SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1994
Commission File Number 1-6926
C. R. BARD, INC.
(Exact name of registrant as specified in its charter)
New Jersey 22-1454160
(State of incorporation) (I.R.S. Employer Identification No.)
730 Central Avenue, Murray Hill, New Jersey 07974
(Address of principal executive offices)
Registrant's telephone number, including area code: (908) 277-8000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock - $.25 par value New York Stock Exchange
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 (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendments to this Form 10-K. [ X ]
The aggregate market value of the voting stock held by
nonaffiliates of the registrant was approximately $1,394,100,000
based on the closing price of stock traded on the New York Stock
Exchange on February 28, 1995. As of February 28, 1995, there were
52,115,526 shares of Common Stock, $.25 par value per share,
outstanding.
The Company's definitive Proxy Statement dated March 10, 1995 has
been incorporated by reference with respect to certain information
contained therein in Part III and Part IV of this Form 10-K.
The exhibit index is located in Part IV, Item 14, Page IV-1.
<PAGE>
PART I
Item 1. Business
General Development of Business
The Company was started by Charles Russell Bard in 1907. One of
its first medical products was the silk urethral catheter imported
from France. In 1923, the Company was incorporated as C. R. Bard,
Inc. and distributed an assortment of urological and surgical
products. Bard became a publicly-traded company in 1963 and five
years later was traded on the New York Stock Exchange.
In 1966, Bard acquired its supplier of urological and
cardiovascular specialty products - the United States Catheter &
Instrument Co. In 1980 Bard acquired its major source of the Foley
catheter - Davol Inc. Numerous other acquisitions were made over
the last thirty-five years broadening Bard's product lines. Today,
C. R. Bard, Inc. is a leading multinational developer, manufacturer
and marketer of health care products.
1994 sales of $1.018 billion increased 5% from 1993. Net income
for 1994 totaled $74.9 million or $1.44 per share, and increased
34% and 35%, respectively against 1993.
Acquisitions
During 1994 the Company spent $118.2 million acquiring new
businesses. Angiomed AG, a German company with products marketed
in the areas of urology, radiology, vascular surgery and
gastroenterology was purchased in October 1994. VasCath, Inc., a
Canadian company with a strong position in specialty catheter
products was acquired in December 1994.
In 1993 acquisition spending totalled $70 million. Pilot
Cardiovascular, Inc., a California company with deflectable tipped
angioplasty guidewire technology, was purchased in September 1993.
Bainbridge Sciences, Inc., a Washington company, was purchased in
October 1993 while in its developmental stages. Bainbridge was
renamed Bard Diagnostic Sciences early in 1995. Bard Diagnostic
Sciences is an "in vitro" diagnostics company with products focused
on cancer detection.
Product Group Information
Bard is engaged in the design, manufacture, packaging, distribution
and sale of medical, surgical, diagnostic and patient care devices.
Hospitals, physicians and nursing homes purchase approximately 90%
of the Company's products, most of which are used once and
discarded.
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The following table sets forth for the last three years ended
December 31, 1994, the approximate percentage contribution by
product line to Bard's consolidated net sales. The figures are on
a worldwide basis.
Years Ended December 31,
1994 1993 1992
Cardiovascular 36% 40% 41%
Urological 29% 26% 25%
Surgical 35% 34% 34%
Total 100% 100% 100%
Narrative Description of Business
General
Historically, Bard has been known for its products in the
urological field, where its Foley catheter is the leading device
for bladder drainage. Today, Bard's largest product group is in
cardiovascular care devices, contributing approximately 36% of
consolidated net sales, with a wide range of products, including
USCI balloon angioplasty catheters used for nonsurgical treatment
of obstructed arteries. Additionally, Bard has important positions
in the area of surgical products.
Bard continually expands its research toward the improvement of
existing products and the development of new ones. It has
pioneered in the development of disposable medical products for
standardized procedures.
Bard's domestic sales may be grouped into three principal product
lines: cardiovascular, urological and surgical. International
sales include most of the same products manufactured and sold by
Bard's domestic operations. Domestic and international sales are
combined for product group sales presentation.
Cardiovascular - Bard's line of cardiovascular products includes
balloon angioplasty catheters, steerable guidewires, guide
catheters and inflation devices; angiography catheters and
accessories; introducer sheaths; electrophysiology products
including cardiac mapping and electrophysiology laboratory systems,
and diagnostic and temporary pacing electrode catheters;
cardiopulmonary support systems; and blood oxygenators and related
products used in open-heart surgery.
In February 1990 the Mini-Profile and Probe balloon angioplasty
catheters were withdrawn from the U.S. market due to claims from
the FDA that the Company had failed to follow appropriate legal and
regulatory procedures. In March 1990, the Company voluntarily
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<PAGE>
withdrew its Sprint and Solo angioplasty catheters from the U.S.
market after an internal investigation revealed the commercial
versions had not received proper regulatory approval. These
withdrawals, accompanied with the withdrawal in 1989 of the New
Probe angioplasty catheter, had effectively withdrawn the Company
from the U.S. balloon angioplasty market. In 1991 the Company
received approval from the FDA to market the New Probe, Force and
Sprint balloon angioplasty catheters in the U.S. During the fourth
quarter of 1992 the Solo balloon angioplasty catheter was approved
for U.S. marketing. See Item 3. Legal Proceedings for additional
information.
Urological - Bard offers a complete line of urological products
including Foley catheters, procedural kits and trays and related
urine monitoring and collection systems; biopsy and other cancer
detection products; ureteral stents; and specialty devices for
incontinence, endoscopic procedures and stone removal.
Surgical - Bard's surgical products include specialty access
catheters and ports; implantable blood vessel replacements; fabrics
and meshes for vessel and hernia repair; surgical suction and
irrigation devices; wound and chest drainage systems; devices for
endoscopic, orthopaedic and laparoscopic surgery; blood management
devices; products for wound management and skin care; and
percutaneous feeding devices.
International - Bard markets cardiovascular, urological and
surgical products throughout the world. Principal markets are
Japan, Canada, the United Kingdom and Continental Europe.
Approximately two-thirds of the sales in this segment are of
products manufactured by Bard in its facilities in Canada, France,
Germany, Ireland, Malaysia and the United Kingdom. The balance of
the sales are from products manufactured in the United States,
Puerto Rico or Mexico for export. Bard's foreign operations are
subject to the usual risks of doing business abroad, including
restrictions on currency transfer, exchange fluctuations and
possible adverse government regulations. See footnote 10 in the
Notes to Consolidated Financial Statements for additional
information.
Competition
The Company knows of no published statistics permitting a general
industry classification which would be meaningful as applied to the
Company's variety of products. However, products sold by the
Company are in substantial competition with those of many other
firms, including a number of larger well-established companies.
The Company depends more on its consistently reliable product
quality and dependable service and its ability to develop products
to meet market needs than on patent protection, although some of
its products are patented or are the subject of patent
applications.
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Marketing
The Company's products are distributed domestically directly to
hospitals and other institutions as well as through numerous
hospital/surgical supply and other medical specialty distributors
with whom the Company has distributor agreements. In international
markets, products are distributed either directly or through
distributors with the practice varying by country. Sales promotion
is carried on by full-time representatives of the Company in
domestic and international markets.
In 1994 no commercial customer accounted for more than 8% of the
Company's sales and the five largest commercial customers combined
accounted for approximately 24% of such sales. Combined sales to
federal agencies accounted for approximately 1% of sales in 1994.
In order to service its customers, both in the U.S. and outside the
U.S., the Company maintains inventories at distribution facilities
in most of its principal marketing areas. Orders are normally
shipped within a matter of days after receipt of customer orders,
except for items temporarily out of stock, and backlog is normally
not significant in the business of the Company.
Most of the products sold by the Company, whether manufactured by
it or by others, are sold under the BARD trade name or trademark
or other trademarks owned by the Company. Such products
manufactured for the Company by outside suppliers are produced
according to the Company's specifications.
Regulation
The development, manufacture, sale and distribution of the
Company's products are subject to comprehensive government
regulation. Government regulation by various federal, state and
local agencies, which includes detailed inspection of and controls
over research and laboratory procedures, clinical investigations,
manufacturing, marketing, sampling, distribution, recordkeeping,
storage and disposal practices, substantially increases the time,
difficulty, and costs incurred in obtaining and maintaining the
approval to market newly developed and existing products.
Government regulatory actions can result in the seizure or recall
of products, suspension or revocation of the authority necessary
for their production and sale, and other civil or criminal
sanctions.
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Raw Materials
The Company uses a wide variety of readily available plastic,
textiles, alloys and rubbers for conversion into its devices. Two
large, U.S.-based chemical suppliers have sought to restrict the
sale of certain of their materials to the device industry for use
in implantable products. Although one guiding principle in the
adoption of this policy is the avoidance of negative economic
effect on the health care industry, a small portion of our product
lines may face a short-term threat to the continuity of their raw
material supply. The companies have indicated that their action is
based on product liability concerns. Bard and the medical device
industry are working to resolve this problem in general and with
these suppliers to assure a continuing supply of necessary raw
materials. Bard is working to maintain a supply of qualified
materials by developing new supplies and increasing inventories of
important stocks.
Environment
The Company continues to address current and pending environmental
regulations relating to its use of Ethylene Oxide and CFC's for the
sterilization of some of its products. The Company is complying
with regulations reducing permitted EtO emissions by installing
scrubbing equipment and adjusting its processes. The Company
recognizes the Montreal Protocol Treaty which plans for the
reduction of CFC use worldwide, and the Company has reduced its own
use of CFC's for sterilization more rapidly than is required by
this treaty. Facilities, processes and equipment are required to
achieve these goals and meet these regulations. The Company has
eliminated over 95% of CFC use for sterilization. The Company
intends to continue to reduce this use of CFC's. Capital
expenditures required will not significantly adversely affect the
Company's earnings or competitive position.
Employees
The Company employs approximately 8,650 persons.
Seasonality
The Company's business is not affected to any material extent by
seasonal factors.
Research and Development
The Company's research and development expenditures amounted to
approximately $69,800,000 in 1994, $66,300,000 in 1993 and
$60,500,000 in 1992.
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<PAGE>
Item 2. Properties
The executive offices of the Company are located in Murray Hill,
New Jersey in facilities which the Company owns. Domestic
manufacturing and development units are located in California,
Georgia, Kansas, Massachusetts, New Jersey, New York, Ohio, Puerto
Rico, Rhode Island, South Carolina, Utah, Washington and Wisconsin.
Sales offices and distribution points are in these locations as
well as others.
Outside the U.S., the Company has plants or offices in Australia,
Austria, Belgium, Canada, France, Germany, Hong Kong, India,
Ireland, Italy, Japan, Malaysia, Mexico, Netherlands, Portugal,
Singapore, Spain and the United Kingdom.
The Company owns approximately 2,500,000 square feet in 24
locations and leases approximately 1,393,000 square feet of space
in 57 locations.
All these facilities are well maintained and suitable for the
operations conducted in them.
Item 3. Legal Proceedings
On October 14, 1993, the Company entered into a Plea Agreement with
the Department of Justice in connection with charges stemming from
violations, primarily during the 1980s by the Company's USCI
division, of the Federal Food, Drug and Cosmetic Act and other
statutes. On April 5, 1994, the U.S. District Court in Boston
approved the plea agreement. In connection with such violations,
the Company received notice of suspension by the Defense Logistics
Agency (the "DLA") relative to new federal government contracts.
In December 1994, the DLA reinstated all of the Company's
subsidiaries and divisions, except the Company's USCI division, as
federal contractors, making them eligible to bid on and obtain
government contracts. Also in December 1994, the DLA issued a
notice of proposed debarment to the Company's USCI division, which
continues the government-wide suspension of that division as a
government contractor. Pursuant to the notice and a subsequent
revision, in February 1995, the Company submitted materials to the
DLA in order to demonstrate that the USCI division has undertaken
substantial remedial programs and certain administrative changes in
order to support a finding by the DLA that the USCI division is a
responsible contractor and that it is in the public interest to
resume contracting with the USCI division. If the DLA does not so
find, the Company's USCI division may be debarred for a period of
time from serving as a government contractor. In January 1994 the
Company received notification that the FDA had determined that
provisions of the Applications Integrity Policy should be applied
to the USCI division. Consequently, the Food and Drug
Administration (the "FDA") suspended its review of pending pre-
market applications that have been submitted by the USCI division.
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<PAGE>
Item 3. Legal Proceedings (continued)
Based upon regulatory compliance audits which the Company commenced
in April 1994, the FDA will assess the validity of data and
information in USCI's pending pre-market applications. The Company
is unable to estimate how long the audit process will take and
cannot predict how long the FDA's suspension of the USCI division's
pre-market applications from review will last or the extent of the
impact such suspension could have on USCI's competitive position.
The Company is continuing discussions in certain related areas
raised by the FDA to finally conclude this matter.
In December 1994, a suit was filed against the Company in the
United States District Court for the Southern District of New York
in which the plaintiff alleges that the Company has breached its
obligations under a royalty agreement between the plaintiff and the
Company relating to the sale of infusion balloon catheters. The
plaintiff seeks $84 million in damages. Although the litigation is
at a preliminary stage, the Company believes it has meritorious
defenses to this action.
In January 1992 a civil complaint was filed in federal court
regarding the Company's efforts to obtain FDA approval for and
market an atherectomy device. In December 1994 this case was
settled.
On November 21, 1994 an action was commenced against the Company by
Surgical Laser Technologies, Inc. in the United States District
Court for the Eastern District of Pennsylvania. The Amended
Complaint alleged that the Company has repudiated, refused to
perform and breached an alleged contract with SLT, and further
alleges a breach of the duty of good faith and fair dealing in the
conduct of contract negotiations between the parties and unfair
competition. Damages of an unspecified amount are sought together
with injunctive relief. The Company has answered the Amended
Complaint, denying that there was ever agreement to the alleged
contract, or that the Company otherwise breached any duty owed to
SLT. Discovery has recently commenced and no trial date has yet
been set. The Company believes it has meritorious defenses to this
action.
During 1993, the United States Environmental Protection Agency (the
"EPA") notified the Company's Urological division that it may be a
potentially responsible party relative to clean-up of the Frontier
Chemical site in Niagara Falls, New York. In September, 1993, the
Company entered into a consent order concerning the first phase of
the clean-up, which was a drum removal action. The Company
currently estimates its liability for the first phase at $119,000.
During 1992, the EPA notified the Company that it had been
identified as a potentially responsible party in connection with an
ongoing investigation of the Solvents Recovery Service of New
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<PAGE>
Item 3. Legal Proceedings (continued)
England site in Southington, Connecticut. Although the full extent
of liability in this case is unknown, the Company has been
identified with less than one-half percent of the total gallonage
of waste materials. The final resolution of this matter is not
expected to have a material adverse financial impact on the
Company.
The Company is also subject to other legal proceedings and claims
which arise in the ordinary course of business.
Item 4. Results of Votes of Security Holders
Not applicable.
I-8
<PAGE>
Executive Officers of the Registrant
Set forth below is the name, age, position, five year business
history and other information with respect to each executive
officer of the Company as of February 28, 1995. No family
relationships exist among the officers of the Company.
Name Age Position
William H. Longfield 56 President and
Chief Executive Officer
and Director
Benson F. Smith 47 Executive Vice President
and Chief Operating Officer
and Director
William C. Bopp 51 Senior Vice President and
Chief Financial Officer
Timothy M. Ring 37 Group Vice President
Richard J. Thomas 45 Group Vice President
William T. Tumber 60 Group Vice President
Terence C. Brady, Jr. 63 Senior Vice President
Gerald L. Messerschmidt, M.D. 44 Senior Vice President
Scientific Affairs
E. Robert Ernest 54 Vice President - Planning
and Development
Richard A. Flink 60 Vice President, General
Counsel and Secretary
Mark W. Sickles 41 Vice President - Human
Resources
Christopher D. Ganser 42 Vice President - Quality
Assurance
Earle L. Parker 51 Vice President and
Treasurer
Charles P. Grom 47 Corporate Controller
All officers of the Company are elected annually by the Board of
Directors. Mr. Longfield has been delegated the duties and
responsibilities of Chairman by the Board of Directors.
I-9
<PAGE>
Mr. Longfield joined the Company in 1989 and was elected executive
vice president and chief operating officer. In 1991 he was elected
president. In June 1994 he was elected to his present position.
Prior to joining the Company, he was chief executive officer since
1984 of the Cambridge Group, Inc., a provider of long term health
services for the elderly. Prior to joining Cambridge, he was
employed by Lifemark, Inc., a health care management company, and
for over 20 years with American Hospital Supply Corporation.
Mr. Smith joined Bard in 1980. Subsequently he was appointed
general manager of Bard Electro Medical Systems, Inc. and in 1986
became vice president and general manager of Bard Home Health
division. In 1987, he was promoted to president of Bard Urological
division. In 1990, he was appointed to the position of group
executive. In 1991, he was elected group vice president. In 1993,
he was elected to the position of executive vice president with
worldwide responsibility for operations. In July 1994 he was
elected to his present position.
Mr. Bopp joined the Company in 1980 as controller of Bard
International, Inc., was promoted to assistant corporate controller
in 1983 and was elected to the position of treasurer later that
year. He was named vice president and treasurer in 1989. In 1992
he was elected to his present position.
Mr. Ring joined the Company in 1992 and was elected vice president-
human resources. Prior to joining the Company he had been with
Abbott Laboratories Inc., a pharmaceutical company, since 1982 and
his last position with their Hospital Products division had been
director of personnel. In December 1993, he was elected to the
position of group vice president.
Mr. Thomas joined Bard in 1984. In 1986 he was promoted to vice
president and general manager of the Bard Cardiovascular Ventures
division. In 1990 he was appointed to the position of group
executive. In October 1991, he was elected to his present
position.
Mr. Tumber joined Bard in 1980. In 1988 he was promoted to vice
president and general manager of Davol Inc. In 1990 he was
promoted to president of Davol Inc. and subsequently appointed to
the position of group executive. In September 1991, he was elected
to his present position.
Mr. Brady joined the Company in 1969, was elected corporate
controller in 1973 and vice president and controller in 1979. He
was elected to his present position in 1987.
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<PAGE>
Dr. Messerschmidt joined the Company in January 1994 as Vice
President-Scientific Affairs and was elected to his present
position in February 1995. Prior to joining the Company he had
been with DNX Corporation, a molecular engineering company, where
he was vice president of medical and regulatory affairs. Prior to
DNX he held various positions with the Pharmaceuticals Division of
Ciba Geigy Corporation, the University of Michigan Medical Center,
Wilford Hall U.S.A.F. Medical Center and the National Cancer
Institute of the National Institutes of Health.
