income" means an amount determined with respect to
-----------------------
any Participant under Section 3.4.
"Earnings" for Plan Years on or after July 1, 1989, means "wages" as
--------
defined under Section 3121(a) of the Code for purposes of calculating social
security taxes, but determined without regard to the wage base limitation in
Section 3121(a)(1) of the Code, the special rules in Section 3121(v) of the Code
(except that elective nonqualified deferred compensation shall be included), any
rules that limit covered employment based on the type or location of an
Employee's employer, and any rules that limit the remuneration included in
wages based on familiar relationship or based on the nature or location of the
employment or the services performed (such as the exceptions to the definition
of employment in Section 3121(b)(1) through (20) of the Code). Without limiting
the generality of the foregoing, Earnings shall include amounts contributed on
behalf of an Employee as part of a salary reduction agreement under a qualified
cash or deferred arrangement pursuant to Code Section 401(k), amounts
contributed to a plan under Code Section 125 pursuant to a salary reduction
election, and elective nonqualified deferred compensation, including, without
limitation, any amount that would otherwise have been paid to a Participant as
salary or an annual bonus which is for-
6
<PAGE>
gone by such Participant in order to receive a grant of stock options, but
exclude all noncash compensation, non-elective nonqualified deferred
compensation, reimbursements or other expense allowances, fringe benefits (cash
and non-cash), moving expenses, welfare benefits and any lump sum severance
payments other than two weeks severance payments in lieu of notice. For Plan
Years prior to July 1, 1989, "Earnings" means the Employee's total cash
compensation received during the period, including but not limited to base
salary, bonuses, Annual Incentive Plan payments, prior to application of any
deferrals pursuant to Code Section 125 or 401(k) or pursuant to any nonqualified
plan or elective deferrals, and excluding moving allowances, expense reim-
bursement, value of stock options, value of equity units, any other stock awards
or grants, any fringe benefits or other non-cash items or any payments to, or
from, any benefit or deferred compensation plan except as otherwise speci-
fically provided. With respect to any Participant who is employed by an
Affiliate not otherwise designated as a participating company in the Plan, the
Committee may decide, in its sole discretion, to include compensation earned by
such Participant while employed by such Affiliate in the calculation of Earnings
under the Plan; provided, however, that the same inclusions and exclusions
applicable to Earn-
7
<PAGE>
ings of other Participants shall apply to the Participant's compensation earned
while employed by such Affiliate.
"Employee" means any person who is regularly employed by the Company.
--------
"Executive Participant" means any corporate officers or other key
---------------------
employees of Tambrands Inc. or of a Company or division of a Company as are
designated by the Committee and approved by the Chief Executive Officer of
Tambrands Inc. to be included as a Participant for purposes of the benefit
formula under Section 3.2(b).
"Grandfathered Participant" means any Participant who, as of June 30,
-------------------------
1990, had attained age 55 and completed 10 Years of Service and was determined
by the Committee to be a principal officer of the Company.
"Highest Average Earnings" means the arithmetical average of the
------------------------
annual Earnings received by a Participant in each of those five consecutive Plan
Years of employment, out of the last ten Plan Years of employment ending with
(or immediately preceding) the date as of which Highest Average Earnings is
being determined, which produce the highest average. In the event that a
Participant shall have been employed by the Company for less than five completed
Plan Years, his Highest Average Earnings shall be his average
8
<PAGE>
annual Earnings for the completed Plan Years of his employment.
"Involuntarily Terminated" means a termination of a Participant's
------------------------
employment (i) by the Company or (ii) by the Participant within ninety days
following (a) a material reduction in such Participant's compensation and
-
benefits (including the termination of this Plan or the reduction of benefits
under this Plan, in which case the Participant shall be deemed to have been
vested as of the date of the termination of this Plan or the reduction in
benefits hereunder), (b) a material change in such Participant's duties or
-
responsibilities or (c) a transfer of the Participant's principal place of
-
employment to a location more than 35 miles from the location at which such
Participant was principally employed immediately prior to the transfer, unless
the Participant shall consent in writing to any such reduction, change or
transfer.
