<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
_______________________
FORM 10-K
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
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 (I.R.S. Employer
of 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, is 914-696-6000
------------
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
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Common Stock, par New York Stock Exchange
value $.25 per share; and Pacific Stock Exchange
Common Share Purchase Rights
Securities registered pursuant to Section 12(g) of the Act: None
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, and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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(Facing Sheet Continuation)
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained in this Form 10-K, and will not
be contained, to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.
[ ]
The aggregate market value of the voting stock held by
non-affiliates of the registrant as of February 18, 1997 was $ 1,624,649,987.
(For this computation, the registrant has excluded the market value of all
shares of its Common Stock reported as beneficially owned by officers and
directors of the registrant; such exclusion shall not be deemed to constitute
an admission that any such person is an "affiliate" of the registrant.)
As of March 14, 1997, 36,948,862 shares of the registrant's Common
Stock were outstanding.
Documents Incorporated by Reference
- -----------------------------------
Part III of this Form 10-K incorporates by reference portions of
the definitive Proxy Statement for the registrant's annual meeting of
shareholders to be held on April 22, 1997, filed with the Securities and
Exchange Commission pursuant to Regulation 14A.
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PART I
------
Item 1. Business
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General
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Tambrands Inc.("Tambrands") was incorporated under the laws of the State
of Delaware in 1936. Tambrands' principal executive offices are located at 777
Westchester Avenue, White Plains, New York 10604 (telephone number
914-696-6000).
Tambrands and its subsidiaries (the "Company") have been manufacturing
and marketing menstrual tampons, which are sold under the trademark TAMPAX(R)
since 1936. The Company is the leading manufacturer and marketer of tampons in
the world. The Company operates in one industry segment, personal care
products. In recent years, the Company has focused on its core TAMPAX tampon
business worldwide and has placed an increased emphasis on the development and
marketing of new products. The Company currently has manufacturing operations
in five countries. In 1996, TAMPAX tampons were sold in over 150 countries.
The Company's eight largest markets are the United States, the United Kingdom,
France, Canada, Spain, CIS (principally Russia and Ukraine), Italy and Belgium.
Recent Developments
- -------------------
During the third quarter of 1996, the Company announced that it was
implementing a single global organizational structure and a restructuring to
increase efficiency, eliminate duplication, improve decision-making, and get
new and improved products to the global market more quickly. A $46.2 million
restructuring charge ($37.0 million after-tax) was taken to provide for the
costs associated with restructuring production facilities around the world to
support this global strategy. The restructuring program involves a reduction
in the number of worldwide plants from nine to five and a reduction of 1,100
jobs from the worldwide workforce. Approximately 500 new jobs will be created
from the upgrade of the remaining manufacturing facilities and expanded
marketing and product development capabilities. See Note 6, "Restructuring
Charge," included in the Notes to Consolidated Financial Statements incorporated
by reference in item 8 of Part II hereof.
As part of the Company's new global organization, Thomas J. Mason was
appointed Executive Vice President and Chief Operating Officer of Tambrands.
Also during 1996, Bruce P. Garren was appointed Vice President - General
Counsel, Michael A. Hecht was appointed Vice President - Controller, and Sheila
A. Hopkins was appointed Vice President - U.S. Marketing.
During 1996, the Company launched five new TAMPAX products in 14 markets
around the world. TAMPAX NATURALS(TM), the only widely available tampon or pad
to be made of 100% cotton, was introduced in the United States and Canada.
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TAMPAX SIMPLE, a value brand, was introduced in Mexico. The Company introduced
its TAMPAX COMPAK(R) brand in several Asian markets and TAMPAX SATIN in Italy.
The Company also expanded its presence in the non-applicator segment by
introducing its non-applicator tampons in a number of additional markets,
including the United States.
During 1996 and the beginning of 1997, the Company extended its
international distribution alliance with SCA Molnlycke, a major global personal
care products company headquartered in Sweden, whose products include sanitary
pads and panty-liners. The Company now distributes Molnlycke's products in the
United Kingdom, as well as Russia, and, commencing in mid-1997, Molnlycke will
distribute the Company's products in France. The combined Tampax/Molnlycke
line of products is the sanitary protection market leader in the United Kingdom
and Russia and is expected to be a leader in France. The alliance
significantly enhances the Company's strength in the international marketplace.
The Company's 1996 capital spending programs comprised investments in
equipment to improve product quality and productivity, modernize production
facilities and manufacture and launch new products. See "Management's
Discussion and Analysis of Results of Operations and Financial Condition"
incorporated by reference in item 7 of Part II hereof. The Company intends to
continue its efforts to achieve productivity gains to improve margins, speed up
the supply chain, and generate funds.
Tambrands converted to a holding company structure as of December 31,
1996, with Tambrands remaining as the ultimate parent company and two new
subsidiaries, Tambrands Mfg. Inc. and Tambrands Sales Corp., now performing
manufacturing, sales and certain other functions. The Company does not expect
any material effects on its business as a result of the new structure.
Products
- --------
Menstrual tampons represent all of the Company's net sales. The Company
is the only tampon manufacturer to broadly offer a product in each of the three
major market segments: cardboard applicator, plastic applicator and
non-applicator. The Company's largest selling tampon is the TAMPAX flushable
applicator tampon, which first became commercially available in 1936 and was
upgraded and relaunched in 1995. The new 100%-cotton TAMPAX NATURALS tampon is
made of all natural components and has a flushable, biodegradable applicator.
It currently is being sold in the United States, Canada and Puerto Rico.
The TAMPAX SATIN TOUCH(R) tampon has a rounded-end applicator with a
patented, high gloss surface. This tampon, which was introduced in the United
States in 1994, offers the ease and comfort of a plastic applicator, but with
an all-paper applicator that is flushable and biodegradable. SATIN TOUCH was
introduced nationally in Canada in 1993 and in
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Puerto Rico and several Caribbean locations in 1995. In 1996, the Company
introduced the TAMPAX SATIN(R) tampon in Italy. This tampon is similar to the
SATIN TOUCH tampon and was first introduced in France in 1994. In 1995, it was
introduced in Spain and Belgium, and in Denmark and Finland under the trademark
TAMPAX SILKS(TM). The Company announced in 1996 that the new 100%-cotton SATIN
Naturals tampon would be launched in 1997 in the United Kingdom.
In 1994, the Company introduced nationally in the United Kingdom its
TAMPAX TAMPETS(R) tampon. This non-applicator tampon has been sold in Ireland
since 1993 and was introduced in 1995 in Australia, Israel and Portugal. In
1996, TAMPAX Non-Applicator tampons were launched in France, Russia, New
Zealand and several other countries.
TAMPAX tampons with plastic applicators are sold in the United States and
Canada and, since 1995, have been sold in Brazil. TAMPAX COMPAK(R) tampons, with
a compact all-plastic applicator, are sold in France, Spain and the United
Kingdom, as well as in the United States, Canada and several other smaller
markets. In 1996, the Company began marketing an improved COMPAK tampon with a
shorter applicator and a wrapper for applicator disposal, and introduced COMPAK
tampons in additional small markets.
In 1994, the Company introduced nationally in the United States the TAMPAX
LITES(R) tampon. This tampon is also sold in Canada and New Zealand, and is
especially designed for use on days of light menstruation, when other tampons
might be too absorbent for comfortable use. The Company sells TAMPAX comfort
shaped flushable applicator tampons, with an all-paper rounded-end applicator
and a slimmer design than the Company's original flushable applicator product.
This tampon is sold in the United States, New Zealand and Japan. In 1996, the
Company introduced a new value-brand tampon, TAMPAX SIMPLE tampons. This
product, which has been introduced in test market in Mexico, has an all-paper
applicator which is flushable and biodegradable.
The Company continues to evaluate the possible introduction of its
existing products in additional markets, as well as additional new products and
product enhancements.
Marketing and Sales
- -------------------
Marketing operations are conducted either directly by the Company, or by
third-party brokers or sales agents and distributors. Sales are made directly
to drug, grocery, variety and discount stores and other comparable outlets, as
well as to wholesalers and distributors. Sales to discount stores, including
mass merchandisers and club stores, have been increasing as a percentage of
total sales. For the years 1994, 1995 and 1996, Wal-Mart, together with its
affiliated stores, accounted for approximately 10.3%, 11.1% and 12.2%,
respectively, of the Company's net sales worldwide. No single customer
(including distributors) of the Company accounted for 10% or more of total net
sales
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prior to 1994. The marketplace for consumer products is becoming increasingly
global and currently is characterized by growing trade consolidation and
expansion across geographic borders.
Substantially all sales involve extensions of credit. Credit terms
generally are consistent with terms typically extended under local industry
practices. In the United States, the Company typically offers a discount of 2%
if payment is received within 30 days. In Canada, a 1% discount is typically
offered if payment is received within 20 days. In the United Kingdom and most
other European markets, discounts generally are not offered and payment terms
range from 30 to 90 days. In other markets, credit terms with longer
collection periods are common, and in some developing markets discounts for
prompt payment are offered. Default rates by the Company's customers in the
United States have been at or below industry averages, based on information
from the Credit Research Foundation.
In the United States, the Company's internal sales management group
directly handles sales to certain large customer accounts. These sales have been
increasing as a percentage of total sales. Other sales in the United States and
sales in Belgium, France and the Netherlands are handled through third-party
sales brokers, who also may sell other branded consumer products but generally
do not carry products that compete with the products of the Company. Sales are
conducted in the Czech Republic, Poland, Russia, Ukraine and the United Kingdom
by the Company and in the People's Republic of China by its joint venture. In
Canada, sales are conducted both by third-party sales brokers and by the
Company. Sales are conducted in other countries through third-party distributors
and agents. The Company's sales forces in the Czech Republic, Poland, Russia,
Ukraine and the United Kingdom distribute or act as broker with respect to
certain household consumer products for several other companies.
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. The size of inventories at the trade level varies from month
to month, sometimes considerably, due to a number of factors.
Media advertising is important to the overall success of the TAMPAX
tampon brand. In the United States, Canada and Europe, the Company focuses its
advertising on women aged 12-34, using a variety of media, including television
and print advertisements. The Company intends to aggressively proceed with its
support of the TAMPAX tampon franchise with advertising, promotion and product
line extensions. During 1996, the Company assigned its worldwide advertising
account to Foote, Cone & Belding.
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During 1996, the Company changed the way it groups markets to focus
more on common attributes of the consumer. Countries are now grouped into
three tampon market "clusters": "very developed," "moderately developed," and
"undeveloped." Each cluster is defined by category strength, common consumer
attitudes, usage behaviors, cultural issues and other factors. This clustering
approach drives the Company's global marketing plans, educational programs and
product portfolio decisions.
The Company provides significant educational and informational support for
young women. The Company seeks to attract and retain customers through its teen
education program, which is designed to help young women understand the various
forms of sanitary protection and promotes trial usage of TAMPAX tampons. In
certain markets, like Russia and China, the Company uses sampling with young
women and physician awareness programs. In the Company's largest markets, the
Company conducts school education programs that include videos, lecturers and
booklets. In addition, during 1996, the Company was the first sanitary
protection manufacturer to establish a web site targeted at young women. The web
site is designed to answer young women's questions, obtain their feedback and
provide product samples.
Competition
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Highly competitive conditions prevail in the feminine protection
industry. The Company competes primarily on the basis of product
performance, value and brand recognition.
In the United States, there are four other manufacturers whose sales,
directly or through subsidiaries, are significant in the total sanitary
protection market: Johnson & Johnson, Kimberly-Clark Corporation, Playtex Family
Products Corporation and The Procter & Gamble Company. Each of these
corporations manufactures and sells external pads or menstrual tampons or both.
Each makes and sells products other than external pads and tampons, and the
total sales of all products by and the capitalization of each of Johnson &
Johnson, Kimberly-Clark and Procter & Gamble are substantially greater than the
total sales and capitalization of the Company. These factors may be helpful to
the respective competitive positions of these companies in the feminine
protection industry. Substantially all of the tampons manufactured by the above-
mentioned four companies are sold under these companies' brand names. In
addition, there is a small but growing private label segment of the industry.
Management believes that the TAMPAX tampon's leading market share position in
the U.S. tampon category (approximately 49.2% in dollars and 51.0% in units for
the year 1996, according to Nielsen Marketing Research) and strong brand loyalty
among consumers (as verified by household panel data obtained by Nielsen
Marketing Research), are positive factors in the Company's ability to compete in
the feminine protection industry. (Information obtained from Nielsen represents
Nielsen estimates only.) During 1996, the level
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of competitive activity continued to increase in the United States, particularly
in the areas of price discounting and new product introductions.
The Company's U.S. volume in 1996 was lower than in 1995, primarily as a
result of increased competitive activity in the form of retail price promotions
and new product introductions. According to Nielsen Marketing Research, the
Tampax U.S. market share in units for 1996 declined 2.7 share points versus
1995, primarily due to this increased competitive activity. However, the U.S.
tampon category in units, as measured by Nielsen, improved 0.6 percentage
points for 1996 versus 1995 and the Company's quarterly U.S. market share
percentages for 1996 trended upward after the second quarter. The fourth quarter
U.S. market share of 52.1%, as measured by Nielsen, was the Company's highest
quarterly share for the year.
Highly competitive conditions prevail in virtually all foreign markets.
Competition tends to be fragmented and regional in nature in most of those
markets, but tampons produced by, or under license from, Johnson & Johnson and
Playtex, and external pads produced by, or under license from, Johnson &
Johnson, Kimberly-Clark and Procter & Gamble, are sold in many of the foreign
markets where the Company does business. During 1996, Johnson & Johnson
marketed plastic applicator tampons manufactured by Playtex in a number of
foreign markets where the Company does business. Competitive activity remained
at high levels in Europe in 1996. This activity included the continued
aggressive marketing of several external pad products.
The worldwide market for consumer products remains highly competitive and
sensitive to price. The Company expects that this trend will continue.
However, in the second half of 1996, two competitors took selective price
increases in the United States. Management will continue to evaluate price
increase opportunities as appropriate. The Company anticipates a continuation
of the current high level of advertising and promotional activities and new
product introductions by competitors, along with continued growth in the
private label sector.
Raw Materials
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The Company is increasing its sourcing of raw materials on a global
basis. The principal raw materials used in the Company's business are cotton
and rayon for tampons, paper and plastic for tampon applicators, and paperboard
for cartons and containers. Most of these raw materials are readily available
in the market from many sources. The cost of manufacturing continues to be
impacted by the prior years' increases in raw material costs. Recently, as a
result of the downward trend of pulp and paper prices and global purchasing
efficiencies, the impact of these costs has moderated somewhat.
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Trademarks and Patents
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The Company owns a number of trademarks, trademark registrations and
trademark applications in the United States and other countries, which, in the
opinion of management, are significant. The Company's trademark registrations
vary in duration and are typically renewable by the Company. Certain features of
TAMPAX tampons are the subject of U.S. and foreign patents or patent
applications owned by the Company. In management's opinion, certain of these
patents are significant. The duration of the Company's patents ranges from 2 to
18 years (i.e., the patents have expiration dates ranging from the year 1999 to
the year 2015).
Research and Development
- ------------------------
The Company maintains a research and development laboratory at its
facility in Palmer, Massachusetts. Management believes that developing better
protecting and more comfortable and convenient products, and products which are
environmentally sound, is important to maintaining the Company's competitive
position. Research is directed toward these goals. The Company expended $12.6
million, $12.2 million and $10.7 million for research and development in 1996,
1995 and 1994, respectively.
Employees
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It is anticipated that approximately 1,100 jobs will be eliminated as a
result of the worldwide restructuring program announced in 1996. However, it
is expected that approximately 500 new jobs will be created from the upgrade of
the remaining manufacturing facilities and expanded marketing and product
development capabilities. At December 31, 1996, the Company employed
approximately 2,900 persons.
Foreign and Domestic Operations; Export Sales
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The information regarding foreign and domestic operations of the Company
set forth on pages F-18 and F-19 in Note 12, "Segment and Geographic
Information," included in the Notes to Consolidated Financial Statements, is
incorporated herein by reference.
Over the past three years, sales by the Company's foreign operations
accounted for approximately one-half of total unit sales.
In 1996, sales between geographic areas and export sales of the Company
were not significant.
Item 2. Properties
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Domestic Properties
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The Company owns and operates three manufacturing plants in the United
States, located in Auburn, Maine; Claremont, New Hampshire; and Rutland,
Vermont. As part of its
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worldwide restructuring program announced in 1996, the Company plans to close
and sell its Vermont facility during 1997. The Company is consolidating its U.S.
manufacturing operations in its two other domestic plants. Product and process
research and development, and certain accounting, data processing and sales and
logistics operations are conducted at the Company's Technical Center, located in
Palmer, Massachusetts. The Company owns each of these plants and the Technical
Center. The Company leases headquarters office space in White Plains, New York.
During the last fiscal year, the Company's domestic plants were suitable
and adequate for the Company's requirements. The Company's domestic plants
operate principally on a three-shift basis, and management believes that these
plants have sufficient additional capacity to satisfy the anticipated
requirements of the Company.
Foreign Properties
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As part of its worldwide restructuring program announced in 1996, the
Company's manufacturing plants in Ireland and Russia were closed in 1996. The
plant in Russia has been sold and it is anticipated that the plant in Ireland
will be sold in 1997. Also as part of this restructuring program, the
Company's manufacturing plant in France will be closed.
The Company owns and operates manufacturing plants in Ukraine and the
United Kingdom. In addition, the joint venture in the People's Republic of
China, in which the Company has an 80% interest, has contractual rights to use
a manufacturing plant there. The French and Irish manufacturing operations are
being consolidated in the U.K. plant. The Company leases office space in the
United Kingdom, Brazil, Canada, France, Mexico, Switzerland, China and Hong
Kong as well as in several other countries.
During the last fiscal year, the Company's foreign facilities were
suitable and adequate for the Company's requirements. In general, these
foreign manufacturing facilities operate on a three-shift basis, and management
believes that these facilities have sufficient additional capacity to satisfy
the anticipated requirements of the Company.
Item 3. Legal Proceedings
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The Company is a defendant in a small number of product liability
lawsuits based on allegations that toxic shock syndrome ("TSS") was contracted
through the use of tampons. 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 is involved, either as a named defendant or as the result of
contractual indemnities, in certain litigation arising out of the operations of
certain divested subsidiaries.
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There are certain other legal proceedings pending against the Company
arising out of its normal course of business in which claims for monetary
damages are asserted.
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 in excess of provisions therefor will not individually or
in the aggregate have a material adverse effect on the Company's financial
position or results of operations.
Item 4. Submission of Matters to a Vote of Security Holders
- ------ ---------------------------------------------------
No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this report.
Management of the Registrant
- ----------------------------
The names and ages of all executive officers of Tambrands, the current
office held by each, and the period during which each has served as such are
set forth in the following table:
<TABLE>
<CAPTION>
Name Age Current Office Period Served In
---- --- -------------- Current Office
--------------
<S> <C> <C> <C>
Edward T. Fogarty 60 Chairman, President and 1996 to date
Chief Executive Officer (1)
Bruce P. Garren 50 Vice President - General Counsel 1996 to date
Michael S. Krause 56 Senior Vice President - Global 1995 to date
Operations (2)
Thomas J. Mason 52 Executive Vice President and 1996 to date
Chief Operating Officer (3)
Susan J. Riley 38 Senior Vice President - 1995 to date
Chief Financial Officer
Thomas Soper, III 47 Senior Vice President - Corporate 1994 to date
Human Resources and
Communications (4)
Jerome B. Wainick 56 Vice President-Research and 1990 to date
Development
</TABLE>
(1) Mr. Fogarty has served as an officer of Tambrands since May 1994. From
prior to March 1992 until May 1994, he was employed by Colgate-Palmolive Company
as President - USA/Canada/Puerto Rico.
(2) Mr. Krause has served as an officer of Tambrands since August 1995.
From January 1995 until July 1995, he was employed by the Snacks Division of The
Quaker Oats Company as Vice President - Supply Chain. From February 1994 until
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August 1994, he was employed by Stella Foods Inc. as Executive Vice
President -Supply Chain. From prior to March 1992 until February 1994, he was
employed by Goody Products, Inc. as Senior Vice President - Operations.
(3) Mr. Mason has served as an officer of Tambrands since October 1994.
From May 1992 until September 1994, he was employed by Dole Packaged Foods, a
division of Dole Food Co., as President. From prior to March 1992 until May
1992, he was employed by Kraft General Foods as Executive Vice President and
General Manager, Specialty Products.
(4) Mr. Soper has served as an officer of Tambrands since October 1994.
From prior to March 1992 until September 1994, he was employed by Alexander &
Alexander Services Inc. (a provider of risk management, insurance brokerage and
human resource management consulting services) as Senior Vice President -
Corporate Human Resources.
Each executive officer is appointed by the Board of Directors to serve
until the first meeting of directors following the annual meeting of
shareholders of Tambrands. Except as indicated in the footnotes above, the
principal occupation and employment during the past five years of each of the
above-named executive officers have been as an officer or other member of
management of Tambrands or one or more of its subsidiaries.
Other members of the Tambrands senior management, corporate staff and
operating management are as follows:
Name Title
- ---- -----
George R. Blees Vice President - Financial Planning and
Analysis
R. Kent Doss Vice President - U.S. Sales
Michael A. Hecht Vice President - Controller
Sheila A. Hopkins Vice President - U.S. Marketing
Michele Jobling Vice President, General Manager -
U.K./Ireland
John C. LaBonty Vice President, General Manager ---
Canada, Asia/Pacific, Latin
America
Janey M. Loyd Vice President - Business Development and
Communications
Kathleen B. Makrakis Director - Investor Relations
and Shareholder Communications
Owen K. Rankin Vice President - Global Marketing
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Christian Roure Vice President, General Manager - Europe,
Africa, Middle East
PART II
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Item 5. Market for Registrant's Common Equity and
- ------ -----------------------------------------
Related Shareholder Matters
---------------------------
Tambrands Common Stock is traded on the New York and Pacific Stock
Exchanges. The following table provides quarterly dividend and Common Stock
price range information for the years 1995 and 1996:
<TABLE>
<CAPTION>
Common Stock
Price Range (a)
---------------------
Dividends
High Low Per Share
---- --- ---------
1995
----
<S> <C> <C> <C>
First Quarter $ 47 $ 37 7/8 $ 0.44
Second Quarter 46 1/2 40 1/4 0.44
Third Quarter 48 1/8 42 1/2 0.44
Fourth Quarter 53 43 3/8 0.46
1996
----
First Quarter $ 52 1/4 $ 46 3/4 $ 0.46
Second Quarter 50 1/4 40 9/16 0.46
Third Quarter 44 3/4 36 0.46
Fourth Quarter 45 1/8 39 3/8 0.46
</TABLE>
(a) Reflects trading on the New York Stock Exchange.
As of March 14, 1997, there were 6,385 holders of record of Tambrands Common
Stock.
Item 6. Selected Financial Data
- ------ -----------------------
The information required by this item is set forth in a separate section
of this Annual Report on Form 10-K under the caption "Selected Financial Data"
appearing on page F-2 and is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Results
- ------ -----------------------------------------------
of Operations and Financial Condition
-------------------------------------
The information required by this item is set forth in a separate section
of this Annual Report on Form 10-K
13
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under the caption "Management's Discussion and Analysis" beginning on page F-3
and is incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data
- ------ -------------------------------------------
The information required by this item is set forth in a separate section
of this Annual Report on Form 10-K as indicated in the "Index to Financial
Information" appearing on page F-1 and is incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on
- ------ ------------------------------------------------
Accounting and Financial Disclosure
-----------------------------------
None.
PART III
- --------
Item 10. Directors and Executive Officers of the Registrant
- ------- --------------------------------------------------
The information relating to nominees for election as directors of
Tambrands set forth under the caption "Election of Directors" in Tambrands'
definitive Proxy Statement for the annual meeting of shareholders to be held on
April 22, 1997 is incorporated herein by reference.
Mrs. Ruth A. Manton and Mr. John A. Meyers are currently directors of
Tambrands, but they are retiring from the Board of Directors and they are not
nominees for election as directors at the annual meeting of shareholders to be
held on April 22, 1997. Mrs. Manton has been Chairman, President and
Chief Executive Officer of Aries Design Management, Inc., New York, New York (a
marketing and licensing consulting firm) since before March 1992. She has been
a director of Tambrands since 1981 and is 71 years old. Mr. Meyers has been
Chairman and President of J.A.M. Enterprises, Vero Beach, Florida (a marketing
and publishing consulting firm) since before March 1992. He has been a
director of Tambrands since 1989 and is 68 years old.