Mr. Ernest joined the Company in 1977 and was elected to his
present position in 1979.
Mr. Flink joined the Company in 1970, was elected vice president
and general counsel in 1973 and was elected to his present position
in 1985.
Mr. Parker joined the Company in 1979. In 1985 he was promoted to
vice president and controller of the USCI division. In December
1990 he was promoted to vice president-operations for the USCI
division and, later that year, was promoted to vice president and
general manager of the USCI Angiography division. In 1992 he was
elected Treasurer and effective January 1, 1995 he was elected to
his present position.
Mr. Sickles joined the Company in March 1994 and was elected to his
current position. Prior to joining the Company he had been with
A.L. Laboratories, a pharmaceutical company, where he was Vice
President, Human Resources. Prior to that he was Vice President,
Human Resources and Total Quality Management for A.W. Chesterton,
Inc., a ceiling and specialty chemical manufacturer.
Mr. Ganser joined the Company in 1989 as Manager, Quality Assurance
in the Moncks Corner facility. In April, 1994 he was elected to
his present position.
Mr. Grom joined the Company in 1977. In 1989 he was promoted to
assistant corporate controller and in May 1994 was elected to his
present position.
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PART II
Item 5. Market for Registrant's Common Stock and Related
Stockholder Matters
Market and Market Prices of Common Stock
The Company's common stock is traded on the New York Stock Exchange
using the symbol: BCR. The following table illustrates the high
and low sales prices as traded on the New York Stock Exchange for
each quarter during the last two years.
Quarters
1st 2nd 3rd 4th Year
1994
High 30-1/2 26-1/4 28-1/4 27-1/2 30-1/2
Low 23-7/8 22-3/8 22-1/4 23-5/8 22-1/4
1993
High 35-1/4 28 27-5/8 26-7/8 35-1/4
Low 22-7/8 21-1/4 20-1/2 21-3/4 20-1/2
Approximate Number of Equity Security Holders
Approximate Number
of Record Holders
Title of Class as of February 28, 1995
Common Stock - $.25 par value 7,985*
*Included in the number of shareholders of record are shares held
in "nominee" name.
Dividends
The Company paid cash dividends of $30,100,000 or $.58 per share in
1994 and $28,200,000 or $.54 per share in 1993. The following
table illustrates the quarterly rate of dividends paid per share.
Quarters
1st 2nd 3rd 4th Year
1994 $ .14 $ .14 $ .15 $ .15 $ .58
1993 $ .13 $ .13 $ .14 $ .14 $ .54
In January 1995, the first quarter dividend of $.15 per share was
declared, indicating an annual rate of $.60 per share. The first
quarter dividend was paid on February 3, 1995 to shareholders of
record on January 23.
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<TABLE>
Item 6. Selected Financial Data
(Thousands of dollars except per share amounts)
<CAPTION>
For the Years Ended December 31,
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net sales $1,018,200 $970,800 $990,200 $876,000 $785,300
Gross profit 520,900 494,100 479,300 408,500 351,500
Operating income 150,700 128,500 122,400 93,000 66,800
Net income 74,900 56,000 75,000 57,200 40,300
BALANCE SHEET DATA
Total assets $ 958,400 $798,600 $712,500 $657,600 $612,800
Working capital 63,400 157,200 201,900 184,000 170,600
Long-term debt 78,300 68,500 68,600 68,900 69,800
Total debt 274,200 153,000 133,000 128,700 123,200
Shareholders'
investment 439,800 383,100 392,400 365,700 342,200
COMMON STOCK DATA
Net income
per share $ 1.44 $ 1.07 $ 1.42 $ 1.08 $ .76
Cash dividends
per share .58 .54 .50 .46 .42
Shareholders'
investment
per share $ 8.45 $ 7.35 $ 7.43 $ 6.90 $ 6.45
Average shares
outstanding
(000's) 52,005 52,197 52,909 53,063 53,266
SUPPLEMENTARY DATA
Return on average
shareholders'
investment 18.2% 14.4% 19.8% 16.2% 11.9%
Gross profit/
net sales 51.2% 50.9% 48.4% 46.6% 44.8%
Operating income/
net sales 14.8% 13.2% 12.4% 10.6% 8.5%
Net income/net
sales 7.4% 5.8% 7.6% 6.5% 5.1%
Days-accts rec. 62.9 61.0 63.0 62.7 65.5
Days-inventory 138.9 131.0 128.1 135.8 142.6
Total debt/total
capitalization 38.4% 28.5% 25.3% 26.0% 26.5%
Interest expense $ 15,100 $ 11,400 $ 12,600 $ 14,100 $ 14,900
R&D expense $ 69,800 $ 66,300 $ 60,500 $ 55,600 $ 44,100
Number of
employees 8,650 8,450 8,850 9,100 8,750
Net sales per
employee $ 117.7 $ 114.9 $ 111.9 $ 96.3 $ 89.7
Net income per
employee $ 8.7 $ 6.6 $ 8.5 $ 6.3 $ 4.6
<FN>
</TABLE>
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Item 7. Management's Discussion and Analysis of Results
of Operations and of Financial Conditions
General
Bard is a leading multinational developer, manufacturer and
marketer of products for the large and growing health care
industry. Worldwide health care expenditures approximated $2
trillion in 1994 with about half that amount spent in the United
States. Bard's segment of this industry, itself a multi-billion
dollar market, is primarily specialized products used mainly in
hospitals, in outpatient centers and in physician's offices to meet
the needs of the medical profession in caring for their patients.
The Company seeks to focus and concentrate on selected markets with
cost-effective, innovative products and specialized sales forces to
maximize our opportunities in these markets.
Operating Results
Consolidated net sales increased 5% in 1994, helped by good growth
in many product areas. Net income increased 34%, while earnings
per share increased 35%. The income figures for both 1993 and 1994
were significantly impacted by unusual or nonrecurring charges,
described starting on page II-5 in this financial review.
Sales
Consolidated net sales totaled $1,018.2 million in 1994, a 5%
increase over 1993. Significant factors in this growth were good
increases in sales of Foley catheters and related procedure trays,
specialty access catheters, vascular fabric and mesh products and
gastroenterological specialty devices as well as a substantial
increase in sales of Bard's Contigen implant. These areas, along
with sales from our 1994 acquisitions and an increase of less than
1% from the effects of foreign currency translations, more than
offset some continued weakness in certain cardiovascular product
lines and price reductions which totaled 2.6% on a worldwide basis.
Consolidated net sales totaled $970.8 million in 1993, a decrease
of $19.4 million or 2% for the year. Sales were lowered 3% as a
result of the sale of the Bard MedSystems division in February 1993
and 1% by the negative impact of generally lower foreign currency
values. Sales in 1993 were also negatively impacted by a slowdown
in U.S. procedural rates, consolidations of health care providers,
limited FDA approvals, increasingly conservative medical practices
fostered by the growth of managed care and weaker European
economies.
Consolidated net sales in 1992 totaled $990.2 million, an increase
of $114.2 million or 13% for the year, primarily from higher
volume, including new and improved products. The slightly
favorable effect from changes in foreign currency values resulted
in less than 1% of the 1992 consolidated net sales increase.
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<PAGE>
Worldwide sales in 1994 increased 16% in the urological product
group, with a majority of the increase a result of sales of the
Contigen implant. 1993 urological sales increased 1%. Good
increases in several relatively new specialty devices were
partially offset by declines in other areas. Urological sales rose
12% in 1992. This product group benefited in 1992 from a full year
of OEM sales of private label urological products compared with
nine months of sales in 1991. Sales growth from Foley catheter
procedure trays and biopsy devices also contributed.
Sales in 1994 of the surgical product group increased 6% with the
areas of specialty access, vascular fabrics and mesh and
gastroenterology showing good gains. Adjusting for the sale of the
MedSystems division in February 1993, sales in this group increased
7% in 1994. Sales of surgical products in 1993 decreased 1% but
increased 8% after adjusting for the sale of the MedSystems
division. Specialty access, endoscopic, laparoscopic and blood
management products contributed significantly to this increase. In
1992, gains in endoscopic, specialty access, orthopaedic
irrigation, vascular fabric and laparoscopic products contributed
to a 15% increase in surgical sales.
Continued weakness in certain cardiovascular product areas resulted
in a decline in sales in this group of 3% in 1994. Increased sales
outside the U.S. were more than offset by declines in the U.S.
which continue to be impacted by the lack of approvals by the Food
and Drug Administration of new products from the USCI division.
Cardiovascular product sales decreased 5% worldwide in 1993 with
most product areas in this group showing declines. In 1992
cardiovascular sales increased 12% as the Company gained market
share in balloon angioplasty catheters. Sales increases in guide
catheters and electrophysiology and radiology products helped the
growth in this area.
Sales in the United States increased 3% in 1994 and represented 70%
of total sales. Sales of Contigen were the most important
contributor to this growth. U.S. sales decreased 1% in 1993 and
represented 71% of total sales. Urological product sales increased
while sales of surgical products (due to the sale of MedSystems)
and cardiovascular products decreased. In 1992, U.S. sales
increased 13% and represented 70% of total sales. Surgical product
sales showed the highest rate of increase.
Sales outside the U.S. increased 9% in 1994 with a little more than
1% of that growth the result of higher foreign currency values.
The growth was broad-based throughout our product areas and major
geographic markets. Acquisitions accounted for 3% of this growth.
In 1993 sales outside the U.S. declined 3%. Changes in foreign
currency values in 1993 lowered these sales by nearly 5%. Growth
in sales of surgical products were more than offset by decreases in
urological and cardiovascular sales. 1992 sales outside the U.S.
increased 12% with nearly 2% of that growth the result of changes
in foreign currency values. Sales of urological and cardiovascular
products led the way.
II-4
<PAGE>
The geographic breakdown of sales outside the U.S. for the last
three years is:
1994 1993 1992
Europe, Middle East
and Africa 57% 56% 58%
Japan, Asia/Pacific 35 37 33
Western hemisphere,
excluding U.S. 8 7 9
100% 100% 100%
Operating Income
Gross profit margins have increased in each of the last three
years. The rates were 51.2% in 1994, 50.9% in 1993 and 48.4% in
1992. Productivity gains, cost reductions and a favorable product
mix in many product areas contributed to this improvement in the
last three years.
Bard uses the LIFO method of valuing substantially all U.S.
inventories, which results in current costs (higher in a period of
inflation) being charged to cost of goods sold. Bard generally has
been able to recover these costs through its strong product
position in its markets. The Company also strives to offset the
effect of inflation through its cost reduction programs.
Marketing, selling and administrative expenses have been controlled
tightly as indicated by increases of less than 1% in total spending
in this category in each of the last two years. As a percent of
sales, these expenses represented 29.5% in 1994 compared with 30.8%
in 1993 and 29.9% in 1992.
Research and development spending continues to increase as the
Company focuses on new technologies and applications for the
future. The Company's 1994 spending of $69.8 million was not as
much as originally planned. The Company continued to focus on
opportunities which improve outcomes and/or lower costs.
As a result of the improvements in gross profit margins and tight
control of expenses, operating income has improved to 14.8% of
sales in 1994 from 13.2% in 1993 and 12.4% in 1992.
Other Expense, Net
Please refer to Note 9, Other Expense, Net, of the Notes to
Consolidated Financial Statements on page II-22 of this report for
a summary of items in this category in the last three years. In
1994 there was a fourth quarter charge of $28.2 million. This
covered the settlement of a 1992 lawsuit by the inventor of an
atherectomy device which Bard is developing and provided for the
anticipated future legal costs associated with the ongoing
prosecution of the six individuals indicted in October 1993 plus
other costs related to the USCI division (please refer to Note 5 of
the Notes to Consolidated Financial Statements on page II-17
of this report).
II-5
<PAGE>
Other expense, net in 1993 included a third quarter provision for
the Justice Department settlement of $61 million, a fourth quarter
gain of $32.7 million from the sale of shares of the common stock
of Ventritex, Inc. and a first quarter gain of $10.9 million from
the sale of the MedSystems division net of nonrecurring charges.
The 1992 results included a first quarter gain from the sale of
common stock of Ventritex.
Income Tax
The effective income tax rate was 27% in 1994, 37% in 1993 and 30%
in 1992. The lower tax rate in 1994 is primarily due to the fourth
quarter charge which is tax effected at U.S. rates. The higher
1993 rate was primarily due to the $61 million Justice Department
settlement, which was not fully deductible. The tax benefit from
operations in Puerto Rico and Ireland favorably affected the tax
rate in each year, even though the benefit from operations in
Puerto Rico was reduced slightly in 1994.
Net Income
Net income increased 34% in 1994 after a 25% decline in 1993 and a
31% increase in 1992. The net income effect of the 1994 and 1993
unusual or nonrecurring items discussed above in Other Expense, Net
plus the after-tax charge of $6.1 million in the first quarter of
1993 for postretirement benefits were (in millions except per share
amounts):
1994
Fourth quarter charge for legal fees
and settlement $(16.9)
Equivalent per share $ (.33)
1993
Gain on sale of Ventritex stock $ 19.4
Gain on sale of MedSystems net of
nonrecurring charges 6.0
Effect of accounting change for
postretirement benefits (6.1)
Justice Department settlement (45.4)
Total 1993 $(26.1)
Equivalent per share $ (.50)
After adjusting for the unusual or nonrecurring items above for the
last two years, income would have been $91.8 million in 1994 and
$82.1 million in 1993 while earnings per share would have been
$1.77 in 1994 and $1.57 in 1993.
II-6
<PAGE>
Financial Condition
Bard's financial condition remains strong. Although total debt
increased by $121 million in 1994 to $274 million and the ratio of
total debt to total capitalization increased to 38%, we believe
this level continues to give the Company sufficient financing
flexibility, should the need arise.
Bard maintains credit lines with banks for short-term cash needs
and the total amount of these lines was increased substantially in
1994. These facilities were used as needed during the last three
years. The current unused lines of credit total $241 million. As
now structured, the Company expects cash flow from operating
activities to exceed capital expenditures and dividend payments.
The Company believes it could borrow adequate funds at competitive
terms and rates, should it be necessary.
Total cash outlays made for purchases of businesses, patents,
trademarks and other related items and long-term investments were
$143 million in 1994, $101 million in 1993 and $46 million in 1992
for a total over the last three years of $290 million. The
majority of these investments were for intangible items. About
half of this total was financed with additional debt ($146 million)
with the balance coming from cash from operations and proceeds from
sales of assets. Cash from operations contributed to an increase
in short-term investments in 1992 and 1993, a substantial portion
of which was used in 1994, primarily for acquisitions.
The Company annually purchases an amount of its common stock in the
open market large enough at least to replace shares issued under
various employee stock plans. Net shares issued under the plans
were 299,400 in 1994; 259,443 in 1993 and 319,480 in 1992. Total
shares purchased were 350,000 in 1994, 1,000,000 in 1993 and
500,000 in 1992. In January 1993 the Board of Directors authorized
the purchase from time to time of up to 2 million shares of which
1,350,000 had been purchased as of December 31, 1994.
Foreign Currency Risk
The Company periodically enters into foreign exchange contracts to
reduce its exposure to fluctuations in currency values. Contracts
have been exclusively for the forward purchase of currencies in
which the Company has known or anticipated payments. These are
primarily for intercompany transactions, resulting in a high degree
of confidence that the anticipated transactions will take place.
Monetary assets of the Company held in foreign currencies have
relatively short maturities and are denominated in currencies that
have not experienced wide short-term fluctuations in their
equivalent U.S. dollar values. Please refer to Note 4 of the Notes
to Consolidated Financial Statements on page II-16 of this report
for current details of the Company's foreign exchange contracts.
II-7
<PAGE>
Legal Proceedings
For a discussion of pending legal proceedings and related matters,
please see Note 5, Commitments and Contingencies, of the Notes to
Consolidated Financial Statements on page II-17.
Acquisitions
For information on the Company's acquisitions of businesses, please
see Note 2 of the Notes to Consolidated Financial Statements on
page II-14.
II-8
<PAGE>
Item 8. Financial Statements and Supplementary Data
Report of Independent Public Accountants
We have audited the accompanying consolidated balance sheets of
C. R. Bard, Inc. (a New Jersey corporation) and subsidiaries as of
December 31, 1994 and 1993 and the related consolidated statements
of income, retained earnings and cash flows for each of the three
years in the period ended December 31, 1994. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of C. R.
Bard, Inc. and subsidiaries as of December 31, 1994 and 1993, and
the results of their operations and their cash flows for each of
the three years in the period ended December 31, 1994 in conformity
with generally accepted accounting principles.
As discussed in Note 8 to the consolidated financial statements,
effective January 1, 1993 the Company changed its method for
accounting for postretirement benefits other than pensions.
ARTHUR ANDERSEN LLP
Roseland, New Jersey
February 8, 1995
II-9
<PAGE>
<TABLE>
C. R. BARD, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
<CAPTION>
For the Years Ended December 31,
(Thousands of dollars except per share amounts)
1994 1993 1992
<S> <C> <C> <C>
Net sales $1,018,200 $970,800 $990,200
Costs and expenses:
Cost of goods sold 497,300 476,700 510,900
Marketing, selling and
administrative 300,400 299,300 296,400
Research and development 69,800 66,300 60,500
867,500 842,300 867,800
Operating income 150,700 128,500 122,400
Interest expense 15,100 11,400 12,600
Other expense, net 32,600 18,200 2,800
Income before taxes and
effect of accounting change 103,000 98,900 107,000
Provision for income taxes 28,100 36,800 32,000
Income before effect of
accounting change 74,900 62,100 75,000
Effect of change in
accounting principle,
net of taxes --- (6,100) ---
Net income $ 74,900 $ 56,000 $ 75,000
Income per share before
effect of accounting change $ 1.44 $ 1.19 $ 1.42
Net income per share $ 1.44 $ 1.07 $ 1.42
</TABLE>
<TABLE>
C. R. BARD, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED RETAINED EARNINGS
<CAPTION>
For the Years Ended December 31,
(Thousands of dollars except per share amounts)
1994 1993 1992
<S> <C> <C> <C>
Balance, beginning of year $ 367,400 $363,800 $329,200
Net income 74,900 56,000 75,000
Cash dividends (per share
1994, $.58; 1993, $.54;
1992, $.50) (30,100) (28,200) (26,500)
Excess of cost over par value
of treasury stock retired
(1994-350,000 shares,
1993-1,000,000 shares
and 1992-500,000 shares) (8,900) (24,200) (13,900)
Balance, end of year $ 403,300 $367,400 $363,800
<FN>
</TABLE>
The accompanying notes to consolidated financial statements are an
integral part of these statements.