"Normal Retirement Date" means the first day of the month coinciding
----------------------
with or next following the 65th birthday of the Participant.
"Normal Retirement Income" means an amount determined, with respect
------------------------
to any Participant, under Section 3.2.
"Participant" means (i) an Employee whose benefits under the Pension
----------- -
Plan are limited by reason of the limita-
9
<PAGE>
tions under the Code specified in Section 3.2(a) or because certain elements of
compensation included in the definition of Earnings are not taken into account
under the Pension Plan, (ii) an Executive Participant, (iii) a Designated
-- ---
Participant or (iv) a Grandfathered Participant. Any person who was a
--
Participant but does not qualify under the ongoing definition of Participant
shall cease to be a Participant and shall have no further rights hereunder. The
participation of a Participant in this Plan shall terminate automatically if
the Participant ceases to qualify as a Participant hereunder, unless the
Committee authorizes and approves such Participant's renewed or continued
participation in this Plan. The Committee, in its sole discretion, shall have
the right to terminate the participation of a Participant in this Plan at any
time. In the event any Participant ceases to be a Participant either
automatically or as a result of Committee action, his rights to benefits he has
accrued and is vested in, if any, through his date of ceasing to be a
Participant may not be altered or impaired.
"Pension Plan" means the Pension Plan for Employees of Tambrands Inc.,
------------
as amended from time to time.
"Plan" means the Tambrands Inc. Supplemental Executive Retirement
----
Plan.
10
<PAGE>
"Plan Year" means each twelve (12) consecutive month period beginning
---------
on July 1 and ending on June 30 of the succeeding calendar year.
"Primary Social Security Benefit" means the Primary Insurance Amount
-------------------------------
as defined under the Federal Social Security Act, computed on an annual basis,
and based upon the following assumptions:
(i) Payments commence on the later of the last day of the month
following the date on which a Participant attains age 62, or the date on which a
Participant's retirement income under this Plan commences to be paid;
(ii) The Participant had no Earnings during the year which includes
the date his employment with the Company terminates or at any time thereafter;
(iii) The Participant's Earnings in each prior year are equal to the
maximum amount of wages subject to tax under the Federal Insurance Contributions
Act.
"Retirement Benefit" means the benefit determined under Section 3.1.
------------------
"Trust" means the trust, if any, described in Section 5.4.
-----
"Years of Service" means the service credited to a Participant under
----------------
the Pension Plan, provided, that the Com-
--------
11
<PAGE>
mittee shall have the discretion to grant additional Years of Service to
Participants.
Wherever appropriate, words used in this Plan in the singular may
include the plural or the plural may be read as the singular; the masculine
gender may include the feminine, and the feminine may include the masculine.
12
<PAGE>
ARTICLE III
Retirement Income
-----------------
3.1 Retirement Income. A Participant who has satisfied the vesting
-----------------
conditions related to such benefits set forth in Section 3.7 shall receive
retirement income in the amount determined under Section 3.2, 3.3, or 3.4 as
such amount may be reduced under Section 3.5, provided that the retirement
-------------
income payable to a Designated Participant or a Grandfathered Participant shall
be determined under Appendix A, if it will result in such a Participant
receiving a greater amount of retirement income. Any such vested retirement
income ("Retirement Benefit"), which shall include any retirement income payable
pursuant to Appendix A, shall be payable in the form specified in Section 3.6.
3.2 Normal Retirement Income. Subject to his meeting the applicable
------------------------
requirements of Section 3.7, a Participant shall receive monthly payments under
this Section 3.2 ("Normal Retirement Income") commencing at the date specified
in and in an annual amount determined under Subsection 3.2(a) or (b).