The information on executive officers set forth under the first two
paragraphs of the caption "Management of the Registrant" beginning on page 11
hereof is incorporated herein by reference.
The information relating to compliance with Section 16(a) of the
Securities Exchange Act of 1934, as amended, set forth under the caption
"Section 16(a) Beneficial Ownership Reporting Compliance" in Tambrands'
definitive Proxy Statement for the annual meeting of shareholders to be held on
April 22, 1997 is incorporated herein by reference.
Item 11. Executive Compensation
- ------- ----------------------
The information regarding executive compensation set forth under the
captions "Information Regarding the Board of Directors - Compensation of
Directors," "Executive
14
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Compensation and Other Information" and "Proposal to Approve an Amendment to the
1991 Stock Option Plan - Amended Plan Grant Table" in Tambrands' definitive
Proxy Statement for the annual meeting of shareholders to be held on April 22,
1997 is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners
- ------- ------------------------------------------------
and Management
---------------
The information regarding the security ownership of certain beneficial
owners and management set forth under the caption "Security Ownership by
Management and Others" in Tambrands' definitive Proxy Statement for the annual
meeting of shareholders to be held on April 22, 1997 is incorporated herein by
reference.
Item 13. Certain Relationships and Related Transactions
- ------- ----------------------------------------------
None.
PART IV
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Item 14. Exhibits, Financial Statement Schedules,
- ------- ----------------------------------------
and Reports on Form 8-K
-----------------------
As used in this Part, "Company" means Tambrands Inc.
(a) Documents filed as part of this report
1. Financial Statements
The list of financial statements set forth under the caption
"Index to Financial Information" on page F-1 is incorporated herein by
reference.
2. Financial Statement Schedules
The list of financial statement schedules set forth under the
caption "Index to Financial Information" on page F-1 is incorporated herein by
reference. All other schedules have been omitted, as the required information
is inapplicable or the information is presented in the financial statements or
related notes.
3. Exhibits
Exhibit
Number Description
------- -----------
3(1) 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.
3(2) Certificate of Amendment of Certificate of
Incorporation of the Company, dated
15
<PAGE>
April 24, 1990, filed May 15, 1990 as Exhibit 4(2)
to the Company's Report on Form 10-Q for the
quarter ended March 31, 1990, incorporated herein
by reference.
3(3) 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 Report on Form 10-Q for the quarter
ended March 31, 1992, incorporated herein by
reference.
3(4)(a) Resolution of the Board of Directors of the
Company authorizing an amendment to the By-Laws of
the Company, adopted on January 28, 1997, filed
herewith.
3(4)(b) By-Laws of the Company, as amended, filed
herewith.
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 Report on Form 10-Q for the
quarter ended March 31, 1992, incorporated herein
by reference.
4(3) Rights Agreement, dated as of October 24, 1989,
between the Company and First Chicago Trust
Company of New York, 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.
4(4)(b) First Supplemental Indenture dated as of December
31, 1996, among the Company,
16
<PAGE>
Tampax Corporation, Tambrands Mfg., Inc. and
Tambrands Sales Corp. and Citibank, N.A., as
trustee, to 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 herewith.
4(4)(c) 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)(d) 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.
Management Contracts and
Compensatory Plans and Arrangements
(Exhibits 10(1) - 10(20))
-----------------------
10(1)(a) 1981 Long Term Incentive Plan, as amended through
November 4, 1988, filed as Exhibit 10(1)(a) to the
Company's Report on Form 10-K for the year 1988,
incorporated herein by reference.
10(1)(b) Amendment to 1981 Long Term Incentive Plan, dated
as of February 27, 1990, filed as Exhibit 10(1)(b)
to the Company's Report on Form 10-K for the year
1989, incorporated herein by reference.
10(1)(c) Amendment to 1981 Long Term Incentive Plan,
effective as of June 25, 1991, filed as Exhibit
10(1)(c) to the Company's Report on Form 10-K for
the year 1991, incorporated herein by reference.
10(1)(d) Amendment to 1981 Long Term Incentive Plan,
effective as of June 23, 1992, filed as Exhibit
10(1)(d) to the Company's Report on Form 10-K for
the year 1992, incorporated herein by reference.
10(1)(e) Amendment to 1981 Long Term Incentive Plan,
effective as of February 23, 1993, filed as
Exhibit 10(1)(e) to the Company's Report on Form
10-K for the year 1992, incorporated herein by
reference.
10(1)(f) Addendum to 1981 Long Term Incentive Plan, filed
April 30, 1987 as Exhibit
17
<PAGE>
28(a) to the Company's Form S-8 Registration
Statement (Reg. No. 33-13902), incorporated herein
by reference.
10(2)(a) 1981 Incentive Stock Option Plan, as amended
through April 30, 1987, filed April 30, 1987 as
Exhibit 28(a) to the Company's Form S-8
Registration Statement (Reg. No. 33-13902),
incorporated herein by reference.
10(2)(b) Amendment to 1981 Incentive Stock Option Plan,
dated as of February 27, 1990, filed as Exhibit
10(2)(b) to the Company's Report on Form 10-K for
the year 1989, incorporated herein by reference.
10(2)(c) Amendment to 1981 Incentive Stock Option Plan,
effective as of June 23, 1992, filed as Exhibit
10(2)(c) to the Company's Report on Form 10-K for
the year 1992, incorporated herein by reference.
10(2)(d) Amendment to 1981 Incentive Stock Option Plan,
effective as of February 23, 1993, filed as
Exhibit 10(2)(d) to the Company's Report on Form
10-K for the year 1992, incorporated herein by
reference.
10(3)(a) 1991 Stock Option Plan, filed as Exhibit 10(3) to
the Company's Report on Form 10-K for the year
1990, incorporated herein by reference.
10(3)(b) First Amendment to 1991 Stock Option Plan,
effective as of July 1, 1991, filed as Exhibit
10(3)(b) to the Company's Report on Form 10-K for
the year 1991, incorporated herein by reference.
10(3)(c) Second Amendment to 1991 Stock Option Plan,
effective as of July 1, 1991, filed as Exhibit
10(3)(c) to the Company's Report on Form 10-K for
the year 1991, incorporated herein by reference.
10(3)(d) Third Amendment to 1991 Stock Option Plan,
effective as of June 23, 1992, filed as Exhibit
10(3)(d) to the Company's Report on Form 10-K for
the year 1992, incorporated herein by reference.
10(3)(e) Fourth Amendment to 1991 Stock Option Plan,
effective as of February 23, 1993, filed as
Exhibit 10(3)(e) to the
18
<PAGE>
Company's Report on Form 10-K for the year 1992,
incorporated herein by reference.
10(3)(f) Fifth Amendment to 1991 Stock Option Plan,
effective as of February 23, 1993, filed as
Exhibit 10(3)(f) to the Company's Report on Form
10-K for the year 1992, incorporated herein by
reference.
10(3)(g) Addendum to 1991 Stock Option Plan, filed as
Exhibit 10(3)(g) to the Company's Report on Form
10-K for the year 1992, incorporated herein by
reference.
10(3)(h) Sixth Amendment to 1991 Stock Option Plan,
effective as of February 1, 1994, filed as Exhibit
10(3)(h) to the Company's Report on Form 10-K for
the year 1993, incorporated herein by reference.
10(3)(i) Seventh Amendment to 1991 Stock Option Plan,
effective as of January 28, 1997, filed herewith.
10(4)(a) 1989 Restricted Stock Plan, as amended through
December 31, 1990, filed as Exhibit 10(4) to the
Company's Report on Form 10-K for the year 1990,
incorporated herein by reference.
10(4)(b) Amendment to 1989 Restricted Stock Plan, effective
as of February 23, 1993, filed as Exhibit 10(4)(b)
to the Company's Report on Form 10-K for the year
1992, incorporated herein by reference.
10(4)(c) Amendment to 1989 Restricted Stock Plan, effective
as of January 28, 1997, filed herewith.
10(5) Supplemental Executive Retirement Plan, effective
July 1, 1986, as amended and restated effective
July 1, 1994, filed as Exhibit 10(6) to the
Company's Report on Form 10-Q for the quarter
ended June 30, 1994, incorporated herein by
reference.
10(6) Trust Agreement between the Company and The
Northern Trust Company, dated as of October 31,
1988, filed as Exhibit 10(6) to the Company's
Report on Form 10-K for the year 1988,
incorporated herein by reference.
19
<PAGE>
10(7) Pension Plan for Non-Employee Directors, filed as
Exhibit 10(10) to the Company's Report on Form 10-
K for the year 1990, incorporated herein by
reference.
10(8)(a) 1992 Directors Stock Incentive Plan, filed as
Exhibit 10(11) to the Company's Report on Form 10-
K for the year 1991, incorporated herein by
reference.
10(8)(b) First Amendment to 1992 Directors Stock Incentive
Plan, effective as of August 18, 1992, filed as
Exhibit 10(8)(b) to the Company's Report on Form
10-K for the year 1992, incorporated herein by
reference.
10(8)(c) Second Amendment to 1992 Directors Stock Incentive
Plan, effective as of February 23, 1993, filed as
Exhibit 10(8)(c) to the Company's Report on Form
10-K for the year 1992, incorporated herein by
reference.
10(8)(d) Third Amendment to the 1992 Directors Stock
Incentive Plan, effective as of August 24, 1993,
filed as Exhibit 10(3) to the Company's Report on
Form 10-Q/A for the quarterly period ended
September 30, 1993, incorporated herein by
reference.
10(8)(e) Fourth Amendment to Tambrands Inc. 1992 Directors
Stock Incentive Plan, effective as of April 28,
1994, filed as Exhibit 10(7) to the Company's
Report on Form 10-Q for the quarter ended June 30,
1994, incorporated herein by reference.
10(8)(f) Fifth Amendment to the Tambrands Inc. 1992
Directors Stock Incentive Plan, effective as of
September 1, 1994, filed as Exhibit 10(4) to the
Company's Report on Form 10-Q for the quarter
ended September 30, 1994, incorporated herein by
reference.
10(9)(a) Employment Protection Agreement between the
Company and Mr. Edward T. Fogarty, dated as of May
31, 1994, filed as Exhibit 10(1) to the Company's
Report on Form 10-Q for the quarter ended June 30,
1994, incorporated herein by reference;
10(9)(b) Amended and Restated Employment Protection
Agreement between the Company and Mr. Thomas J.
Mason, dated as of October 1, 1996, filed
herewith;
20
<PAGE>
10(9)(c) Employment Protection Agreement between the
Company and Mr. Thomas Soper, III, dated as of
October 1, 1996, filed as Exhibit 10(9)(d) to the
Company's Report on Form 10-K for the year 1995,
incorporated herein by reference;
10(9)(d) Employment Protection Agreement between the
Company and Mr. Michael S. Krause, dated as of
July 5, 1995, filed herewith;
10(9)(e) Employment Protection Agreement between the
Company and Ms. Susan J. Riley, dated as of
December 15, 1994, filed herewith;
The Company has agreements similar to the
agreements listed as Exhibits 10(9)(c), 10(9)(d)
and 10(9)(e) with its other executive officers.
10(10) Resolution of the Board of Directors of the
Company with respect to the compensation of the
Board, adopted on December 13, 1994, filed as
Exhibit 10(11) to the Company's Report on Form 10-
K for the year 1994, incorporated herein by
reference.
10(11) 1995 Directors Stock and Deferred Compensation
Plan, effective as of July 1, 1995, included as
Exhibit A to the Company's Proxy Statement, dated
March 10, 1995, for the annual meeting of
shareholders held on April 25, 1995, incorporated
herein by reference.
10(12) Executive Severance Program of the Company, filed
as Exhibit 10(15) to the Company's Report on Form
10-K for the year 1989, incorporated herein by
reference.
10(13) 1981 Annual Incentive Plan of the Company, as
amended through March 30, 1995, filed as Exhibit
10(1) to the Company's Report on Form 10-Q for the
quarter ended March 31, 1995, incorporated herein
by reference.
10(14) Letter Agreement between the Company and Mr.
Edward T. Fogarty, dated as of April 25, 1994,
filed as Exhibit 10(1) to the Company's Report on
Form 10-Q for the quarter ended June 30, 1994,
incorporated herein by reference.
10(15) Letter Agreement between the Company and Mr.
Thomas Soper, III, dated as of August
21
<PAGE>
29, 1994, filed as Exhibit 10(7) to the Company's
Report on Form 10-K for the year 1994,
incorporated herein by reference.
10(16) Letter Agreement between the Company and Mr.
Thomas J. Mason, dated as of October 18, 1994,
filed as Exhibit 10(18) to the Company's Report on
Form 10-K for the year 1994, incorporated herein
by reference.
10(17) Letter Agreement between the Company and Mr.
Michael S. Krause, dated as of July 5, 1995, filed
as Exhibit 10(1) to the Company's Report on Form
10-Q for the quarter ended September 30, 1995,
incorporated herein by reference.
10(18) Restricted Stock Agreement between the Company and
Mr. Edward T. Fogarty, dated May 31, 1994, filed
as Exhibit 10(3) to the Company's Report on Form
10-Q for the quarter ended June 30, 1994,
incorporated herein by reference.
10(19) Stock Option Agreement between the Company and Mr.
Edward T. Fogarty, dated May 31, 1994, filed as
Exhibit 10(4) to the Company's Report on Form 10-Q
for the quarter ended June 30, 1994, incorporated
herein by reference.
10(20) Tambrands Inc. 1996 Non-Employee Director Stock
Unit Plan, effective as of April 23, 1996, filed
as Exhibit 10(1) to the Company's Report on Form
10-Q for the quarter ended June 30, 1996,
incorporated herein by reference.
10(21)(a) Commercial Paper Dealer Agreement between the
Company and Merrill Lynch Money Markets, Inc.,
dated November 18, 1992, filed as Exhibit 10(15)
(a) to the Company's Report on Form 10-K for the
year 1992, incorporated herein by reference.
10(21)(b) Letter Agreement between the Company and the First
National Bank of Chicago, dated as of November 18,
1992, filed as Exhibit 10(15)(b) to the Company's
Report on Form 10-K for the year 1992,
incorporated herein by reference.
10(21)(c) Amended and Restated Credit Agreement by and among
the Company, Tambrands Limited, the signatory
banks thereto and The Bank
22
<PAGE>
of New York, as agent, dated as of September 6,
1994, filed as Exhibit 10(5) to the Company's
Report on Form 10-Q for the quarter ended
September 30, 1994, incorporated herein by
reference.
10(21)(d) Amendment No. 1, dated as of May 5, 1995, to the
Amended and Restated Credit Agreement, dated as of
September 6, 1994, by and among the Company,
Tambrands Limited, the signatory banks thereto and
The Bank of New York, as agent, filed as Exhibit
10(3) to the Company's Report on Form 10-Q for the
quarter ended June 30, 1995, incorporated herein
by reference.
10(21)(e) Amendment No. 2, dated as of December 13, 1996, to
the Amended and Restated Credit Agreement, dated
as of September 6, 1994, by and among the Company,
Tambrands Limited, the signatory banks thereto and
The Bank of New York, as agent, filed herewith.
12 Computation of Ratio of Earnings to Fixed
Charges, filed herewith.
21 Subsidiaries of the Company, filed herewith.
23 Independent Auditors' Consent, filed herewith.
24 Powers of attorney, filed herewith.
27 Financial Data Schedules, filed herewith (in
electronic format only).
23
<PAGE>
(b) Reports on Form 8-K
The Company filed a Report under Item 5 of Form 8-K on October 23,
1996 in order to file a press release, issued by the Company on
October 23, 1996, which contained the Company's third-quarter 1996
results.
TAMPAX, COMPAK, LITES, TAMPAX NATURALS, SATIN, SATIN TOUCH, TAMPAX SILKS,
SIMPLE and TAMPETS are trademarks of the Company.
24
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
TAMBRANDS INC.
/s/EDWARD T. FOGARTY
Date: March 28, 1997 By --------------------
Edward T. Fogarty
Chairman, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ EDWARD T. FOGARTY Chairman, President March 28, 1997
- ------------------------ and Chief Executive
EDWARD T. FOGARTY Officer and Director
(Principal Executive
Officer)
/s/ SUSAN J. RILEY Senior Vice March 28, 1997
- ------------------------ President-Chief
SUSAN J. RILEY Financial Officer
(Principal Financial
Officer)
/s/ MICHAEL A. HECHT Vice President - March 28, 1997
- ------------------------ Controller
MICHAEL A. HECHT (Principal Accounting
Officer)
25
<PAGE>
Signature Title Date
- --------- ----- ----
* Director March 28, 1997
- -----------------------
LILYAN H. AFFINITO
* Director March 28, 1997
- -----------------------
ANNE M. BUSQUET
* Director March 28, 1997
- -----------------------
PAUL S. DOHERTY
* Director March 28, 1997
- -----------------------
JANET HILL
* Director March 28, 1997
- -----------------------
ROBERT P. KILEY
* Director March 28, 1997
- -----------------------
JOHN LOUDON
* Director March 28, 1997
- -----------------------
RUTH M. MANTON
* Director March 28, 1997
- -----------------------
JOHN A. MEYERS
* Director March 28, 1997
- -----------------------
H.L. TOWER
/s/ HOWARD B. WENTZ, JR. Director March 28, 1997
- -----------------------
HOWARD B. WENTZ, JR.
26
<PAGE>
* Director March 28, 1997
- -------------------------
ROBERT M. WILLIAMS
/s/EDWARD T. FOGARTY
* By ---------------------
Edward T. Fogarty
Attorney-in-Fact
27
<PAGE>
INDEX TO FINANCIAL INFORMATION
------------------------------
Page
Reference
---------
Selected Financial Data................................... F-2
Management's Discussion and Analysis of
Results of Operations and Financial
Condition................................................. F-3
Financial Statements:
Consolidated Statements of Earnings
for the years ended
December 31, 1996, 1995 and 1994................ F-6
Consolidated Balance Sheets as of
December 31, 1996 and 1995...................... F-7
Consolidated Statements of Cash
Flows for the years ended
December 31, 1996, 1995 and 1994................ F-8
Notes to Consolidated Financial
Statements...................................... F-9
Independent Auditors' Report on
Consolidated Financial Statements............... F-20
Financial Statement Schedule:
II Valuation and Qualifying Accounts............ F-21
Independent Auditors' Report on
Financial Statement Schedule.................... F-22
Supplementary Financial Information
and Quarterly Data for the years
ended December 31, 1996 and 1995................ F-23
F-1
<PAGE>
TAMBRANDS INC.
Selected Financial Data
($ in thousands, except per share amounts)
<TABLE>
<CAPTION>
Years ended December 31 1996 (a) 1995 (a) 1994 1993 (a) 1992
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net sales $662,112 $683,092 $644,513 $611,465 $684,113
Gross profit 435,764 451,467 438,402 409,759 456,032
Marketing, selling and distribution 248,644 238,558 233,753 202,031 193,477
Administrative and general 48,625 52,546 53,034 61,378 67,823
Restructuring charge 46,221 - - 30,042 -
Operating income 92,274 160,363 151,615 116,308 194,732
Litigation Charge - 11,396 - - -
Earnings before cumulative effect
of accounting change 45,803 85,522 89,729 73,702 122,409
Earnings before cumulative effect
of accounting change per share 1.24 2.33 2.43 1.91 3.09
Average number of shares outstanding 36,842 36,671 36,992 38,632 39,640
Total assets 409,966 422,049 379,075 362,398 372,981
Medium-term notes obligations 69,205 80,889 59,983 30,000 -
Dividends per share 1.84 1.78 1.70 1.56 1.40
</TABLE>
(a) Results and related financial data include restructuring charges in 1996 and
1993 and a litigation charge in 1995.
F-2
<PAGE>
Management's Discussion and Analysis
RESULTS OF OPERATIONS
1996 vs. 1995 Net sales for 1996 were $662.1 million, down 3% from the prior
year. The decline in net sales was primarily due to lower worldwide volume
principally in the United States. The reduced U.S. volume was primarily a result
of increased competitive activity in the form of retail price promotions and new
product introductions. The lower volume was partially offset by selective price
increases in certain international markets and in the United States. The U.S.
tampon category in units improved 0.6 percentage points for the year versus
1995. Tampax U.S. market share in units for the current year declined 2.7 share
points versus the prior year to 51%, primarily due to the increased competitive
activity discussed above. However, the Company's quarterly U.S. market share has
been trending upward since the second quarter of 1996. The fourth quarter U.S.
market share of 52.1% was the Company's highest quarterly share for the year.
Gross profit as a percentage of net sales was 65.8% compared to 66.1% for the
prior year. The lower margin in the current year was primarily the result of the
unfavorable volumes discussed above and one-time consolidation costs relating to
the restructuring of the Company's manufacturing facilities. The decrease was
partially offset by pricing improvements.
Marketing, selling and distribution expenses were 4% higher than the prior year.
The increase principally reflected promotional support for the launch of Tampax
Naturals in the United States and the launch of a non-applicator tampon in
France.
Administrative and general expenses declined 8% versus the prior year. The
decrease was the result of management's continuing efforts to contain overhead
costs.
During the third quarter of 1996, the Company announced that it was implementing
a single global structure and a restructuring to increase efficiency, eliminate
duplication, improve decision-making, and get new and improved products to the
global market more quickly. A $46.2 million restructuring charge ($37.0 million
after-tax) was taken to provide for the costs associated with restructuring
production facilities around the world to support this global strategy. The
charge included $26.2 million in asset write-downs and $20.0 million in
severance and employee related costs in connection with the closure of the
manufacturing plants in Tours, France; Tipperary, Ireland; St. Petersburg,
Russia; and Rutland, Vermont, U.S.A. The restructuring charge provides for a
reduction of 1,100 jobs from the worldwide workforce. However, approximately 500
new jobs will be created from the upgrade of the remaining manufacturing
facilities and expanded marketing and product development capabilities. As a
result of the restructuring, consolidation costs of approximately $2.8 million
were charged to the current year operating results. As of December 31, 1996,
approximately 530 jobs had been eliminated and the remaining accrual of $15.5
million related primarily to severance and employee related costs in the United
States and France. The restructuring is expected to be substantially complete by
December 31, 1997.
Operating income of $92.3 million included the pre-tax restructuring charge of
$46.2 million. Exclusive of the restructuring charge, operating income decreased
by 14% from the prior year. The decrease was principally attributable to the
lower sales volume and increased promotional activities, partially mitigated by
favorable pricing, as discussed above.
Interest, net and other was favorable by 7% compared to 1995. The decrease was
primarily due to a reduction in realized foreign exchange losses from the prior
year.
The effective tax rate for 1996 was 45% compared to 38.6% for 1995. Exclusive of
the restructuring charge, which was not fully deductible for tax purposes, the
1996 effective tax rate would have been 36.1%. Exclusive of the litigation
charge, the 1995 effective tax rate would have been 37.5%. Comparing the
effective tax rates exclusive of these charges, the lower effective tax rate in
the current year is primarily due to the additional utilization of foreign tax
credits in 1996.
Net earnings were $45.8 million ($1.24 earnings per share) for 1996 versus $85.5
million ($2.33 earnings per share) for the prior year. Excluding the
restructuring charge, 1996 net earnings would have been $82.8 million ($2.25
earnings per share). Excluding the 1995 litigation charge, the prior year net
earnings would have been $94.2 million ($2.57 earnings per share).
F-3
<PAGE>
TAMBRANDS INC. AND SUBSIDIARIES
Outlook The worldwide market for consumer products remains highly competitive
and sensitive to price. The Company expects that this trend will continue.
However, in the second half of 1996, two competitors took selective price
increases in the United States. Management will continue to evaluate price
increase opportunities as appropriate. The Company anticipates a continuation of
the current high level of advertising and promotional activities and new product
introductions by competitors, along with continued growth in the private label
sector. The Company intends to aggressively proceed with its support of the
Tampax tampon franchise with advertising, promotions and product line
extensions. The Company has a significant customer that accounted for 12.2% of
net sales in 1996.
The cost of manufacturing continues to be impacted by the prior years' increases
in raw material and packaging costs. Recently, as a result of the downward trend
of pulp and paper prices and global purchasing efficiencies, the impact of these
costs has moderated. The full benefit of the restructuring program and other on-
going cost reduction activities are expected to lower overall production costs
by the beginning of 1998.