II-10
<PAGE>
<TABLE>
C. R. BARD, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
December 31,
(Thousands of dollars) 1994 1993
<S> <C> <C>
Assets
Current assets:
Cash $ 7,400 $ 4,100
Short-term investments 26,800 70,900
Accounts receivable, less reserve of
$7,900 and $7,100 187,300 167,300
Inventories 199,200 173,500
Other current assets 7,300 5,700
Total current assets 428,000 421,500
Long-term investments 13,300 17,700
Property, plant and equipment, at cost
Land 10,000 8,800
Buildings and improvements 141,800 106,700
Machinery and equipment 160,500 145,400
312,300 260,900
Less - Accumulated depreciation
and amortization 112,400 92,000
Net property, plant and equipment 199,900 168,900
Intangible assets, net of amortization 265,400 149,100
Other assets 51,800 41,400
$958,400 $798,600
Liabilities and shareholders' investment
Current liabilities:
Short-term borrowings and current maturities
of long-term debt $195,900 $ 84,500
Accounts payable 39,200 39,300
Accrued compensation and benefits 31,900 29,900
Accrued expenses 89,600 94,600
Federal and foreign income taxes 8,000 16,000
Total current liabilities 364,600 264,300
Long-term debt 78,300 68,500
Other long-term liabilities 75,700 82,700
Shareholders' investment:
Preferred stock, $1 par value, authorized
5,000,000 shares; none issued --- ---
Common stock, $.25 par value, authorized
300,000,000 shares; issued and outstanding
52,047,524 shares in 1994, 52,098,124
shares in 1993 13,000 13,000
Capital in excess of par value 20,500 15,200
Retained earnings 403,300 367,400
Other 3,000 (12,500)
Total shareholders' investment 439,800 383,100
$958,400 $798,600
<FN>
</TABLE>
The accompanying notes to consolidated financial statements are an
integral part of these balance sheets.
II-11
<PAGE>
<TABLE>
C. R. BARD, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
For Years Ended December 31,
(Thousands of dollars)
1994 1993 1992
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 74,900 $ 56,000 $ 75,000
Adjustments to reconcile net
income to net cash provided
from operating activities:
Depreciation and amortization 39,600 35,500 35,600
Deferred income taxes (4,300) (7,100) (1,900)
Expenses under stock plans 1,400 1,200 1,100
Gain on disposal of assets,
net --- (50,400) (3,700)
Changes in assets and liabilities
net of acquired businesses:
Accounts receivable (7,300) 9,900 (21,400)
Inventories (12,000) 3,000 (4,900)
Other assets 10,800 2,700 200
Current liabilities, excluding
debt (27,500) 27,000 20,200
Other long-term liabilities (7,000) 46,200 3,400
Net cash provided from operating
activities 68,600 124,000 103,600
Cash flows from investing activities:
Capital expenditures (34,200) (30,700) (30,000)
Proceeds from sale of assets --- 65,000 8,300
Payments made for purchases of
businesses (118,200) (70,000) (3,600)
Patents, trademarks and other (24,500) (22,700) (26,700)
Long-term investments (200) (8,700) (15,900)
Net cash used in investing
activities (177,100) (67,100) (67,900)
Cash flows from financing activities:
Common stock issued for options
and benefit plans 2,600 2,200 1,300
Purchase of common stock
(350,000 shares in 1994,
1,000,000 shares in 1993 and
500,000 shares in 1992) (9,000) (24,400) (14,000)
Proceeds from long-term
borrowings 500 --- 16,000
Principal payments of long-term
borrowings (100) (400) (700)
Proceeds from short-term
borrowings, net 99,500 20,400 5,000
Dividends paid (30,100) (28,200) (26,500)
Net cash provided from
(used in) financing activities 63,400 (30,400) (18,900)
Translation adjustment 4,300 (1,300) (800)
Cash and short-term investments:
Increase (decrease) during
the year (40,800) 25,200 16,000
Balance at January 1, 75,000 49,800 33,800
Balance at December 31, $ 34,200 $ 75,000 $ 49,800
<FN>
</TABLE>
The accompanying notes to consolidated financial statements are an
integral part of these statements.
II-12
<PAGE>
C. R. BARD, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Significant Accounting Policies
Consolidation All subsidiaries are consolidated and intercompany
transactions have been eliminated.
Income Per Share The computations of income per share are based on
the weighted average number of shares outstanding: 52,004,575 in
1994, 52,196,645 in 1993 and 52,909,360 in 1992. The effect of
outstanding stock options and stock awards is not material and has
been excluded from the computations.
Reserve for Doubtful Accounts Reserve for doubtful accounts was
$7,900,000, $7,100,000 and $5,300,000 at December 31, 1994, 1993
and 1992, respectively. The Company charged to income $1,600,000,
$2,100,000 and $2,000,000 for additional reserves against doubtful
accounts during 1994, 1993 and 1992, respectively. Write-offs, net
of recoveries were $1,400,000, $300,000 and $1,700,000 during 1994,
1993 and 1992, respectively. The 1994 reserve was increased by
$600,000 as a result of acquisitions during the year.
Inventories Inventories are stated at the lower of cost or market.
Substantially all domestic inventories are accounted for using the
LIFO method of determining costs. All other inventories are
accounted for using the FIFO method. Inventories valued under the
LIFO method were $138,000,000 in 1994, $127,000,000 in 1993 and
$127,000,000 in 1992; under the FIFO method such inventories would
have been higher by $13,300,000, $15,800,000 and $13,000,000,
respectively. The following is a summary of inventories at
December 31:
(Thousands of dollars) 1994 1993
Finished goods $111,800 $101,300
Work in process 57,300 51,400
Raw materials 30,100 20,800
$199,200 $173,500
Depreciation Property, plant and equipment are depreciated on a
straight-line basis over the useful lives of the various classes of
assets.
Investments Long-term investments include long-term bonds and
equity securities accounted for on the cost basis net of allowances
where appropriate. The fair value of such investments, determined
primarily by market quotes, approximated their carrying value at
December 31, 1994 and 1993. For purposes of the Consolidated
Statements of Cash Flows all short-term investments which have a
maturity of ninety days or less are considered cash equivalents.
Such investments are stated at cost which approximates their fair
value.
II-13
<PAGE>
C. R. BARD, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Significant Accounting Policies (continued)
Intangible Assets Intangible assets are recorded at cost and are
amortized using the straight-line method over appropriate periods
not exceeding 40 years. As of December 31, 1994 and 1993,
intangible assets include the following:
(Thousands of dollars) 1994 1993
Goodwill $209,200 $ 91,500
Other intangibles (primarily patents) 117,100 102,000
Less accumulated amortization (60,900) (44,400)
Intangible assets, net $265,400 $149,100
Federal Income Taxes The Company has not provided for federal
income taxes on the undistributed earnings of its foreign
operations (primarily in Ireland) as it is the Company's intention
to permanently reinvest undistributed earnings (approximately
$185,000,000 as of December 31, 1994).
Research and Development Research and development costs are
charged to income as incurred.
New Accounting Pronouncements Effective January 1, 1994, the
Company adopted SFAS No. 112 "Employers' Accounting for
Postemployment Benefits" and SFAS No. 115 "Accounting for Certain
Investments in Debt and Equity Securities." Adoption of these
statements did not have a significant effect on the Company's
financial position or results of operations.
2. Acquisitions
During 1994 the Company acquired several companies which are
primarily located outside the United States. These acquisitions,
along with the acquisitions made in 1993 have been accounted for
under the purchase method of accounting and enhance or expand the
Company's existing product lines and further develop international
markets.
The cost of these acquisitions amounted to $118,200,000 in 1994 and
$70,000,000 in 1993 and were financed through internally generated
cash and available credit lines. These acquisitions did not have
a significant effect on the Company's results of operations. The
acquisition of Angiomed AG in October 1994 resulted in a dilution
in earnings of $.03 per share.
II-14
<PAGE>
C. R. BARD, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. Income Tax Expense
Income tax expense consists of the following:
(Thousands of dollars)
1994 1993 1992
Currently payable:
Federal $21,800 $31,900 $20,300
Foreign 8,100 8,100 9,500
State 2,500 3,900 4,100
32,400 43,900 33,900
Deferred:
Federal (3,200) (6,600) (1,700)
Foreign (1,100) (500) (200)
(4,300) (7,100) (1,900)
$28,100 $36,800 $32,000
Deferred income taxes are recognized for tax consequences of
"temporary differences" by applying enacted statutory tax rates,
applicable to future years, to differences between the financial
reporting and the tax basis of assets and liabilities. At December
31, 1994, the Company's net deferred tax asset amounted to
approximately $13,000,000 which is recorded in other assets. This
amount principally comprises the tax effects of the differences
between tax and financial accounting treatment of employee benefits
of $14,000,000 and other temporary differences offset by the effect
of accelerated depreciation ($6,000,000).
The following is a reconciliation between the effective tax rates
and the statutory rates:
1994 1993 1992
U.S. federal statutory rate 35% 35% 34%
State income taxes net of federal
income tax benefits 2 3 2
Operations taxed at less than
statutory rate, primarily Ireland
and Puerto Rico (10) (11) (10)
Justice Department settlement -- 7 --
Other, net -- 3 4
Effective tax rate 27% 37% 30%
Cash payments for income taxes were $45,500,000, $31,400,000 and
$28,600,000 in 1994, 1993 and 1992, respectively.
II-15
<PAGE>
C. R. BARD, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. Short-Term Borrowings and Long-Term Debt
Short-term bank borrowings amounted to $195,800,000 and $84,400,000
at December 31, 1994 and 1993, respectively. The maximum amount
outstanding during 1994 was approximately $199,800,000 with an
average outstanding balance of $144,700,000. The effective
interest rate was 4.8% in 1994 and 3.7% in 1993. Unused lines of
credit amounted to $241,000,000 at December 31, 1994.
The following is a summary of long-term debt:
(Thousands of dollars) 1994 1993
8.69% Unsecured Notes due 1999 $ 60,000 $ 60,000
7.8% Mortgage Loan 8,400 ---
Other, primarily 5.75% to 11.75% industrial
development revenue bonds 10,000 8,600
78,400 68,600
Less: amounts classified as current 100 100
$ 78,300 $ 68,500
Under three deposit loan agreements with a bank, $55,000,000 has
been borrowed at floating rates (7.23% at December 31, 1994) with
maturity dates of September 1996, December 1999 and December 2002.
At maturity, the loans are to be repaid through matured
certificates of deposit held by the Company at the same bank.
Since the Company has the right of offset under these agreements
and it is the Company's intention to present certain certificates
of deposit for repayment of these loans at their maturity, these
borrowings have been offset against these certificates of deposit
in the accompanying consolidated balance sheets at December 31,
1994 and 1993. The related interest income has been offset against
the interest expense.
The Company enters into foreign exchange contracts to help reduce
the exposure to fluctuations between certain currencies. As of
December 31, 1994 the contracts relate to the anticipated normal
purchases by a subsidiary in Japan from a subsidiary in Ireland.
At December 31, 1994, there were Irish pound contracts outstanding
payable in Japanese yen on a monthly basis throughout 1995 totaling
18,000,000 Irish pounds. Gains and losses which are required to be
reflected on a mark-to-market basis are not significant.
The Company's long-term debt agreements contain restrictions which,
among other things, require the maintenance of minimum net worth
levels and limitations on the amounts of debt.
II-16
<PAGE>
C. R. BARD, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. Short-Term Borrowings and Long-Term Debt (continued)
As of December 31, 1994, the aggregate maturities of long-term debt
were as follows: 1995-$100,000; 1996-$200,000; 1997-$2,000,000;
1998-$1,300,000; 1999-$61,200,000; 2000 and thereafter-$13,600,000.
The fair value of the Company's long-term debt is not significantly
different from its recorded value. Interest expense in 1994, 1993
and 1992 approximated the cash outlay in each year.
5. Commitments and Contingencies
On April 5, 1994, the U.S. District Court in Boston approved the
Plea Agreement previously agreed to by the Company and the
Department of Justice on October 14, 1993. The Agreement related
to charges stemming from violations, primarily during the 1980's by
the Company's USCI division, of the Federal Food, Drug and Cosmetic
Act and other statutes. Under the Agreement, the Company is
required to pay a fine and civil damages totaling $61 million. In
accordance with the terms of the Agreement, a provision was made
for this amount in the quarter ended September 30, 1993. As of
December 31, 1994, the Company has paid $30.5 million of this
amount. During 1994 the Defense Logistics Agency (DLA) reinstated
the Company as a federal contractor with the exception of the USCI
division. Furthermore, the Company is continuing discussions with
the DLA to explore a possible resolution of this matter relative to
the USCI division. In January 1994 the Company announced that the
Food and Drug Administration's (FDA) Applications Integrity Policy
had been applied to current applications from Bard's USCI division,
and that based upon audits to be conducted by the Company, the FDA
would assess the validity of data and information in USCI's pending
premarket applications. The Company is unable to estimate how long
the audit process will take or how long the suspension of FDA
review of USCI's pending premarket applications will last. The
Company is continuing discussions in certain related areas raised
by the FDA to finally conclude this matter.
During the fourth quarter of 1994 the Company recorded a $28.2
million pretax charge ($16.9 million or 33 cents per share charge
after taxes). This charge related to the settlement of a 1992
lawsuit by the inventor of an atherectomy device and includes a
provision for the anticipated future legal costs associated with
the ongoing criminal prosecution of individuals indicted as a
result of the Justice Department's prior investigation into Bard's
USCI division and for other costs related to the USCI division.
II-17
<PAGE>
C. R. BARD, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. Commitments and Contingencies (continued)
The Company is involved in two lawsuits which allege breaches of
agreements where substantial amounts have been claimed. The
Company is also subject to other legal proceedings and claims
involving product liability and disputes on agreements which arise
in the ordinary course of business.
Although some amounts claimed are substantial, the Company believes
that the pending legal proceedings and other matters discussed in
this Note will likely be disposed of over an extended period of
time and should not have a material adverse impact on the Company's
financial position or results of operations.
The Company is committed under noncancelable operating leases
involving certain facilities and equipment. The minimum annual
rentals under the terms of these leases are as follows: 1995 -
$19,000,000; 1996 - $13,400,000; 1997 - $9,000,000; 1998 -
$5,400,000; 1999 -$3,200,000; and thereafter - $4,600,000. Total
rental expense for all leases amounted to $28,800,000 in 1994,
$26,500,000 in 1993 and $26,600,000 in 1992.
6. Stock Rights
In 1985 the Board of Directors declared a dividend distribution of
one Common Share Purchase Right for each outstanding share of Bard
common stock. These Rights will expire in October 1995 and trade
with the common stock. They are not presently exercisable and have
no voting power. In the event a person acquires 20% or more, or
makes a tender or exchange offer for 30% or more of the common
stock, the Rights detach from the common stock and become
exercisable and entitle a holder to buy one share of common stock
at $31.25 (adjustable to prevent dilution). If, after the Rights
become exercisable, Bard is acquired or merged, each Right will
entitle its holder to purchase $62.50 market value of the surviving
company's stock for $31.25, based upon the current exercise price
of the Rights. The Company may redeem the Rights, at its option,
at $.025 per Right, prior to a public announcement that any person
has acquired beneficial ownership of at least 20% of the common
stock. These Rights are designed primarily to encourage anyone
interested in acquiring Bard to negotiate with the Board of
Directors.
II-18
<PAGE>
C. R. BARD, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. Shareholders' Investment
The Company has stock option, stock award and restricted stock
plans under which certain directors, officers and employees are
participants. At December 31, 1994, 1,175,323 shares were reserved
for future issuance under these plans.
Under the Company's stock option plans, options have been granted
to certain directors, officers and employees at prices equal to the
market value of the shares at the date of grant, become exercisable
in four annual installments and expire not more than 10 years after
the date of grant. A summary of option transactions follows:
Number Option
Of Price Range
Shares Per Share
Options outstanding,
December 31, 1991 2,273,791 $ 5.63 - 27.56
Granted 434,310 25.63 - 32.63
Exercised (384,301) 5.63 - 26.88
Cancelled (32,631) --- - ---
Options outstanding,
December 31, 1992 2,291,169 5.63 - 32.63
Granted 558,822 22.75 - 33.56
Exercised (187,291) 5.63 - 26.88
Cancelled (75,508) --- ---
Options outstanding,
December 31, 1993 2,587,192 5.63 - 33.56
Granted 695,594 22.56 - 29.44
Exercised (195,200) 5.63 - 26.88
Cancelled (111,125) --- ---
Options outstanding,
December 31, 1994 2,976,461 $ 8.92 - 33.56
There were 1,645,397 shares exercisable at December 31, 1994 under
these option plans.
II-19
<PAGE>
C. R. BARD, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. Shareholders' Investment (continued)
Under the Company's stock award plans for key employees and
directors, shares are granted at no cost to the recipients and
distributed in three separate installments. During 1994 awards for
29,668 shares (net of cancellations) were granted and 36,532 shares
were issued. Awards are charged to income over the vesting period.
At December 31, 1994, 36,341 awarded shares (aggregate market price
at date of grant $872,000) have not been issued.
Under the Company's restricted stock plan which was established in
1993, common stock may be granted at no cost to certain officers
and key employees. Shares are issued to the participants at the
date of grant entitling the participants to cash dividends and the
right to vote their respective shares. Restrictions limit the sale
or transfer of these shares during a five year period from the
grant date. Upon issuance of stock under the plan, unearned
compensation ($2,800,000 at December 31, 1994) equivalent to the
market value of the stock at the date of grant is reflected as a
reduction in Shareholders' Investment and subsequently amortized to
expense over the five year restriction period. During 1994, 96,279
restricted shares were granted, net of forfeitures.
Additions to capital in excess of par value of $5,300,000 in 1994
and $4,800,000 in 1993 relates to shares issued under these plans
in excess of the related par value of the shares.
For shares purchased by the Company, common stock is charged for
the par value of the shares retired and retained earnings is
charged for the excess of the cost over the par value of shares
retired.