Notwithstanding the foregoing, the Committee in its sole discretion may increase
the amount of Normal Retirement Income payable under this Plan.
(a) A Participant who has attained his Normal Retirement Date,
terminated employment with the Company and
13
<PAGE>
notified the Company of his desire to commence benefits under this Plan, shall
receive annually, commencing on his Normal Retirement Date, an amount equal to
the benefit payable under the benefit formula in the Pension Plan in the form of
a straight life annuity without regard to the $150,000 maximum salary
limitation, as such limitation may be Adjusted, under Section 401(a)(17) of the
Code, and without regard to the $90,000 maximum dollar limitation, as such
limitation may be Adjusted, on benefits (or, if applicable, the percentage limit
set forth therein) under Section 415(b) of the Code.
(b) An Executive Participant who meets the conditions to receive a
benefit under Subsection 3.2(a) shall receive annually, commencing on his Normal
Retirement Date, an amount equal to the greater of (i) the amount payable to
-
such Executive Participant under Subsection 3.2(a) or (ii) (x) 3% of his Highest
-- -
Average Earnings multiplied by his Years of Service not in excess of 15 years,
less (y) 3% of his Primary Social Security Benefit multiplied by his Years of
-
Service not in excess of 15 years.
3.3 Deferred Retirement Income. A Participant who continues in
-------------------------------
employment after his Normal Retirement Date shall continue to accrue benefits
under this Plan after his Normal Retirement Date which shall be determined under
Sec-
14
<PAGE>
tion 3.2 based on Years of Service and Earnings to the Deferred Retirement Date.
Alternatively, the Committee, in its sole discretion, may adjust the Normal
Retirement Income of a Participant who retires after he attains his Normal
Retirement Date to provide a benefit which is the Actuarial Equivalent of the
accrued benefit the Participant would have received at his Normal Retirement
Date or at any time thereafter, provided that in no event shall a Participant's
Deferred Retirement Income be less than that determined under the first sentence
of this Section 3.3.
3.4 Early Retirement Income. Subject to his meeting the requirements
-----------------------
of Section 3.7, a Participant who has attained his Early Retirement Date and who
wishes to receive benefits determined in accordance with Section 3.2 before the
attainment of his Normal Retirement Date shall so notify the Company and shall
thereupon receive Early Retirement Income commencing before his Normal
Retirement Date. The annual amount of Early Retirement Income shall be equal to
the greater of (i) the Normal Retirement Income credited under Section 3.2(a)
-
based on Years of Service and earnings, as defined in the Pension Plan, to his
Early Retirement Date and (ii) the Normal Retirement Income credited under
--
Section 3.2(b) whichever is applicable, assuming that the Participant retired
at the later of age 62 or his age on his Early
15
<PAGE>
Retirement Date (without giving effect to the requirement of Section 3.2 that
the Participant have attained his Normal Retirement Date) and based on his
current Highest Average Earnings, multiplied by a fraction, the numerator of
which is his actual Years of Service and the denominator of which is his
projected Years of Service had he continued employment until the attainment of
the later of age 62 or his age on his Early Retirement Date. The amount
determined under the preceding sentence (whether under Subsection 3.2(a) or
3.2(b) shall be reduced by 1/3 of 1% for each month by which his age, when
payment commences, is less than 62. No adjustment shall be made for
commencements after age 62. The Committee shall have complete discretion as to
whether to decrease or eliminate the reductions described in this Section 3.4,
and its decision shall be final in all respects.