1995 vs. 1994 Net sales for 1995 were $683.1 million, an increase of 6% from
1994. The increase was primarily due to higher unit sales in the United States,
Russia/Ukraine, Canada, Latin America, and in Europe with the exception of the
United Kingdom. The overall increase in unit sales was principally attributable
to the strengthening of the tampon category and Tampax market shares over the
prior year in our core markets, with the exception of the United Kingdom where
the category had declined but toward the end of the year showed improvement.
Strong unit sales and favorable foreign currency translation were somewhat
offset by lower average prices in the United States due to changes in the sales
mix.
Gross profit as a percent of net sales was 66.1% for 1995 vs. 68% in 1994. The
margin reduction in 1995 was principally due to a change in the mix of product
and package sizes, increasing costs of raw and packaging materials, and
manufacturing start-up costs in the United States associated with the fourth-
quarter 1995 relaunch of the Tampax flushable line and the production of Tampax
Naturals, which was launched in early 1996. The decrease in margin was partially
offset by productivity improvements resulting from our capital spending program.
Marketing, selling and distribution expenses were up 2% compared with the prior
year. The increase was primarily due to unfavorable foreign exchange
translations and higher marketing expenditures partially offset by lower fourth-
quarter advertising and promotional activity in anticipation of the Tampax
Naturals launch in the United States.
Administrative and general expenses were 1% lower than 1994 primarily as a
result of management's continuing efforts to contain overhead costs. A reduction
in the United States was partially offset by higher costs in international
markets due to management changes.
Operating income of $160.4 million was 6% higher than the prior year. The
increased sales volume was partially mitigated by the factors reducing gross
profit discussed above.
Interest, net and other expense decreased slightly in 1995 compared to 1994. A
reduction in realized foreign exchange losses was partially offset by higher
interest expense resulting from higher average interest rates and higher
borrowing levels.
In the second quarter of 1995, the Company provided $11.4 million for several
legal proceedings related to previously divested non-tampon businesses and for
settlement of a securities class action filed in 1993.
The effective tax rate for 1995 was 38.6%, compared to 36.7% for 1994. The
higher effective tax rate in 1995 was due primarily to the litigation charge,
the cost of which is not fully deductible for tax purposes. Exclusive of the
litigation charge, the current effective tax rate would have been 37.5% for
1995.
Net earnings were $85.5 million ($2.33 earnings per share) compared to $89.7
million ($2.43 earnings per share) in 1994. The principal reason for the decline
was due to the litigation charge that the Company took in the second quarter.
Exclusive of the litigation charge, net earnings would have been $94.2 million
($2.57 earnings per share) compared to $89.7 million ($2.43 earnings per share)
in 1994.
F-4
<PAGE>
Management's Discussion And Analysis (continued)
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows from Operating Activities 1996 Cash flows from operating activities
were $101.6 million compared to $101.9 for 1995. Improved management of
inventories and accounts receivable were primarily offset by a decrease in
accounts payable and accrued expenses (excluding special charges) at the end of
the current year. As a result, cash flows from operating activities were
relatively unchanged versus the prior year. The Company's working capital
deficit increased to $19.2 million from $4.1 million in the prior year
principally due to the current maturity of medium-term obligations. The current
ratio was .9 at December 31, 1996 compared with 1.0 at December 31, 1995. The
deficit does not impair the Company's ability to borrow and its credit
agreements do not contain any provisions or requirements with respect to working
capital.
Over the past three years, Cash flows from operating activities were $332.3
million. These funds were used for the payment of dividends, capital
expenditures and the repurchase of Common Stock. Management expects that 1997
cash flows will be impacted by $10 to $15 million due to payments relating to
the 1996 restructuring.
Capital Expenditures The 1996 capital spending programs related to
investments in equipment to improve product quality and productivity, modernize
production facilities and manufacture and launch new products. Capital
expenditures were $39.0 million in 1996, $44.8 million in 1995, and $38.5
million in 1994. 1997 spending levels are expected to approximate those of 1996.
Liquidity and Capital Resources During 1996, a strong debt rating and
favorable financial climate permitted the Company to borrow at favorable
interest rates. The Company's short-term debt is supported by unused revolving
credit of $120 million at December 31, 1996 and 1995. Additionally, the Company
has a $150 million medium-term note program of which $70 million was outstanding
at December 31, 1996 and 1995.
Management expects funds generated from operations and borrowing capacity will
be adequate to finance the Company's business needs, including working capital,
shareholder dividends, additions to property, plant and equipment and completion
of the restructuring activities.
INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS
Statements contained in this Annual Report, other than matters of historical
fact, are forward-looking statements and are made based on management's
expectations and beliefs concerning future developments and their potential
effect on the Company. There can be no assurance that future developments will
be in accordance with management's expectations or that the effect of future
developments on the Company will be those anticipated by management. Among the
factors that could cause actual results to differ materially from such forward-
looking statements are the following:
- - the market reception given the Company's new products;
- - competitive pressures, including new product developments or increased
advertising or promotional activity by existing or new competitors or continued
growth in the private label tampon segment;
- - changes in the market for raw or packaging materials, which could impact the
Company's manufacturing costs;
- - changes in the pricing of the products of the Company or its competitors;
- - changes in consumer preferences affecting the usage of tampons;
- - the loss of a significant customer;
- - the costs and uncertainties associated with implementation of actions
resulting from the Company's ongoing evaluation of its business strategies and
organizational structures;
- - production delays or inefficiencies;
- - the costs and other effects of legal and administrative cases and proceedings,
settlements and investigations;
- - real or perceived safety or quality issues with respect to the Company's
products, whether arising from tampering or otherwise; and
- - changes in U.S. or international economic or political conditions, such as
inflation or fluctuations in interest or foreign exchange rates.
While the Company periodically reassesses material trends and uncertainties
affecting the Company's results of operations and financial condition contained
in its annual and quarterly reports, the Company does not intend to review or
revise any particular forward-looking statement in light of future events.
F-5
<PAGE>
Consolidated Statements of Earnings TAMBRANDS INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
Years Ended December 31 (in thousands, except per share amounts) 1996 1995 1994
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET SALES $662,112 $683,092 $644,513
Cost of products sold 226,348 231,625 206,111
- --------------------------------------------------------------------------------------------------
Gross profit 435,764 451,467 438,402
Selling, administrative and general expenses:
Marketing, selling and distribution 248,644 238,558 233,753
Administrative and general 48,625 52,546 53,034
Restructuring charge 46,221 -- --
- --------------------------------------------------------------------------------------------------
343,490 291,104 286,787
- --------------------------------------------------------------------------------------------------
OPERATING INCOME 92,274 160,363 151,615
Interest, net and other (8,949) (9,632) (9,864)
Litigation charge -- (11,396) --
- --------------------------------------------------------------------------------------------------
Earnings before provision for income taxes 83,325 139,335 141,751
Provision for income taxes 37,522 53,813 52,022
- --------------------------------------------------------------------------------------------------
NET EARNINGS $ 45,803 $ 85,522 $ 89,729
- --------------------------------------------------------------------------------------------------
Average number of shares outstanding 36,842 36,671 36,992
Net earnings per share $ 1.24 $ 2.33 $ 2.43
Dividends per share $ 1.84 $ 1.78 $ 1.70
- --------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
Consolidated Balance Sheets TAMBRANDS INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
Years Ended December 31 (in thousands) 1996 1995
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 11,554 $ 11,135
Accounts receivable, net 99,385 98,047
Inventories 40,331 46,736
Deferred taxes on income 20,964 17,724
Prepaid expenses 12,788 12,289
Other current assets 11,574 13,982
- --------------------------------------------------------------------------------------------------
Total current assets 196,596 199,913
Property, plant and equipment, net 207,639 216,122
Intangible and other assets 5,731 6,014
- --------------------------------------------------------------------------------------------------
Total assets $ 409,966 $ 422,049
- --------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Short-term debt $ 64,699 $ 55,063
Accounts payable 47,666 48,498
Accrued expenses 78,862 73,330
Taxes on income 24,535 27,078
- --------------------------------------------------------------------------------------------------
Total current liabilities 215,762 203,969
Medium-term obligations 69,205 80,889
Deferred taxes on income 25,781 22,537
Postemployment benefits 4,530 11,682
- --------------------------------------------------------------------------------------------------
Total liabilities 315,278 319,077
Shareholders' equity
Common Stock, authorized 300,000,000 shares, par value $.25 per share;
issued 43,547,938 shares 10,887 10,887
Retained earnings 452,608 476,252
Cumulative foreign currency translation adjustment (9,606) (14,223)
Treasury stock (358,304) (368,543)
Unamortized value of restricted stock and pension costs (897) (1,401)
- --------------------------------------------------------------------------------------------------
Total shareholders' equity 94,688 102,972
- --------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 409,966 $ 422,049
- --------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-7
<PAGE>
Consolidated Statements of Cash Flows TAMBRANDS INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
Years Ended December 31 (in thousands) 1996 1995 1994
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 45,803 $ 85,522 $ 89,729
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization 27,557 25,667 24,284
Deferred income taxes (914) 2,158 4,557
Litigation charge (3,282) 4,425 --
Restructuring and other charges 32,716 (3,587) (10,417)
Working capital changes:
Accounts receivable (542) (14,737) (2,224)
Inventories 7,133 (8,326) 1,503
Prepaid expenses and other current assets 1,044 (591) (1,901)
Accounts payable and accrued expenses (13,685) 2,974 17,415
Taxes on income 5,781 8,350 5,925
- ---------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 101,611 101,855 128,871
- ---------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (39,007) (44,778) (38,470)
Proceeds from sales of property, plant and equipment 1,450 108 2,093
Proceeds from sales of marketable securities -- -- 639
- ---------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (37,557) (44,670) (35,738)
- ---------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of dividends (67,837) (65,274) (62,721)
Treasury shares repurchased -- (4,326) (71,118)
Short-term debt changes (520) (17,448) 6,149
Reduction of medium-term obligations (1,978) (1,094) --
Proceeds from medium-term obligations -- 24,091 29,983
Proceeds from exercise of stock options and other 8,000 5,307 2,422
- ---------------------------------------------------------------------------------------------------------------------
Net cash used in financing activities (62,335) (58,744) (95,285)
- ---------------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash (1,300) (1,182) 730
- ---------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 419 (2,741) (1,422)
Cash and cash equivalents at beginning of year 11,135 13,876 15,298
- ---------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 11,554 $ 11,135 $ 13,876
- ---------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL CASH FLOW INFORMATION
Income taxes paid $ 34,879 $ 44,756 $ 49,500
Interest paid 8,330 9,188 4,573
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-8
<PAGE>
Notes to Consolidated Financial Statements
(dollar amounts in thousands, except per share amounts)
NOTE 1
Accounting Policies
The consolidated financial statements are prepared in accordance with generally
accepted accounting principles in the United States.
Principles of Consolidation The consolidated financial statements include the
accounts of Tambrands Inc. and all majority owned subsidiaries (the "Company").
All significant intercompany accounts and transactions are eliminated.
Foreign Currency Translation For most foreign subsidiaries, the local
currency is the functional currency and gains or losses resulting from
translation are accumulated in a separate component of shareholders' equity. For
subsidiaries operating in highly inflationary economies, the U.S. dollar is the
functional currency. In such cases, monetary items are translated using current
exchange rates and all other balance sheet items are remeasured at historical
exchange rates. Any gains or losses from remeasurement are included in earnings.
Cash Equivalents Highly liquid investments with a maturity of three months or
less when purchased are considered to be cash equivalents.
Inventories Inventories are stated at the lower of cost or market. Cost is
determined using the LIFO method for all U.S. inventories. All other inventories
are stated at FIFO.
Depreciation Depreciation is computed on the straight-line and accelerated
methods over the useful lives of the assets.
Intangibles Intangible assets are amortized on a straight-line basis over
periods not exceeding 40 years.
Financial Instruments The Company utilizes derivative financial instruments,
principally options and forward contracts, for the purpose of reducing its
exposure to adverse fluctuations in foreign exchange rates. These contracts
hedge actual and anticipated transactions and balances for periods consistent
with the Company's committed and expected exposures. Gains and losses on hedges
of existing assets or liabilities are included in the carrying amounts of those
assets or liabilities. Gains and losses on contracts that do not qualify as
hedges are recognized in earnings. Option premiums are deferred and amortized
over the period being hedged. The Company does not hold or issue financial
instruments for trading purposes.
Advertising Costs Advertising costs are charged to earnings as incurred.
Earnings Per Share Earnings per share of Common Stock are based on the
average number of shares outstanding during each period. Outstanding stock
options do not have a significant dilutive effect.
Estimates and Assumptions The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts in the financial
statements. Actual results could differ from those estimates.
New Accounting Standards The Company adopted Statement of Financial
Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to Be Disposed Of" as of January 1, 1996,
which had no material effect on the consolidated financial statements. The
Company utilizes the undiscounted cash flow method to determine impairment in
the carrying value of its long-lived assets. Measurement of an impairment loss
is determined by reducing the carrying value of assets to fair value. Assets to
be disposed of by sale or abandonment, as part of a plan committed to and
approved by management, are recorded at the lower of the carrying value or the
fair value less the cost to sell.
In 1996, the Company adopted the provisions of SFAS No. 123, "Accounting for
Stock-Based Compensation". The statement establishes a fair value based method
of accounting for stock-based compensation. The provisions of the Statement
permit the choice to either recognize as expense in the income statement the
fair value of stock options and similar equity instruments or continue the
current approach set forth in Accounting Principles Board (APB) Opinion 25,
"Accounting for Stock Issued to Employees" and disclose the pro forma effect on
net earnings and earnings per share in the footnotes. The Company has elected to
continue its current accounting for stock-based compensation granted to
employees in accordance with APB 25 and make the required disclosures in the
footnotes.
F-9
<PAGE>
TAMBRANDS INC. AND SUBSIDIARIES
NOTE 2
Balance Sheet Components
The components of certain balance sheet accounts at December 31 are as follows:
<TABLE>
<CAPTION>
1996 1995
------------------
<S> <C> <C>
ACCOUNTS RECEIVABLE, NET
Accounts receivable, trade $ 94,252 $ 93,603
Less allowance for doubtful accounts 1,776 1,667
- ------------------------------------------------------------------
92,476 91,936
Other 6,909 6,111
- ------------------------------------------------------------------
$ 99,385 $ 98,047
- ------------------------------------------------------------------
INVENTORIES
Raw materials $ 10,537 $ 17,952
Finished goods 29,794 28,784
- ------------------------------------------------------------------
$ 40,331 $ 46,736
- ------------------------------------------------------------------
Current cost of LIFO inventories $ 24,395 $ 30,834
Stated value of LIFO inventories 11,371 15,098
- ------------------------------------------------------------------
Excess of current cost over stated value $ 13,024 $ 15,736
- ------------------------------------------------------------------
OTHER CURRENT ASSETS
Spare parts inventory $ 9,456 $ 10,460
Other 2,118 3,522
- ------------------------------------------------------------------
$ 11,574 $ 13,982
- ------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT, NET (AT COST)
Buildings, leaseholds and improvements $ 62,545 $ 63,972
Machinery, equipment and fixtures 256,311 245,931
Land 3,723 3,802
Construction in progress 32,163 39,724
- ------------------------------------------------------------------
354,742 353,429
Less accumulated depreciation 147,103 137,307
- ------------------------------------------------------------------
$207,639 $216,122
- ------------------------------------------------------------------
INTANGIBLE AND OTHER ASSETS
Cost $ 13,228 $ 12,983
Less accumulated amortization 7,497 6,969
- ------------------------------------------------------------------
$ 5,731 $ 6,014
- ------------------------------------------------------------------
ACCRUED EXPENSES
Promotions $ 19,644 $ 20,032
Salaries and benefits 21,203 25,067
Restructuring reserves 16,563 3,916
Other liabilities 21,452 24,315
- ------------------------------------------------------------------
$ 78,862 $ 73,330
- ------------------------------------------------------------------
</TABLE>
F-10
<PAGE>
Notes to Consolidated Financial Statements (continued)
NOTE 3
Statement of Earnings Information
Statement of earnings information for the years ended December 31 are as
follows:
<TABLE>
<CAPTION>
1996 1995 1994
----------------------------
<S> <C> <C> <C>
Interest, net and other
Net financing:
Interest income $ 537 $ 1,124 $ 1,304
Interest expense (9,283) (9,206) (7,645)
- -------------------------------------------------------------
(8,746) (8,082) (6,341)
Net foreign exchange losses (669) (1,743) (3,449)
Other 466 193 (74)
- -------------------------------------------------------------
$(8,949) $(9,632) $(9,864)
- -------------------------------------------------------------
Depreciation $27,013 $25,127 $23,545
Advertising 55,953 63,272 66,484
Research and development 12,643 12,204 10,735
</TABLE>
Note 4
Benefit Plans
The Company maintains several non-contributory pension plans covering domestic
and foreign employees who meet certain minimum service and age requirements and
provides supplemental non-qualified retirement benefits to certain officers and
key employees. Pensions are based upon earnings of covered employees during
their periods of credited service. The Company's funding policy for its pensions
is to make the annual contributions required by applicable regulations. In early
1996, the Board of Directors approved the elimination of the Directors Pension
Plan with respect to current and future non-employee directors and converted the
benefits accrued under the plan into an economic interest in the Company's stock
under a phantom stock program.
The following table sets forth the funded status of the plans and the amounts
recognized in the accompanying financial statements at December 31:
<TABLE>
<CAPTION>
1996 1995
-------------------
<S> <C> <C>
Plan assets at fair value, primarily stocks and bonds $120,330 $107,897
- --------------------------------------------------------------------------------------------
Actuarial present value of benefit obligations:
Vested benefits 102,366 101,510
Nonvested benefits 6,351 6,510
- --------------------------------------------------------------------------------------------
Accumulated benefit obligation 108,717 108,020
Effect of projected future salary increases 9,840 9,883
- --------------------------------------------------------------------------------------------
Projected benefit obligation 118,557 117,903
- --------------------------------------------------------------------------------------------
Projected benefit obligation (less than) or in excess of plan assets (1,773) 10,006
Deferred actuarial adjustments 10,997 (203)
Deferred prior service cost (2,551) (2,913)
- --------------------------------------------------------------------------------------------
Accrued pension cost included in accrued expenses $ 6,673 $ 6,890
- --------------------------------------------------------------------------------------------
</TABLE>
F-11
<PAGE>
TAMBRANDS INC. AND SUBSIDIARIES
At December 31, 1996 and 1995, the accumulated benefit obligation of the
domestic plans exceeded plan assets by $1,039 and $8,460, respectively.
The net cost of pensions included in the Statements of earnings for the years
ended December 31 consists of:
<TABLE>
<CAPTION>
1996 1995 1994
------------------------------
<S> <C> <C> <C>
Service cost: benefits earned during the period $ 4,237 $ 3,940 $ 5,045
Interest cost on projected benefit obligation 8,415 8,389 8,093
Actual return on plan assets (14,102) (19,493) 3,375
Net amortization and deferral 5,197 11,900 (10,289)
- ---------------------------------------------------------------------------------
$ 3,747 $ 4,736 $ 6,224
- ---------------------------------------------------------------------------------
</TABLE>
In 1996 and 1995, the discount rates used to determine the projected benefit
obligation for the U.S. plans were 7.5% and 7.25%, respectively, and the rate of
increase in future compensation in each year was 4.5%. For the international
plans, the discount rates used to determine the projected benefit obligation
were 8.25% in 1996 and ranged from 7.5% to 8% in 1995. The rates of increase in
future compensation were 5.25% in 1996 and ranged from 5% to 6% in 1995.
Expected long-term rates of return on plan assets ranged from 9.25% to 10% in
1996 and 8.5% to 10% in 1995. Prior service costs arising from plan amendments
are amortized on a straight-line basis over the average remaining service period
of employees expected to receive benefits under each plan.
The Company sponsors a defined contribution 401(k) savings plan available to
domestic employees who meet certain minimum age and service requirements. The
Company's contributions to the plan are funded principally with its Common
Stock.
NOTE 5
Income Taxes
Provision for income taxes for the years ended December 31 has been made as
follows:
<TABLE>
<CAPTION>
1996 1995 1994
--------------------------
<S> <C> <C> <C>
Current tax expense
United States $34,595 $45,597 $47,866
Foreign 3,841 6,058 (401)
- --------------------------------------------------
38,436 51,655 47,465
Deferred tax expense
United States (2,140) 754 6,699
Foreign 1,226 1,404 (2,142)
- --------------------------------------------------
(914) 2,158 4,557
- --------------------------------------------------
$37,522 $53,813 $52,022
- --------------------------------------------------
</TABLE>
F-12
<PAGE>
Notes to Consolidated Financial Statements (continued)
Income Taxes (continued)
Provision has not been made for income taxes on foreign subsidiaries' unremitted
earnings to the extent that such earnings have been reinvested in the business;
any U.S. income taxes payable on the distribution of available earnings should
generally be offset by credits for foreign taxes paid.
Reconciliation of the statutory federal income tax rates to the Company's
effective tax rates for the years ended December 31 are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
------------------
<S> <C> <C> <C>
Statutory federal tax rate 35.0% 35.0% 35.0%
State taxes - net of federal benefit 3.2 3.5 4.3
Rate differential on foreign income (1.8) (3.7) (2.3)
Effect of litigation charge -- 1.1 --
Effect of restructuring charge 8.3 -- --
Other differences 0.3 2.7 (0.3)
- -----------------------------------------------------------
Effective tax rate 45.0% 38.6% 36.7%
- -----------------------------------------------------------
</TABLE>
During 1996 and 1995, shareholders' equity was credited for $443 and $343,
respectively, for tax benefits relating to compensation expense for tax purposes
in excess of the amounts recognized for financial reporting purposes.
Deferred tax assets and liabilities are determined based on the difference
between the financial statement and tax bases of assets and liabilities using
enacted tax rates in effect for the year in which the differences are expected
to reverse.
The components of the net deferred tax assets (liabilities) for the years ended
December 31 are as follows:
<TABLE>
<CAPTION>
1996 1995
-----------------
<S> <C> <C>
Deferred tax assets:
Employee benefits $ 5,532 $ 5,620
Postemployment benefits 1,405 4,098
Intercompany transactions 933 4,588
Accrued liabilities 5,466 4,446
Restructuring 7,994 --
Other 2,540 4,271
- ----------------------------------------------------
23,870 23,023
- ----------------------------------------------------
Deferred tax liabilities:
Property, plant and equipment 23,319 21,351
Safe harbor leases 4,579 5,973
Other 789 512
- ----------------------------------------------------
28,687 27,836
- ----------------------------------------------------
$(4,817) $(4,813)
- ----------------------------------------------------
</TABLE>
F-13
<PAGE>
TAMBRANDS INC. AND SUBSIDIARIES
NOTE 6
Restructuring Charge
During the third quarter of 1996, a $46,221 restructuring charge ($36,977 after-
tax) was taken to provide for the costs associated with restructuring production
facilities around the world to support the Company's global strategy. The charge
included $26,156 in asset write-downs and $20,065 in severance and employee
related costs in connection with the closure of the manufacturing plants in
Tours, France; Tipperary, Ireland; St. Petersburg, Russia; and Rutland, Vermont,
U.S.A. The restructuring charge provided for a reduction of 1,100 jobs from the
worldwide workforce. However, approximately 500 new jobs will be created from
the upgrade of the remaining manufacturing facilities and expanded marketing and
product development capabilities. As a result of the restructuring,
consolidation costs of approximately $2,772 were charged to the current year
operating results. As of December 31, 1996, approximately 530 jobs had been
eliminated and the remaining accrual of $15,461 related primarily to severance
and employee related costs in the United States and France. The restructuring is
expected to be substantially complete by December 31, 1997.
NOTE 7
Lease Commitments
The Company's lease of its headquarters in White Plains, New York and European
headquarters in the United Kingdom are non-cancelable operating leases. Future
minimum lease payments under operating leases with terms in excess of one year
amount to $4,582 in 1997, $3,994 in 1998, $3,105 in 1999, $2,962 in 2000 and
$2,316 in 2001. Rent expense in 1996, 1995 and 1994 amounted to $4,649, $5,029
and $4,270, respectively.
NOTE 8
Litigation
The Company has been named in product liability litigation and claims arising
from the alleged association of tampons with Toxic Shock Syndrome. The cases
seek compensatory and punitive damages in various amounts.