Cumulative foreign currency translation included in Other
Shareholders' Investment amounted to $5,800,000 at December 31,
1994, and increased by $16,900,000 during the year.
8. Postretirement Benefits
The Company has defined benefit pension plans which cover
substantially all domestic and certain foreign employees and its
policy is to fund accrued pension expense for these plans up to the
full funding limitations. These plans provide for benefits based
upon individual participants' compensation and years of service.
The Company also has a supplemental defined contribution plan for
certain officers and key employees. Individual participant
accounts under the supplemental plan are credited annually based
upon a percentage of compensation. The amounts charged to income
for these plans amounted to $9,900,000 in 1994, $7,800,000 in 1993
and $5,400,000 in 1992.
II - 20
<PAGE>
C. R. BARD, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. Postretirement Benefits (continued)
The following table sets forth the funded status of the defined
benefit pension plans as of September 30, 1994 and 1993 and amounts
recognized in the Company's consolidated balance sheets at December
31, 1994 and 1993:
(Thousands of dollars) 1994 1993
Actuarial present value of accumulated benefit
obligation, including vested benefits of
$66,800 in 1994 and $67,700 in 1993 $ 74,700 $ 76,300
Plan assets at fair value, primarily
investment securities $ 73,400 $ 71,900
Less: Actuarial present value of projected
benefit obligation for service rendered
to date 91,200 95,400
Projected benefit obligation in excess of
plan assets (17,800) (23,500)
Unrecognized loss 8,300 14,400
Unrecognized prior service cost 7,000 7,200
Unrecognized net asset at transition amortized
over 12 years (5,300) (6,400)
Accrued pension cost included in other
liabilities $ (7,800) $ (8,300)
Pension costs related to the defined benefit pension plans for the
years ended December 31, 1994, 1993 and 1992 are as follows:
(Thousands of dollars) 1994 1993 1992
Net pension cost includes:
Service cost $ 8,000 $ 6,300 $ 5,400
Interest cost 6,700 5,800 4,700
Actual return on plan assets (2,600) (8,200) (3,900)
Net amortization and deferral (3,500) 2,100 (2,300)
Net pension cost $ 8,600 $ 6,000 $ 3,900
The range of assumed discount rates used was 6% to 9% with the rate
on domestic plans at 8% in 1994, 7% in 1993 and 8% in 1992. The
rate of increase in future salary levels ranged from 4% to 7% in
determining the projected benefit obligation. The expected long-
term rate of return on assets used in determining net pension cost
ranged from 8.5% to 9.0%.
II-21
<PAGE>
C. R. BARD, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. Postretirement Benefits (continued)
The Company also provides postretirement health care benefits and
life insurance coverage to a limited number of employees at a
subsidiary. The health care benefits include cost-sharing features
based on years of service for future retirees.
Effective January 1, 1993, the Company adopted the provisions of
SFAS No. 106 "Employers' Accounting for Postretirement Benefits
Other Than Pensions." SFAS 106 requires the Company to recognize
expense as employees earn postretirement benefits, rather than on
the cash basis as paid. The Company elected to recognize the
accumulated postretirement benefit obligation as a cumulative
catch-up adjustment in the first quarter of 1993. This resulted in
a one-time charge of approximately $10,000,000 pretax or $6,100,000
net of taxes.
The amounts charged to income for this plan amounted to $800,000 in
1994 ($100,000 of service cost and $700,000 of interest cost),
$850,000 in 1993 ($100,000 of service cost and $750,000 of interest
cost) and $400,000 in 1992.
Actuarial assumptions included a discount rate of 8%. Health care
cost trends have been projected at annual rates beginning at 13%
for 1994 decreasing gradually down to 6% in 2001 and later years.
The effect of a 1% annual increase in these assumed cost trend
rates would increase the accumulated postretirement benefit
obligation at December 31, 1994, by $900,000 and postretirement
benefit cost by $100,000.
9. Other Expense, Net
Other expense, net in the Statements of Consolidated Income is
summarized as follows:
(Thousands of dollars)
1994 1993 1992
Interest income $(4,600) $(4,600) $(3,900)
Foreign exchange (gains) losses (400) (1,700) 4,100
Legal fees and settlements (Note 5) 28,200 --- ---
Justice Department settlement --- 61,000 ---
Gain on sale of MedSystems division --- (15,900) ---
Gain on sale of Ventritex stock --- (32,700) (5,900)
Other, net 9,400 12,100 8,500
Total other expense, net $32,600 $18,200 $ 2,800
II-22
<PAGE>
10. Segment Information
The Company is engaged in the design, manufacture, packaging,
distribution and sale of medical, surgical, diagnostic and patient
care devices. Hospitals, physicians and nursing homes purchase
approximately 90% of the Company's products, most of which are used
once and discarded. Information pertaining to domestic and foreign
operations as of December 31, 1994, 1993 and 1992 and for the years
then ended is given below.
<TABLE>
<CAPTION>
(Thousands of dollars)
<S> <C> <C> <C> <C>
United Elimi- Consoli-
States Foreign nations dation
1994
Sales:
Trade $711,200 $282,800 $ --- $ 994,000
Export 24,200 --- --- 24,200
Intersegment 97,700 4,400 (102,100) ---
Total $833,100 $287,200 $(102,100) $1,018,200
Operating income $104,300 $ 59,000 $ (12,600) $ 150,700
Identifiable assets:
December 31, 1994 $649,300 $309,100 $ --- $ 958,400
1993
Sales:
Trade $687,900 $259,600 $ --- $ 947,500
Export 23,300 --- --- 23,300
Intersegment 75,700 1,600 (77,300) ---
Total $786,900 $261,200 $ (77,300) $ 970,800
Operating income $ 83,400 $ 55,200 $ (10,100) $ 128,500
Identifiable assets:
December 31, 1993 $600,200 $198,400 $ --- $ 798,600
1992
Sales:
Trade $697,200 $265,700 $ --- $ 962,900
Export 27,300 --- --- 27,300
Intersegment 56,700 600 (57,300) ---
Total $781,200 $266,300 $ (57,300) $ 990,200
Operating income $ 80,900 $ 51,200 $ (9,700) $ 122,400
Identifiable assets:
December 31, 1992 $526,300 $186,200 $ --- $ 712,500
<FN>
</TABLE>
II-23
<PAGE>
<TABLE>
C. R. BARD, INC. AND SUBSIDIARIES
Supplementary Financial Data
QUARTERLY FINANCIAL DATA
<CAPTION>
(Thousands of dollars except per share amounts)
1994
1st 2nd 3rd 4th Year
<S> <C> <C> <C> <C> <C>
Net sales $247,400 $256,300 $251,900 $262,600 $1,018,200
Cost of goods
sold 121,300 124,500 123,000 128,500 497,300
Operating income 36,600 38,200 37,000 38,900 150,700
Income before
taxes 33,000 33,800 32,600 3,600 103,000
Net income 22,800 23,300 22,800 6,000 74,900
Per share:
Net income .44 .45 .44 .11 1.44
Dividends $ .14 $ .14 $ .15 $ .15 $ .58
</TABLE>
Note: Reflected in the fourth quarter of 1994 is a pretax charge
of $28,200 ($16,900 or 33 cents per share charge after taxes) for
the settlement of a lawsuit and for other costs related to the USCI
division which affected the fourth quarter tax provision.
<TABLE>
<CAPTION>
1993
1st 2nd 3rd 4th Year
<S> <C> <C> <C> <C> <C>
Net sales $236,400 $243,900 $243,500 $247,000 $ 970,800
Cost of goods
sold 116,500 119,000 119,100 122,100 476,700
Operating income 29,900 32,700 33,800 32,100 128,500
Income(loss)
before taxes 39,500 29,000 (32,100) 62,500 98,900
Income(loss)
before effect
of accounting
change 26,900 20,300 (25,200) 40,100 62,100
Net income(loss) 20,800 20,300 (25,200) 40,100 56,000
Per share:
Income(loss)
before effect
of accounting
change .51 .39 (.48) .77 1.19
Net income(loss) .39 .39 (.48) .77 1.07
Dividends $ .13 $ .13 $ .14 $ .14 $ .54
<FN>
</TABLE>
Note: During the first quarter of 1993 a pretax gain of $10,900
was recognized from the sale of the MedSystems division net of
nonrecurring charges. Included in the third quarter of 1993 is a
pretax charge of $61,000 for the settlement reached with the
Justice Department. During the fourth quarter of 1993 the Company
recognized a $32,700 pretax gain from the sale of its Ventritex,
Inc. stock.
II-24
<PAGE>
C. R. BARD, INC. AND SUBSIDIARIES
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
Not applicable.
II-25
<PAGE>
C. R. BARD, INC. AND SUBSIDIARIES
PART III
Item 10. Directors and Executive Officers of the Registrant
Directors of the Registrant
Information with respect to Directors of the Company is
incorporated herein by reference to the material contained under
the heading "Proposal No. 1 - Election of Directors" appearing on
pages 1 through 3 of the Company's definitive Proxy Statement dated
March 10, 1995.
Executive Officers of the Registrant
Information with respect to Executive Officers of the Registrant
are on pages I-9 through I-11 of this filing.
Item 11. Executive Compensation
The information contained under the caption "Executive
Compensation" appearing on Pages 5 through 14 of the Company's
definitive Proxy Statement dated March 10, 1995 is incorporated
herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
The information contained under the captions "Securities Ownership
of Certain Beneficial Owners" and "Securities Ownership of
Management" on pages 3 and 4 of the Company's definitive Proxy
Statement dated March 10, 1995 is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
The information contained under the caption "Compensation of
Outside Directors - Related Transactions" on page 11 of the
Company's definitive Proxy Statement dated March 10, 1995 is
incorporated herein by reference.
III-1
<PAGE>
C. R. BARD, INC. AND SUBSIDIARIES
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K
(a) l. Financial Statements and Supplementary Data
Included in Part II Item 8 of this report:
Page
II- 9 Report of Independent Public Accountants.
II-10 Statements of Consolidated Income and Statements of
Consolidated Retained Earnings for the three years
ended December 31, 1994.
II-11 Consolidated Balance Sheets at December 31, 1994 and
1993.
II-12 Consolidated Statements of Cash Flows for the three
years ended December 31, 1994.
II-13 Notes to Consolidated Financial Statements.
II-24 Quarterly Financial Data.
2. Financial Statement Schedules
Schedules are omitted because they are not applicable, are
not required or the information required is included in the
financial statements or notes thereto.
3. Exhibits, No.
3a Registrant's Restated Certificate of Incorporation, as
amended, as of April 19, 1989, filed as Exhibit 3a to
the Company's 1993 Annual Report on Form 10-K is
incorporated herein by reference.
3b Registrant's Bylaws revised as of April 18, 1990,
filed as Exhibit 3b to the Company's 1993 Annual
Report on Form 10-K is incorporated herein by
reference.
4 Rights Agreement dated as of October 9, 1985 between
C. R. Bard, Inc. and Morgan Guaranty Trust Company of
New York as Rights Agent, filed as Exhibit 4 to the
Company's 1993 Annual Report on Form 10-K is
incorporated herein by reference.
IV-1
<PAGE>
C. R. BARD, INC. AND SUBSIDIARIES
3. Exhibits, No. (Continued)
10 Plea Agreement with attachments and Civil Settlement
Agreement between United States of America and C. R.
Bard, Inc. dated October 14, 1993, filed as Exhibit 10
to the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1993, File No. 1-6926 is
incorporated herein by reference.
10a* Benson F. Smith Severance Agreement dated as of
June 29, 1994. (p. IV-7)
10b* William H. Longfield Severance Agreement as amended
dated as of July 13, 1994. (p. IV-21)
10c* William C. Bopp Severance Agreement as amended dated
as of August 31, 1994. (p. IV-25)
10d* Terence C. Brady, Jr. Severance Agreement as amended
dated as of July 19, 1994. (p. IV-29)
10e* Richard A. Flink Severance Agreement as amended dated
as of July 22, 1994. (p. IV-33)
10f* E. Robert Ernest Severance Agreement as amended dated
as of July 19, 1994. (p. IV-37)
10g* William H. Longfield Supplemental Executive Retirement
Agreement dated as of January 12, 1994, filed as
Exhibit 10g to the Company's 1993 Annual Report on
Form 10-K is incorporated herein by reference.
10h* 1990 Stock Option Plan, filed as Exhibit 10h to the
Company's 1993 Annual Report on Form 10-K is
incorporated herein by reference.
10i* 1989 Employee Stock Appreciation Rights Plan, filed as
Exhibit 10i to the Company's 1993 Annual Report on
Form 10-K is incorporated herein by reference.
10j* C. R. Bard, Inc. Agreement and Plans Trust, filed as
Exhibit 10j to the Company's 1993 Annual Report on
Form 10-K is incorporated herein by reference.
10k* Supplemental Insurance/Retirement Plan, Plan I - For
new corporate officer when previous agreement as non-
officer exists, Plan II - For new corporate officer
when no previous agreement exists, filed as Exhibit
10k to the Company's 1993 Annual Report on Form 10-K
is incorporated herein by reference.
10l* Retirement Plan for Outside Directors of C. R. Bard,
Inc, filed as Exhibit 10l to the Company's 1993 Annual
Report on Form 10-K is incorporated herein by
reference.
IV-2
<PAGE>
C. R. BARD, INC. AND SUBSIDIARIES
3. Exhibits, No. (Continued)
10m* Deferred Compensation Contract Deferral of Directors'
Fees, as amended entered into with directors William
T. Butler, M.D., Regina E. Herzlinger, and Robert P.
Luciano, filed as Exhibit 10m to the Company's 1993
Annual Report on Form 10-K is incorporated herein by
reference.
10n* 1988 Directors Stock Award Plan, as amended in October
1991, filed as Exhibit 10n to the Company's 1993
Annual Report on Form 10-K is incorporated herein by
reference.
10o* Excess Benefit Plan, filed as Exhibit 10o to the
Company's 1993 Annual Report on Form 10-K is
incorporated herein by reference.
10p* Supplemental Executive Retirement Plan, filed as
Exhibit 10p to the Company's 1993 Annual Report on
Form 10-K is incorporated herein by reference.
10q* 1994 Executive Bonus Plan, filed as Exhibit 10 to the
Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1994, File No. 1-6926 is
incorporated herein by reference.
10r* Long Term Performance Incentive Plan, filed as Exhibit
10r to the Company's 1993 Annual Report on Form 10-K
is incorporated herein by reference.
10s* Deferred Compensation Contract Deferral of
Discretionary Bonus, filed as Exhibit 10s to the
Company's 1993 Annual Report on Form 10-K is
incorporated herein by reference.
10t* Deferred Compensation Contract Deferral of Salary,
filed as Exhibit 10t to the Company's 1993 Annual
Report on Form 10-K is incorporated herein by
reference.
10u* 1993 Long Term Incentive Plan, filed as Exhibit 10u to
the Company's 1993 Annual Report on Form 10-K is
incorporated herein by reference.
10v* Earle L. Parker Severance Agreement dated as of
June 29, 1994. (pIV-41).
10w* Mark W. Sickles Severance Agreement dated as of
June 29, 1994. (p.IV-55).
IV-3
<PAGE>
C. R. BARD, INC. AND SUBSIDIARIES
3. Exhibits, No. (Continued)
21 Parents and subsidiaries of registrant. (p. IV-69)
23 Arthur Andersen LLP consent to the incorporation by
reference of their report on Form 10-K as amended into
previously filed Forms S-8. (p. IV-70)
27 Financial data schedule
99 Indemnity agreement between the Company and each of
its directors and officers, filed as Exhibit 99 to
the Company's 1993 Annual Report on Form 10-K is
incorporated herein by reference.
* Each of these exhibits listed under the number 10 constitutes
a management contract or a compensatory plan or arrangement.
All other exhibits are not applicable.
(b) Reports on Form 8-K
Registrant filed a Current Report on Form 8-K dated December 29,
1994 announcing that the Company plans to take an after-tax
charge in the fourth quarter of 1994 for the settlement of a
lawsuit and for legal and related expenses.
Registrant filed a Current Report on Form 8-K dated December 29,
1994 announcing that it had been notified by the Defense
Logistics Agency that it has been reinstated as a federal
contractor.
IV-4
<PAGE>
C. R. BARD, INC. AND SUBSIDIARIES
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.
C. R. BARD, INC.
(Registrant)
By: William C. Bopp /s/
William C. Bopp
Senior Vice President and
Chief Financial Officer
Date: March 17, 1995
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.
Signatures Title Date
William H. Longfield /s/ President and March 17, 1995
William H. Longfield Chief Executive Officer
and Director
(Principal Executive
Officer)
William C. Bopp /s/ Senior Vice President March 17, 1995
William C. Bopp and Chief Financial
Officer
(Principal Financial
Officer)
Charles P. Grom /s/ Corporate Controller March 17, 1995
Charles P. Grom (Principal Accounting
Officer)
Benson F. Smith /s/ Executive Vice President March 17, 1995
Benson F. Smith and Chief Operating
Officer and Director
IV-5
<PAGE>
C. R. BARD, INC. AND SUBSIDIARIES
Signatures Title Date
Joseph F. Abely, Jr. /s/ Director March 8, 1995
Joseph F. Abely, Jr.
William T. Butler, M.D. /s/ Director March 8, 1995
William T. Butler, M.D.
Raymond B. Carey, Jr. /s/ Director March 8, 1995
Raymond B. Carey, Jr.
Daniel A. Cronin, Jr. /s/ Director March 7, 1995
Daniel A. Cronin, Jr.
T. Kevin Dunnigan /s/ Director March 17, 1995
T. Kevin Dunnigan
Regina E. Herzlinger /s/ Director March 17, 1995
Regina E. Herzlinger
Robert P. Luciano /s/ Director March 8, 1995
Robert P. Luciano
Robert H. McCaffrey /s/ Director March 17, 1995
Robert H. McCaffrey
IV-6
EXHIBIT 10a
AGREEMENT
AGREEMENT by and between C. R. BARD, INC., a New Jersey
corporation (the "Corporation"), and Benson F. Smith (the
"Executive"), dated as of the 29th day of June, 1994.