3.5 Reduction for Benefits Received Under Other Retirement Plans.
------------------------------------------------------------
The amount of Normal Retirement Income payable to a Participant shall be reduced
by the Actuarial Equivalent of any amount paid or payable to the Participant
under any plan, program or agreement providing pension, retirement, or related
benefits (but excluding benefits under any savings, stock bonus or incentive
plan unless the Committee in its sole discretion determines to include such
16
<PAGE>
a plan at either the time a person becomes eligible for this Plan or at the time
of the awarding of recognition of additional Years of Service pursuant to
Article I hereof or an additional benefit pursuant to Section 3.2 hereof, but in
the event of such additional recognition of service or additional benefit, the
reduction shall not be greater than the additional Retirement Income created by
such additional recognition of service or additional benefit (an "Other
Retirement Plan")) maintained by the Company or any Affiliate (unless it
expressly provides otherwise). In the event the Committee, in its sole
discretion, grants additional Years of Service to Participants based on prior
service with previous employers, the amount of Normal Retirement Income
described in the preceding sentence shall be further reduced by the Actuarial
Equivalent of any amount paid or payable to the Participant under any Other
Retirement Plan maintained by the Participant's previous employers (unless the
Committee in its sole discretion modifies such reduction).
3.6 Form of Benefits. If a Participant is married on the date his
----------------
Retirement Benefit commences to be paid such Benefit shall be payable in the
form of a joint and survivor annuity which is the Actuarial Equivalent of such
Benefit and is payable to the Participant for his lifetime and following his
death to his surviving spouse for the
17
<PAGE>
lifetime of the spouse in one-half the amount payable to the Participant.
If a Participant is not married on the date his Retirement Benefit
commences to be paid such Benefit shall be payable in the form of a life annuity
for his life.
Notwithstanding the foregoing, with the consent of the Committee,
which it may grant or deny in its sole discretion, a Participant may receive
his Retirement Benefit in a form other than specified above, if such optional
form of payment is available under the Pension Plan and the Participant meets
each requirement under the Pension Plan respecting the election of such form of
payment. Each optional form of payment shall be the Actuarial Equivalent of the
Participant's Retirement Benefit.
If an amount is payable under this Plan in respect of a Participant,
and the present value of such amount does not exceed $3,500, such present value
may be immediately distributed to the Participant (or his beneficiary, as the
case may be) at the discretion of the Company, without the consent of the
Participant.
3.7 Vesting of Retirement Benefit. Except as provided in Section
-----------------------------
3.8, no amount shall be payable to a Participant as a Retirement Benefit unless
such Participant is vested in such Retirement Benefit in accordance with the
18
<PAGE>
provisions of this Section 3.7. A Participant who has completed 5 Years of
Service shall be vested in the Retirement Benefit payable under Subsection
3.2(a). A Participant who has attained his Early Retirement Date (age 55 with
10 Years of Service) while a Participant shall be vested in the Retirement
Benefit described in Subsection 3.2(b) and payable under Section 3.4. A
Participant who has attained his Normal Retirement Date and completed 10 Years
of Service while a Participant shall be vested in the Retirement Benefit
described in Subsection 3.2(b) and payable under either Section 3.2 or 3.3.
3.8 Involuntary Termination of Employment Following a Change of
------------------------------------------------------------
Control. Notwithstanding anything else in this Plan to the contrary, in the
- - -------
event a Participant is Involuntarily Terminated within two years following the
occurrence of a Change of Control, regardless of the Participant's age and
Years of Service at such termination, such Participant shall be entitled to
receive a monthly benefit commencing at or after the later of age 55 and such
termination of employment equal to the benefit that would have been payable to
such Participant at his Normal Retirement Date (but subject to an actuarial
reduction for early commencement to the extent such reduction would be imposed
under Section 3.4) based on the number of Years of Service such
19
<PAGE>
Participant had completed prior to such termination, plus two additional Years
of Service.
ARTICLE IV
Death Benefits
--------------
If a Participant dies after becoming eligible (other than satisfying
the requirement for actual retirement) for Early Retirement Income under
Section 3.4 and is survived by a spouse, such spouse shall be paid a benefit (a
"Surviving Spouse's Benefit") commencing on the first day of the month in which
the Participant would have attained his Early Retirement Date had he survived.