In the second quarter of 1995, the Company provided for $11,396 ($8,686 after-
tax) for expenses related to a securities class action lawsuit, which was
settled and dismissed in 1995, and several legal proceedings related to
previously divested non-tampon business. Most of these legal proceedings related
to previously divested businesses are still pending resolution.
There are certain other legal proceedings pending against the Company arising
out of its normal course of business in which claims for monetary damages are
asserted.
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
in excess of reserved amounts will not individually or in the aggregate have a
material adverse effect on the Company's financial position or results of
operations.
F-14
<PAGE>
Notes to Consolidated Financial Statements (continued)
NOTE 9
Obligations
Short-term debt consists of commercial paper issued in the United States, bank
loans and notes payable. Commercial paper outstanding at December 31, 1996 and
1995 was $47,398 and $42,672, respectively. Bank loans and notes payable at
December 31, 1996 and 1995 totaled $5,029 and $10,419, respectively. The
weighted-average interest rates for short-term debt at December 31, 1996 and
1995 were 5.7% and 6%, respectively. The Company's short-term debt is supported
by unused bank lines of credit amounting to $120,000 at December 31, 1996 and
1995. Commitment fees to secure the lines of credit are not material.
At December 31, 1996, there were $11,477 of medium-term obligations outstanding
of which $2,272 was payable within the next year. At December 31, 1995, there
were $12,869 of medium-term obligations outstanding of which $1,972 was payable
within the next year. At the end of both years, these obligations carried
interest rates ranging from 7% to 7.9%, had various maturities through June
2003, and had carrying values which approximated market.
At December 31, 1996, there were $70,000 of unsecured medium-term notes
outstandingof which $10,000 was payable within the next year. At December 31,
1995, $69,992 of unsecured medium-term notes were outstanding.At the end of both
years, the notes carried interest rates ranging from 4.7% to 7.4%, had
maturities ranging from January 1997 to May 2004, and had carrying values which
approximated market.
The annual maturities on all medium-term notes and obligations through the next
five years amount to $12,272 in 1997, $2,303 in 1998, $32,484 in 1999, $11,728
in 2000 and $878 in 2001.
The terms of the Company's financing arrangements include various covenants with
which the Company was in compliance at December 31, 1996.
NOTE 10
Financial Instruments
As part of its risk management program, the Company reduces its exposure to
foreign currency fluctuation through the use of forward exchange and option
contracts. The Company does not enter into financial instruments for trading or
speculative purposes. The agreements entered into are short-term in nature with
maturities less than one year and the Company primarily acts as a buyer. The
Company contracts only with major financial institutions and no significant
exposure exists to any one financial institution. Management believes that
credit risk of loss is remote and in any event would be immaterial.
The Company had forward exchange contracts with notional values of $11,559 and
$7,846 at December 31, 1996 and 1995, respectively. The carrying value of these
contracts approximated market. At December 31, 1996, the Company had foreign
currency options with notional values of $20,388 and an estimated fair value of
$362. At December 31, 1995, the Company had foreign currency options with
notional values of $30,373 and an estimated fair value of $322. Premiums are
amortized to expense over the option periods and unamortized premiums amounted
to $153 and $432 at December 31, 1996 and 1995, respectively.
The Company only enters into forward exchange contracts which match the periods
of the underlying transactions being hedged. The maximum loss on foreign
currency options is the amount of premiums paid for those options. Therefore,
the Company has no material exposure through the use of any of these financial
instruments.
F-15
<PAGE>
TAMBRANDS INC. AND SUBSIDIARIES
NOTE 11
Shareholders' Equity
The changes in Shareholders' equity for the years ended December 31, 1996, 1995,
and 1994 are as follows:
<TABLE>
<CAPTION>
Cumulative
Common Treasury Retained Translation
Stock Stock Earnings Adjustment Other Total
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
December 31, 1993 $10,887 ($303,948) $430,822 ($20,659) ($2,077) $115,025
Compensation plans 4,050 (759) 3,291
Share repurchase (71,118) (71,118)
Net earnings 89,729 89,729
Dividends (62,721) (62,721)
Translation adjustment 7,038 7,038
Other 770 770
- ------------------------------------------------------------------------------------------
December 31, 1994 $10,887 ($371,016) $457,071 ($13,621) ($1,307) $ 82,014
Compensation plans 6,799 (1,067) 5,732
Share repurchase (4,326) (4,326)
Net earnings 85,522 85,522
Dividends (65,274) (65,274)
Translation adjustment (602) (602)
Other (94) (94)
- ------------------------------------------------------------------------------------------
December 31, 1995 $10,887 ($368,543) $476,252 ($14,223) ($1,401) $102,972
Compensation plans 10,239 (1,610) 8,629
Net earnings 45,803 45,803
Dividends (67,837) (67,837)
Translation adjustment 4,617 4,617
Other 504 504
- ------------------------------------------------------------------------------------------
December 31, 1996 $10,887 ($358,304) $452,608 ($ 9,606) ($ 897) $ 94,688
- ------------------------------------------------------------------------------------------
</TABLE>
F-16
<PAGE>
Notes to Consolidated Financial Statements (continued)
Shareholders' Equity (continued)
Common Stock The Company has 300 million authorized shares of Common Stock.
Changes in outstanding shares for the years ended December 31 are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
-----------------------------------
<S> <C> <C> <C>
Shares outstanding at beginning of year 36,722,319 36,674,030 38,292,952
Shares repurchased -- (99,700) (1,718,700)
Shares issued for stock option and other employee plans from treasury 210,325 147,989 99,778
- ------------------------------------------------------------------------------------------------------------
Shares outstanding at end of year 36,932,644 36,722,319 36,674,030
- ------------------------------------------------------------------------------------------------------------
Shares held in treasury at end of year 6,615,294 6,825,619 6,873,908
- ------------------------------------------------------------------------------------------------------------
</TABLE>
Stock Option Plans The Company has stock option plans which provide for the
granting of options to directors, officers and key employees to purchase shares
of its Common Stock within ten years, at prices equal to or greater than the
fair market value on the date of grant. Stock options vest in increments of one-
third over a three year period.
In 1996, the Company adopted the provisions of SFAS No. 123, "Accounting for
Stock-Based Compensation". The statement establishes a fair value based method
of accounting for stock-based compensation.
The provisions of the Statement permit the choice to either recognize as expense
in the income statement the fair value of stock options and similar equity
instruments or continue the current approach set forth in Accounting Principles
Board (APB) Opinion 25, "Accounting for Stock Issued to Employees" and disclose
the pro forma effect on net earnings and earnings per share in the footnotes.
The Company has elected to continue its current accounting for stock-based
compensation granted to employees in accordance with APB 25 and make the
required disclosures in the footnotes. If compensation cost for the Company's
stock-based compensation plans had been recognized in the income statement based
on the fair value method, net earnings would have been reduced to the pro forma
amounts of $44,636 and $84,798 and earnings per share would have been reduced to
the pro forma amounts of $1.21 and $2.31 for 1996 and 1995, respectively.
Stock option activity for the years 1996, 1995, and 1994 is as follows:
<TABLE>
<CAPTION>
1996 1995 1994
--------------------- -------------------- --------------------
Weighted Weighted Weighted
Number of Average Number of Average Number of Average
Shares Price Shares Price Shares Price
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year 2,837,462 $47.95 2,845,634 $47.80 2,524,886 $51.36
Granted 249,814 43.55 308,834 47.78 866,074 38.78
Expired/Forfeited (322,170) 52.23 (219,872) 53.44 (508,672) 51.94
Exercised (132,757) 37.06 (97,134) 34.48 (36,654) 27.57
- ------------------------------------------------------------------------------------------------------------
Outstanding at end of year 2,632,349 $47.55 2,837,462 $47.95 2,845,634 $47.80
- ------------------------------------------------------------------------------------------------------------
Options excercisable at year-end 1,926,689 $48.30 1,823,593 $48.95 1,290,051 $52.73
Weighted-average fair value of options
granted during the year $7.77 $9.70
</TABLE>
F-17
<PAGE>
TAMBRANDS INC. AND SUBSIDIARIES
The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option-pricing model. The weighted-average assumptions used for
grants in 1996 included dividend yields ranging from 3.7% to 4.5%, risk-free
interest rates ranging from 5.7% to 6.9%, assumed expected volatilities ranging
from 19.4% to 22.5% and expected lives of 6.5 years. The weighted-average
assumptions used for grants in 1995 included dividend yields ranging from 3% to
4.2%, risk-free interest rates ranging from 5.7% to 7.5%, assumed expected
volatilities ranging from 21.7% to 22.4% and expected lives of 6.5 years. At
December 31, 1996 and 1995, the respective number of shares available for
granting options were 2,494,714 and 2,442,356.
The following table summarizes information about stock options outstanding at
December 31, 1996:
<TABLE>
<CAPTION>
Weighted Weighted
Exercise Number Average Remaining Average Number Average
Price Outstanding Contractual Life Price Exercisable Price
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$21-29 7,225 1.4 Years $26.71 7,225 $26.71
32-37 561,982 7.6 36.48 454,520 36.45
38-45 685,602 7.8 43.03 429,707 42.93
46-56 1,060,432 6.2 51.66 720,906 52.58
59-69 317,108 6.1 63.39 314,331 63.43
- ---------------------------------------------------------------------------
$21-69 2,632,349 6.9 $47.55 1,926,689 $48.30
- ---------------------------------------------------------------------------
</TABLE>
NOTE 12
Segment and Geographic Information
The Company operates in one industry segment, personal care products. The
Company markets these products around the world. Sales are made and credit is
granted to drug, grocery, variety and discount stores and other comparable
outlets, as well as to wholesalers and distributors. A small number of
significant customers are financed through highly leveraged capital structures,
making them particularly sensitive to market interest rate changes and other
economic variables.
The Company had a significant customer that accounted for 12.2%, 11.1% and 10.3%
of net sales in 1996, 1995 and 1994, respectively. In the geographic summary
that follows, certain overhead costs are allocated to the geographic areas based
on the benefit derived by the area. Restructuring charges of $46,221 reduced
1996 Operating income of the United States, Europe and Other international by
$26,438, $18,483 and $1,300, respectively.
F-18
<PAGE>
Notes to Consolidated Financial Statements (continued)
Segment and Geographic Information (continued)
Information for the years ended December 31 is as follows:
<TABLE>
<CAPTION>
1996 1995 1994
------------------------------
<S> <C> <C> <C>
Net sales
United States $371,660 $391,011 $381,975
Europe 214,712 210,567 195,748
Other international 75,740 81,514 66,790
- --------------------------------------------------------------------
$662,112 $683,092 $644,513
- --------------------------------------------------------------------
Operating income
United States $112,717 $134,194 $142,931
Europe 46,415 43,530 27,112
Other international 10,601 14,135 10,314
Unallocated items, net (31,238) (31,496) (28,742)
Restructuring charge (46,221) -- --
- --------------------------------------------------------------------
$ 92,274 $160,363 $151,615
- --------------------------------------------------------------------
Identifiable assets at December 31
United States $238,744 $237,054 $212,346
Europe $159,287 169,665 152,295
Other international $ 11,935 15,330 14,434
- --------------------------------------------------------------------
$409,966 $422,049 $379,075
- --------------------------------------------------------------------
</TABLE>
F-19
<PAGE>
Independent Auditors' Report TAMBRANDS INC. AND SUBSIDIARIES
[LOGO] KPMG
To the Board of Directors and Shareholders of Tambrands Inc.:
We have audited the accompanying consolidated balance sheets of Tambrands Inc.
and subsidiaries as of December 31, 1996 and 1995 and the related consolidated
statements of earnings and cash flows for each of the years in the three-year
period ended December 31, 1996. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Tambrands Inc. and
subsidiaries as of December 31, 1996 and 1995 and the results of their
operations and cash flows for each of the years in the three-year period ended
December 31, 1996, in conformity with generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
Stamford, Connecticut
January 23, 1997
F-20
<PAGE>
SCHEDULE II
TAMBRANDS INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
($ in thousands)
<TABLE>
<CAPTION>
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Reserve deducted in the balance sheet
from the asset to which it applies
Allowance for doubtful accounts:
Balance at beginning of period $1,667 $1,456 $1,453
Additions charged to cost and expenses 288 353 93
Reclassification of unrecoverable promotional
allowance & other (6) 53 11
Write-off of bad debts (173) (195) (101)
------------ ------------ ------------
Balance at end of period $1,776 $1,667 $1,456
=========== =========== ===========
</TABLE>
F-21
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Tambrands Inc.:
Under date of January 23, 1997, we reported on the consolidated balance sheets
of Tambrands Inc. and subsidiaries as of December 31, 1996 and 1995, and the
related consolidated statements of earnings and cash flows for each of the years
in the three-year period ended December 31, 1996, as contained in the annual
report on Form 10-K for the year 1996. In connection with our audits of the
aforementioned consolidated financial statements, we also have audited the
related financial statement schedule as listed in Item 14(a)2 of the annual
report on Form 10-K for the year 1996. This financial statement schedule is the
responsibility of the Company's management. Our responsibility is to express an
opinion on this financial statement schedule based on our audits.
In our opinion, the financial statement schedule, when considered in relation to
the basic consolidated financial statements taken as a whole, presents fairly,
in all material respects, the information set forth therein.
KPMG Peat Marwick LLP
/s/ KPMG Peat Marwick LLP
Stamford, Connecticut
January 23, 1997
F-22
<PAGE>
Supplementary Financial Information
and Quarterly Data
-----------------------------------
Quarterly Data
(unaudited)
<TABLE>
<CAPTION>
First Second Third Fourth
------------- --------------- ------------------ --------------
(in millions, except per share amounts) 1996 1995 1996 1995 1996 1995 1996 1995
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $169.0 $166.9 161.3 $176.3 $175.1 $178.1 $156.7 $161.8
Gross profit 113.1 111.6 107.2 117.9 114.5 116.8 100.9 105.2
Net earnings (loss) 23.6 22.8 13.0 13.0(a) (14.7)(b) 26.7 23.9 23.0
Net earnings (loss) per share 0.64 0.62 0.35 0.36(a) (0.40)(b) 0.73 0.65 0.63
</TABLE>
(a) Includes the 1995 Litigation charge as described in the notes to the
consolidated financial statements.
(b) Includes the 1996 Restructuring charge as described in the notes to the
consolidated financial statements.
F-23
<PAGE>
INDEX TO EXHIBITS
-----------------
Exhibit
Number Description
------- -----------
3(1) 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.
3(2) Certificate of Amendment of Certificate of
Incorporation of the Company, dated
<PAGE>
April 24, 1990, filed May 15, 1990 as Exhibit 4(2)
to the Company's Report on Form 10-Q for the
quarter ended March 31, 1990, incorporated herein
by reference.
3(3) 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 Report on Form 10-Q for the quarter
ended March 31, 1992, incorporated herein by
reference.
3(4)(a) Resolution of the Board of Directors of the
Company authorizing an amendment to the By-Laws of
the Company, adopted on January 28, 1997, filed
herewith.
3(4)(b) By-Laws of the Company, as amended, filed
herewith.
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 Report on Form 10-Q for the
quarter ended March 31, 1992, incorporated herein
by reference.
4(3) Rights Agreement, dated as of October 24, 1989,
between the Company and First Chicago Trust
Company of New York, 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.
4(4)(b) First Supplemental Indenture dated as of December
31, 1996, among the Company,
<PAGE>
Tampax Corporation, Tambrands Mfg., Inc. and
Tambrands Sales Corp. and Citibank, N.A., as
trustee, to 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 herewith.
4(4)(c) 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)(d) 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.
Management Contracts and
Compensatory Plans and Arrangements
(Exhibits 10(1) - 10(20))
-----------------------
10(1)(a) 1981 Long Term Incentive Plan, as amended through
November 4, 1988, filed as Exhibit 10(1)(a) to the
Company's Report on Form 10-K for the year 1988,
incorporated herein by reference.
10(1)(b) Amendment to 1981 Long Term Incentive Plan, dated
as of February 27, 1990, filed as Exhibit 10(1)(b)
to the Company's Report on Form 10-K for the year
1989, incorporated herein by reference.
10(1)(c) Amendment to 1981 Long Term Incentive Plan,
effective as of June 25, 1991, filed as Exhibit
10(1)(c) to the Company's Report on Form 10-K for
the year 1991, incorporated herein by reference.
10(1)(d) Amendment to 1981 Long Term Incentive Plan,
effective as of June 23, 1992, filed as Exhibit
10(1)(d) to the Company's Report on Form 10-K for
the year 1992, incorporated herein by reference.
10(1)(e) Amendment to 1981 Long Term Incentive Plan,
effective as of February 23, 1993, filed as
Exhibit 10(1)(e) to the Company's Report on Form
10-K for the year 1992, incorporated herein by
reference.
10(1)(f) Addendum to 1981 Long Term Incentive Plan, filed
April 30, 1987 as Exhibit
<PAGE>
28(a) to the Company's Form S-8 Registration
Statement (Reg. No. 33-13902), incorporated herein
by reference.
10(2)(a) 1981 Incentive Stock Option Plan, as amended
through April 30, 1987, filed April 30, 1987 as
Exhibit 28(a) to the Company's Form S-8
Registration Statement (Reg. No. 33-13902),
incorporated herein by reference.
10(2)(b) Amendment to 1981 Incentive Stock Option Plan,
dated as of February 27, 1990, filed as Exhibit
10(2)(b) to the Company's Report on Form 10-K for
the year 1989, incorporated herein by reference.
10(2)(c) Amendment to 1981 Incentive Stock Option Plan,
effective as of June 23, 1992, filed as Exhibit
10(2)(c) to the Company's Report on Form 10-K for
the year 1992, incorporated herein by reference.
10(2)(d) Amendment to 1981 Incentive Stock Option Plan,
effective as of February 23, 1993, filed as
Exhibit 10(2)(d) to the Company's Report on Form
10-K for the year 1992, incorporated herein by
reference.
10(3)(a) 1991 Stock Option Plan, filed as Exhibit 10(3) to
the Company's Report on Form 10-K for the year
1990, incorporated herein by reference.
10(3)(b) First Amendment to 1991 Stock Option Plan,
effective as of July 1, 1991, filed as Exhibit
10(3)(b) to the Company's Report on Form 10-K for
the year 1991, incorporated herein by reference.
10(3)(c) Second Amendment to 1991 Stock Option Plan,
effective as of July 1, 1991, filed as Exhibit
10(3)(c) to the Company's Report on Form 10-K for
the year 1991, incorporated herein by reference.
10(3)(d) Third Amendment to 1991 Stock Option Plan,
effective as of June 23, 1992, filed as Exhibit
10(3)(d) to the Company's Report on Form 10-K for
the year 1992, incorporated herein by reference.
10(3)(e) Fourth Amendment to 1991 Stock Option Plan,
effective as of February 23, 1993, filed as
Exhibit 10(3)(e) to the
<PAGE>
Company's Report on Form 10-K for the year 1992,
incorporated herein by reference.
10(3)(f) Fifth Amendment to 1991 Stock Option Plan,
effective as of February 23, 1993, filed as
Exhibit 10(3)(f) to the Company's Report on Form
10-K for the year 1992, incorporated herein by
reference.
10(3)(g) Addendum to 1991 Stock Option Plan, filed as
Exhibit 10(3)(g) to the Company's Report on Form
10-K for the year 1992, incorporated herein by
reference.
10(3)(h) Sixth Amendment to 1991 Stock Option Plan,
effective as of February 1, 1994, filed as Exhibit
10(3)(h) to the Company's Report on Form 10-K for
the year 1993, incorporated herein by reference.
10(3)(i) Seventh Amendment to 1991 Stock Option Plan,
effective as of January 28, 1997, filed herewith.
10(4)(a) 1989 Restricted Stock Plan, as amended through
December 31, 1990, filed as Exhibit 10(4) to the
Company's Report on Form 10-K for the year 1990,
incorporated herein by reference.
10(4)(b) Amendment to 1989 Restricted Stock Plan, effective
as of February 23, 1993, filed as Exhibit 10(4)(b)
to the Company's Report on Form 10-K for the year
1992, incorporated herein by reference.
10(4)(c) Amendment to 1989 Restricted Stock Plan, effective
as of January 28, 1997, filed herewith.
10(5) Supplemental Executive Retirement Plan, effective
July 1, 1986, as amended and restated effective
July 1, 1994, filed as Exhibit 10(6) to the
Company's Report on Form 10-Q for the quarter
ended June 30, 1994, incorporated herein by
reference.
10(6) Trust Agreement between the Company and The
Northern Trust Company, dated as of October 31,
1988, filed as Exhibit 10(6) to the Company's
Report on Form 10-K for the year 1988,
incorporated herein by reference.
<PAGE>
10(7) Pension Plan for Non-Employee Directors, filed as
Exhibit 10(10) to the Company's Report on Form 10-
K for the year 1990, incorporated herein by
reference.
10(8)(a) 1992 Directors Stock Incentive Plan, filed as
Exhibit 10(11) to the Company's Report on Form 10-
K for the year 1991, incorporated herein by
reference.
10(8)(b) First Amendment to 1992 Directors Stock Incentive
Plan, effective as of August 18, 1992, filed as
Exhibit 10(8)(b) to the Company's Report on Form
10-K for the year 1992, incorporated herein by
reference.
10(8)(c) Second Amendment to 1992 Directors Stock Incentive
Plan, effective as of February 23, 1993, filed as
Exhibit 10(8)(c) to the Company's Report on Form
10-K for the year 1992, incorporated herein by
reference.
10(8)(d) Third Amendment to the 1992 Directors Stock
Incentive Plan, effective as of August 24, 1993,
filed as Exhibit 10(3) to the Company's Report on
Form 10-Q/A for the quarterly period ended
September 30, 1993, incorporated herein by
reference.
10(8)(e) Fourth Amendment to Tambrands Inc. 1992 Directors
Stock Incentive Plan, effective as of April 28,
1994, filed as Exhibit 10(7) to the Company's
Report on Form 10-Q for the quarter ended June 30,
1994, incorporated herein by reference.
10(8)(f) Fifth Amendment to the Tambrands Inc. 1992
Directors Stock Incentive Plan, effective as of
September 1, 1994, filed as Exhibit 10(4) to the
Company's Report on Form 10-Q for the quarter
ended September 30, 1994, incorporated herein by
reference.
10(9)(a) Employment Protection Agreement between the
Company and Mr. Edward T. Fogarty, dated as of May
31, 1994, filed as Exhibit 10(1) to the Company's
Report on Form 10-Q for the quarter ended June 30,
1994, incorporated herein by reference;
10(9)(b) Amended and Restated Employment Protection
Agreement between the Company and Mr. Thomas J.
Mason, dated as of October 1, 1996, filed
herewith;
<PAGE>
10(9)(c) Employment Protection Agreement between the
Company and Mr. Thomas Soper, III, dated as of
October 1, 1996, filed as Exhibit 10(9)(d) to the
Company's Report on Form 10-K for the year 1995,
incorporated herein by reference;
10(9)(d) Employment Protection Agreement between the
Company and Mr. Michael S. Krause, dated as of
July 5, 1995, filed herewith;
10(9)(e) Employment Protection Agreement between the
Company and Ms. Susan J. Riley, dated as of
December 15, 1994, filed herewith;
The Company has agreements similar to the
agreements listed as Exhibits 10(9)(c), 10(9)(d)
and 10(9)(e) with its other executive officers.
10(10) Resolution of the Board of Directors of the
Company with respect to the compensation of the
Board, adopted on December 13, 1994, filed as
Exhibit 10(11) to the Company's Report on Form 10-
K for the year 1994, incorporated herein by
reference.
10(11) 1995 Directors Stock and Deferred Compensation
Plan, effective as of July 1, 1995, included as
Exhibit A to the Company's Proxy Statement, dated
March 10, 1995, for the annual meeting of
shareholders held on April 25, 1995, incorporated
herein by reference.
10(12) Executive Severance Program of the Company, filed
as Exhibit 10(15) to the Company's Report on Form
10-K for the year 1989, incorporated herein by
reference.
10(13) 1981 Annual Incentive Plan of the Company, as
amended through March 30, 1995, filed as Exhibit
10(1) to the Company's Report on Form 10-Q for the
quarter ended March 31, 1995, incorporated herein
by reference.
10(14) Letter Agreement between the Company and Mr.