WHEREAS, the Corporation, on behalf of itself and its
shareholders, wishes to assure that the Corporation will have the
continued dedication of the Executive, notwithstanding the
possibility, threat, or occurrence of a Change of Control (as
defined below) of the Corporation. The Board of Directors of the
Corporation (the "Board") believes it is imperative to diminish the
inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change
of Control, to encourage his attention and dedication to his
assigned duties currently and in the event of any threatened or
pending Change of Control, and to provide the Executive with
competitive compensation arrangements; therefore, the Board has
caused the Corporation to enter into this Agreement (i) to ensure
the Executive of individual financial security in the event of a
Change of Control, and (ii) to provide such protection in a manner
which is competitive with that of other corporations.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Certain Definitions. (a) The "Effective Date" shall be
the first date during the "Change of Control Period" (as defined in
Section l(b)) on which a Change of Control occurs. Anything in this
Agreement to the contrary notwithstanding, if the Executive's
employment with the Corporation is terminated prior to the date on
which a Change of Control occurs, and the Executive can reasonably
demonstrate that such termination (1) was at the request of a third
party who has taken steps reasonably calculated to effect a Change
of Control or (2) otherwise arose in connection with or
anticipation of a Change of Control, then for all purposes of this
Agreement the "Effective Date" shall mean the date immediately
prior to the date of such termination.
(b) The "Change of Control Period" is the period commencing
on the date hereof and ending on the earlier to occur of (i) the
third anniversary of such date or (ii) the first day of the month
next following the Executive's normal retirement date ("Normal
Retirement Date") under the Corporation's retirement plan;
provided, however, that commencing on the date one year after the
date hereof, and on each annual anniversary of such date (such date
and each annual anniversary thereof is hereinafter referred to as
the "Renewal Date"), the Change of Control Period shall be
automatically extended so as to terminate on the earlier of (x) two
years from such Renewal Date or (y) the first day of the month
coinciding with or next following the Executive's Normal Retirement
Date, unless at least 60 days prior to the Renewal Date the
Corporation shall give notice that the Change of Control Period
shall not be so extended.
IV-7
2. Change of Control. (a) For purposes of this Agreement,
a "Change of Control" shall be deemed to have occurred if a change
of control of the nature that would be required to be reported in
response to Item l(a) of the Current Report on Form 8-K as in
effect on the date hereof pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act") occurs,
provided that, without limitation, a "Change of Control" shall be
deemed to have occurred if (i) the beneficial ownership at any time
hereafter by any person, as defined herein, of capital stock of the
Corporation, constitutes 20 percent or more of the general voting
power of all of the Corporation's outstanding capital or (ii)
individuals who, as of the date hereof, constitute the Board (as of
the date hereof, the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board, provided that any
person becoming a Director subsequent to the date hereof whose
election, or nomination for election by the Corporation's
shareholders, was approved by a vote of at least three-quarters of
the Directors comprising the Incumbent Board (other than an
election or nomination of an individual whose initial assumption of
office is in connection with an actual or threatened election
contest relating to the election of the Directors of the
Corporation, as such terms are used in Rule 14a-11 of Regulation
14A promulgated under the Exchange Act) shall be, for purposes of
this Agreement, considered as though such person were a member of
the Incumbent Board. No sale to underwriters or private placement
of its capital stock by the Corporation, nor any acquisition
initiated by the Corporation, through merger, purchase of assets or
otherwise, effected in whole or in part by issuance or reissuance
of shares of its capital stock, shall constitute a Change of
Control.
(b) For purposes of the definition of "Change of Control",
the following definitions shall be applicable:
(i) The term "person" shall mean any individual,
corporation or other entity and any group as such term is used in
Section 13(d)(3) or 14(d)(2) of the Exchange Act.
(ii) Any person shall be deemed to be the beneficial
owner of any shares of capital stock of the Corporation:
A. which that person owns directly, whether or not
of record, or
B. which that person has the right to acquire
pursuant to any agreement or understanding or upon exercise of
conversion rights, warrants, or options, or otherwise, or
C. which are beneficially owned, directly or
indirectly (including shares deemed owned through application of
clause (B) above), by an "affiliate" or "associate" (as defined in
the rules of the Securities and Exchange Commission under the
Securities Act of 1933, as amended) of that person, or
IV-8
D. which are beneficially owned, directly or
indirectly (including shares deemed owned through application of
clause (B) above), by any other person with which that person or
his "affiliate" or "associate" (defined as aforesaid) has any
agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of capital stock of the
Corporation.
(iii) The outstanding shares of capital stock of the
Corporation shall include shares deemed owned through application
of clauses (ii) (B), (C) and (D), above, but shall not include
any other shares which may be issuable pursuant to any agreement or
upon exercise of conversion rights, warrants or options, or
otherwise, but which are not actually outstanding.
(iv) Shares of capital stock, if any, held by The Chase
Manhattan Bank N.A. under the Indenture and the Escrow Agreement
dated as of November 1, 1971 between International Paper
Corporation and said bank shall not be deemed owned by
International Paper Corporation or by said bank for purposes of
this definition, so long as they are held by said bank under said
Escrow Agreement, but said shares shall be deemed outstanding for
the purpose of determining the aggregate number of outstanding
shares of capital stock of the Corporation.
3. Employment Period. The Corporation hereby agrees to
continue the Executive in its employ, and the Executive hereby
agrees to remain in the employ of the Corporation, for the period
commencing on the Effective Date and ending on the earlier to occur
of (a) the third anniversary of such date or (b) the first day of
the month coinciding with or next following the Executive's Normal
Retirement Date (the "Employment Period").
4. Terms of Employment. (a) Position and Duties. (i)
During the Employment Period, (A) the Executive's position
(including status, offices, titles and reporting requirements),
authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant of
those held, exercised and assigned at any time during the 90-day
period immediately preceding the Effective Date and (B) the
Executive's services shall be performed at the location where the
Executive was employed immediately preceding the Effective Date or
any office or location less than thirty-five (35) miles from such
location.
(ii) During the Employment Period, and excluding any periods
of vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote reasonable attention and time during
normal business hours to the business and affairs of the
Corporation and, to the extent necessary to discharge the
responsibilities assigned to the Executive hereunder, to use the
IV-9
Executive's reasonable best efforts to perform faithfully and
efficiently such responsibilities. During the Employment Period it
shall not be a violation of this Agreement for the Executive to (A)
serve on corporate, civic or charitable boards or committees, (B)
deliver lectures, fulfill speaking engagements or teach at
educational institutions and (C) manage personal investments, so
long as such activities do not significantly interfere with the
performance of the Executive's responsibilities as an employee of
the Corporation in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities
have been conducted by the Executive prior to the Effective Date,
the continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent to the
Effective Date shall not thereafter be deemed to interfere with the
performance of the Executive's responsibilities to the Corporation.
(b) Compensation. (i) Base Salary. During the Employment
Period, the Executive shall receive a base salary ("Base Salary")
at a monthly rate at least equal to the highest monthly base salary
paid to the Executive by the Corporation during the twelve-month
period immediately preceding the month in which the Effective Date
occurs. During the Employment Period, the Base Salary shall be
reviewed at least annually and shall be increased at any time and
from time to time as shall be consistent with increases in base
salary awarded in the ordinary course of business to other key
executives of the Corporation. Any increase in Base Salary shall
not serve to limit or reduce any other obligation to the Executive
under this Agreement. Base Salary shall not be reduced after any
such increase.
(ii) Annual Bonus. In addition to Ease Salary, the Executive
shall be awarded, for each fiscal year during the Employment
Period, an annual bonus (an "Annual Bonus") in cash at least equal
to the average bonus received by the Executive from the Corporation
in respect of the three fiscal years immediately preceding the
fiscal year in which the Effective Date occurs.
(iii) Incentive, Savings and Retirement Plans. In addition to
Base Salary and Annual Bonus payable as hereinabove provided, the
Executive shall be entitled to participate during the Employment
Period in all incentive, savings and retirement plans and programs,
whether qualified or non-qualified, then applicable to other key
executives of the Corporation and its affiliates (including the
Corporation's 1981 Stock Option Plan, the Long-Term Performance
Incentive Plan, the 1986 Stock Award Plan, the 1981 Employee Stock
Appreciation Rights Plan, the Employees' Stock Ownership Plan and
the Employees' Retirement Savings Plan, in each case to the extent
then in effect or as subsequently amended); provided, however, that
such plans and programs, in the aggregate, shall provide the
Executive with compensation, benefits and reward opportunities at
least as favorable as the most favorable such compensation benefits
and reward opportunities provided by the Corporation for the
Executive under such plans and programs as in effect at any time
during the 90-day period immediately preceding the Effective
IV-10
Date or, if more favorable to the Executive, as provided at any
time thereafter with respect to other key executives.
(iv) Welfare Benefit Plans. During the Employment Period,
the Executive and/or the Executive's family, as the case may be,
shall be eligible for participation in and shall receive all
benefits under welfare benefit plans provided by the Corporation
(including, without limitation, medical, prescription, dental,
disability, salary continuance, executive life, group life,
accidental death and travel accident insurance plans and programs),
at least comparable to those in effect at any time during the
90-day period immediately preceding the Effective Date which would
be most favorable to the Executive or, if more favorable to the
Executive, as in effect at any time thereafter with respect to
other key executives.
(v) 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 most favorable policies and procedures of the Corporation and
its affiliates in effect at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable to
the Executive, as in effect at any time thereafter with respect to
other key executives.
(vi) Fringe Benefits. During the Employment Period, the
Executive shall be entitled to fringe benefits, in accordance with
the most favorable policies of the Corporation and its affiliates
in effect at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the
Executive, as in effect at any time thereafter with respect to
other key executives.
(vii) 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 those provided to the Executive
at any time during the 90-day period immediately preceding the
Effective Date which would be most favorable to the Executive or,
if more favorable to the Executive, as provided at any time
thereafter with respect to other key executives.
(viii) Vacation. During the Employment Period, the Executive
shall be entitled to paid vacation in accordance with the most
favorable policies of the Corporation and its affiliates as in
effect at any time during the 90-day period immediately preceding
the Effective Date or, if more favorable to the Executive, as in
effect at any time thereafter with respect to other key executives.
5. Termination. (a) Death or Disability. This Agreement
shall terminate automatically upon the Executive's death. The
Corporation may terminate this Agreement, after having established
IV-11
the Executive's Disability (pursuant to the definition of
"Disability" set forth below), by giving to the Executive written
notice of its intention to terminate the Executive's employment.
In such a case, the Executive's employment with the Corporation
shall terminate effective on the 180th day after receipt of such
notice (the "Disability Effective Date"), provided that, within 180
days after such receipt, the Executive shall not have returned to
full-time performance of the Executive's duties. For purposes of
this Agreement, "Disability" means disability which, at least 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 the Executive's legal
representative (such agreement as to acceptability not to be
withheld unreasonably).
(b) Cause. The Corporation may terminate the Executive's
employment for "Cause." For purposes of this Agreement, "Cause"
means (i) an act or acts of dishonesty taken by the Executive and
intended to result in substantial personal enrichment of the
Executive at the expense of the Corporation, (ii) repeated
violations by the Executive of the Executive's obligations under
Section 4(a) of this Agreement which are demonstrably willful and
deliberate on the Executive's part and which are not remedied after
the receipt of notice from the Corporation or (iii) the conviction
of the Executive of a felony.
(c) Termination by Executive for Good Reason. The
Executive's employment may be terminated by the Executive for Good
Reason. For purposes of this Agreement, "Good Reason" means
(i) (A) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position
(including status, offices, titles and reporting requirements),
authority, duties or responsibilities as contemplated by Section
4(a) of this Agreement, or (B) any other action by the Corporation
which results in a diminution in such position, authority, duties
or responsibilities, other than an insubstantial and inadvertent
action which is remedied by the Corporation promptly after receipt
of notice thereof given by the Executive;
(ii) any failure by the Corporation to comply with any
of the provisions of Section 4(b) of this Agreement, other than an
insubstantial and inadvertent failure which is remedied by the
Corporation promptly after receipt of notice thereof given by the
Executive;
(iii) the Corporation's requiring the Executive to be
based at any office or location other than that described in
Section 4(a)(i)(B) hereof, except for travel reasonably required in
the performance of the Executive's responsibilities;
IV-12
(iv) any purported termination by the Corporation of
the Executive's employment otherwise than as permitted by this
Agreement; or
(v) any failure by the Corporation to comply with and
satisfy Section ll(c) of this Agreement.
Anything in this Agreement to the contrary
notwithstanding, any termination by the Executive for any reason
whatsoever during the six month period immediately following the
first anniversary of the date of a Change of Control shall be a
termination for "Good Reason". For purposes of this Section 5(c),
any good faith determination of "Good Reason" made by the Executive
shall be conclusive.
(d) Notice of Termination. Any termination by the
Corporation for Cause or by the Executive for Good Reason shall be
communicated by Notice of Termination to the other party hereto
given in accordance with Section 12(b) of this Agreement. For
purposes of this Agreement, a "Notice of Termination" means a
written notice 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 (which date shall be not more than fifteen (15) days after the
giving of such notice).
(e) Date of Termination. "Date of Termination" means
the date of receipt of the Notice of Termination or any later date
specified therein, as the case may be. If the Executive's
employment is terminated by the Corporation other than for Cause or
Disability, the Date of Termination shall be the date on which the
Corporation notifies the Executive of such termination.
6. Obligations of the Corporation upon Termination. (a)
Death. If the Executive's employment is terminated 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 or earned by
the Executive hereunder at the date of the Executive's death.
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 benefits provided by the Corporation to
surviving families of executives of the Corporation under such
plans, programs and policies relating to family death benefits, if
any, as in effect at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Executive
and/or the Executive's family, as in effect on the date of the
Executive's death with respect to other key executives and their
families.
IV-13
(b) Disability. If the Executive's employment is
terminated by reason of the Executive's Disability, this Agreement
shall terminate without further obligations to the Executive, other
than those obligations accrued or earned by the Executive hereunder
as of the Disability Effective Date. Anything in this Agreement to
the contrary notwithstanding, the Executive shall be entitled after
the Disability Effective Date to receive disability and other
benefits at least equal to the most favorable of those provided by
the Corporation to disabled employees and/or their families in
accordance with such plans, programs and policies relating to
disability, if any, as in effect at any time during the 90-day
period immediately preceding the Effective Date or, if more
favorable to the Executive and/or the Executive's family, as in
effect at any time thereafter with respect to other key executives
and their families.
(c) Cause: Other than for Good Reason. If the Executive's
employment shall be terminated for Cause or the Executive
terminates his employment other than for Good Reason, the
Corporation shall pay the Executive his full Base Salary through
the Date of Termination at the rate in effect at the time Notice of
Termination is given and shall have no further obligations to the
Executive under this Agreement.
(d) Termination by Executive for Good Reason: Termination
by Corporation Other Than for Cause or Disability. If, during the
Employment Period, the Corporation shall terminate the Executive's
employment other than for Cause or Disability, or the employment of
the Executive shall be terminated by the Executive for Good Reason:
(i) the Corporation shall pay to the Executive in a
lump sum in cash within 10 days after the Date of Termination (the
"Payment Date") the aggregate of the following amounts:
A. to the extent not theretofore paid, the
Executive's Base Salary through the Date of Termination at the rate
in effect on the Date of Termination or, if higher, at the highest
rate in effect at any time within the three year period preceding
the Effective Date (the "Highest Base Salary"); and
B. the product of (x) the average of the annual
bonuses paid, or payable to the extent deferred, to the Executive
for the three full fiscal years prior to the Effective Date (the
"Recent Bonus") and (y) the fraction obtained by dividing (i) the
number of days between the Date of Termination and the last day of
the last full fiscal year and (ii) 365; and
C. the product of (x) three and (y) the sum of the
Highest Base Salary and (ii) the Recent Bonus; and
D. in the case of compensation previously deferred
by the Executive, all amounts previously deferred and not yet paid
by the Corporation; and
IV-14
(ii) for one year after the Date of Termination, the
Corporation shall continue benefits to the Executive and/or the
Executive's family at least equal to those which would have been
provided to them in accordance with the plans, programs and
policies described in Section 4(b)(iv) of this Agreement if the
Executive's employment had not been terminated, including health
insurance and life insurance, if and as in effect at any time
during the 90-day period immediately preceding the Effective Date
or, if more favorable to the Executive, as in effect at any time
thereafter with respect to other key executives and their families
and for purposes of eligibility for retiree benefits pursuant to
such plans, programs and policies, the Executive shall be
considered to have remained employed until the end of the
Employment Period and to have retired on the last day of such
period.
Anything herein to the contrary notwithstanding, the Executive
may elect in his Notice of Termination to receive the payment
provided for pursuant to Section 6(d)(i)(C) hereof (the "Severance
Payment") in installments. If the Executive elects the installment
method, one-quarter of the Severance Payment shall be paid to the
Executive on the Payment Date and one-quarter of the severance
payment shall be paid to the Executive on each of the next three
anniversaries thereof and, in the case of the latter three
payments, the amounts to be paid shall include interests from the
Payment Date on the remaining unpaid balance of the Severance
Payment calculated at the Morgan Guaranty Trust Company prime rate
as in effect from time to time.
7. 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 affect such rights as the
Executive may have under any stock option or other 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. 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
set-off, counterclaim, recoupment, defense or other claim, right or
action which the Corporation may have against the Executive or
others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of
this Agreement. The Corporation agrees to pay, to the full extent
permitted by law, all legal fees and expenses which the Executive
IV-15
may reasonably incur as a result of any contest (regardless of the
outcome thereof) by the Corporation or others of the validity or
enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof or as a result of
any contest by the Executive about the amount of any payment
pursuant to Section 9 of this Agreement, plus in each case interest
at the Federal Rate (as defined below).
9. Gross-up.
(a) In the event it shall be determined that any
payment, benefit or distribution (or combination thereof) by the
Corporation to or for the benefit of Executive (whether paid or
payable or distributed or distributable pursuant to the terms of
this Agreement, or otherwise) (a "Payment") would be subject to
the excise tax imposed by Section 4999 of the Internal Revenue Code
of 1986, as amended (the "Code"), or any interest or penalties are
incurred by Executive with respect to such excise tax (such excise
tax, together with any such interest and penalties, hereinafter
collectively referred to as the "Excise Tax"), Executive shall be
entitled to receive an additional payment (a "Gross-Up Payment") in
an amount such that after payment by Executive of the Excise Tax
imposed upon the Gross-Up Payment, 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 Arthur Andersen &
Co. (the ~Accounting Firm") which shall provide detailed supporting
calculations both to the Corporation and Executive within fifteen
(15) business days of the receipt of notice from 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 an individual, entity or group
effecting the change in ownership or effective control (within the
meaning of Section 280G of the Code), 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, as determined pursuant to this
Section 9, shall be paid by the Corporation to Executive within
five (5) days after the receipt of the Accounting Firm's
determination. If the Accounting Firm determines that no Excise
Tax is payable by Executive, it shall so indicate to Executive in
writing. Any determination by the Accounting Firm shall be binding
upon the Corporation and Executive. As a result of the uncertainty
in the application of Section 4999 of the Code at the time of the
initial determination by the Accounting Firm hereunder, it is
IV-16
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 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
Executive.