The monthly amount of the Surviving Spouse's Benefit payable in accordance with
this Article shall be equal to the monthly amount which would have been payable
to the Participant's spouse if the deceased Participant had separated from
service on the date of death, survived until his Early Retirement Date, retired
on his Early Retirement Date with a "joint and survivor annuity" as described in
Section 3.6, and died on the day following his Early Retirement Date.
If a Participant dies while employed by the Company and is not
married, no death benefit shall be payable under this Plan.
20
<PAGE>
Notwithstanding the preceding provisions of this Article IV, (i) if a
-
Participant dies while employed by the Company and after properly electing an
optional form of payment in accordance with Section 3.6 that has been consented
to by the Committee, payment shall be made in accordance with such election or
(ii) if a Participant who is entitled to receive a Retirement Benefit under
--
Subsection 3.2(a) dies, the Company shall pay a death benefit hereunder to the
beneficiary, if any, to whom the Pension Plan pays a death benefit in respect of
such Participant in an amount equal to the amount which would have been payable
to such beneficiary under the Pension Plan had such Retirement Benefit been
payable under the Pension Plan.
ARTICLE V
Administrative and General Provisions
-------------------------------------
5.1 Administration. This Plan shall be administered by Tambrands
--------------
Inc. Tambrands Inc. shall have the power, subject to the terms of this Plan, to
make all interpretations and other determinations not reserved to the Committee
which may be necessary or desirable for this Plan's administration. Any
interpretations and determinations of the Committee or Tambrands Inc. shall be
final and conclusive. No member of the Committee or employee of
21
<PAGE>
Tambrands Inc. may act or vote upon a decision specifically relating to his own
participation in this Plan. No member of the Board of Directors of Tambrands
Inc. or the Committee and no employee of Tambrands Inc. shall be liable for any
action or determination made in good faith with respect to this Plan or the
rights of any person under this Plan, nor shall Tambrands Inc. be liable for any
such action or determination. Tambrands Inc. or its agents shall keep such
records as may be necessary for the administration of this Plan and shall
furnish Participants such statements as it may determine to be necessary or
desirable to show their interests in this Plan.
22
<PAGE>
5.2 Claims Procedure.
----------------
(a) The Committee shall be responsible for determining all claims
for benefits under this Plan by Participants or their beneficiaries. Within 90
days after receiving a claim (or within up to 180 days, if the claimant is so
notified, including the reason for the delay), the Committee shall notify the
Participant or beneficiary of its decision in writing, giving the reasons for
its decision if adverse to the claim. If the decision is adverse to the
claimant, the Committee shall advise him of the Plan provisions involved, of
any additional information which he must provide to perfect his claim and why,
and of his right to request a review of the decision.
(b) A claimant may request a review of an adverse decision by written
request to the Committee made within 60 days after receipt of the decision. The
claimant, or his attorney, may review pertinent documents and submit written
issues and comments.
(c) Within 60 days after receiving a request for review, the
Committee shall notify the claimant in writing of (i) its decision, (ii) the
reasons therefor, and (iii) the Plan provisions upon which it is based.
(d) The Committee may at any time alter the claims procedure set
forth above, so long as the revised
23
<PAGE>
claims procedure complies with ERISA and the regulations issued thereunder.
5.3 Inalienability and Forfeiture of Benefits. Except as set forth
-----------------------------------------
below, the benefits payable under this Plan shall not be subject to alienation,
transfer, assignment, garnishment, execution or levy of any kind, and any
attempt to cause any benefits to be so subjected shall not be recognized. If
any Participant entitled to a benefit under this Plan is discharged for cause,
enters into competition with the Company, interferes with the relations between
the Company and any customer, discloses confidential information that has an
adverse effect on the Company, or engages in any activity that would result in
any decrease in sales or income of the Company, the rights of such Participant
to a benefit under this Plan will be forfeited, unless the Committee in its sole
discretion determines that such activity is not detrimental to the best interest
of the Company. The foregoing sentence of this Section 5.3 shall not apply (a)
to any event or action occurring after a Change of Control, or (b) to any event
occurring prior to a Change of Control unless the Participant had been notified
in writing prior to such Change of Control of implementation of the foregoing
sentence or the Committee had otherwise taken formal actions to implement the
foregoing sentence.