Edward T. Fogarty, dated as of April 25, 1994,
filed as Exhibit 10(1) to the Company's Report on
Form 10-Q for the quarter ended June 30, 1994,
incorporated herein by reference.
10(15) Letter Agreement between the Company and Mr.
Thomas Soper, III, dated as of August
<PAGE>
29, 1994, filed as Exhibit 10(7) to the Company's
Report on Form 10-K for the year 1994,
incorporated herein by reference.
10(16) Letter Agreement between the Company and Mr.
Thomas J. Mason, dated as of October 18, 1994,
filed as Exhibit 10(18) to the Company's Report on
Form 10-K for the year 1994, incorporated herein
by reference.
10(17) Letter Agreement between the Company and Mr.
Michael S. Krause, dated as July 5, 1995, filed as
Exhibit 10(1) to the Company's Report on Form 10-Q
for the quarter ended September 30, 1995,
incorporated herein by reference.
10(18) Restricted Stock Agreement between the Company and
Mr. Edward T. Fogarty, dated May 31, 1994, filed
as Exhibit 10(3) to the Company's Report on Form
10-Q for the quarter ended June 30, 1994,
incorporated herein by reference.
10(19) Stock Option Agreement between the Company and Mr.
Edward T. Fogarty, dated May 31, 1994, filed as
Exhibit 10(4) to the Company's Report on Form 10-Q
for the quarter ended June 30, 1994, incorporated
herein by reference.
10(20) Tambrands Inc. 1996 Non-Employee Director Stock
Unit Plan, effective as of April 23, 1996, filed
as Exhibit 10(1) to the Company's Report on Form
10-Q for the quarter ended June 30, 1996,
incorporated herein by reference.
10(21)(a) Commercial Paper Dealer Agreement between the
Company and Merrill Lynch Money Markets, Inc.,
dated November 18, 1992, filed as Exhibit 10(15)
(a) to the Company's Report on Form 10-K for the
year 1992, incorporated herein by reference.
10(21)(b) Letter Agreement between the Company and the First
National Bank of Chicago, dated as of November 18,
1992, filed as Exhibit 10(15)(b) to the Company's
Report on Form 10-K for the year 1992,
incorporated herein by reference.
10(21)(c) Amended and Restated Credit Agreement by and among
the Company, Tambrands Limited, the signatory
banks thereto and The Bank
<PAGE>
of New York, as agent, dated as of September 6,
1994, filed as Exhibit 10(5) to the Company's
Report on Form 10-Q for the quarter ended
September 30, 1994, incorporated herein by
reference.
10(21)(d) Amendment No. 1, dated as of May 5, 1995, to the
Amended and Restated Credit Agreement, dated as of
September 6, 1994, by and among the Company,
Tambrands Limited, the signatory banks thereto and
The Bank of New York, as agent, filed as Exhibit
10(3) to the Company's Report on Form 10-Q for the
quarter ended June 30, 1995, incorporated herein
by reference.
10(21)(e) Amendment No. 2, dated as of December 13, 1996, to
the Amended and Restated Credit Agreement, dated
as of September 6, 1994, by and among the Company,
Tambrands Limited, the signatory banks thereto and
The Bank of New York, as agent, filed herewith.
12 Computation of Ratio of Earnings to Fixed
Charges, filed herewith.
21 Subsidiaries of the Company, filed herewith.
23 Independent Auditors' Consent, filed herewith.
24 Powers of attorney, filed herewith.
27 Financial Data Schedules, filed herewith (in
electronic format only).
<PAGE>
EXHIBIT 3(4)(a)
Amendment to Bylaws
-------------------
RESOLVED, that Article II, Section 8 of the Bylaws of the Corporation
--------
be, and it hereby is, amended and restated in its entirety to read as set
forth in the attached Exhibit B.
<PAGE>
EXHIBIT B
---------
PROPOSED REVISION TO BYLAWS
---------------------------
Article II, Section 8
- ---------------------
Each director shall retire from the Board not later than the date of the
annual meeting of the stockholders of the Corporation next following his or her
70th birthday.
<PAGE>
EXHIBIT 3(4)(b)
BY-LAWS
OF
TAMBRANDS INC.
--------------
as amended through January 28, 1997
ARTICLE I
STOCKHOLDERS.
------------
Section 1. The annual meeting of the stockholders of the Corporation
shall be held, at such time and at such place within or without the State of
Delaware as may be fixed by the Board of Directors from time to time, for the
purpose of electing directors and for the transaction of such other business as
may properly be brought before the meeting. Any previously scheduled annual
meeting of the stockholders may be postponed by resolution of the Board of
Directors upon public notice given on or prior to the date previously scheduled
for such annual meeting of stockholders. To be properly brought before an
annual meeting, business must be (a) specified in the notice of meeting (or any
---
supplement thereto) given by or at the direction of the Board of Directors, (b)
---
otherwise properly brought before the meeting by or at the direction of the
Board of Directors, or (c) otherwise properly brought before the meeting by a
---
stockholder of the Corporation who was a stockholder of record at the time of
giving of notice provided for in this Section 1, who is entitled to vote at the
meeting and who complied with the notice procedures set forth in this Section 1.
For business to be properly brought before an annual meeting by a stockholder,
if such business is related to the election of directors of the Corporation, the
procedures in Article II, Section 9 of these By-Laws must be complied with. If
such business relates to any other
<PAGE>
matter, the stockholder must have given timely notice thereof in writing to the
Secretary of the Corporation. To be timely, a stockholder's notice shall be
delivered to or mailed to and received at the principal executive offices of the
Corporation not less than 60 days nor more than 90 days prior to the first
anniversary of the preceding year's annual meeting; provided, however, that in
the event that the date of the annual meeting is advanced by more than 30 days
or delayed by more than 60 days from such anniversary date, notice by the
stockholder to be timely must be so delivered not earlier than the 90th day
prior to such annual meeting and not later than the close of business on the
later of the 60th day prior to such annual meeting or the 10th day following the
day on which public announcement of the date of such meeting is first made.
Such stockholder's notice shall set forth in writing as to each matter the
stockholder proposes to bring before the annual meeting (i) a brief description
---
of the business desired to be brought before the annual meeting, the reasons for
conducting such business at the annual meeting, and any material interest in
such business of such stockholder and the beneficial owner, if any, on whose
behalf the proposal is made; and (ii) as to the stockholder giving the notice
----
and the beneficial owner, if any, on whose behalf the nomination or proposal is
made (A) the name and address of such stockholder, as they appear on the
Corporation's books, and of such beneficial owner and (B) the class and number
of shares of the Corporation which are owned beneficially and of record by such
stockholder and such beneficial owner. Notwithstanding anything in these By-
Laws to the contrary, no business shall be conducted at any annual meeting
except in accordance with the
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procedures set forth in this Section 1. The Chairman of the meeting shall, if
the facts warrant, determine and declare to the meeting that business was not
properly brought before the meeting in accordance with the provisions of this
Section 1, and if he should so determine, the Chairman shall declare to the
meeting that any such business not properly brought before the meeting shall not
be transacted. For purposes of this Section 1 and Article II, Section 9, "public
announcement" shall mean disclosure in a press release reported by the Dow Jones
News Service, Associated Press or comparable national news service or in a
document publicly filed by the Corporation with the Securities and Exchange
Commission pursuant to Section 13, 14 or 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"). In addition to the provisions of this
Section 1, a stockholder shall also comply with all applicable requirements of
the Exchange Act and the rules and regulations thereunder with respect to the
matters set forth herein. Nothing in these By-Laws shall be deemed to affect any
rights of stockholders to request inclusion of proposals in the Corporation's
proxy statement pursuant to Rule 14a-8 under the Exchange Act.
Section 2. Special meetings of the stockholders may be held only upon
call of the Board of Directors or of the Executive Committee or of the Chairman
of the Board or of the President, at such time and at such place within or
without the State of Delaware as may be fixed by the Board of Directors or by
the Executive Committee or by the Chairman of the Board or by the President, as
the case may be, and as may be stated in the notice setting forth such call.
Any previously scheduled special meeting of the stockholders
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may be postponed by resolution of the Board of Directors upon public notice
given on or prior to the date previously scheduled for such special meeting of
stockholders.
The purpose or purposes of any special meeting of stockholders shall
be set forth in the notice of meeting, and, except as otherwise required by law
or by the Certificate of Incorporation, no business shall be transacted at any
special meeting of stockholders other than the items of business stated in the
notice of meeting. The Chairman of the meeting shall, if the facts warrant,
determine and declare to the meeting that business was not properly brought
before the meeting in accordance with the provisions of this Section 2, and if
he should so determine, the Chairman shall declare to the meeting that any such
business not properly brought before the meeting shall not be transacted.
Section 3. Notice of the time and place of every meeting of
stockholders shall be delivered personally or mailed not less than ten days nor
more than 60 days prior to such meeting to each stockholder of record entitled
to vote thereat, who shall have furnished a written address to the Secretary of
the Corporation for the purpose. Such further notice shall be given as may be
required by law. Meetings may be held without notice, if all stockholders
entitled to vote are present, or if notice is waived by those not present.
Section 4. The holders of record of a majority of the shares of the
capital stock of the Corporation, issued and outstanding, and entitled to vote,
present in person or by proxy shall, except as otherwise provided by
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law, constitute a quorum at all meetings of the stockholders. Whether or not a
quorum is present at the meeting, the Chairman of the meeting or the holders of
a majority of such shares so present or represented may adjourn the meeting from
time to time. The stockholders present at any duly organized meeting may
continue to transact business until adjournment, notwithstanding the withdrawal
of sufficient stockholders to constitute the remaining stockholders less than a
quorum.
Section 5. Meetings of the stockholders shall be presided over by the
Chairman of the Board, or if he is not present, by the President, or if neither
of them is present, by a Vice President, or, if neither the Chairman of the
Board, the President nor a Vice President is present, by a Chairman to be chosen
at the meeting. The Secretary of the Corporation, or in his absence, an
Assistant Secretary, shall act as Secretary of the meeting, or, if neither the
Secretary nor an Assistant Secretary is present, then the meeting shall choose
its Secretary.
Section 6. Each stockholder entitled to vote at any meeting shall
have one vote in person or by proxy for each share of stock held by him which
has voting power upon the matter in question at the time; but no proxy shall be
voted on after three years from its date, unless such proxy provides for a
longer period.
Section 7. Unless otherwise provided by express provision of
applicable law, the Certificate of Incorporation or these By-Laws, all matters
to be decided at a meeting of stockholders shall be by the vote of a majority of
the shares present, either in person or by proxy, that are entitled to vote
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at such meeting, except that the election of directors shall be by a plurality
of votes cast. At all elections of directors by the stockholders the voting
shall be by ballot. The Corporation shall, in advance of any meeting of
stockholders, appoint one or more inspectors to act at the meeting and make a
written report thereof. The Corporation may designate one or more persons as
alternate inspectors to replace any inspector who fails to act. If no inspector
or alternate is able to act at a meeting of stockholders, the Chairman of such
meeting shall appoint one or more inspectors to act at such meeting. No director
or candidate for the office of director shall be appointed as such inspector.
Each inspector shall first take and subscribe an oath or affirmation faithfully
to execute the duties of inspector at such meeting with strict impartiality and
according to the best of his ability, shall make a certificate of the result of
the vote taken after the balloting, and shall have such other duties as are
prescribed by law. The Chairman of the meeting shall fix and announce at the
meeting the date and time of the opening and the closing of the polls for each
matter upon which the stockholders will vote at the meeting.
Section 8. In order to determine the stockholders entitled to notice
of or to vote at any meeting of stockholders or any adjournment thereof, or
entitled to receive payment of any dividend or other distribution or allotment
of any rights, or entitled to exercise any rights in respect of any change,
conversion or exchange of stock or for the purpose of any other lawful action
(other than action by consent, which is the subject of Article I, Section 9 of
these By-Laws), the Board of Directors may fix a record date,
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which record date shall not precede the date upon which the resolution fixing
the record date is adopted by the Board of Directors, and which record date
shall not be more than 60 nor less than 10 days before the date of any such
meeting, nor more than 60 days prior to any other such action. A determination
of the stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting, provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
Section 9. (a) Unless otherwise provided in the Certificate of
Incorporation, any action required to be taken at any annual or special meeting
of the stockholders of the Corporation, or any action which may be taken at any
annual or special meeting of such stockholders, may, subject to the provisions
of this Section 9, be taken without a meeting, without prior notice and without
a vote, if a consent or consents in writing, setting forth the actions so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and voted
and shall be delivered to the Corporation. Prompt notice of the taking of the
corporate action without a meeting by less than unanimous written consent shall
be given to those stockholders who have not consented in writing.
(b) Every written consent shall bear the date of signature of each
stockholder who signs the consent and no written consent shall be effective to
take the corporate action referred to therein unless, within 60
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days of the earliest dated consent delivered to the Corporation, written
consents signed by a sufficient number of holders to take action are delivered
to the Corporation.
(c) The record date for determining stockholders entitled to consent
to corporate action in writing without a meeting shall be fixed by the Board of
Directors. Any stockholder seeking to have the stockholders authorize or take
corporate action by written consent without a meeting shall, by written notice
to the Secretary of the Corporation, request the Board of Directors to fix a
record date. Upon receipt of such a request, the Secretary of the Corporation
shall, as promptly as practicable, direct the Chairman or the President to call
a special meeting of the Board of Directors to be held as promptly as
practicable, but in any event not more than 10 days following the date of
receipt of such a request. At such a meeting, the Board of Directors shall fix
a record date which shall not precede the date upon which the resolution fixing
the record date is adopted by the Board of Directors, and which shall not be
more than 10 days after the date that the resolution fixing the record date is
adopted by the Board of Directors. Notice of the record date shall be published
in accordance with the rules and policies of any stock exchange on which
securities of the Corporation are then listed or, if the securities of the
Corporation are not listed on a stock exchange, then notice of the record date
shall be published in accordance with the rules and policies of the National
Association of Securities Dealers Automatic Quotation National Market System. If
no record date has been so fixed by the Board of Directors, the record date for
determining the stockholders entitled to
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consent to corporate action in writing without a meeting, where no prior action
by the Board of Directors is required by the Delaware General Corporation Law,
shall be the first date on which a signed written consent setting forth the
action taken or proposed to be taken is delivered to the Corporation. If no date
has been fixed by the Board of Directors and prior action by the Board of
Directors is required by the Delaware General Corporation Law, the record date
for determining stockholders entitled to consent to corporate action in writing
without a meeting shall be at the close of business on the day on which the
Board of Directors adopts the resolution taking such prior action.
(d) In the event of the delivery to the Corporation of a written
consent or consents purporting to represent the requisite voting power to
authorize or take corporate action and/or related revocations, the Secretary of
the Corporation shall provide for the safekeeping of such consents and
revocations and shall, as promptly as practicable, engage inspectors for the
purpose of promptly performing a ministerial review of the validity of the
consents and revocations. No action by written consent without a meeting shall
be effective until such inspectors have completed their review, determined that
the requisite number of valid and unrevoked consents has been obtained to
authorize or take actions specified in the consents and certified such
determination for entry in the records of the Corporation for the purpose of
recording the proceedings of meetings of the stockholders.
(e) For purposes of this Section 9, delivery to the Corporation shall
be effected by delivery to its registered office in the State of
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<PAGE>
Delaware, its principal place of business, or an officer or agent of the
Corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to the Corporation's registered office
shall be by hand or by certified or registered mail, return receipt requested.
ARTICLE II
DIRECTORS.
---------
Section 1. The number of directors shall be fixed by the Board of
Directors from time to time by appropriate resolution, provided that the number
of directors shall not be less than three. A director shall hold office until
his successor is elected and has qualified. A director need not be a
stockholder. One-third of the total number of directors shall constitute a
quorum for the transaction of business, provided that a quorum shall never be
less than two directors. If at any meeting of the Board of Directors there
shall be less than a quorum present, a majority of those present may adjourn the
meeting from time to time until a quorum shall have been obtained. The Board of
Directors may designate the Chairman of the Board as an officer.
Section 2. Whenever any vacancy shall have occurred in the Board of
Directors by reason of death, resignation, increase in the number of directors,
or otherwise, it shall be filled by a majority of the remaining directors,
though less than a quorum, and the person so chosen shall hold office for the
unexpired term of the director whom he will have succeeded, or in a
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case of the increase of the number of directors, the person so chosen shall hold
office until his successor is elected and has qualified.
Section 3. Meetings of the Board of Directors shall be held at such
place within or without the State of Delaware as may from time to time be fixed
by resolution of the Board, or as may be specified in the notice of any meeting.
Regular meetings of the Board of Directors shall be held at such times as may
from time to time be fixed by resolution of the Board. Notice need not be given
of regular meetings of the Board held at times fixed by resolution of the Board.
A meeting of the Board may be held without notice immediately after the annual
meeting of stockholders at the same place at which such meeting was held.
Special meetings of the Board of Directors may be called at any time
by or at the direction of the Board of Directors itself, the Executive
Committee, the Chairman of the Board or the President or, in the event of the
absence or disability of the Chairman and the President, by or at the direction
of the Secretary by oral, telegraphic or written notice to each director, duly
served or sent at least 24 hours before such meeting or, if mailed, mailed no
later than the fourth calendar day before such meeting. Meetings may be held at
any time without notice if all the directors are present or if those not present
waive notice of the meeting, in writing.
Section 4. The Board of Directors may, in its discretion, by
resolution passed by a majority of the whole Board, designate an Executive
Committee to consist of the Chairman or the President and such number of other
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directors (not less than two) as the Board may from time to time determine,
which Committee shall have, and may exercise when the Board is not in session,
all the powers and authority of the Board of Directors in the management of the
business and affairs of the Corporation, and may authorize the seal of the
Corporation to be affixed to all papers which may require it, may declare a
dividend or dividends, may authorize the issuance of stock and may adopt a
certificate of ownership and merger pursuant to Section 253 (or its successor
provision) of the Delaware General Corporation Law; but the power and authority
of the Executive Committee shall be subject to the provisions of Section 141(c)
(or its successor provision) of the Delaware General Corporation Law and any
other applicable statute.
The Board may designate one or more directors as alternate members of
the Executive Committee, who may replace any absent or disqualified member at
any meeting of the Executive Committee. The Board shall have the power at any
time to change the membership of the Executive Committee, or to fill vacancies
in it, or to dissolve it. The Executive Committee may make such rules for the
conduct of its business as it shall from time to time deem necessary or
appropriate. A majority of the members of the Executive Committee shall
constitute a quorum.
Section 5. The Board of Directors may, in its discretion, by
resolution passed by a majority of the whole Board, appoint one or more other
Committees in addition to the Executive Committee, each consisting of one or
more of the directors of the Corporation, which shall have and may exercise such
of the powers and authority of the Board of Directors in the management
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of the business and affairs of the Corporation as shall be conferred by the
resolution appointing it, and which, in furtherance thereof, may authorize the
seal of the Corporation to be affixed to all papers which may require it; but
the power and authority of any such Committee shall be subject to the provisions
of Section 141(c) (or its successor provision) of the Delaware General
Corporation law and any other applicable statute.
The Board may designate one or more directors as alternate members of
any such Committee, who may replace any absent or disqualified member at any
meeting of such Committee. The Board shall have the power at any time to change
the membership of any such Committee, or to fill vacancies in it, or to dissolve
it. Any such Committee may make such rules for the conduct of its business as
it shall from time to time deem necessary or appropriate. Except as may be
otherwise provided by resolution of the Board, a majority of the members of any
such Committee, composed of more than two members, shall constitute a quorum.
Section 6. Each director who is not also an officer of the
Corporation shall receive as compensation for all his or her services as a
Director, an annual fee plus an additional fee for attendance at each meeting of
the Board of Directors and each meeting of any committee of the Board of which
he or she is a member, each such fee to be in such amount as may from time to
time be fixed by resolution of the Board. Directors who are also officers shall
receive no additional compensation for their services as Directors of the
Corporation.
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Section 7. The Board of Directors may (but need not) elect one of the
directors as Chairman of the Board, but a director so elected shall not be an
officer or employee of the Corporation, and shall not exercise the functions of
an officer, unless expressly so designated as provided in Section 1 of Article
III. The Chairman of the Board shall serve until the meeting of the Board next
following the ensuing annual meeting of stockholders but may be removed at any
time by the affirmative vote of a majority of the members of the Board then in
office.
Section 8. Each director shall retire from the Board not later than
the date of the annual meeting of the stockholders of the Corporation next
following his or her 70th birthday.
Section 9. Nomination of Directors. (a) Only persons who are
-----------------------
nominated in accordance with the procedures set forth in this Section 9 shall be
eligible for election as directors of the Corporation. Nominations of persons
for election to the Board of Directors of the Corporation may be made at any
annual meeting of stockholders by or at the direction of the Board of Directors
or by any stockholder of the Corporation entitled to vote for the election of
directors at the meeting who was a stockholder of record at the time of giving
of notice provided for in this Section 9 and who complies with the notice
procedures set forth in this Section 9. Any such nomination by a stockholder
shall be made pursuant to timely notice in writing to the Secretary of the
Corporation. To be timely notice for an annual meeting, a stockholder's notice
shall be delivered to the Secretary of the Corporation at the principal
executive offices of the Corporation not less than 60 days nor
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more than 90 days prior to the first anniversary of the preceding year's annual
meeting; provided, however, that in the event that the date of the annual
meeting is advanced by more than 30 days or delayed by more than 60 days from
such anniversary date, notice by the stockholder to be timely must be so
delivered not earlier than the 90th day prior to such annual meeting and not
later than the close of business on the later of the 60th day prior to such
annual meeting or the 10th day following the day on which public announcement
(as defined in Article I, Section 1) of the date of such meeting is first made.
Notwithstanding anything in the foregoing sentence to the contrary, in the event
that the number of directors to be elected to the Board of Directors of the
Corporation is increased and there is no public announcement naming all of the
nominees for director or specifying the size of the increased Board of Directors
made by the Corporation at least 70 days prior to the first anniversary of the
preceding year's annual meeting, a stockholder's notice required by this Section
9 shall also be considered timely, but only with respect to nominees for any new
positions created by such increase, if it shall be delivered to the Secretary of
the Corporation at the principal executive offices of the Corporation not later
than the close of business on the 10th day following the day on which such
public announcement is first made by the Corporation. Such stockholder's notice
shall set forth in writing (i) as to each person whom the stockholder proposes
to nominate for election or re-election as a director (A) the name, age,
business address and residence address of such person, (B) the principal
occupation or employment of such person, (C) the number of shares of stock of
the Corporation which are
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beneficially owned by such person, and (D) any other information relating to
such person that is required to be disclosed in connection with the solicitation
of proxies for election of directors, or as otherwise required, in each case
pursuant to Regulation 14A under the Exchange Act (including, without
limitation, such person's written consent to being named in a proxy statement as
a nominee and to serving as a director if elected); and (ii) as to the
stockholder giving the notice and the beneficial owner, if any, on whose behalf
the nomination is made (A) the name and address of such stockholder, as they
appear on the Corporation's books, and of such beneficial owner and (B) the
class and number of shares of the Corporation which are owned beneficially and
of record by such stockholder and such beneficial owner.
(b) Nominations of persons for election to the Board of Directors of
the Corporation may be made at a special meeting of stockholders at which
directors are to be elected pursuant to the Corporation's notice of meeting (i)
by or at the direction of the Board of Directors or (ii) provided that the Board
of Directors has determined that directors shall be elected at such special
meeting, by any stockholder of the Corporation who is a stockholder of record at
the time of giving of notice provided for in this Section 9, who shall be
entitled to vote at the meeting and who complies with the notice procedures set
forth in this Section 9. In the event the Corporation calls a special meeting
of stockholders for the purpose of electing one or more directors to the Board
of Directors, any such stockholder may nominate a person or persons (as the case
may be), for election to such position(s) as
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specified in the Corporation's notice of meeting, if the stockholder's notice
shall be delivered to the Secretary of the Corporation at the principal
executive offices of the Corporation not earlier than the 90th day prior to such
special meeting and not later than the close of business on the later of the
60th day prior to such special meeting or the 10th day following the day on
which public announcement is first made of the date of the special meeting and
of the nominees proposed by the Board of Directors to be elected at such
meeting.