(c) 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 ten (10) business days after 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. Executive shall not pay such claim prior to
the expiration of the thirty (30) day period following the date on
which it 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 Executive in
writing prior to the expiration of such period that it desires to
contest such claim, 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 to effectively 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 Executive harmless, on an after-tax basis, for
any Excise Tax (including interest and penalties with respect
thereto) imposed as a result of such representation and payment of
costs and expenses. Without limitation on 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 forego 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 Executive to
IV-17
pay the tax claimed and sue for a refund or contest the claim in
any permissible manner, and 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 Executive to pay such claim and sue for
a refund, the Corporation shall advance the amount of such payment
to Executive, on an interest-free basis, and shall indemnify and
hold Executive harmless, on an after-tax basis, from any Excise 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 provided, further, that if Executive
is required to extend the statute of limitations to enable the
Corporation to contest such claim, Executive may limit this
extension solely to such contested amount.
(d) If, after the receipt by Executive of an amount
advanced by the Corporation pursuant to Section 9(c), Executive
becomes entitled to receive any refund with respect to such claim,
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
Executive of an amount advanced by the Corporation pursuant to
Section 9(c), a determination is made that Executive shall not be
entitled to any refund with respect to such claim and the
Corporation does not notify Executive in writing of its intent to
contest such denial of refund prior to the expiration of thirty
(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. 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, which shall have been obtained by the
Executive during the Executive's employment by the Corporation or
any of its affiliated companies and which shall not be public
knowledge (other than by acts by the Executive or his
representatives in violation of this Agreement). After termination
of the Executive's employment with the Corporation, the Executive
shall not, without the prior written consent of the Corporation,
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 10 constitute a basis for deferring or withholding any
amounts otherwise payable to the Executive under this Agreement.
IV-18
11. 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.
(c) The Corporation will require any successor
(whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or
assets of the Corporation to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the
Corporation would be required to perform it if no such succession
had taken place. As used in this Agreement, "Corporation" shall
mean the Corporation as hereinbefore defined and any successor to
its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
12. Miscellaneous. (a) This Agreement shall be governed
by and construed in accordance with the laws of the State of New
Jersey, without reference to principles of conflict of laws. The
captions of this Agreement are not part of the provisions hereof
and shall have no force or effect. 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.
(b) 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:
Benson F. Smith
3028 Castle Pines Drive
Duluth, GA 30136
If to the Corporation:
C.R. BARD, INC.
730 Central Avenue
Murray Hill, New Jersey 07974
Attention: General Counsel
or to such other address as either party shall have furnished to
the other in writing in accordance herewith. Notice and
communications shall be effective when actually received by the
addressee.
IV-19
(c) The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
(d) 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) The Executive's failure to insist upon strict
compliance with any provision hereof shall not be deemed to be
waiver of such provision or any other provision thereof.
(f) This Agreement contains the entire understanding
of the Corporation and the Executive with respect to the subject
matter hereof.
(g) The Executive and the Corporation acknowledge
that the employment of the Executive by the Corporation is "at
will", and, prior to the Effective Date, may be terminated by
either the Executive or the Corporation at any time. Upon a
termination of the Executive's employment or upon the Executive's
ceasing to be an officer of the Corporation, in each case, prior to
the Effective Date, there shall be no further rights under this
Agreement.
IN WITNESS WHEREOF, the Executive has hereunto set his hand
and, pursuant to the authorization from its Board of Directors, the
Corporation has caused these presents to be executed in its name on
its behalf, all as of the day and year first above written.
Benson F. Smith /s/
Benson F. Smith
C. R. BARD, INC.
By: William H. Longfield /s/
Name: William H. Longfield
Title: President and
Chief Executive Officer
Attest: Jean F. Miller /s/
Jean F. Miller
Assistant Secretary
IV-20
EXHIBIT 10b
FIRST AMENDMENT TO
CHANGE OF CONTROL AGREEMENT, DATED AS OF JULY 12, 1989
BY AND BETWEEN C.R. BARD, INC. and William H. Longfield
C. R. Bard, Inc. (the "Corporation") and William H. Longfield
the ("Executive") have agreed to amend that certain Change of
Control Agreement (the "Agreement"), dated as of July 12, 1989,
between the Corporation and the Executive to provide the Executive
with a gross-up payment under certain circumstances.
1. Section 9 of the Agreement is hereby amended by deleting such
section in its entirety and replacing it with the following
language:
9. Gross-up.
(a) In the event it shall be determined that any payment,
benefit or distribution (or combination thereof) by the Corporation
to or for the benefit of Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this
Agreement, or otherwise) (a "Payment") would be subject to the
excise tax imposed by Section 4999 of the Internal Revenue Code of
1986, as amended (the "Code"), or any interest or penalties are
incurred by Executive with respect to such excise tax (such excise
tax, together with any such interest and penalties, hereinafter
collectively referred to as the "Excise Tax"), Executive shall be
entitled to receive an additional payment (a "Gross-Up Payment") in
an amount such that after payment by Executive of the Excise Tax
imposed upon the Gross-Up Payment, 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 Arthur Andersen &
Co. (the "Accounting Firm") which shall provide detailed supporting
calculations both to the Corporation and Executive within fifteen
(15) business days of the receipt of notice from 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 an individual, entity or group
effecting the change in ownership or effective control (within the
meaning of Section 280G of the Code), 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, as determined pursuant to this
Section 9, shall be paid by the Corporation to Executive within
five (5) days after the receipt of the Accounting Firm's
IV-21
determination. If the Accounting Firm determines that no Excise
Tax is payable by Executive, it shall so indicate to Executive in
writing. Any determination by the Accounting Firm shall be binding
upon the Corporation and Executive. As a result of the uncertainty
in the application of Section 4999 of the Code 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 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
Executive.
(c) 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 ten (10) business days after 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. Executive shall not pay such claim prior to the
expiration of the thirty (30) day period following the date on
which it 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 Executive in
writing prior to the expiration of such period that it desires to
contest such claim, Executive shall:
1. give the Corporation any information reasonably requested
by the Corporation relating to such claim;
2. 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;
3. cooperate with the Corporation in good faith in order to
effectively contest such claim; and
4. 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 Executive harmless, on an after-tax basis, for
any Excise Tax (including interest and penalties with respect
thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing
IV-22
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 forego 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
Executive to pay the tax claimed and sue for a refund or contest
the claim in any permissible manner, and 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 Executive to pay such
claim and sue for a refund, the Corporation shall advance the
amount of such payment to Executive, on an interest-free basis, and
shall indemnify and hold Executive harmless, on an after-tax basis,
from any Excise 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 provided,
further, that if Executive is required to extend the statute of
limitations to enable the Corporation to contest such claim,
Executive may limit this extension solely to such contested amount.
(d) If, after the receipt by Executive of an amount advanced
by the Corporation pursuant to Section 9(c), Executive becomes
entitled to receive any refund with respect to such claim,
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
Executive of an amount advanced by the Corporation pursuant to
Section 9(c), a determination is made that Executive shall not be
entitled to any refund with respect to such claim and the
Corporation does not notify Executive in writing of its intent to
contest such denial of refund prior to the expiration of thirty
(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.
2. Section 6(d)(i) B of the Agreement is hereby amended by
deleting such section in its entirety and replacing it with the
following language:
B. the product of (x) the average of the annual bonuses
paid, or payable to the extent deferred, to the Executive for the
three full fiscal years prior to the Effective Date (the "Recent
Bonus") and (y) the fraction obtained by dividing (i) the number of
days between the Date of Termination and the last day of the last
full fiscal year and (ii) 365; and
IV-23
IN WITNESS WHEREOF, the Corporation and the Executive execute
this First Amendment this 13th day of July, 1994.
William H. Longfield /s/
[Executive] William H. Longfield
C. R. BARD, INC.
By: Robert P. Luciano /s/
Name: Robert P. Luciano
Title: Chairperson Compensation and
Stock Option Committee of the
Board of Directors
Attest: Jean F. Miller /s/
Assistant Secretary
IV-24
EXHIBIT 10c
FIRST AMENDMENT TO
CHANGE OF CONTROL AGREEMENT, DATED AS OF JANUARY 14, 1991
BY AND BETWEEN C.R. BARD, INC. and William C. Bopp
C. R. Bard, Inc. (the "Corporation") and William C. Bopp the
("Executive") have agreed to amend that certain Change of Control
Agreement (the "Agreement"), dated as of January 14, 1991, between
the Corporation and the Executive to provide the Executive with a
gross-up payment under certain circumstances.
1. Section 9 of the Agreement is hereby amended by deleting such
section in its entirety and replacing it with the following
language:
9. Gross-up.
(a) In the event it shall be determined that any payment,
benefit or distribution (or combination thereof) by the Corporation
to or for the benefit of Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this
Agreement, or otherwise) (a "Payment") would be subject to the
excise tax imposed by Section 4999 of the Internal Revenue Code of
1986, as amended (the "Code"), or any interest or penalties are
incurred by Executive with respect to such excise tax (such excise
tax, together with any such interest and penalties, hereinafter
collectively referred to as the "Excise Tax"), Executive shall be
entitled to receive an additional payment (a "Gross-Up Payment") in
an amount such that after payment by Executive of the Excise Tax
imposed upon the Gross-Up Payment, 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 Arthur Andersen &
Co. (the "Accounting Firm") which shall provide detailed supporting
calculations both to the Corporation and Executive within fifteen
(15) business days of the receipt of notice from 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 an individual, entity or group
effecting the change in ownership or effective control (within the
meaning of Section 280G of the Code), 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, as determined pursuant to this
Section 9, shall be paid by the Corporation to Executive within
five (5) days after the receipt of the Accounting Firm's
IV-25
determination. If the Accounting Firm determines that no Excise
Tax is payable by Executive, it shall so indicate to Executive in
writing. Any determination by the Accounting Firm shall be binding
upon the Corporation and Executive. As a result of the uncertainty
in the application of Section 4999 of the Code 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 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
Executive.
(c) 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 ten (10) business days after 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. Executive shall not pay such claim prior to the
expiration of the thirty (30) day period following the date on
which it 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 Executive in
writing prior to the expiration of such period that it desires to
contest such claim, Executive shall:
1. give the Corporation any information reasonably requested
by the Corporation relating to such claim;
2. 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;
3. cooperate with the Corporation in good faith in order to
effectively contest such claim; and
4. 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 Executive harmless, on an after-tax basis, for
any Excise Tax (including interest and penalties with respect
thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing
IV-26
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 forego 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
Executive to pay the tax claimed and sue for a refund or contest
the claim in any permissible manner, and 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 Executive to pay such
claim and sue for a refund, the Corporation shall advance the
amount of such payment to Executive, on an interest-free basis, and
shall indemnify and hold Executive harmless, on an after-tax basis,
from any Excise 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 provided,
further, that if Executive is required to extend the statute of
limitations to enable the Corporation to contest such claim,
Executive may limit this extension solely to such contested amount.
(d) If, after the receipt by Executive of an amount advanced
by the Corporation pursuant to Section 9(c), Executive becomes
entitled to receive any refund with respect to such claim,
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
Executive of an amount advanced by the Corporation pursuant to
Section 9(c), a determination is made that Executive shall not be
entitled to any refund with respect to such claim and the
Corporation does not notify Executive in writing of its intent to
contest such denial of refund prior to the expiration of thirty
(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.
2. Section 6(d)(i) B of the Agreement is hereby amended by
deleting such section in its entirety and replacing it with the
following language:
B. the product of (x) the average of the annual bonuses
paid, or payable to the extent deferred, to the Executive for the
three full fiscal years prior to the Effective Date (the "Recent
Bonus") and (y) the fraction obtained by dividing (i) the number of
days between the Date of Termination and the last day of the last
full fiscal year and (ii) 365; and
IV-27
IN WITNESS WHEREOF, the Corporation and the Executive execute
this First Amendment this 31st day of August, 1994.
William C. Bopp /s/
[Executive] William C. Bopp
C. R. BARD, INC.
By: William H. Longfield /s/
Name: William H. Longfield
Title: President and
Chief Executive Officer
Attest: Jean F. Miller /s/
Assistant Secretary
IV-28
EXHIBIT 10d
FIRST AMENDMENT TO
CHANGE OF CONTROL AGREEMENT, DATED AS OF FEBRUARY 22, 1988
BY AND BETWEEN C.R. BARD, INC. and Terence C. Brady, Jr.
C. R. Bard, Inc. (the "Corporation") and Terence C. Brady, Jr.
the ("Executive") have agreed to amend that certain Change of
Control Agreement (the "Agreement"), dated as of February 22, 1988,
between the Corporation and the Executive to provide the Executive
with a gross-up payment under certain circumstances.
1. Section 9 of the Agreement is hereby amended by deleting such
section in its entirety and replacing it with the following
language:
9. Gross-up.
(a) In the event it shall be determined that any payment,
benefit or distribution (or combination thereof) by the Corporation
to or for the benefit of Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this
Agreement, or otherwise) (a "Payment") would be subject to the
excise tax imposed by Section 4999 of the Internal Revenue Code of
1986, as amended (the "Code"), or any interest or penalties are
incurred by Executive with respect to such excise tax (such excise
tax, together with any such interest and penalties, hereinafter
collectively referred to as the "Excise Tax"), Executive shall be
entitled to receive an additional payment (a "Gross-Up Payment") in
an amount such that after payment by Executive of the Excise Tax
imposed upon the Gross-Up Payment, 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 Arthur Andersen &
Co. (the "Accounting Firm") which shall provide detailed supporting
calculations both to the Corporation and Executive within fifteen
(15) business days of the receipt of notice from 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 an individual, entity or group
effecting the change in ownership or effective control (within the
meaning of Section 280G of the Code), 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, as determined pursuant to this
Section 9, shall be paid by the Corporation to Executive within
five (5) days after the receipt of the Accounting Firm's
IV-29
determination. If the Accounting Firm determines that no Excise
Tax is payable by Executive, it shall so indicate to Executive in
writing. Any determination by the Accounting Firm shall be binding
upon the Corporation and Executive. As a result of the uncertainty
in the application of Section 4999 of the Code 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 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
Executive.
(c) 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 ten (10) business days after 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. Executive shall not pay such claim prior to the
expiration of the thirty (30) day period following the date on
which it 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 Executive in
writing prior to the expiration of such period that it desires to
contest such claim, Executive shall:
1. give the Corporation any information reasonably requested
by the Corporation relating to such claim;
2. 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;
3. cooperate with the Corporation in good faith in order to
effectively contest such claim; and
4. 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 Executive harmless, on an after-tax basis, for
any Excise Tax (including interest and penalties with respect
thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing
IV-30
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 forego 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
Executive to pay the tax claimed and sue for a refund or contest
the claim in any permissible manner, and 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 Executive to pay such
claim and sue for a refund, the Corporation shall advance the
amount of such payment to Executive, on an interest-free basis, and
shall indemnify and hold Executive harmless, on an after-tax basis,
from any Excise 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 provided,
further, that if Executive is required to extend the statute of
limitations to enable the Corporation to contest such claim,
Executive may limit this extension solely to such contested amount.
(d) If, after the receipt by Executive of an amount advanced
by the Corporation pursuant to Section 9(c), Executive becomes
entitled to receive any refund with respect to such claim,
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
Executive of an amount advanced by the Corporation pursuant to
Section 9(c), a determination is made that Executive shall not be
entitled to any refund with respect to such claim and the
Corporation does not notify Executive in writing of its intent to
contest such denial of refund prior to the expiration of thirty
(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.
2. Section 6(d)(i) B of the Agreement is hereby amended by
deleting such section in its entirety and replacing it with the
following language:
B. the product of (x) the average of the annual bonuses
paid, or payable to the extent deferred, to the Executive for the
three full fiscal years prior to the Effective Date (the "Recent
Bonus") and (y) the fraction obtained by dividing (i) the number of
days between the Date of Termination and the last day of the last
full fiscal year and (ii) 365; and
IV-31
IN WITNESS WHEREOF, the Corporation and the Executive execute
this First Amendment this 19th day of July, 1994.
Terence C. Brady, Jr. /s/
[Executive] Terence C. Brady, Jr.
C. R. BARD, INC.
By: William H. Longfield /s/
Name: William H. Longfield
Title: President and
Chief Executive Officer
Attest: Jean F. Miller /s/
Assistant Secretary
IV-32
EXHIBIT 10e
FIRST AMENDMENT TO
CHANGE OF CONTROL AGREEMENT, DATED AS OF FEBRUARY 22, 1988
BY AND BETWEEN C.R. BARD, INC. and Richard A. Flink
C. R. Bard, Inc. (the "Corporation") and Richard A. Flink the
("Executive") have agreed to amend that certain Change of Control
Agreement (the "Agreement"), dated as of February 22, 1988, between
the Corporation and the Executive to provide the Executive with a
gross-up payment under certain circumstances.
1. Section 9 of the Agreement is hereby amended by deleting such
section in its entirety and replacing it with the following
language:
9. Gross-up.
(a) In the event it shall be determined that any payment,
benefit or distribution (or combination thereof) by the Corporation
to or for the benefit of Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this
Agreement, or otherwise) (a "Payment") would be subject to the
excise tax imposed by Section 4999 of the Internal Revenue Code of
1986, as amended (the "Code"), or any interest or penalties are
incurred by Executive with respect to such excise tax (such excise
tax, together with any such interest and penalties, hereinafter
collectively referred to as the "Excise Tax"), Executive shall be
entitled to receive an additional payment (a "Gross-Up Payment") in
an amount such that after payment by Executive of the Excise Tax
imposed upon the Gross-Up Payment, 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 Arthur Andersen &
Co. (the "Accounting Firm") which shall provide detailed supporting
calculations both to the Corporation and Executive within fifteen
(15) business days of the receipt of notice from 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 an individual, entity or group
effecting the change in ownership or effective control (within the
meaning of Section 280G of the Code), 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, as determined pursuant to this
Section 9, shall be paid by the Corporation to Executive within
five (5) days after the receipt of the Accounting Firm's
IV-33
determination. If the Accounting Firm determines that no Excise
Tax is payable by Executive, it shall so indicate to Executive in
writing. Any determination by the Accounting Firm shall be binding
upon the Corporation and Executive. As a result of the uncertainty
in the application of Section 4999 of the Code 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 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
Executive.