24
<PAGE>
5.4 Unsecured General Creditor. Participants shall have no legal or
--------------------------
equitable rights, interest or claims in any property or assets of the Company.
Except as expressly otherwise provided by the Company pursuant to Section 5.5,
no assets of the Company shall be held under any trust for the benefit of
Participants, or held in any way as collateral security for the fulfilling of
the obligations of the Company under this Plan. The Company's obligation
under this Plan shall be merely that of an unfunded and unsecured promise of the
Company to pay money in the future. Notwithstanding any other provision of this
Plan, any claim for benefits under this Plan shall be subordinate to claims by
general creditors of the Company against the assets of the Company and against
the assets of any trust that may be established by the Company pursuant to
Section 5.4.
5.5 Trust. The Company shall be responsible for the payment of all
-----
benefits provided under this Plan. At its discretion, Tambrands Inc. may
establish one or more trusts, with such trustees as the Committee may approve,
for the purpose of providing for the payment of such benefits. Such trust or
trusts may be irrevocable, but the assets thereof shall be subject to the claims
of the Company's creditors. To the extent any benefits provided under this Plan
are actually paid from any such trust, the Company
25
<PAGE>
shall have no further obligation with respect thereto, but to the extent not so
paid, such benefits shall remain the obligation of, and shall be paid by, the
Company. In the event that assets of any such trust are applied to satisfy
claims of creditors of the Company, an amount equal to the amount so applied
shall be contributed promptly to the trust by the Company.
5.6 Not a Contract of Employment. The terms and conditions of this
---------------------------
Plan shall not be deemed to constitute a contract of employment between the
Company and the Participant, and the Participant shall have no rights against
the Company except as may otherwise be specifically provided herein. Moreover,
nothing in this Plan shall be deemed to give a Participant the right to be
retained in the service of the Company or to interfere with the right of the
Company to discipline or discharge him at any time for any reason whatsoever.
5.7 Captions. The captions of the articles, sections and paragraphs
--------
of this Plan are for convenience only and shall not control or affect the
meaning or construction of any of its provisions.
5.8 Governing Law. The provisions of this Plan shall be construed
-------------
and interpreted according to the laws of the State of New York.
26
<PAGE>
5.9 Validity. In case any provision of this Plan shall be illegal or
--------
invalid for any reason, said illegality or invalidity shall not affect the
remaining parts hereof, but this Plan shall be construed and enforced as if such
illegal and invalid provision had never been inserted herein.
5.10 Notice. Any notice or filing required or permitted to be given
------
to the Committee or the Company under this Plan shall be sufficient if in
writing and hand delivered, or sent by registered or certified mail, to the
Committee or the Company, as the case may be, at the principal office of the
Company. Such notice shall be deemed given as of the date of delivery or, if
delivery is made by mail, as of the date shown on the postmark on the receipt
for registration or certification.
5.11 Incompetent Participant. In the event that it shall be found
-----------------------
upon evidence satisfactory to the Company that any Participant to whom a benefit
is payable under this Plan is unable to care for his affairs because of illness
or accident, any payment due (unless prior claim therefor shall have been made
by a duly authorized guardian or other legal representative) may be paid, upon
appropriate indemnification of the Company and the Committee, to the spouse or
other person deemed by the Company to have incurred expense
27
<PAGE>
for such Participant. Any such payment shall be a payment for the account of
the Participant and shall be a complete discharge of any liability of this Plan
therefor.