(c) At the request of the Board of Directors, any person nominated by
the Board of Directors for election as a director shall furnish to the Secretary
of the Corporation that information required to be set forth in a stockholder's
notice of nomination which pertains to the nominee. No person shall be eligible
for election as a director of the Corporation unless nominated in accordance
with the procedures set forth in this Section 9. The Chairman of the meeting
shall, if the facts warrant, determine and declare to the meeting that a
nomination was not made in accordance with the procedures prescribed by these
By-Laws and in that event the defective nomination shall be disregarded. In
addition to the provisions of this Section 9, a stockholder shall also comply
with all applicable requirements of the Exchange Act and the rules and
regulations thereunder with respect to the matters set forth herein.
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ARTICLE III
OFFICERS.
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Section 1. The Board of Directors as soon as may be after the
election held in each year shall choose a President of the Corporation, one or
more Vice Presidents, a Secretary and a Treasurer. One or more of the Vice
Presidents may be designated Executive Vice President, and one or more of the
Vice Presidents may be designated Senior Vice President. The Board of Directors
or the Executive Committee may from time to time appoint such additional Vice
Presidents, such Assistant Vice Presidents, Assistant Secretaries and Assistant
Treasurers and such other officers as it may deem proper and may fill vacancies
in any office. The office of Secretary and Treasurer may be held by the same
person and a Vice President of the Corporation may be either the Secretary or
the Treasurer. The President shall be chosen from the directors. The Board of
Directors may at any time choose a Chairman of the Board.
Section 2. The term of office of all officers shall be one year, or
until their respective successors are chosen, but any officer may be removed
from office at any time by the affirmative vote of a majority of the members of
the Board then in office.
Section 3. The officers of the Corporation shall each have such
powers and duties as generally pertain to their respective offices, as well as
such powers and duties as from time to time may be conferred by the Board of
Directors or by the Executive Committee. The Treasurer and the Assistant
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Treasurers may be required to give bond for the faithful discharge of their
duties, in such form and with such surety or sureties as the Board of Directors
may from time to time prescribe.
ARTICLE IV
INDEMNIFICATION.
---------------
Section 1. Nature of Indemnity. The Corporation shall indemnify any
-------------------
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he is or
was or has agreed to become a director or officer of the Corporation, or is or
was serving or has agreed to serve at the request of the Corporation as a
director or officer of another corporation, partnership, joint venture, trust or
other enterprise, including an employee benefit plan, or by reason of any action
alleged to have been taken or omitted in such capacity, and may indemnify any
person who was or is a party or is threatened to be made a party to such an
action, suit or proceeding by reason of the fact that he is or was or has agreed
to become an employee or agent of the Corporation, or is or was serving or has
agreed to serve at the request of the Corporation as an employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
including an employee benefit plan, against expenses (including attorneys'
fees), judgments, fines, excise taxes or penalties (including those payable
under the Employee Retirement Income Security Act of 1974, as amended) and
amounts paid in settlement actually and reasonably
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incurred by him or on his behalf in connection with such action, suit or
proceeding and any appeal therefrom, except to the extent prohibited by the
Delaware General Corporation Law, as the same exists or may hereafter be amended
(but in the case of any such amendment, only to the extent that such amendment
permits the Corporation to provide broader indemnification rights than said law
permitted the Corporation to provide prior to such amendment), provided,
--------
however, that, except as provided in Section 5 of this Article IV, the
- -------
Corporation shall indemnify any such person seeking indemnification in
connection with an action, suit or proceeding (or part thereof) initiated by
such person only if such action, suit or proceeding (or part thereof) was
authorized by the Board of Directors.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
---- ----------
shall not, of itself, create a presumption that the person did not act in
accordance with any applicable standard of conduct under the Delaware General
Corporation Law making it permissible for the Corporation to indemnify the
claimant for the amount claimed.
Section 2. Successful Defense. To the extent that a director,
------------------
officer, employee or agent of the Corporation has been successful on the merits
or otherwise in defense of any action, suit or proceeding referred to in Section
1 hereof or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
Section 3. Determination That Indemnification Is Proper. Any
--------------------------------------------
indemnification of a director or officer of the Corporation under Section 1 of
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this Article IV (unless ordered by a court) shall be made by the Corporation
unless a determination is made that indemnification of the director or officer
is not proper in the circumstances because he has not met the applicable
standard of conduct or because indemnification would otherwise be prohibited
under the Delaware General Corporation Law. Any indemnification of an employee
or agent of the Corporation under Section 1 of this Article IV (unless ordered
by a court) may be made by the Corporation upon a determination that
indemnification of the employee or agent is proper in the circumstances because
he has met the applicable standard of conduct and indemnification is not
otherwise prohibited. Any such determination shall be made (a) if requested by
the indemnitee, by Independent Counsel (as hereinafter defined) in a written
opinion to the Board of Directors, a copy of which shall be delivered to the
indemnitee, or (b) if no request is made by the indemnitee for a determination
by Independent Counsel, (i) by the Board of Directors by a majority vote of a
quorum consisting of Disinterested Directors (as hereinafter defined), or (ii)
if a quorum of the Board of Directors consisting of Disinterested Directors is
not obtainable, or even if obtainable, such quorum of Disinterested Directors so
directs, by Independent Counsel in a written opinion to the Board of Directors,
a copy of which shall be delivered to the indemnitee, or (iii) by the
stockholders of the Corporation. In the event the determination of entitlement
to indemnification is to be made by Independent Counsel at the request of the
indemnitee, Independent Counsel shall be selected by the indemnitee unless the
indemnitee shall request that such selection be made by the Board of Directors,
in which event Independent Counsel shall be selected by the Board of Directors.
If it
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is so determined that the indemnitee is entitled to indemnification, payment to
the indemnitee shall be made within 10 days after such determination. In making
a determination with respect to entitlement to indemnification hereunder, the
person, persons or entity making such determination shall presume that the
indemnitee is entitled to indemnification under this Article IV, and the
Corporation shall have the burden of proof to overcome that presumption in
connection with the making by any person, persons or entity of any determination
contrary to that presumption. For purposes of this Section 3, "Disinterested
Director" means a director of the Corporation who is not and was not a party to
the matter in respect of which indemnification is sought by the indemnitee, and
"Independent Counsel" means a law firm, or a member of a law firm, that is
experienced in matters of corporation law and neither presently is, nor in the
past five years has been, retained to represent: (a) the Corporation or the
indemnitee in any matter material to either such party, or (b) any other party
to the matter giving rise to a claim for indemnification. Notwithstanding the
foregoing, the term "Independent Counsel" shall not include any person who,
under the applicable standards of professional conduct then prevailing, would
have a conflict of interest in representing either the Corporation or the
indemnitee in an action to determine the indemnitee's rights under this Article
IV.
Section 4. Advance Payment of Expenses. Expenses (including
---------------------------
attorney's fees) incurred by a director or officer in defending any civil,
criminal, administrative or investigative action, suit or proceeding shall be
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paid by the Corporation in advance of the final disposition of such action, suit
or proceeding upon receipt of an undertaking by or on behalf of the
director or officer to repay such amount if it shall ultimately be determined
that he is not entitled to be indemnified by the Corporation as authorized in
this Article IV. Such expenses (including attorney's fees) incurred by other
employees and agents may be so paid upon such terms and conditions, if any, as
the Board of Directors deems appropriate. The Board of Directors may authorize
the Corporation's counsel to represent such director, officer or employee or
agent in any action, suit or proceeding, whether or not the Corporation is a
party to such action, suit or proceeding.
Section 5. Procedure for Indemnification of Directors and Officers.
-------------------------------------------------------
Any indemnification of a director or officer of the Corporation under Sections 1
and 2 of this Article IV, or advance of costs, charges or expenses to a director
or officer under Section 4 of this Article IV, shall be made promptly, and in
any event within 30 days, upon the written request of the director or officer.
If a determination by the Corporation that the director or officer is entitled
to indemnification or advances pursuant to this Article IV is required, and the
Corporation fails to respond within 30 days to a written request therefor, the
Corporation shall be deemed to have approved such request. If the Corporation
denies a written request for indemnification or advances, in whole or in part,
or if payment in full pursuant to such request is not made within 30 days, the
right to indemnification or advances as granted by this Article IV shall be
enforceable by the director or officer in any court of competent jurisdiction.
Such
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<PAGE>
person's costs and expenses incurred in connection with successfully
establishing his right to indemnification or advances, in whole or in part, in
any such action shall also be indemnified by the Corporation. It shall be a
defense to any such action (other than an action brought to enforce a claim for
advance of costs, charges and expenses under Section 4 of this Article IV where
the required undertaking, if any, has been received by the Corporation) that the
claimant has not met the applicable standard of conduct or that indemnification
is otherwise prohibited under the Delaware General Corporation Law, but the
burden of proving such defense shall be on the Corporation. Neither the failure
of the Corporation (including the Board of Directors, Independent Counsel and
the Corporation's stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he has met the applicable standard of conduct, nor the
fact that there has been an actual determination by the Corporation (including
the Board of Directors, Independent Counsel and the Corporation's stockholders)
that the claimant has not met such applicable standard of conduct, shall be a
defense to the action or create a presumption that the claimant has not met the
applicable standard of conduct.
Section 6. Survival; Preservation of Other Rights. The foregoing
--------------------------------------
provisions of this Article shall be deemed to be a contract between the
Corporation and each director, officer, employee and agent who serves in such
capacity at any time while these provisions and the relevant provisions of the
Delaware General Corporation Law are in effect, and any repeal or modification
thereof shall not affect any right or obligation then existing with respect to
-24-
<PAGE>
any state of facts then or previously existing or any action, suit or proceeding
previously or thereafter brought or threatened based in whole or in part upon
any such state of facts. Such contract may not be modified retroactively
without the consent of such director, officer, employee or agent.
The indemnification provided by this Article shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any by-law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall inure to the benefit of
the heirs, executors and administrators of such a person and shall continue as
to a person who has ceased to be a director, officer, employee or agent.
The Corporation may, upon a vote of a majority of the directors, enter
into an indemnity agreement with any director, officer, employee or agent of the
Corporation providing for the maximum right to indemnification permissible under
the applicable laws of the State of Delaware.
Section 7. Insurance. The Corporation shall purchase and maintain
---------
insurance on behalf of any person who is or was or has agreed to become a
director or officer of the Corporation, or is or was serving at the request of
the Corporation as a director or officer of another corporation, partnership,
joint venture, trust or other enterprise, including an employee benefit plan,
against any liability asserted against him and incurred by him or on his behalf
in any such capacity, or arising out of his status as such, whether or not the
Corporation would have the power to indemnify him against such liability under
the provisions of this Article IV, provided that such
--------
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<PAGE>
insurance is available on acceptable terms, which determination shall be made by
a vote of a majority of the entire Board of Directors.
Section 8. Savings Clause. If this Article or any portion hereof
--------------
shall be invalidated on any ground by any court of competent jurisdiction, then
the Corporation shall nevertheless indemnify each director or officer and may
indemnify each employee or agent of the Corporation as to costs, charges and
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement with respect to any action, suit or proceeding, whether civil,
criminal, administrative or investigative, including an action by or in the
right of the Corporation, to the full extent permitted by any applicable portion
of this Article that shall not have been invalidated and to the full extent
permitted by applicable law.
Section 9. Amendments. This Article may be amended solely by the
----------
affirmative vote of (i) a majority of the Board of Directors, but only to the
extent that such amendment would permit the Corporation to provide broader
indemnification rights than were provided hereby immediately prior to such
amendment, or (ii) the holders of 75% or more of the outstanding shares of
Common Stock of the Corporation.
ARTICLE V
CERTIFICATES OF STOCK.
---------------------
Section 1. The interest of each stockholder of the Corporation shall
be evidenced by certificates for shares of stock in such form as the
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<PAGE>
Board of Directors may from time to time prescribe. The shares in the stock of
the Corporation shall be transferred on the books of the Corporation by the
holder thereof in person or by his attorney, upon surrender for cancellation of
certificates for the same number of shares, with an assignment and power of
transfer endorsed thereon or attached thereto, duly executed, with such proof of
the authenticity of the signature as the Corporation or its agents may
reasonably require.
Section 2. The certificates of stock shall be signed by the Chairman
of the Board or the President or a Vice President and by the Secretary or an
Assistant Secretary, or the Treasurer or an Assistant Treasurer, and may be
countersigned and registered in such manner, if any, and sealed as the Board of
Directors or the Executive Committee may by resolution prescribe.
ARTICLE VI
CHECKS, NOTES, ETC.
------------------
All checks and drafts on the Corporation's bank accounts and all bills
of exchange and promissory notes, and all acceptances, obligations and other
instruments for the payment of money, shall be signed by such officer or
officers, agent or agents as shall be thereunto authorized from time to time by
the Board of Directors or the Executive Committee.
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<PAGE>
ARTICLE VII
OFFICES.
-------
The Corporation and the stockholders and the directors may have
offices outside of the State of Delaware at such places as shall be determined
from time to time by the Board of Directors or the Executive Committee.
ARTICLE VIII
AMENDMENTS.
----------
The By-Laws of the Corporation, regardless of whether made by the
stockholders or by the Board of Directors, may be amended, added to, rescinded
or repealed at any meeting of the Board of Directors or of the stockholders,
provided notice of the proposed change is given in the notice of the meeting.
-28-
<PAGE>
EXHIBIT 4(4)(b)
[EXECUTION COPY]
================================================================================
TAMBRANDS INC.
AND
TAMPAX CORPORATION
AND
TAMBRANDS MFG. INC.
AND
TAMBRANDS SALES CORP.
TO
CITIBANK, N.A.
as Trustee
____________________
First Supplemental Indenture
Dated as of December 31, 1996
to
Indenture
Dated as of December 1, 1993
_______________________
<PAGE>
FIRST SUPPLEMENTAL INDENTURE dated as of December 31, 1996 (the "First
Supplemental Indenture") among TAMBRANDS INC., a corporation duly organized and
existing under the laws of the State of Delaware (the "Company"), having its
principal office at 777 Westchester Avenue, White Plains, New York 10604, TAMPAX
CORPORATION, a corporation duly organized and existing under the laws of the
State of Delaware ("Tampax"), having its principal office at 777 Westchester
Avenue, White Plains, New York 10604, TAMBRANDS MFG. INC., a corporation duly
organized and existing under the laws of the State of Delaware
("Manufacturing"), having its principal office at 2879 Hotel Road, Auburn, Maine
04211, TAMBRANDS SALES CORP., a corporation duly organized and existing under
the laws of the State of Delaware ("Sales"), having its principal office at
Bridge and Springfield Streets, Palmer, Massachusetts 01069, and CITIBANK, N.A.,
a national banking association duly organized and existing under the laws of the
United States, as Trustee (the "Trustee").
R E C I T A L S
The Company has heretofore executed and delivered to the Trustee a
certain Indenture dated as of December 1, 1993 (herein called the "Indenture").
All terms used in this First Supplemental Indenture which are defined in the
Indenture shall have the same meanings assigned to them in the Indenture.
Immediately prior to the execution and delivery of this First
Supplemental Indenture, each of Tampax, Manufacturing and Sales was a wholly-
owned subsidiary of the Company. Following the the execution and delivery of
this First Supplemental Indenture, the Company will transfer certain assets
owned by it to each of Tampax, Manufacturing and Sales. Thereafter, the Company
will contribute all the outstanding capital stock of each of Manufacturing and
Sales to Tampax, so that Manufacturing and Sales will become direct wholly-owned
subsidiaries of Tampax and indirect wholly-owned subsidiaries of the Company.
Section 801 of the Indenture provides that the Company shall not
convey, transfer or lease its properties and assets substantially as an entirety
to any Person unless (1) such Person shall be a corporation, partnership or
trust, shall be organized and validly existing under the laws of the United
States of America, any State thereof or the District of Columbia and shall
expressly assume, by an indenture supplemental hereto, executed and delivered to
the Trustee, in form satisfactory to the Trustee, the due and punctual payment
of the principal of and any premium and interest on all the Securities and the
performance or observance of every covenant of the Indenture on the part of the
Company to be performed or observed, (2) immediately after giving effect to such
transaction no Event of Default, and no event which, after notice or lapse of
time or both, would become an Event of Default, shall have happened and be
continuing and (3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such conveyance,
transfer or lease and, if a supplemental indenture is required in connection
with such transaction, such supplemental indenture comply with Article Eight of
the Indenture and that all conditions precedent therein provided for relating to
such transaction have been complied with.
<PAGE>
Section 901(5) of the Indenture provides that, without the consent of
the Holders, the Company, when authorized by a Board Resolution, and the
Trustee, at any time and from time to time, may enter into one or more
indentures supplemental thereto, in form satisfactory to the Trustee, to add to,
change or eliminate any of the provisions of the Indenture in respect of one or
more series of Securities, provided that any such addition, change or
elimination (A) shall neither (i) apply to any Security of any series created
prior to the execution of such supplemental indenture and entitled to the
benefit of such provision nor (ii) modify the rights of the Holder of any such
Security with respect to such provision or (B) shall become effective only when
there is no such Security Outstanding.
Section 901(9) of the Indenture provides that, without the consent of
any Holders, the Company, when authorized by a Board Resolution, and the
Trustee, at any time and from time to time, may enter into one or more
indentures supplemental thereto, in form satisfactory to the Trustee, to cure
any ambiguity, to correct or supplement any provision in the Indenture which may
be defective or inconsistent with any other provision therein, or to make any
other provisions with respect to matters or questions arising under the
Indenture, provided that such action shall not adversely affect the interests of
the Holders of Securities of any series in any material respect.
The Company has delivered to the Trustee (i) an Officers' Certificate
and an Opinion of Counsel pursuant to Section 801 of the Indenture, each stating
that the transfer of certain assets of the Company to each of Tampax,
Manufacturing and Sales being made on or about the date hereof and this First
Supplemental Indenture comply with Article Eight of the Indenture and that all
conditions precedent therein provided for relating to such transfers have been
complied with and (ii) an Opinion of Counsel pursuant to Section 903 of the
Indenture stating that the execution of this First Supplemental Indenture is
authorized or permitted by the Indenture. Each of the Company, Tampax,
Manufacturing and Sales has furnished the Trustee with a copy of a Board
Resolution of such corporation authorizing the execution and delivery by such
corporation of this First Supplemental Indenture.
All things necessary to authorize the guarantee by each of Tampax,
Manufacturing and Sales of the Company's obligations under the Indenture, and to
make this First Supplemental Indenture when executed by the parties hereto a
valid and binding agreement of such parties and supplement to the Indenture have
been done and performed.
NOW, THEREFORE, for and in consideration of the premises and the
covenants contained in this First Supplemental Indenture, the parties hereto
hereby agree, for the equal and proportionate benefit of all Holders of the
Securities, as follows:
SECTION 1. Each of Tampax, Manufacturing and Sales hereby expressly
agrees to be unconditionally bound by the terms and provisions of the Guarantee
set forth below:
For value received, each of TAMPAX CORPORATION ("Tampax"),
TAMBRANDS MFG. INC. ("Manufacturing") and TAMBRANDS SALES CORP.
("Sales") (each, a "Guarantor" and, collectively, the "Guarantors"),
hereby, jointly and severally, unconditionally guarantees to the
Holders of
-2-
<PAGE>
Securities Outstanding at the time of the execution and delivery of
the First Supplemental Indenture dated as of December 31, 1996 among
the Company, Tampax, Manufacturing, Sales and the Trustee (i) the due
and punctual payment of the principal of, premium, if any, and
interest on such Securities, when and as the same shall become due and
payable, whether at the Stated Maturity, by declaration of
acceleration, call for redemption or otherwise, according to the terms
thereof and of the Indenture referred to therein, and (ii) the
performance or observance of every covenant of the Company under the
Indenture. In case of the failure of the Company punctually to make
any such payment of principal, premium, if any, or interest, the
Guarantors, jointly and severally, hereby agree to cause any such
payment to be made punctually when and as the same shall become due
and payable, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise, and as if such payment
were made by the Company.
Each Guarantor hereby agrees that its obligations hereunder shall
be as if it were the principal debtor and not merely surety, shall be
joint and several with each of the other Guarantors, and shall be
absolute and unconditional, irrespective of, and shall be unaffected
by, any invalidity, irregularity or unenforceability of such
Securities or such Indenture, any failure to enforce the provisions of
such Securities or such Indenture, or any waiver, modification or
indulgence granted to the Company with respect thereto, by the holder
of such Securities hereof or the Trustee or any other circumstance
which may otherwise constitute a legal or equitable discharge of a
surety or guarantor; provided, however, that, notwithstanding the
foregoing, no such waiver, modification or indulgence shall, without
the consent of the Guarantors, increase the principal amount of such
Securities, change the redemption terms of such Securities or alter
the Stated Maturity thereof. The Guarantors hereby waive diligence,
presentment, demand of payment, filing of claims with a court in the
event of merger or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest or notice with respect
to such Security or the indebtedness evidenced thereby and all demands
whatsoever, and covenant that this Guarantee will not be discharged
except by strict and complete performance of the obligations contained
in such Securities and this Guarantee.
The Guarantors shall be subrogated to all rights of the Holders
of such Securities and the Trustee against the Company in respect of
any amounts paid to such Holder by the Guarantors pursuant to the
provisions of this Guarantee; provided, however, that the Guarantors
shall not be entitled to enforce, or to receive any payments arising
out of or based upon, such right of subrogation until the principal
of, premium if any, and interest on all Securities issued under such
Indenture and Outstanding on the date hereof shall have been paid in
full.
-3-
<PAGE>
The guarantee set forth above shall be enforceable by the Holders
of the Securities to which it applies whether or not such guarantee is
endorsed upon or attached to such Securities.
SECTION 2. The Company, by its execution of this First Supplemental
Indenture, expressly affirms that, notwithstanding the guarantee by Tampax,
Manufacturing and Sales to the Holders specified in Section 1 of the obligations
of the Company under the Securities specified in Section 1 and the Indenture,
the Company shall not be relieved of such obligations.
SECTION 3. (a) The following are hereby added to Section 101 of the
Indenture:
""Capital Lease Obligation" of any Person means the obligation to
pay rent or other payment amounts under a lease of (or other
arrangements conveying the right to use) real or personal property of
such Person which is required to be classified and accounted for as a
capital lease or a liability on the face of a balance sheet of such
Person in accordance with GAAP. The stated maturity of such
obligation shall be the date of the last payment of rent or any other
amount due under such lease prior to the first date upon which such
lease may be terminated by the lessee without payment of a penalty.
The principal amount of such obligation shall be the capitalized
amount thereof that would appear on the face of a balance sheet of
such Person in accordance with GAAP.
"Permitted Interest Rate or Currency Protection Agreement" means
any agreement entered into with one or more financial institutions in
the ordinary course of business that is designed to protect such
Person against fluctuations in interest rates or currency exchange
rates with respect to Indebtedness, accounts payable or accounts
receivable and which shall have a notional amount no greater than the
principal amount of such Indebtedness or the amount of such accounts,
as the case may be including, without limitation, any such interest
rate swap, cap collar, currency forward or currency future agreement.
"Purchase Money Indebtedness" of any Person means Indebtedness of
such Person incurred for the purpose of financing all or any part of
the purchase price or the cost of construction or improvement of
equipment or property, but only if such equipment or property is or
should be included in "addition to property, plant or equipment" in
accordance with GAAP and only if such equipment or property is not
being purchased as part of an acquisition of any business.
"Transferee Subsidiaries" means Tampax Corporation, Tambrands
Mfg. Inc. and Tambrands Sales Corp., each a Delaware corporation."