(c) 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 ten (10) business days after 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. Executive shall not pay such claim prior to the
expiration of the thirty (30) day period following the date on
which it 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 Executive in
writing prior to the expiration of such period that it desires to
contest such claim, Executive shall:
1. give the Corporation any information reasonably requested
by the Corporation relating to such claim;
2. 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;
3. cooperate with the Corporation in good faith in order to
effectively contest such claim; and
4. 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 Executive harmless, on an after-tax basis, for
any Excise Tax (including interest and penalties with respect
thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing
IV-34
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 forego 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
Executive to pay the tax claimed and sue for a refund or contest
the claim in any permissible manner, and 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 Executive to pay such
claim and sue for a refund, the Corporation shall advance the
amount of such payment to Executive, on an interest-free basis, and
shall indemnify and hold Executive harmless, on an after-tax basis,
from any Excise 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 provided,
further, that if Executive is required to extend the statute of
limitations to enable the Corporation to contest such claim,
Executive may limit this extension solely to such contested amount.
(d) If, after the receipt by Executive of an amount advanced
by the Corporation pursuant to Section 9(c), Executive becomes
entitled to receive any refund with respect to such claim,
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
Executive of an amount advanced by the Corporation pursuant to
Section 9(c), a determination is made that Executive shall not be
entitled to any refund with respect to such claim and the
Corporation does not notify Executive in writing of its intent to
contest such denial of refund prior to the expiration of thirty
(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.
2. Section 6(d)(i) B of the Agreement is hereby amended by
deleting such section in its entirety and replacing it with the
following language:
B. the product of (x) the average of the annual bonuses
paid, or payable to the extent deferred, to the Executive for the
three full fiscal years prior to the Effective Date (the "Recent
Bonus") and (y) the fraction obtained by dividing (i) the number of
days between the Date of Termination and the last day of the last
full fiscal year and (ii) 365; and
IV-35
IN WITNESS WHEREOF, the Corporation and the Executive execute
this First Amendment this 22nd day of July, 1994.
Richard A. Flink /s/
[Executive] Richard A. Flink
C. R. BARD, INC.
By: William H. Longfield /s/
Name: William H. Longfield
Title: President and
Chief Executive Officer
Attest: Jean F. Miller /s/
Assistant Secretary
IV-36
EXHIBIT 10f
FIRST AMENDMENT TO
CHANGE OF CONTROL AGREEMENT, DATED AS OF JANUARY 21, 1991
BY AND BETWEEN C.R. BARD, INC. and E. Robert Ernest
C. R. Bard, Inc. (the "Corporation") and E. Robert Ernest the
("Executive") have agreed to amend that certain Change of Control
Agreement (the "Agreement"), dated as of January 21, 1991, between
the Corporation and the Executive to provide the Executive with a
gross-up payment under certain circumstances.
1. Section 9 of the Agreement is hereby amended by deleting such
section in its entirety and replacing it with the following
language:
9. Gross-up.
(a) In the event it shall be determined that any payment,
benefit or distribution (or combination thereof) by the Corporation
to or for the benefit of Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this
Agreement, or otherwise) (a "Payment") would be subject to the
excise tax imposed by Section 4999 of the Internal Revenue Code of
1986, as amended (the "Code"), or any interest or penalties are
incurred by Executive with respect to such excise tax (such excise
tax, together with any such interest and penalties, hereinafter
collectively referred to as the "Excise Tax"), Executive shall be
entitled to receive an additional payment (a "Gross-Up Payment") in
an amount such that after payment by Executive of the Excise Tax
imposed upon the Gross-Up Payment, 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 Arthur Andersen &
Co. (the "Accounting Firm") which shall provide detailed supporting
calculations both to the Corporation and Executive within fifteen
(15) business days of the receipt of notice from 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 an individual, entity or group
effecting the change in ownership or effective control (within the
meaning of Section 280G of the Code), 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, as determined pursuant to this
Section 9, shall be paid by the Corporation to Executive within
five (5) days after the receipt of the Accounting Firm's
IV-37
determination. If the Accounting Firm determines that no Excise
Tax is payable by Executive, it shall so indicate to Executive in
writing. Any determination by the Accounting Firm shall be binding
upon the Corporation and Executive. As a result of the uncertainty
in the application of Section 4999 of the Code 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 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
Executive.
(c) 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 ten (10) business days after 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. Executive shall not pay such claim prior to the
expiration of the thirty (30) day period following the date on
which it 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 Executive in
writing prior to the expiration of such period that it desires to
contest such claim, Executive shall:
1. give the Corporation any information reasonably requested
by the Corporation relating to such claim;
2. 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;
3. cooperate with the Corporation in good faith in order to
effectively contest such claim; and
4. 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 Executive harmless, on an after-tax basis, for
any Excise Tax (including interest and penalties with respect
thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing
IV-38
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 forego 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
Executive to pay the tax claimed and sue for a refund or contest
the claim in any permissible manner, and 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 Executive to pay such
claim and sue for a refund, the Corporation shall advance the
amount of such payment to Executive, on an interest-free basis, and
shall indemnify and hold Executive harmless, on an after-tax basis,
from any Excise 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 provided,
further, that if Executive is required to extend the statute of
limitations to enable the Corporation to contest such claim,
Executive may limit this extension solely to such contested amount.
(d) If, after the receipt by Executive of an amount advanced
by the Corporation pursuant to Section 9(c), Executive becomes
entitled to receive any refund with respect to such claim,
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
Executive of an amount advanced by the Corporation pursuant to
Section 9(c), a determination is made that Executive shall not be
entitled to any refund with respect to such claim and the
Corporation does not notify Executive in writing of its intent to
contest such denial of refund prior to the expiration of thirty
(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.
2. Section 6(d)(i) B of the Agreement is hereby amended by
deleting such section in its entirety and replacing it with the
following language:
B. the product of (x) the average of the annual bonuses
paid, or payable to the extent deferred, to the Executive for the
three full fiscal years prior to the Effective Date (the "Recent
Bonus") and (y) the fraction obtained by dividing (i) the number of
days between the Date of Termination and the last day of the last
full fiscal year and (ii) 365; and
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IN WITNESS WHEREOF, the Corporation and the Executive execute
this First Amendment this 19th day of July, 1994.
E. Robert Ernest /s/
[Executive] E. Robert Ernest
C. R. BARD, INC.
By: William H. Longfield /s/
Name: William H. Longfield
Title: President and
Chief Executive Officer
Attest: Jean F. Miller /s/
Assistant Secretary
IV-40
EXHIBIT 10v
AGREEMENT
AGREEMENT by and between C. R. BARD, INC., a New Jersey
corporation (the "Corporation"), and Earle L. Parker (the
"Executive"), dated as of the 29th day of June, 1994.
WHEREAS, the Corporation, on behalf of itself and its
shareholders, wishes to assure that the Corporation will have the
continued dedication of the Executive, notwithstanding the
possibility, threat, or occurrence of a Change of Control (as
defined below) of the Corporation. The Board of Directors of the
Corporation (the "Board") believes it is imperative to diminish the
inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change
of Control, to encourage his attention and dedication to his
assigned duties currently and in the event of any threatened or
pending Change of Control, and to provide the Executive with
competitive compensation arrangements; therefore, the Board has
caused the Corporation to enter into this Agreement (i) to ensure
the Executive of individual financial security in the event of a
Change of Control, and (ii) to provide such protection in a manner
which is competitive with that of other corporations.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Certain Definitions. (a) The "Effective Date" shall be
the first date during the "Change of Control Period" (as defined in
Section l(b)) on which a Change of Control occurs. Anything in this
Agreement to the contrary notwithstanding, if the Executive's
employment with the Corporation is terminated prior to the date on
which a Change of Control occurs, and the Executive can reasonably
demonstrate that such termination (1) was at the request of a third
party who has taken steps reasonably calculated to effect a Change
of Control or (2) otherwise arose in connection with or
anticipation of a Change of Control, then for all purposes of this
Agreement the "Effective Date" shall mean the date immediately
prior to the date of such termination.
(b) The "Change of Control Period" is the period commencing
on the date hereof and ending on the earlier to occur of (i) the
third anniversary of such date or (ii) the first day of the month
next following the Executive's normal retirement date ("Normal
Retirement Date") under the Corporation's retirement plan;
provided, however, that commencing on the date one year after the
date hereof, and on each annual anniversary of such date (such date
and each annual anniversary thereof is hereinafter referred to as
the "Renewal Date"), the Change of Control Period shall be
automatically extended so as to terminate on the earlier of (x) two
years from such Renewal Date or (y) the first day of the month
coinciding with or next following the Executive's Normal Retirement
Date, unless at least 60 days prior to the Renewal Date the
Corporation shall give notice that the Change of Control Period
shall not be so extended.
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2. Change of Control. (a) For purposes of this Agreement,
a "Change of Control" shall be deemed to have occurred if a change
of control of the nature that would be required to be reported in
response to Item l(a) of the Current Report on Form 8-K as in
effect on the date hereof pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act") occurs,
provided that, without limitation, a "Change of Control" shall be
deemed to have occurred if (i) the beneficial ownership at any time
hereafter by any person, as defined herein, of capital stock of the
Corporation, constitutes 20 percent or more of the general voting
power of all of the Corporation's outstanding capital or (ii)
individuals who, as of the date hereof, constitute the Board (as of
the date hereof, the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board, provided that any
person becoming a Director subsequent to the date hereof whose
election, or nomination for election by the Corporation's
shareholders, was approved by a vote of at least three-quarters of
the Directors comprising the Incumbent Board (other than an
election or nomination of an individual whose initial assumption of
office is in connection with an actual or threatened election
contest relating to the election of the Directors of the
Corporation, as such terms are used in Rule 14a-11 of Regulation
14A promulgated under the Exchange Act) shall be, for purposes of
this Agreement, considered as though such person were a member of
the Incumbent Board. No sale to underwriters or private placement
of its capital stock by the Corporation, nor any acquisition
initiated by the Corporation, through merger, purchase of assets or
otherwise, effected in whole or in part by issuance or reissuance
of shares of its capital stock, shall constitute a Change of
Control.
(b) For purposes of the definition of "Change of Control",
the following definitions shall be applicable:
(i) The term "person" shall mean any individual,
corporation or other entity and any group as such term is used in
Section 13(d)(3) or 14(d)(2) of the Exchange Act.
(ii) Any person shall be deemed to be the beneficial
owner of any shares of capital stock of the Corporation:
A. which that person owns directly, whether or not
of record, or
B. which that person has the right to acquire
pursuant to any agreement or understanding or upon exercise of
conversion rights, warrants, or options, or otherwise, or
C. which are beneficially owned, directly or
indirectly (including shares deemed owned through application of
clause (B) above), by an "affiliate" or "associate" (as defined in
the rules of the Securities and Exchange Commission under the
Securities Act of 1933, as amended) of that person, or
IV-42
D. which are beneficially owned, directly or
indirectly (including shares deemed owned through application of
clause (B) above), by any other person with which that person or
his "affiliate" or "associate" (defined as aforesaid) has any
agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of capital stock of the
Corporation.
(iii) The outstanding shares of capital stock of the
Corporation shall include shares deemed owned through application
of clauses (ii) (B), (C) and (D), above, but shall not include
any other shares which may be issuable pursuant to any agreement or
upon exercise of conversion rights, warrants or options, or
otherwise, but which are not actually outstanding.
(iv) Shares of capital stock, if any, held by The Chase
Manhattan Bank N.A. under the Indenture and the Escrow Agreement
dated as of November 1, 1971 between International Paper
Corporation and said bank shall not be deemed owned by
International Paper Corporation or by said bank for purposes of
this definition, so long as they are held by said bank under said
Escrow Agreement, but said shares shall be deemed outstanding for
the purpose of determining the aggregate number of outstanding
shares of capital stock of the Corporation.
3. Employment Period. The Corporation hereby agrees to
continue the Executive in its employ, and the Executive hereby
agrees to remain in the employ of the Corporation, for the period
commencing on the Effective Date and ending on the earlier to occur
of (a) the third anniversary of such date or (b) the first day of
the month coinciding with or next following the Executive's Normal
Retirement Date (the "Employment Period").
4. Terms of Employment. (a) Position and Duties. (i)
During the Employment Period, (A) the Executive's position
(including status, offices, titles and reporting requirements),
authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant of
those held, exercised and assigned at any time during the 90-day
period immediately preceding the Effective Date and (B) the
Executive's services shall be performed at the location where the
Executive was employed immediately preceding the Effective Date or
any office or location less than thirty-five (35) miles from such
location.
(ii) During the Employment Period, and excluding any periods
of vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote reasonable attention and time during
normal business hours to the business and affairs of the
Corporation and, to the extent necessary to discharge the
responsibilities assigned to the Executive hereunder, to use the
IV-43
Executive's reasonable best efforts to perform faithfully and
efficiently such responsibilities. During the Employment Period it
shall not be a violation of this Agreement for the Executive to (A)
serve on corporate, civic or charitable boards or committees, (B)
deliver lectures, fulfill speaking engagements or teach at
educational institutions and (C) manage personal investments, so
long as such activities do not significantly interfere with the
performance of the Executive's responsibilities as an employee of
the Corporation in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities
have been conducted by the Executive prior to the Effective Date,
the continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent to the
Effective Date shall not thereafter be deemed to interfere with the
performance of the Executive's responsibilities to the Corporation.
(b) Compensation. (i) Base Salary. During the Employment
Period, the Executive shall receive a base salary ("Base Salary")
at a monthly rate at least equal to the highest monthly base salary
paid to the Executive by the Corporation during the twelve-month
period immediately preceding the month in which the Effective Date
occurs. During the Employment Period, the Base Salary shall be
reviewed at least annually and shall be increased at any time and
from time to time as shall be consistent with increases in base
salary awarded in the ordinary course of business to other key
executives of the Corporation. Any increase in Base Salary shall
not serve to limit or reduce any other obligation to the Executive
under this Agreement. Base Salary shall not be reduced after any
such increase.
(ii) Annual Bonus. In addition to Ease Salary, the Executive
shall be awarded, for each fiscal year during the Employment
Period, an annual bonus (an "Annual Bonus") in cash at least equal
to the average bonus received by the Executive from the Corporation
in respect of the three fiscal years immediately preceding the
fiscal year in which the Effective Date occurs.
(iii) Incentive, Savings and Retirement Plans. In addition to
Base Salary and Annual Bonus payable as hereinabove provided, the
Executive shall be entitled to participate during the Employment
Period in all incentive, savings and retirement plans and programs,
whether qualified or non-qualified, then applicable to other key
executives of the Corporation and its affiliates (including the
Corporation's 1981 Stock Option Plan, the Long-Term Performance
Incentive Plan, the 1986 Stock Award Plan, the 1981 Employee Stock
Appreciation Rights Plan, the Employees' Stock Ownership Plan and
the Employees' Retirement Savings Plan, in each case to the extent
then in effect or as subsequently amended); provided, however, that
such plans and programs, in the aggregate, shall provide the
Executive with compensation, benefits and reward opportunities at
least as favorable as the most favorable such compensation benefits
and reward opportunities provided by the Corporation for the
IV-44
Executive under such plans and programs as in effect at any time
during the 90-day period immediately preceding the Effective
Date or, if more favorable to the Executive, as provided at any
time thereafter with respect to other key executives.
(iv) Welfare Benefit Plans. During the Employment Period,
the Executive and/or the Executive's family, as the case may be,
shall be eligible for participation in and shall receive all
benefits under welfare benefit plans provided by the Corporation
(including, without limitation, medical, prescription, dental,
disability, salary continuance, executive life, group life,
accidental death and travel accident insurance plans and programs),
at least comparable to those in effect at any time during the
90-day period immediately preceding the Effective Date which would
be most favorable to the Executive or, if more favorable to the
Executive, as in effect at any time thereafter with respect to
other key executives.
(v) 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 most favorable policies and procedures of the Corporation and
its affiliates in effect at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable to
the Executive, as in effect at any time thereafter with respect to
other key executives.
(vi) Fringe Benefits. During the Employment Period, the
Executive shall be entitled to fringe benefits, in accordance with
the most favorable policies of the Corporation and its affiliates
in effect at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the
Executive, as in effect at any time thereafter with respect to
other key executives.
(vii) 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 those provided to the Executive
at any time during the 90-day period immediately preceding the
Effective Date which would be most favorable to the Executive or,
if more favorable to the Executive, as provided at any time
thereafter with respect to other key executives.
(viii) Vacation. During the Employment Period, the Executive
shall be entitled to paid vacation in accordance with the most
favorable policies of the Corporation and its affiliates as in
effect at any time during the 90-day period immediately preceding
the Effective Date or, if more favorable to the Executive, as in
effect at any time thereafter with respect to other key executives.
IV-45
5. Termination. (a) Death or Disability. This Agreement
shall terminate automatically upon the Executive's death. The
Corporation may terminate this Agreement, after having established
the Executive's Disability (pursuant to the definition of
"Disability" set forth below), by giving to the Executive written
notice of its intention to terminate the Executive's employment.
In such a case, the Executive's employment with the Corporation
shall terminate effective on the 180th day after receipt of such
notice (the "Disability Effective Date"), provided that, within 180
days after such receipt, the Executive shall not have returned to
full-time performance of the Executive's duties. For purposes of
this Agreement, "Disability" means disability which, at least 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 the Executive's legal
representative (such agreement as to acceptability not to be
withheld unreasonably).
(b) Cause. The Corporation may terminate the Executive's
employment for "Cause." For purposes of this Agreement, "Cause"
means (i) an act or acts of dishonesty taken by the Executive and
intended to result in substantial personal enrichment of the
Executive at the expense of the Corporation, (ii) repeated
violations by the Executive of the Executive's obligations under
Section 4(a) of this Agreement which are demonstrably willful and
deliberate on the Executive's part and which are not remedied after
the receipt of notice from the Corporation or (iii) the conviction
of the Executive of a felony.