ARTICLE VI
Amendment and Termination
-------------------------
The Committee may terminate or amend this Plan in any respect at any
time, provided that no action of the Committee may, without the consent of the
person involved, alter or impair the rights of a Participant to any benefits
accrued and vested hereunder.
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed by its duly authorized officer, as of this 1st day of June, 1994.
TAMBRANDS INC.
By: /s/Kevin J. Paradise
--------------------
Title: Vice President -
Human Resources
28
<PAGE>
APPENDIX A
----------
Notwithstanding anything else to the contrary, this Appendix A shall
apply for determining the benefits of Designated Participants and Grandfathered
Participants. All capitalized terms used herein shall have the meaning set
forth in the Plan.
1.1 Benefits.
--------
A. A Designated Participant or a Grandfathered Participant who has
satisfied the vesting conditions related to such benefits set forth in
Subsection 1.1(E) below shall receive annually, commencing on his Normal
Retirement Date, retirement income in the amount determined under Section 1.1(B)
or 1.1(C) below, as such amount may be reduced under Section 3.5 of the Plan.
B. A Designated Participant who meets the conditions to receive a benefit
under Subsection 1.1(A) shall receive annually, commencing on his Normal
Retirement Date, an amount equal to (i) 45% of his Highest Average Earnings
-
times the lesser of (x) one or (y) a fraction, the numerator of which is the
- -
Designated Participant's Years of Service and the denominator of which is the
remainder of 62 minus the Participant's age at his or her birthday occurring in
the calendar year in which he or she first became an employee of the Company
less (ii) the product of his Primary Social Security Benefit times a percentage
--
equal to the percentage determined under subclause (i).
C. A Grandfathered Participant who meets the conditions to receive a
benefit under Subsection 1.1(A) shall receive annually, commencing on his Normal
Retirement Date, an amount equal to the greater of (i) an amount equal to 1.5%
-
of his Highest Average Earnings multiplied by the number of his Years of
Service, less $762, and (ii) an amount equal to 3% of his Highest Average
--
Earnings multiplied by the number of his Years of Service not in excess of 15
Years of Service, less $762.
D. A Designated Participant or a Grandfathered Participant who has
attained his Early Retirement Date may elect to have his retirement income
payable at the same time and subject to the same offsets and reductions as apply
with respect to any retirement income payable under Section 3.4
29
<PAGE>
of the Plan. A Designated Participant or a Grandfathered Participant who
continues in employment after his Normal Retirement Date shall have his
retirement income payable at the same time and subject to the same offsets and
reductions as apply with respect to any retirement income payable under Section
3.3 of the Plan.
E. Except as provided in Subsection 1.1(F) below, no amount shall be
payable to a Participant as a Retirement Benefit under this Appendix A unless
such Participant is vested in such Retirement Benefit in accordance with the
provisions of this Subsection 1.1(E). A Designated Participant who has attained
his Early Retirement Date (age 55 with 10 Years of Service) while a Participant
or who has attained his Normal Retirement Date and completed 10 Years of Service
while a Participant shall be vested in the Retirement Benefit described in
Subsection 1.1(B). A Grandfathered Participant who has completed 5 Years of
Service shall be vested in the Retirement Benefit payable under Subsection
1.1(C).
F. Notwithstanding anything else in this Appendix A or the Plan to
the contrary, in the event a Designated Participant or a Grandfathered
Participant is Involuntarily Terminated within two years following the
occurrence of a Change of Control, regardless of the Participant's age and Years
of Service at such termination, such Participant shall be entitled to receive a
monthly benefit commencing at or after the later of age 55 and such termination
of employment equal to the benefit that would have been payable to such
Participant at his Normal Retirement Date (but subject to an actuarial reduction
for early commencement to the extent such reduction would be imposed under
Section 3.4 of the Plan) based on the number of Years of Service such
Participant had completed prior to such termination, plus two additional Years
of Service.
30
<PAGE>
EXHIBIT 10.7
FOURTH AMENDMENT TO
THE TAMBRANDS INC.