-4-
<PAGE>
(b) The definition of "Restricted Subsidiary" in Section 101 of the
Indenture is hereby amended by adding the following at the end thereof
immediately before the period:
"and shall include each of the Transferee Subsidiaries"
SECTION 4. Subsections (5) and (6) of Section 501 of the Indenture
are hereby deleted in their entirety and replaced with the following:
"(5) a default under any bond, debenture, note or other evidence
of indebtedness for money borrowed by the Company or any Transferee
Subsidiary (including a default with respect to Securities of any
series other than that series) having an aggregate principal amount
outstanding of at least $50,000,000, or under any mortgage, indenture
or instrument (including this Indenture) under which there may be
issued or by which there may be secured or evidenced any indebtedness
for money borrowed by the Company or any Transferee Subsidiary having
an aggregate principal amount outstanding of at least $50,000,000,
whether such indebtedness now exists or shall hereafter be created,
which default shall have resulted in such indebtedness becoming or
being declared due and payable prior to the date on which it would
otherwise have become due and payable, without such indebtedness
having been discharged or such acceleration having been cured, waived,
rescinded or annulled, within a period of 30 days after there shall
have been given, by registered or certified mail, return receipt
requested, to the Company by the Trustee or to the Company and the
Trustee by the Holders of at least 25% in principal amount of the
Outstanding Securities of that series a written notice specifying such
default and requiring the Company to cause such indebtedness to be
discharged or cause such acceleration to be rescinded or annulled, as
the case may be, and stating that such notice is a "Notice of Default"
hereunder; provided, however, that, subject to the provisions of
Sections 601 and 602, the Trustee shall not be deemed to have
knowledge of such default unless either (A) a Responsible Officer of
the Trustee shall have actual knowledge of such default or (B) the
Trustee shall have received written notice thereof from the Company,
from any Holder, from the holder of any such indebtedness or from the
trustee under any such mortgage, indenture or other instrument; and
provided, further, however, that if any such default or acceleration
referred to in this clause (5) shall cease or be cured, waived,
rescinded or annulled, then the Event of Default hereunder by reason
thereof shall be deemed likewise to have been thereupon cured; or
(6) the entry by a court having jurisdiction in the premises of
(A) a decree or order for relief in respect of the Company or any
Transferee Subsidiary in an involuntary case or proceeding under any
applicable Federal or State bankruptcy, insolvency, reorganization or
other similar law or (B) a decree or order adjudging the Company or
any Transferee Subsidiary a bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement,
adjustment or composition of or in respect of the Company or any
Transferee Subsidiary under any applicable Federal or State
-5-
<PAGE>
law, or appointing a custodian, receiver, liquidator, assignee,
trustee, sequestrator or other similar official of the Company or any
Transferee Subsidiary or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and the
continuance of any such decree or order for relief or any such other
decree or order unstayed and in effect for a period of 60 consecutive
days; or"
SECTION 5. Section 801 of the Indenture is hereby deleted in its
entirety and replaced by the following:
"The Company and each Transferee Subsidiary shall not consolidate with
or merge into any other Person or convey, transfer or lease the
properties and assets of the Company and the Transferee Subsidiaries
(determined on a combined basis for the Company and the Transferee
Subsidiaries) substantially as an entirety to any Person, and the
Company shall not permit any Person to consolidate with or merge into
the Company or any Transferee Subsidiary or convey, transfer or lease
its properties and assets substantially as an entirety to the Company
or any Transferee Subsidiary, unless:
(1) in case the Company or any Transferee Subsidiary shall
consolidate with or merge into another Person or convey, transfer or
lease the properties and assets of the Company and the Transferee
Subsidiaries (determined on a combined basis for the Company and the
Transferee Subsidiaries) substantially as an entirety to any Person,
the Person formed by such consolidation or into which the Company or
such Transferee Subsidiary is merged or the Person which acquires by
conveyance or transfer, or which leases, the properties and assets of
the Company and the Transferee Subsidiaries (determined on a combined
basis for the Company and the Transferee Subsidiaries) substantially
as an entirety shall be a corporation, partnership or trust, shall be
organized and validly existing under the laws of the United States of
America, any State thereof or the District of Columbia and shall
expressly assume, by an indenture supplemental hereto, executed and
delivered to the Trustee, in form satisfactory to the Trustee, the due
and punctual payment of the principal of and any premium and interest
on all the Securities and the performance or observance of every
covenant of this Indenture on the part of the Company to be performed
or observed; provided, however, that, with respect only to Securities
originally issued after execution and delivery of the First
Supplemental Indenture this subsection (1) shall not apply to any
conveyance, transfer or lease of properties and assets of the Company
to any Transferee Subsidiary;
(2) immediately after giving effect to such transaction and
treating any indebtedness which becomes an obligation of the Company
or any Subsidiary as a result of such transaction as having been
incurred by the Company or such Subsidiary at the time of such
transaction, no Event of Default, and no event which, after notice or
lapse of time or both, would become an Event of Default, shall have
happened and be continuing;
-6-
<PAGE>
(3) if, as a result of any such consolidation or merger or such
conveyance, transfer or lease, properties or assets of the Company or
any Transferee Subsidiary would become subject to a mortgage, pledge,
lien, security interest or other encumbrance which would not be
permitted by this Indenture, the Company or such successor Person, as
the case may be, shall take such steps as shall be necessary
effectively to secure the Securities equally and ratably with (or
prior to) all indebtedness secured thereby; and
(4) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and, if a
supplemental indenture is required in connection with such
transaction, such supplemental indenture comply with this Article and
that all conditions precedent herein provided for relating to such
transaction have been complied with."
SECTION 6. A new Section 1011 is hereby added to the Indenture as
follows:
"SECTION 1011. Limitation on Indebtedness of Transferee Subsidiaries.
The Company shall not permit any Transferee Subsidiary to,
and each Transferee Subsidiary agrees it shall not, incur or suffer to
exist any Indebtedness except for:
(i) The guarantees provided in Section 1 of the First
Supplemental Indenture;
(ii) Indebtedness to the Company or any Subsidiary of
the Company;
(iii) Indebtedness incurred to renew, extend, refinance
or refund (each, a "refinancing") Indebtedness otherwise
permitted under the provisions of this Section in an aggregate
principal amount not to exceed the principal amount of the
Indebtedness so refinanced plus the amount of any premium
required to be paid in connection with such refinancing pursuant
to the terms of the Indebtedness so refinanced, plus the expenses
of the Company and such Transferee Subsidiary incurred in
connection with such refinancing; provided, however, that
Indebtedness the proceeds of which are used to refinance
Indebtedness which is subordinate in right of payment to the
Securities shall only be permitted if such Indebtedness is
subordinated to the Securities to substantially the same extent
as the Indebtedness being refinanced;
(iv) Indebtedness consisting of Permitted Interest Rate
and Currency Protection Agreements;
-7-
<PAGE>
(v) Indebtedness constituting Purchase Money
Indebtedness or Capital Lease Obligations;
(vi) Indebtedness in respect of performance, surety or
appeal bonds provided in the ordinary course of business;
(vii) Indebtedness arising from agreements providing for
indemnification, adjustment of purchase price or similar
obligations, or from guarantees, letters of credit, surety bonds
or performance bonds securing any obligation of such Transferee
Subsidiary under such agreements, in any case incurred in
connection with the disposition of any business or asset of such
Transferee Subsidiary; and
(viii) Indebtedness not otherwise permitted to be
incurred pursuant to the provisions of this Section, and any
refinancing of Indebtedness incurred pursuant to this clause
(viii) (but only if such refinancing meets the requirements
specified in the proviso to clause (iii) above); provided,
however, that the principal amount of Indebtedness incurred
pursuant to this clause (viii) and outstanding at any time shall
not exceed $10,000,000.
SECTION 7. All covenants and agreements in this First Supplemental
Indenture by each of Tampax, Manufacturing and Sales shall bind their respective
successors and assigns, whether so expressed or not.
SECTION 8. Any request, demand, authorization, direction, notice,
consent, waiver or Act of Holders or other document provided for or permitted by
the Indenture to be made upon, given or furnished to, or filed with the Company
which is delivered to the Company in accordance with Section 105 of the
Indenture shall be deemed thereby to have been delivered also to each of Tampax,
Manufacturing and Sales.
SECTION 9. In case any provision in this First Supplemental Indenture
shall be invalid, illegal or unenforceable, the validity, legality, and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
SECTION 10. Nothing in this First Supplemental Indenture, express or
implied, shall give to any Person, other than the parties hereto and their
successors under the Indenture and the Holders of the Securities, any benefit or
any legal or equitable right, remedy or claim under the Indenture.
SECTION 11. This First Supplemental Indenture supplements the
Indenture and shall be a part and subject to all the terms thereof. Except as
supplemented hereby, the Indenture shall continue in full force and effect.
-8-
<PAGE>
SECTION 12. This First Supplemental Indenture may be executed in any
number of counterparts, each of which as so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
SECTION 13. This First Supplemental Indenture shall be governed by
and construed in accordance with the laws of the State of New York.
-9-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed, and their respective corporate seals
to be hereunto affixed and attested, all as of the day and year first above
written.
TAMBRANDS INC.
By/s/Susan J. Riley
------------------------------
Susan J. Riley
Senior Vice President -
Chief Financial Officer
Attest:
/s/Jonathan W. Emery
- -----------------------------
Jonathan W. Emery
TAMPAX CORPORATION
By/s/Martha Lindsay
----------------------------
Martha Lindsay
Vice President and Treasurer
Attest:
/s/Jonathan W. Emery
- -----------------------------
Jonathan W. Emery
TAMBRANDS MFG. INC.
By/s/Martha Lindsay
----------------------------
Martha Lindsay
Treasurer
-10-
<PAGE>
Attest:
/s/Jonathan W. Emery
- -----------------------------
Jonathan W. Emery
TAMBRANDS SALES CORP.
By/s/Martha Lindsay
-----------------------------
Martha Lindsay
Treasurer
Attest:
Jonathan W. Emery
- ------------------------------
Jonathan W. Emery
CITIBANK, N.A., as Trustee
By/s/Robert T. Kirchner
-----------------------------
Name: Robert T. Kirchner
Title:Vice President
Attest:
/s/John Byrnes
- ---------------------------------
John Byrnes
-11-
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF WESTCHESTER )
On the 26th day of December, 1996 before me personally came Susan J.
Riley, to me known, who, being by me duly sworn, did depose and say that she is
the Senior Vice President - Chief Financial Officer of Tambrands Inc., one of
the corporations described in and which executed the foregoing instrument; that
she knows the seal of said corporation; that the seal affixed to said instrument
is such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation, and that she signed her name thereto by like
authority.
/s/Cynthia M. Luneau
------------------------------
CYNTHIA M. LUNEAU
Notary Public - State of New York
No. 01LU4957757
Qualified in Dutchess County
Commission Expires Oct. 23, 1997
-12-
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF WESTCHESTER )
On the 26th day of December, 1996 before me personally came Martha
Lindsay, to me known, who, being by me duly sworn, did depose and say that she
is the Vice President and Treasurer of Tampax Corporation, one of the
corporations described in and which executed the foregoing instrument; that she
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation, and that she signed her name thereto by like
authority.
/s/Cynthia M. Luneau
------------------------------
CYNTHIA M. LUNEAU
Notary Public - State of New York
No. 01LU4957757
Qualified in Dutchess County
Commission Expires Oct. 23, 1997
-13-
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF WESTCHESTER )
On the 26th day of December, 1996 before me personally came Martha
Lindsay, to me known, who, being by me duly sworn, did depose and say that she
is the Treasurer of Tambrands Mfg. Inc., one of the corporations described in
and which executed the foregoing instrument; that she knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by authority of the Board of Directors of said
corporation, and that she signed her name thereto by like authority.
/s/Cynthia M. Luneau
-----------------------------
CYNTHIA M. LUNEAU
Notary Public - State of New York
No. 01LU4957757
Qualified in Dutchess County
Commission Expires Oct. 23, 1997
-14-
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF WESTCHESTER )
On the 26th day of December, 1996 before me personally came Martha
Lindsay, to me known, who, being by me duly sworn, did depose and say that she
is the Treasurer of Tambrands Sales Corp., one of the corporations described in
and which executed the foregoing instrument; that she knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by authority of the Board of Directors of said
corporation, and that she signed her name thereto by like authority.
/s/Cynthia M. Luneau
-----------------------------
CYNTHIA M. LUNEAU
Notary Public - State of New York
No. 01LU4957757
Qualified in Dutchess County
Commission Expires Oct. 23, 1997
-15-
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 30th day of December, 1996 before me personally came Robert
Kirchner, to me known, who, being by me duly sworn, did depose and say that he
is a Vice President of Citibank, N.A., the association described in and which
executed the foregoing instrument; that he/she knows the seal of said
association; that the seal affixed to said instrument is such seal; that it was
so affixed by authority of the Board of Directors of said association, and that
he/she signed his/her name thereto by like authority.
/s/Doris Ware
--------------------------------
DORIS WARE
Notary Public, State of New York
No. 01WA5017421
Qualified in Queens County
Commission Expires September 7, 1997
-16-
<PAGE>
EXHIBIT 10(3)(i)
SEVENTH AMENDMENT TO
THE TAMBRANDS INC. 1991 STOCK OPTION PLAN
-----------------------------------------
WHEREAS, TAMBRANDS INC. (the "Company") adopted the 1991 Stock Option
Plan (the "Plan"); and
WHEREAS, pursuant to Section 11 of the Plan, the Board of Directors
retained the right to amend the Plan;
NOW, THEREFORE, the Plan is amended as follows:
1. Section 2 (b) is amended in its entirety to read as follows:
"Committee" shall mean the Compensation Committee of the Board or such
other committee as may from time to time be appointed by the Board to administer
the Plan; provided, however, that (i) no member of the Committee shall be
-
eligible to participate in the Plan, (ii) the Committee shall always consist of
--
at least two members and (iii) each member of the Committee shall qualify as a
---
non-employee director for purposes of Rule 16b-3 (or any successor rule
thereto), as promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended.
2. This Seventh Amendment to the Plan shall be effective as of
January 28, 1997.
IN WITNESS WHEREOF, the Company has caused this Seventh Amendment to
the 1991 Stock Option Plan to be executed by its duly authorized officer as of
the 28th day of January, 1997.
TAMBRANDS INC.
By: /s/ Thomas Soper, III
-----------------
Title: Senior Vice President - Corporate Human
Resources and Communications
----------------------------
WITNESS:
- --------
/s/ Jonathan W. Emery
- ---------------------
Title: Corporate Counsel and Assistant Secretary
-----------------------------------------
<PAGE>
EXHIBIT 10(4)(c)
AMENDMENT TO
THE TAMBRANDS INC.
1989 RESTRICTED STOCK PLAN
--------------------------
WHEREAS, TAMBRANDS INC. (the "Company") adopted the 1989
Restricted Stock Plan (the "Plan"); and
WHEREAS, pursuant to Section 9 of the Plan, the Compensation Committee
of the Board of Directors retained the right to amend the Plan;
NOW, THEREFORE, the Plan is amended as follows:
1. The definition of "Committee" in Section 2 of the Plan is amended and
restated to read in its entirety as follows:
"Committee" shall mean the Compensation Committee of the Board or such
other committee as may from time to time be appointed by the Board to
administer the Plan; provided, however, that (i) no member of the Committee
-
shall be eligible to participate in the Plan, (ii) the Committee shall
--
always consist of at least two members and (iii) each member of the
---
Committee shall qualify as a non-employee director for the purposes of Rule
16b-3 (or any successor rule thereto), as promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended.
2. This Amendment to the Plan shall be effective as of January 28, 1997.
IN WITNESS WHEREOF, the Company has caused this Amendment to the 1989
Restricted Stock Plan to be executed by its duly authorized officer as of the
28th day of January, 1997.
TAMBRANDS INC.
By: /s/ Thomas Soper,III
----------------------
Senior Vice President - Corporate
Title: Human Resources and Communications
----------------------------------
WITNESS:
- --------
/s/ Jonathan W. Emery
- ----------------------
Title: Corporate Counsel and Assistant Secretary
-----------------------------------------
<PAGE>
EXHIBIT 10(9)(b)
AMENDED AND RESTATED
EMPLOYMENT PROTECTION AGREEMENT
-------------------------------
THIS AMENDED AND RESTATED AGREEMENT between Tambrands Inc., a Delaware
corporation (the "Corporation"), and Thomas J. Mason (the "Executive"), dated as
of this 1st day of October, 1996.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Corporation and the Executive have previously entered into
an agreement dated as of October 18, 1994 providing the Corporation and the
Executive with certain rights upon the occurrence of a change of control (the
"Prior Agreement") to assure the Corporation of continuity of management in the
event of any Change of Control;
WHEREAS, the Executive has been promoted to a considerably more senior
position the compensation for which is considerably in excess of the
compensation for his prior position;
WHEREAS, the Corporation and the Executive have agreed to amend and
restate the Prior Agreement to provide greater benefits to the Executive, which
are commensurate with his new position.
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 (as defined below) 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 September 30, 1999, provided that the
termination date of this Agreement shall be extended for one additional year on
October 1, 1997 and each subsequent October 1, unless the Executive shall have
received written notice from the Corporation prior to the July 1 immediately
preceding such October 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"),
<PAGE>
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 September 30, 1996, the persons who 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 September 30, 1996 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 as-
-2-
<PAGE>
signed 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 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 pro-rated 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
- 3 -
<PAGE>
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
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
- 4 -
<PAGE>
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 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
- 5 -
<PAGE>
(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
- 6 -
<PAGE>
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 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
maintained 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;
- 7 -
<PAGE>
(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 annualized 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
- 8 -
<PAGE>
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.
(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
- 9 -
<PAGE>
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;
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 an 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
- 10 -
<PAGE>
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 statute 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
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
- 11 -
<PAGE>
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.
- 12 -
<PAGE>
(b) Amendments. This Agreement may not be amended or modified
----------
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 Assistant
Secretary, all as of the day and year first above written.
- 13 -
<PAGE>
ATTEST: TAMBRANDS INC.
/s/ Jonathan W. Emery By /s/ Edward T. Fogarty
- ------------------------- ----------------------------
Corporate Counsel and Title: Chairman, President and
Assistant Secretary Chief Executive Officer
(Seal)
EXECUTIVE: Thomas J. Mason
/s/ Thomas J. Mason
----------------------------
Address:
Tambrands Inc.
777 Westchester Avenue
White Plains, New York 10604
- 14 -
<PAGE>
EXHIBIT 10(9)(d)
EMPLOYMENT PROTECTION AGREEMENT
-------------------------------
THIS AGREEMENT between Tambrands Inc., a Delaware corporation (the
"Corporation"), and Michael S. Krause (the "Executive"), dated as of this 5th
day of July, 1995.
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 July 31, 1998, provided that the termination date of this Agreement shall be
extended for one additional year on August 1, 1996 and each subsequent August 1,
unless the Executive shall have received written notice from the Corporation
prior to the May 1 immediately preceding such August 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 share-
----
<PAGE>
holders 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
-----
July 5, 1995, the persons who 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 July 5, 1995 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
2
<PAGE>
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 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 pro-rated 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
- 3 -
<PAGE>
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
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).
- 4 -
<PAGE>
(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 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 respon-
- 5 -
<PAGE>
sibilities 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 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
- 6 -
<PAGE>
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
maintained 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 two times the sum of
(1) the Executive's annual Base Salary at the rate specified in
Section 5(a) of this Agreement;
- 7 -
<PAGE>
(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 annualized 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.
- 8 -
<PAGE>
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.
(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.
- 9 -
<PAGE>
(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;
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
- 10 -
<PAGE>
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
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
- 11 -
<PAGE>
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.
- 12 -
<PAGE>
(b) Amendments. This Agreement may not be amended or modified
----------
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 Assistant
Secretary, all as of the day and year first above written.
- 13 -
<PAGE>
ATTEST: TAMBRANDS INC.
/s/ Barry K. Misenheimer By /s/ Edward T. Fogarty
- ------------------------- -------------------------------
Assistant Secretary Title: President and
Chief Executive Officer
(Seal)
EXECUTIVE: Michael S. Krause
/s/ Michael S. Krause
---------------------------------
Address:
Tambrands Inc.
777 Westchester Avenue
White Plains, New York 10604
- 14 -
<PAGE>
EXHIBIT 10(9)(e)
EMPLOYMENT PROTECTION AGREEMENT
-------------------------------
THIS AGREEMENT between Tambrands Inc., a Delaware corporation (the
"Corporation"), and Susan J. Riley (the "Executive"), dated as of this 15th day
of December, 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 December 31, 1997, provided that the termination date of this Agreement shall
be extended for one additional year on January 1, 1995 and each subsequent
January 1, unless the Executive shall have received written notice from the
Corporation prior to the September 1 immediately preceding such January 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 share-
----
<PAGE>
holders 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
-----
December 31, 1994, the persons who 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 December 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
-2-
<PAGE>
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 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 pro-rated 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
- 3 -
<PAGE>
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
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).
- 4 -
<PAGE>
(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 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 respon-
- 5 -
<PAGE>
sibilities 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 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
- 6 -
<PAGE>
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
maintained 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 two times the sum of
(1) the Executive's annual Base Salary at the rate specified in
Section 5(a) of this Agreement;
- 7 -
<PAGE>
(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 annualized 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.
- 8 -
<PAGE>
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.
(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.
- 9 -
<PAGE>
(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;
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
- 10 -
<PAGE>
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
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
- 11 -
<PAGE>
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.
- 12 -
<PAGE>
(b) Amendments. This Agreement may not be amended or modified
----------
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 Corporate
Counsel, all as of the day and year first above written.
- 13 -
<PAGE>
ATTEST: TAMBRANDS INC.
/s/ Jonathan W. Emery By /s/ Edward T. Fogarty
- ------------------------- -------------------------------
Corporate Counsel Title: President and
Chief Executive Officer
(Seal)
EXECUTIVE: Susan J. Riley
/s/ Susan J. Riley
------------------------------
Address:
Tambrands Inc.
777 Westchester Avenue
White Plains, New York 10604
- 14 -
<PAGE>
EXHIBIT 10(21)(e)
AMENDMENT NO. 2
---------------
AMENDMENT NO. 2 (this "Amendment"), dated as of December 13, 1996, to the
---------
Amended and Restated Credit Agreement, dated as of September 6, 1994, among
Tambrands Inc. (the "Company"), Tambrands Limited, the Lenders party thereto
-------
(the "Lenders") and The Bank of New York, as agent (the "Agent"), as amended by
------- -----
Amendment No. 1, dated as of May 5, 1995 (the "Agreement").
---------
RECITALS
--------
1. Capitalized terms used herein that are not herein defined shall have
the meanings ascribed thereto by the Agreement.
2. The Borrowers have requested that the Agreement be amended as set
forth herein. The Agent is willing to amend the Agreement upon the terms and
conditions herein contained.
Therefore, in consideration of the RECITALS and the terms and conditions
herein contained, and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Borrowers and the Agent hereby
agree that the Agreement be amended in the following respects:
3. Paragraph 1.1 is amended to add the following definitions thereto in
their appropriate alphabetic order:
"Intercompany Indebtedness": Indebtedness of a Subsidiary of the Company
-------------------------
due to the Company or to another Subsidiary of the Company.
"MTN Notes": the Medium-Term Notes of the Company issued under the
---------
Indenture, dated as of December 1, 1993, between the Company and Citibank, N.A.,
as Trustee, as amended or supplemented from time to time.
"MTN Notes Guaranties": the Guaranties (contained in the First Supplemental
--------------------
Indenture referred to below) by each of the Transferee Subsidiaries of the
payment of the MTN Notes outstanding at the time of the execution and delivery
of the First Supplemental Indenture, dated as of December 31, 1996, among the
Company, the Transferee Subsidiaries and Citibank, N.A., as Trustee.
<PAGE>
"Transferee Subsidiaries": each of Tampax Corporation, a Delaware
-----------------------
corporation and a wholly-owned Subsidiary of the Company ("Tampax") and
------
Tambrands Mfg., Inc. and Tambrands Sales Corp., each a Delaware corporation and
each a wholly-owned Subsidiary of Tampax, and indirectly, of the Company.
4. Paragraph 8.3 is amended in its entirety to read as follows:
8.3 Sale of Assets.
--------------
Sell, assign, exchange, lease, transfer or otherwise dispose of, or
enter into sales and leasebacks with respect to, any of its assets (other than
Margin Stock), other than in the ordinary course of business, or permit any of
its Subsidiaries so to do, in an aggregate amount, on and after the Effective
Date, in excess of 15% of its Consolidated assets (determined in accordance with
GAAP), such assets to be valued at book value, provided, however, that the
foregoing shall not prohibit (i) the Company from selling or transferring any of
its assets to Transferee Subsidiaries, or (ii) a Transferee Subsidiary from
selling or transferring any of its assets to the Company or to another
Transferee Subsidiary.
5. Paragraph 8.7 is amended in its entirety to read as follows:
"8.7 Contingent Obligations.
----------------------
Create, incur, assume or suffer to exist any Contingent Obligation, or
permit any Subsidiary so to do, if, after giving effect thereto, the aggregate
amount of all Contingent Obligations (other than the MTN Notes Guaranties) of
the Company and its Subsidiaries (determined in accordance with GAAP) would
exceed $10,000,000 or, except with respect to the MTN Notes Guaranties, permit
any Transferee Subsidiary to create, incur, assume or suffer to exist any
Contingent Obligation."
6. The following paragraph is added to the Agreement immediately after
paragraph 8.7:
"8.8 Indebtedness of Transferee Subsidiaries.
---------------------------------------
Permit any Transferee Subsidiary to create, incur, assume or suffer to
exist any Indebtedness (other than Intercompany Indebtedness) if, after giving
effect thereto, the aggregate amount of all Indebtedness (other than
Intercompany Indebtedness) of all Transferee Subsidiaries would exceed
$10,000,000."
-2-
<PAGE>
7. This Amendment shall not be effective until such time (the "Amendment
---------
No. 2 Effective Date") as each of the following conditions has been fulfilled:
- --------------------
(i) The Agent shall have received an original of this Amendment (i)
executed by a duly authorized officer or officers of each of the
Borrowers, and (ii) consented to by the Required Lenders.
(ii) On and as of the Amendment No. 2 Effective Date, no Default or
Event of Default shall have occurred or be continuing.
(iii) The MTN Notes Guaranties shall be in substantially the form
attached to this Amendment.
8. The Borrowers reaffirm and admit the validity and enforceability of
the Loan Documents and all of their obligations thereunder, agree and admit that
they have no defenses to or offsets against any of their obligations to the
Lenders or the Agent under the Loan Documents, and represent and warrant that
there exists no Default or Event of Default, and that the representations and
warranties contained in the Agreement are true and correct on and as of the date
hereof, except such thereof as relate solely to an earlier date.
9. Except as amended hereby, the Loan Documents shall remain in full
force and effect, and no amendment of any term or condition of the Agreement
herein contained shall be deemed to be an amendment of any other term or
condition contained in the Agreement or any other Loan Document or constitute a
waiver of any Default or Event of Default.
10. This Amendment may be executed in any number of counterparts all of
which, taken together, shall constitute one Amendment. In making proof of this
Amendment, it shall only be necessary to produce the counterpart executed and
delivered by the party to be charged.
11. THIS AMENDMENT IS BEING EXECUTED AND DELIVERED IN, AND IS INTENDED TO
BE PERFORMED IN, THE STATE OF NEW YORK AND SHALL BE CONSTRUED AND ENFORCEABLE IN
ACCORDANCE WITH, AND BE GOVERNED BY, THE INTERNAL LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
-3-
<PAGE>
The Borrowers and the Agent have caused this Amendment No. 2 to be duly
executed as of the date first above written.
TAMBRANDS INC.
By: /s/ Susan J. Riley
------------------
Title: Senior Vice President -
Chief Financial Officer
-----------------------
TAMBRANDS LIMITED
By: /s/ Seth E. Herbert
--------------------
Title: Director
-------------------
THE BANK OF NEW YORK,
Individually and as Agent
By /s/ Georgia M. Pan-Kita
-----------------------
Title: Assistant Vice President
------------------------
Each of the Lenders hereby
consents to the execution and
delivery of this Amendment by
the Agent:
BANK BRUSSELS LAMBERT,
NEW YORK BRANCH
-4-
<PAGE>
By: /s/ Ann E. Hardy
----------------
Title: Assistant Vice President
-------------------------
By: /s/ Dominick Vangaever
----------------------
Title: Senior Vice President - Credit
------------------------------
CITIBANK, N.A.
By: /s/ William G. Martens III
--------------------------
Title: Attorney-in-Fact
-------------------
NATIONAL WESTMINSTER BANK plc
By: / s/ Grey Stoehle
-----------------
Title: Vice President
----------------
ROYAL BANK OF CANADA
By /s/ Sheryl H. Greenberg
------------------------
Title: Manager
----------------------
FLEET NATIONAL BANK
By: /s/ D.E. Bambach
----------------
Title: Senior Vice President
---------------------
-5-
<PAGE>
FORM OF MTN NOTES GUARANTIES
----------------------------
SECTION 1 Each of Tampax, Manufacturing and Sales hereby expressly
agrees to be unconditionally bound by the terms and provisions of the Guarantee
set forth below:
For value received, each of TAMPAX CORPORATION ("Tampax"),
TAMBRANDS MFG. INC. ("Manufacturing") and TAMBRANDS SALES CORP.
("Sales") (each, a "Guarantor" and, collectively, the "Guarantors"),
hereby, jointly and severally, unconditionally guarantees to the
Holders of Securities Outstanding at the time of the execution and
delivery of the First Supplemental Indenture dated as of December 31,
1996 among the Company, Tampax, Manufacturing, Sales and the Trustee
(i) the due and punctual payment of the principal of, premium, if any,
and interest on such Securities, when and as the same shall become due
and payable, whether at the Stated Maturity, by declaration of
acceleration, call for redemption or otherwise, according to the terms
thereof and of the Indenture referred to therein, and (ii) the
performance or observance of every covenant of the Company under the
Indenture. In case of the failure of the Company punctually to make
any such payment of principal, premium, if any, or interest, the
Guarantors, jointly and severally, hereby agree to cause any such
payment to be made punctually when and as the same shall become due
and payable, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise, and as if such payment
were made by the Company.
Each Guarantor hereby agrees that its obligations hereunder shall
be as if it were the principal debtor and not merely surety, shall be
joint and several with each of the other Guarantors, and shall be
absolute and unconditional, irrespective of, and shall be unaffected
by, any invalidity, irregularity or unenforceability of such
Securities or such Indenture, any failure to enforce the provisions of
such Securities or such Indenture, or any waiver, modification or
indulgence granted to the Company with respect thereto, by the holder
of such Securities hereof or the Trustee or any other circumstance
which may otherwise constitute a legal or equitable discharge of a
surety or guarantor; provided, however, that, notwithstanding the
foregoing, no such waiver, modification or indulgence shall, without
the consent of the Guarantors, increase the principal amount of such
Securities, change the redemption terms of such Securities or alter
the Stated Maturity thereof. The Guarantors hereby waive diligence,
presentment, demand of payment, filing of claims with a court in the
event of merger or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest or notice with respect
to such Security or the indebtedness evidenced thereby and all demands
whatsoever, and covenant that this Guarantee will not be discharged
except by strict and complete performance of the obligations contained
in such Securities and this Guarantee.
-6-
<PAGE>
The Guarantors shall be subrogated to all rights of the Holders
of such Securities and the Trustee against the Company in respect of
any amounts paid to such Holder by the Guarantors pursuant to the
provisions of this Guarantee; provided, however, that the Guarantors
shall not be entitled to enforce, or to receive any payments arising
out of or based upon, such right of subrogation until the principal
of, premium if any, and interest on all Securities issued under such
Indenture and Outstanding on the date hereof shall have been paid in
full.
The guarantee set forth above shall be enforceable by the Holders
of the Securities to which it applies whether or not such guarantee is
endorsed upon or attached to such Securities.
-7-
<PAGE>
EXHIBIT 12
TAMBRANDS INC.
FORM 10-K
PART IV, ITEM 14., EXHIBIT 12
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the Company's ratio of earnings to fixed charges
for the periods indicated.
Year Ended
(in thousands, except ratios)
-----------------------------------------------
1996 1995 1994 1993 1992
Earnings:
Income before income taxes $83,325 $139,335 $141,751 $118,652 $191,863
Fixed charges 10,817 10,866 9,054 6,549 6,470
-----------------------------------------------
EARNINGS $94,142 $150,201 $150,805 $125,201 $198,333
===============================================
Fixed charges:
Interest portion of operating
lease expense:
Operating lease expense $4,649 $5,029 $4,270 $5,027 $4,031
Assumed interest factor 0.33 0.33 0.33 0.33 0.33
-----------------------------------------------
Interest portion of
operating lease
expense 1,534 1,660 1,409 1,659 1,330
Interest expense 9,283 9,206 7,645 4,890 5,140
-----------------------------------------------
FIXED CHARGES $10,817 $10,866 $9,054 $6,549 $6,470
===============================================
RATIO OF EARNINGS TO FIXED
CHARGES 8.7 13.8 16.7 19.1 30.7
===============================================
<PAGE>
EXHIBIT 21
TAMBRANDS INC.
Subsidiaries of the registrant.
- -------------------------------
<TABLE>
<CAPTION>
(1) (2) (3)
Percentage of Voting
Securities Owned
---------------------------
State or Country By the By Other
Name of Subsidiary of Organization Company Subsidiaries
- ------------------ ---------------- ------- -------------
<S> <C> <C> <C>
Tampax Corporation Delaware 100%
Tambrands Sales Corp. Delaware 100% (a)
Tambrands Mfg. Inc. Delaware 100% (a)
TIM International Delaware 100%
Investments Incorporated
Tambrands PACE, Inc. Delaware 100%
Tambrands Limited United Kingdom 100% (a)
Shenyang Tambrands People's Republic 80%
Company Limited of China
Tambrands Dosmil, S.A. de C.V. Mexico 100% (b)
Tambrands de Venezuela, C.A. Venezuela 100% (c)
Tambrands Industria e Brazil 99% (d)
Comercio Limitada
Tambrands AG Switzerland 100% (a)
Tambrands Canada Inc. Canada 100% (a)
Tambrands spol. s.r.o. Czech Republic 100% (c)
Tambrands France S.A. France 100% (a)
Tambrands Ireland Limited Ireland 100% (e)
ZAO Tambrands Russia 100% (a)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
(1) (2) (3)
Percentage of Voting
Securities Owned
---------------------------
State or Country By the By Other
Name of Subsidiary of Organization Company Subsidiaries
- ------------------ ---------------- ------- -------------
<S> <C> <C> <C>
Tambrands Polska Sp. z o.o. Poland 100% (c)
Industrial Catenation South Africa 100% (a)
Services (Pty) Ltd.
Tambrands South Africa South Africa 100% (f)
(Pty) Ltd.
Tambrands Ukraine Ukraine 100% (g)
</TABLE>
Notes: (a) Owned by Tampax Corporation.
(b) Owned by TIM International Investments Incorporated.
(c) Owned by Tambrands PACE, Inc.
(d) Owned by the Company in part directly and in part indirectly
through Tampax Corporation.
(e) Owned by Tambrands Limited.
(f) Owned by Industrial Catenation Services (Pty) Ltd.
(g) Owned by Tambrands Limited and Tambrands PACE, Inc.
<PAGE>
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Tambrands Inc.:
We consent to incorporation by reference in the Registration Statement No. 33-
50961 on Form S-3 and Nos. 2-77947, 33-13902, 33-36746, 33-40161, 33-43713, 33-
50398 and 33-64269 on Form S-8 of Tambrands Inc. of our reports dated January
23, 1997, relating to the consolidated balance sheets of Tambrands Inc. and
subsidiaries as of December 31, 1996 and 1995, and the related consolidated
statements of earnings, and cash flows for each of the years in the three-year
period ended December 31, 1996, and the related schedule, which reports appear
in the December 31, 1996 annual report on Form 10-K of Tambrands Inc.
KPMG Peat Marwick LLP
/s/ KPMG Peat Marwick LLP
Stamford, Connecticut
March 28, 1997
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby make,
constitute and appoint Edward T. Fogarty and Howard B. Wentz, Jr., and each of
them, with full power to act without the other, the true and lawful attorney of
the undersigned, in the name, place and stead of the undersigned to execute on
behalf of the undersigned, as Director of Tambrands Inc., the Annual Report on
Form 10-K for the year ended December 31, 1996 of Tambrands Inc., and any and
all amendments thereto, to be filed with the Securities and Exchange Commission
("SEC") pursuant to the Securities Exchange Act of 1934, as amended ("Act"), and
any and all other instruments which either of said attorneys deems necessary or
advisable to enable Tambrands Inc. to comply with the Act, the rules,
regulations and requirements of the SEC in respect thereof, and the securities
or Blue Sky laws of any State or other governmental subdivision, giving and
granting to each of said attorneys full power and authority to do and perform
each and every act and thing whatsoever necessary or appropriate to be done in
and about the premises as fully to all intents as the undersigned might or would
do if personally present at the doing thereof, with full power of substitution
and revocation, thereby ratifying and confirming all that said attorneys or
substitutes may or shall lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto executed this power of
attorney on the date indicated below.
/s/LILYAN H. AFFINITO
_______________________
Lilyan H. Affinito
Dated: March 12, 1997
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby make,
constitute and appoint Edward T. Fogarty and Howard B. Wentz, Jr., and each of
them, with full power to act without the other, the true and lawful attorney of
the undersigned, in the name, place and stead of the undersigned to execute on
behalf of the undersigned, as Director of Tambrands Inc., the Annual Report on
Form 10-K for the year ended December 31, 1996 of Tambrands Inc., and any and
all amendments thereto, to be filed with the Securities and Exchange Commission
("SEC") pursuant to the Securities Exchange Act of 1934, as amended ("Act"), and
any and all other instruments which either of said attorneys deems necessary or
advisable to enable Tambrands Inc. to comply with the Act, the rules,
regulations and requirements of the SEC in respect thereof, and the securities
or Blue Sky laws of any State or other governmental subdivision, giving and
granting to each of said attorneys full power and authority to do and perform
each and every act and thing whatsoever necessary or appropriate to be done in
and about the premises as fully to all intents as the undersigned might or would
do if personally present at the doing thereof, with full power of substitution
and revocation, thereby ratifying and confirming all that said attorneys or
substitutes may or shall lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto executed this power of
attorney on the date indicated below.
/s/ANNE M. BUSQUET
_____________________
Anne M. Busquet
Dated: March 12, 1997
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby make,
constitute and appoint Edward T. Fogarty and Howard B. Wentz, Jr., and each of
them, with full power to act without the other, the true and lawful attorney of
the undersigned, in the name, place and stead of the undersigned to execute on
behalf of the undersigned, as Director of Tambrands Inc., the Annual Report on
Form 10-K for the year ended December 31, 1996 of Tambrands Inc., and any and
all amendments thereto, to be filed with the Securities and Exchange Commission
("SEC") pursuant to the Securities Exchange Act of 1934, as amended ("Act"), and
any and all other instruments which either of said attorneys deems necessary or
advisable to enable Tambrands Inc. to comply with the Act, the rules,
regulations and requirements of the SEC in respect thereof, and the securities
or Blue Sky laws of any State or other governmental subdivision, giving and
granting to each of said attorneys full power and authority to do and perform
each and every act and thing whatsoever necessary or appropriate to be done in
and about the premises as fully to all intents as the undersigned might or would
do if personally present at the doing thereof, with full power of substitution
and revocation, thereby ratifying and confirming all that said attorneys or
substitutes may or shall lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto executed this power of
attorney on the date indicated below.
/s/ PAUL S. DOHERTY
_________________________
Paul S. Doherty
Dated: March 12, 1997
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby make,
constitute and appoint Edward T. Fogarty and Howard B. Wentz, Jr., and each of
them, with full power to act without the other, the true and lawful attorney of
the undersigned, in the name, place and stead of the undersigned to execute on
behalf of the undersigned, as Director of Tambrands Inc., the Annual Report on
Form 10-K for the year ended December 31, 1996 of Tambrands Inc., and any and
all amendments thereto, to be filed with the Securities and Exchange Commission
("SEC") pursuant to the Securities Exchange Act of 1934, as amended ("Act"), and
any and all other instruments which either of said attorneys deems necessary or
advisable to enable Tambrands Inc. to comply with the Act, the rules,
regulations and requirements of the SEC in respect thereof, and the securities
or Blue Sky laws of any State or other governmental subdivision, giving and
granting to each of said attorneys full power and authority to do and perform
each and every act and thing whatsoever necessary or appropriate to be done in
and about the premises as fully to all intents as the undersigned might or would
do if personally present at the doing thereof, with full power of substitution
and revocation, thereby ratifying and confirming all that said attorneys or
substitutes may or shall lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto executed this power of
attorney on the date indicated below.
/s/JANET HILL
__________________________
Janet Hill
Dated: March 12, 1997
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby make,
constitute and appoint Edward T. Fogarty and Howard B. Wentz, Jr., and each of
them, with full power to act without the other, the true and lawful attorney of
the undersigned, in the name, place and stead of the undersigned to execute on
behalf of the undersigned, as Director of Tambrands Inc., the Annual Report on
Form 10-K for the year ended December 31, 1996 of Tambrands Inc., and any and
all amendments thereto, to be filed with the Securities and Exchange Commission
("SEC") pursuant to the Securities Exchange Act of 1934, as amended ("Act"), and
any and all other instruments which either of said attorneys deems necessary or
advisable to enable Tambrands Inc. to comply with the Act, the rules,
regulations and requirements of the SEC in respect thereof, and the securities
or Blue Sky laws of any State or other governmental subdivision, giving and
granting to each of said attorneys full power and authority to do and perform
each and every act and thing whatsoever necessary or appropriate to be done in
and about the premises as fully to all intents as the undersigned might or would
do if personally present at the doing thereof, with full power of substitution
and revocation, thereby ratifying and confirming all that said attorneys or
substitutes may or shall lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto executed this power of
attorney on the date indicated below.
/s/ROBERT P. KILEY
_________________________
Robert P. Kiley
Dated: March 12, 1997
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby make,
constitute and appoint Edward T. Fogarty and Howard B. Wentz, Jr., and each of
them, with full power to act without the other, the true and lawful attorney of
the undersigned, in the name, place and stead of the undersigned to execute on
behalf of the undersigned, as Director of Tambrands Inc., the Annual Report on
Form 10-K for the year ended December 31, 1996 of Tambrands Inc., and any and
all amendments thereto, to be filed with the Securities and Exchange Commission
("SEC") pursuant to the Securities Exchange Act of 1934, as amended ("Act"), and
any and all other instruments which either of said attorneys deems necessary or
advisable to enable Tambrands Inc. to comply with the Act, the rules,
regulations and requirements of the SEC in respect thereof, and the securities
or Blue Sky laws of any State or other governmental subdivision, giving and
granting to each of said attorneys full power and authority to do and perform
each and every act and thing whatsoever necessary or appropriate to be done in
and about the premises as fully to all intents as the undersigned might or would
do if personally present at the doing thereof, with full power of substitution
and revocation, thereby ratifying and confirming all that said attorneys or
substitutes may or shall lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto executed this power of
attorney on the date indicated below.
/s/JOHN LOUDON
_________________________
John Loudon
Dated: March 12, 1997
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby make,
constitute and appoint Edward T. Fogarty and Howard B. Wentz, Jr., and each of
them, with full power to act without the other, the true and lawful attorney of
the undersigned, in the name, place and stead of the undersigned to execute on
behalf of the undersigned, as Director of Tambrands Inc., the Annual Report on
Form 10-K for the year ended December 31, 1996 of Tambrands Inc., and any and
all amendments thereto, to be filed with the Securities and Exchange Commission
("SEC") pursuant to the Securities Exchange Act of 1934, as amended ("Act"), and
any and all other instruments which either of said attorneys deems necessary or
advisable to enable Tambrands Inc. to comply with the Act, the rules,
regulations and requirements of the SEC in respect thereof, and the securities
or Blue Sky laws of any State or other governmental subdivision, giving and
granting to each of said attorneys full power and authority to do and perform
each and every act and thing whatsoever necessary or appropriate to be done in
and about the premises as fully to all intents as the undersigned might or would
do if personally present at the doing thereof, with full power of substitution
and revocation, thereby ratifying and confirming all that said attorneys or
substitutes may or shall lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto executed this power of
attorney on the date indicated below.
/s/RUTH M. MANTON
___________________________
Ruth M. Manton
Dated: March 12, 1997
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby make,
constitute and appoint Edward T. Fogarty and Howard B. Wentz, Jr., and each of
them, with full power to act without the other, the true and lawful attorney of
the undersigned, in the name, place and stead of the undersigned to execute on
behalf of the undersigned, as Director of Tambrands Inc., the Annual Report on
Form 10-K for the year ended December 31, 1996 of Tambrands Inc., and any and
all amendments thereto, to be filed with the Securities and Exchange Commission
("SEC") pursuant to the Securities Exchange Act of 1934, as amended ("Act"), and
any and all other instruments which either of said attorneys deems necessary or
advisable to enable Tambrands Inc. to comply with the Act, the rules,
regulations and requirements of the SEC in respect thereof, and the securities
or Blue Sky laws of any State or other governmental subdivision, giving and
granting to each of said attorneys full power and authority to do and perform
each and every act and thing whatsoever necessary or appropriate to be done in
and about the premises as fully to all intents as the undersigned might or would
do if personally present at the doing thereof, with full power of substitution
and revocation, thereby ratifying and confirming all that said attorneys or
substitutes may or shall lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto executed this power of
attorney on the date indicated below.
/s/JOHN A. MEYERS
___________________________
John A. Meyers
Dated: March 12, 1997
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby make,
constitute and appoint Edward T. Fogarty and Howard B. Wentz, Jr., and each of
them, with full power to act without the other, the true and lawful attorney of
the undersigned, in the name, place and stead of the undersigned to execute on
behalf of the undersigned, as Director of Tambrands Inc., the Annual Report on
Form 10-K for the year ended December 31, 1996 of Tambrands Inc., and any and
all amendments thereto, to be filed with the Securities and Exchange Commission
("SEC") pursuant to the Securities Exchange Act of 1934, as amended ("Act"), and
any and all other instruments which either of said attorneys deems necessary or
advisable to enable Tambrands Inc. to comply with the Act, the rules,
regulations and requirements of the SEC in respect thereof, and the securities
or Blue Sky laws of any State or other governmental subdivision, giving and
granting to each of said attorneys full power and authority to do and perform
each and every act and thing whatsoever necessary or appropriate to be done in
and about the premises as fully to all intents as the undersigned might or would
do if personally present at the doing thereof, with full power of substitution
and revocation, thereby ratifying and confirming all that said attorneys or
substitutes may or shall lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto executed this power of
attorney on the date indicated below.
/s/H.L. TOWER
______________________________
H.L. Tower
Dated: March 12, 1997
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby make,
constitute and appoint Edward T. Fogarty and Howard B. Wentz, Jr., and each of
them, with full power to act without the other, the true and lawful attorney of
the undersigned, in the name, place and stead of the undersigned to execute on
behalf of the undersigned, as Director of Tambrands Inc., the Annual Report on
Form 10-K for the year ended December 31, 1996 of Tambrands Inc., and any and
all amendments thereto, to be filed with the Securities and Exchange Commission
("SEC") pursuant to the Securities Exchange Act of 1934, as amended ("Act"), and
any and all other instruments which either of said attorneys deems necessary or
advisable to enable Tambrands Inc. to comply with the Act, the rules,
regulations and requirements of the SEC in respect thereof, and the securities
or Blue Sky laws of any State or other governmental subdivision, giving and
granting to each of said attorneys full power and authority to do and perform
each and every act and thing whatsoever necessary or appropriate to be done in
and about the premises as fully to all intents as the undersigned might or would
do if personally present at the doing thereof, with full power of substitution
and revocation, thereby ratifying and confirming all that said attorneys or
substitutes may or shall lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto executed this power of
attorney on the date indicated below.
/s/ROBERT M. WILLIAMS
____________________________
Robert M. Williams
Dated: March 12, 1997
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FULL YEAR
10K 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996
<PERIOD-START> OCT-01-1996 JAN-01-1996
<PERIOD-END> DEC-31-1996 DEC-31-1996
<CASH> 11,554 11,554
<SECURITIES> 0 0
<RECEIVABLES> 101,161 101,161
<ALLOWANCES> (1,776) (1,776)
<INVENTORY> 40,331 40,331
<CURRENT-ASSETS> 196,596 196,596
<PP&E> 354,742 354,742
<DEPRECIATION> (147,103) (147,103)
<TOTAL-ASSETS> 409,996 409,966
<CURRENT-LIABILITIES> 215,762 215,762
<BONDS> 69,205 69,205
<COMMON> 10,887 10,887
0 0
0 0
<OTHER-SE> 83,801 83,801
<TOTAL-LIABILITY-AND-EQUITY> 409,966 409,966
<SALES> 156,692 662,112
<TOTAL-REVENUES> 156,692 662,112
<CGS> 55,777 226,348
<TOTAL-COSTS> 55,777 226,348
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 288 288
<INTEREST-EXPENSE> (2,379) (8,949)
<INCOME-PRETAX> 37,409 83,325
<INCOME-TAX> 13,503 37,522
<INCOME-CONTINUING> 23,906 45,803
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 23,906 45,803
<EPS-PRIMARY> 0.65 1.24
<EPS-DILUTED> 0.65 1.24
</TABLE>