1992 DIRECTORS STOCK INCENTIVE PLAN
-----------------------------------
WHEREAS, TAMBRANDS INC. (the "Company") adopted the 1992 Directors Stock
Incentive Plan (the "Plan"); and
WHEREAS, pursuant to Section 13 of the Plan, the Board of Directors
retained the right to amend the Plan;
NOW, THEREFORE, the Plan is amended as follows:
1. Section 8(b) is amended to delete the first sentence thereof and to
substitute a new first sentence thereof, to read as follows:
The date of each grant shall be November 15 for Awards granted in
1991, August 15 for Awards granted in 1992 to Participating Directors,
August 24 for Awards granted in 1993 to Participating Directors, August 23
for Awards granted in 1994 to Participating Directors and September 15 for
Awards granted in 1994 to Eligible Directors (the "Date of Grant").
2. Section 8(d) is amended to delete the first sentence thereof and
to substitute a new first sentence thereof, to read as follows:
A Participant who wishes to elect to receive an Exchange Option in
accordance with Section 8(a) shall deliver to the Secretary of the Company
a written irrevocable election, in a form acceptable to the General Counsel
of the Company, not later than November 8, 1991 for grants to be made in
November 1991, August 10, 1992 for grants to be made in August 1992, August
17, 1993 for grants to be made in August 1993, August 16, 1994 for grants
to be made in August 1994 and September 8 for grants to be made in
September 1994, specifying the type and amount of compensation such
Participant wishes to forgo.
<PAGE>
-2-
3. This Fourth Amendment to the Plan shall be effective as of March
1, 1994.
IN WITNESS WHEREOF, the Company has caused this Fourth Amendment to be
executed by its duly authorized officer on the 28th day of April, 1994.
TAMBRANDS INC.
By:/s/Helen G. Goodman
---------------------------
Title: Senior Vice President -
Human Resources
------------------------
WITNESS:
/s/Concetta Bazzano
- - --------------------------
Title: Executive Secretary
--------------------
<PAGE>
TAMBRANDS INC.
FORM 10-Q
PART II, ITEM 6., EXHIBIT 12
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Unaudited)
The following table sets forth the Company's ratio of earnings to fixed charges
for the periods indicated.
<TABLE>
<CAPTION>
Six months Three months Three months
ended ended ended Year Ended
(in thousands, except ratios) June 30, 1994 June 30, 1994 March 31, 1994 December 31,
--------------- --------------- --------------- -----------------------------------------------
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Earnings:
Income before income taxes 66,749 31,758 34,991 118,652 191,863 131,825 154,696 30,859
Fixed charges 4,901 2,478 2,423 6,549 9,897 10,258 13,149 9,490
------ ------ ------ ------- ------- ------- ------- ------
EARNINGS 71,650 34,236 37,414 125,201 201,760 142,083 167,845 40,349
====== ====== ====== ======= ======= ======= ======= ======
Fixed charges:
Interest portion of operating
lease expense:
Operating lease expense 2,029 1,105 924 5,027 4,031 4,204 2,221 2,053
Assumed interest factor 0.33 0.33 0.33 0.33 0.33 0.33 0.33 0.33
------ ------ ------ ------- ------- ------- ------- ------
Interest portion of
operating lease expense 670 365 305 1,659 1,330 1,387 733 677
Interest expense 4,231 2,113 2,118 4,890 8,567 8,871 12,416 8,813
------ ------ ------ ------- ------- ------- ------- ------
FIXED CHARGES 4,901 2,478 2,423 6,549 9,897 10,258 13,149 9,490
====== ====== ====== ======= ======= ======= ======= ======
RATIO OF EARNINGS TO FIXED CHARGES 14.6 13.8 15.4 19.1 20.4 13.9 12.8 4.3
====== ====== ====== ======= ======= ======= ======= ======
</TABLE>