(c) Termination by Executive for Good Reason. The
Executive's employment may be terminated by the Executive for Good
Reason. For purposes of this Agreement, "Good Reason" means
(i) (A) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position
(including status, offices, titles and reporting requirements),
authority, duties or responsibilities as contemplated by Section
4(a) of this Agreement, or (B) any other action by the Corporation
which results in a diminution in such position, authority, duties
or responsibilities, other than an insubstantial and inadvertent
action which is remedied by the Corporation promptly after receipt
of notice thereof given by the Executive;
(ii) any failure by the Corporation to comply with any
of the provisions of Section 4(b) of this Agreement, other than an
insubstantial and inadvertent failure which is remedied by the
Corporation promptly after receipt of notice thereof given by the
Executive;
(iii) the Corporation's requiring the Executive to be
based at any office or location other than that described in
Section 4(a)(i)(B) hereof, except for travel reasonably required in
the performance of the Executive's responsibilities;
IV-46
(iv) any purported termination by the Corporation of
the Executive's employment otherwise than as permitted by this
Agreement; or
(v) any failure by the Corporation to comply with and
satisfy Section ll(c) of this Agreement.
Anything in this Agreement to the contrary
notwithstanding, any termination by the Executive for any reason
whatsoever during the six month period immediately following the
first anniversary of the date of a Change of Control shall be a
termination for "Good Reason". For purposes of this Section 5(c),
any good faith determination of "Good Reason" made by the Executive
shall be conclusive.
(d) Notice of Termination. Any termination by the
Corporation for Cause or by the Executive for Good Reason shall be
communicated by Notice of Termination to the other party hereto
given in accordance with Section 12(b) of this Agreement. For
purposes of this Agreement, a "Notice of Termination" means a
written notice 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 (which date shall be not more than fifteen (15) days after the
giving of such notice).
(e) Date of Termination. "Date of Termination" means
the date of receipt of the Notice of Termination or any later date
specified therein, as the case may be. If the Executive's
employment is terminated by the Corporation other than for Cause or
Disability, the Date of Termination shall be the date on which the
Corporation notifies the Executive of such termination.
6. Obligations of the Corporation upon Termination. (a)
Death. If the Executive's employment is terminated 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 or earned by
the Executive hereunder at the date of the Executive's death.
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 benefits provided by the Corporation to
surviving families of executives of the Corporation under such
plans, programs and policies relating to family death benefits, if
any, as in effect at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Executive
and/or the Executive's family, as in effect on the date of the
Executive's death with respect to other key executives and their
families.
IV-47
(b) Disability. If the Executive's employment is
terminated by reason of the Executive's Disability, this Agreement
shall terminate without further obligations to the Executive, other
than those obligations accrued or earned by the Executive hereunder
as of the Disability Effective Date. Anything in this Agreement to
the contrary notwithstanding, the Executive shall be entitled after
the Disability Effective Date to receive disability and other
benefits at least equal to the most favorable of those provided by
the Corporation to disabled employees and/or their families in
accordance with such plans, programs and policies relating to
disability, if any, as in effect at any time during the 90-day
period immediately preceding the Effective Date or, if more
favorable to the Executive and/or the Executive's family, as in
effect at any time thereafter with respect to other key executives
and their families.
(c) Cause: Other than for Good Reason. If the Executive's
employment shall be terminated for Cause or the Executive
terminates his employment other than for Good Reason, the
Corporation shall pay the Executive his full Base Salary through
the Date of Termination at the rate in effect at the time Notice of
Termination is given and shall have no further obligations to the
Executive under this Agreement.
(d) Termination by Executive for Good Reason: Termination
by Corporation Other Than for Cause or Disability. If, during the
Employment Period, the Corporation shall terminate the Executive's
employment other than for Cause or Disability, or the employment of
the Executive shall be terminated by the Executive for Good Reason:
(i) the Corporation shall pay to the Executive in a
lump sum in cash within 10 days after the Date of Termination (the
"Payment Date") the aggregate of the following amounts:
A. to the extent not theretofore paid, the
Executive's Base Salary through the Date of Termination at the rate
in effect on the Date of Termination or, if higher, at the highest
rate in effect at any time within the three year period preceding
the Effective Date (the "Highest Base Salary"); and
B. the product of (x) the average of the annual
bonuses paid, or payable to the extent deferred, to the Executive
for the three full fiscal years prior to the Effective Date (the
"Recent Bonus") and (y) the fraction obtained by dividing (i) the
number of days between the Date of Termination and the last day of
the last full fiscal year and (ii) 365; and
C. the product of (x) three and (y) the sum of the
Highest Base Salary and (ii) the Recent Bonus; and
D. in the case of compensation previously deferred
by the Executive, all amounts previously deferred and not yet paid
by the Corporation; and
IV-48
(ii) for one year after the Date of Termination, the
Corporation shall continue benefits to the Executive and/or the
Executive's family at least equal to those which would have been
provided to them in accordance with the plans, programs and
policies described in Section 4(b)(iv) of this Agreement if the
Executive's employment had not been terminated, including health
insurance and life insurance, if and as in effect at any time
during the 90-day period immediately preceding the Effective Date
or, if more favorable to the Executive, as in effect at any time
thereafter with respect to other key executives and their families
and for purposes of eligibility for retiree benefits pursuant to
such plans, programs and policies, the Executive shall be
considered to have remained employed until the end of the
Employment Period and to have retired on the last day of such
period.
Anything herein to the contrary notwithstanding, the Executive
may elect in his Notice of Termination to receive the payment
provided for pursuant to Section 6(d)(i)(C) hereof (the "Severance
Payment") in installments. If the Executive elects the installment
method, one-quarter of the Severance Payment shall be paid to the
Executive on the Payment Date and one-quarter of the severance
payment shall be paid to the Executive on each of the next three
anniversaries thereof and, in the case of the latter three
payments, the amounts to be paid shall include interests from the
Payment Date on the remaining unpaid balance of the Severance
Payment calculated at the Morgan Guaranty Trust Company prime rate
as in effect from time to time.
7. 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 affect such rights as the
Executive may have under any stock option or other 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. 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
set-off, counterclaim, recoupment, defense or other claim, right or
action which the Corporation may have against the Executive or
others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of
this Agreement. The Corporation agrees to pay, to the full extent
permitted by law, all legal fees and expenses which the Executive
may reasonably incur as a result of any contest (regardless of the
IV-49
outcome thereof) by the Corporation or others of the validity or
enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof or as a result of
any contest by the Executive about the amount of any payment
pursuant to Section 9 of this Agreement, plus in each case interest
at the Federal Rate (as defined below).
9. Gross-up.
(a) In the event it shall be determined that any
payment, benefit or distribution (or combination thereof) by the
Corporation to or for the benefit of Executive (whether paid or
payable or distributed or distributable pursuant to the terms of
this Agreement, or otherwise) (a "Payment") would be subject to
the excise tax imposed by Section 4999 of the Internal Revenue Code
of 1986, as amended (the "Code"), or any interest or penalties are
incurred by Executive with respect to such excise tax (such excise
tax, together with any such interest and penalties, hereinafter
collectively referred to as the "Excise Tax"), Executive shall be
entitled to receive an additional payment (a "Gross-Up Payment") in
an amount such that after payment by Executive of the Excise Tax
imposed upon the Gross-Up Payment, 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 Arthur Andersen &
Co. (the ~Accounting Firm") which shall provide detailed supporting
calculations both to the Corporation and Executive within fifteen
(15) business days of the receipt of notice from 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 an individual, entity or group
effecting the change in ownership or effective control (within the
meaning of Section 280G of the Code), 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, as determined pursuant to this
Section 9, shall be paid by the Corporation to Executive within
five (5) days after the receipt of the Accounting Firm's
determination. If the Accounting Firm determines that no Excise
Tax is payable by Executive, it shall so indicate to Executive in
writing. Any determination by the Accounting Firm shall be binding
upon the Corporation and Executive. As a result of the uncertainty
in the application of Section 4999 of the Code 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
IV-50
with the calculations required to be made hereunder. In the event
that the Corporation exhausts its remedies pursuant to Section 9(c)
and 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
Executive.
(c) 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 ten (10) business days after 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. Executive shall not pay such claim prior to
the expiration of the thirty (30) day period following the date on
which it 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 Executive in
writing prior to the expiration of such period that it desires to
contest such claim, 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 to effectively 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 Executive harmless, on an after-tax basis, for
any Excise Tax (including interest and penalties with respect
thereto) imposed as a result of such representation and payment of
costs and expenses. Without limitation on 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 forego 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 Executive to
pay the tax claimed and sue for a refund or contest the claim in
any permissible manner, and Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in
IV-51
a court of initial jurisdiction and in one or more appellate
courts, as the Corporation shall determine; provided, however, that
if the Corporation directs Executive to pay such claim and sue for
a refund, the Corporation shall advance the amount of such payment
to Executive, on an interest-free basis, and shall indemnify and
hold Executive harmless, on an after-tax basis, from any Excise 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 provided, further, that if Executive
is required to extend the statute of limitations to enable the
Corporation to contest such claim, Executive may limit this
extension solely to such contested amount.
(d) If, after the receipt by Executive of an amount
advanced by the Corporation pursuant to Section 9(c), Executive
becomes entitled to receive any refund with respect to such claim,
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
Executive of an amount advanced by the Corporation pursuant to
Section 9(c), a determination is made that Executive shall not be
entitled to any refund with respect to such claim and the
Corporation does not notify Executive in writing of its intent to
contest such denial of refund prior to the expiration of thirty
(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. 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, which shall have been obtained by the
Executive during the Executive's employment by the Corporation or
any of its affiliated companies and which shall not be public
knowledge (other than by acts by the Executive or his
representatives in violation of this Agreement). After termination
of the Executive's employment with the Corporation, the Executive
shall not, without the prior written consent of the Corporation,
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 10 constitute a basis for deferring or withholding any
amounts otherwise payable to the Executive under this Agreement.
11. 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.
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(b) This Agreement shall inure to the benefit of and
be binding upon the Corporation and its successors.
(c) The Corporation will require any successor
(whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or
assets of the Corporation to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the
Corporation would be required to perform it if no such succession
had taken place. As used in this Agreement, "Corporation" shall
mean the Corporation as hereinbefore defined and any successor to
its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
12. Miscellaneous. (a) This Agreement shall be governed
by and construed in accordance with the laws of the State of New
Jersey, without reference to principles of conflict of laws. The
captions of this Agreement are not part of the provisions hereof
and shall have no force or effect. 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.
(b) 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:
Earle L. Parker
44 Deer Creek Drive
Basking Ridge, NJ 07920
If to the Corporation:
C.R. BARD, INC.
730 Central Avenue
Murray Hill, New Jersey 07974
Attention: General Counsel
or to such other address as either party shall have furnished to
the other in writing in accordance herewith. Notice and
communications shall be effective when actually received by the
addressee.
(c) The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
IV-53
(d) 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) The Executive's failure to insist upon strict
compliance with any provision hereof shall not be deemed to be
waiver of such provision or any other provision thereof.
(f) This Agreement contains the entire understanding
of the Corporation and the Executive with respect to the subject
matter hereof.
(g) The Executive and the Corporation acknowledge
that the employment of the Executive by the Corporation is "at
will", and, prior to the Effective Date, may be terminated by
either the Executive or the Corporation at any time. Upon a
termination of the Executive's employment or upon the Executive's
ceasing to be an officer of the Corporation, in each case, prior to
the Effective Date, there shall be no further rights under this
Agreement.
IN WITNESS WHEREOF, the Executive has hereunto set his hand
and, pursuant to the authorization from its Board of Directors, the
Corporation has caused these presents to be executed in its name on
its behalf, all as of the day and year first above written.
Earle L. Parker /s/
Earle L. Parker
C. R. BARD, INC.
By: William H. Longfield /s/
Name: William H. Longfield
Title: President and
Chief Executive Officer
Attest: Jean F. Miller /s/
Jean F. Miller
Assistant Secretary
IV-54
EXHIBIT 10w
AGREEMENT
AGREEMENT by and between C. R. BARD, INC., a New Jersey
corporation (the "Corporation"), and Mark W. Sickles (the
"Executive"), dated as of the 29th day of June, 1994.
WHEREAS, the Corporation, on behalf of itself and its
shareholders, wishes to assure that the Corporation will have the
continued dedication of the Executive, notwithstanding the
possibility, threat, or occurrence of a Change of Control (as
defined below) of the Corporation. The Board of Directors of the
Corporation (the "Board") believes it is imperative to diminish the
inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change
of Control, to encourage his attention and dedication to his
assigned duties currently and in the event of any threatened or
pending Change of Control, and to provide the Executive with
competitive compensation arrangements; therefore, the Board has
caused the Corporation to enter into this Agreement (i) to ensure
the Executive of individual financial security in the event of a
Change of Control, and (ii) to provide such protection in a manner
which is competitive with that of other corporations.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Certain Definitions. (a) The "Effective Date" shall be
the first date during the "Change of Control Period" (as defined in
Section l(b)) on which a Change of Control occurs. Anything in this
Agreement to the contrary notwithstanding, if the Executive's
employment with the Corporation is terminated prior to the date on
which a Change of Control occurs, and the Executive can reasonably
demonstrate that such termination (1) was at the request of a third
party who has taken steps reasonably calculated to effect a Change
of Control or (2) otherwise arose in connection with or
anticipation of a Change of Control, then for all purposes of this
Agreement the "Effective Date" shall mean the date immediately
prior to the date of such termination.
(b) The "Change of Control Period" is the period commencing
on the date hereof and ending on the earlier to occur of (i) the
third anniversary of such date or (ii) the first day of the month
next following the Executive's normal retirement date ("Normal
Retirement Date") under the Corporation's retirement plan;
provided, however, that commencing on the date one year after the
date hereof, and on each annual anniversary of such date (such date
and each annual anniversary thereof is hereinafter referred to as
the "Renewal Date"), the Change of Control Period shall be
automatically extended so as to terminate on the earlier of (x) two
years from such Renewal Date or (y) the first day of the month
coinciding with or next following the Executive's Normal Retirement
Date, unless at least 60 days prior to the Renewal Date the
Corporation shall give notice that the Change of Control Period
shall not be so extended.
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2. Change of Control. (a) For purposes of this Agreement,
a "Change of Control" shall be deemed to have occurred if a change
of control of the nature that would be required to be reported in
response to Item l(a) of the Current Report on Form 8-K as in
effect on the date hereof pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act") occurs,
provided that, without limitation, a "Change of Control" shall be
deemed to have occurred if (i) the beneficial ownership at any time
hereafter by any person, as defined herein, of capital stock of the
Corporation, constitutes 20 percent or more of the general voting
power of all of the Corporation's outstanding capital or (ii)
individuals who, as of the date hereof, constitute the Board (as of
the date hereof, the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board, provided that any
person becoming a Director subsequent to the date hereof whose
election, or nomination for election by the Corporation's
shareholders, was approved by a vote of at least three-quarters of
the Directors comprising the Incumbent Board (other than an
election or nomination of an individual whose initial assumption of
office is in connection with an actual or threatened election
contest relating to the election of the Directors of the
Corporation, as such terms are used in Rule 14a-11 of Regulation
14A promulgated under the Exchange Act) shall be, for purposes of
this Agreement, considered as though such person were a member of
the Incumbent Board. No sale to underwriters or private placement
of its capital stock by the Corporation, nor any acquisition
initiated by the Corporation, through merger, purchase of assets or
otherwise, effected in whole or in part by issuance or reissuance
of shares of its capital stock, shall constitute a Change of
Control.
(b) For purposes of the definition of "Change of Control",
the following definitions shall be applicable:
(i) The term "person" shall mean any individual,
corporation or other entity and any group as such term is used in
Section 13(d)(3) or 14(d)(2) of the Exchange Act.
(ii) Any person shall be deemed to be the beneficial
owner of any shares of capital stock of the Corporation:
A. which that person owns directly, whether or not
of record, or
B. which that person has the right to acquire
pursuant to any agreement or understanding or upon exercise of
conversion rights, warrants, or options, or otherwise, or
C. which are beneficially owned, directly or
indirectly (including shares deemed owned through application of
clause (B) above), by an "affiliate" or "associate" (as defined in
the rules of the Securities and Exchange Commission under the
Securities Act of 1933, as amended) of that person, or
IV-56
D. which are beneficially owned, directly or
indirectly (including shares deemed owned through application of
clause (B) above), by any other person with which that person or
his "affiliate" or "associate" (defined as aforesaid) has any
agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of capital stock of the
Corporation.
(iii) The outstanding shares of capital stock of the
Corporation shall include shares deemed owned through application
of clauses (ii) (B), (C) and (D), above, but shall not include
any other shares which may be issuable pursuant to any agreement or
upon exercise of conversion rights, warrants or options, or
otherwise, but which are not actually outstanding.
(iv) Shares of capital stock, if any, held by The Chase
Manhattan Bank N.A. under the Indenture and the Escrow Agreement
dated as of November 1, 1971 between International Paper
Corporation and said bank shall not be deemed owned by
International Paper Corporation or by said bank for purposes of
this definition, so long as they are held by said bank under said
Escrow Agreement, but said shares shall be deemed outstanding for
the purpose of determining the aggregate number of outstanding
shares of capital stock of the Corporation.
3. Employment Period. The Corporation hereby agrees to
continue the Executive in its employ, and the Executive hereby
agrees to remain in the employ of the Corporation, for the period
commencing on the Effective Date and ending on the earlier to occur
of (a) the third anniversary of such date or (b) the first day of
the month coinciding with or next following the Executive's Normal
Retirement Date (the "Employment Period").
4. Terms of Employment. (a) Position and Duties. (i)
During the Employment Period, (A) the Executive's position
(including status, offices, titles and reporting requirements),
authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant of
those held, exercised and assigned at any time during the 90-day
period immediately preceding the Effective Date and (B) the
Executive's services shall be performed at the location where the
Executive was employed immediately preceding the Effective Date or
any office or location less than thirty-five (35) miles from such
location.
(ii) During the Employment Period, and excluding any periods
of vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote reasonable attention and time during
normal business hours to the business and affairs of the
Corporation and, to the extent necessary to discharge the
responsibilities assigned to the Executive hereunder, to use the
IV-57
Executive's reasonable best efforts to perform faithfully and
efficiently such responsibilities. During the Employment Period it
shall not be a violation of this Agreement for the Executive to (A)
serve on corporate, civic or charitable boards or committees, (B)
deliver lectures, fulfill speaking engagements or teach at
educational institutions and (C) manage personal investments, so
long as such activities do not significantly interfere with the
performance of the Executive's responsibilities as an employee of
the Corporation in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities
have been conducted by the Executive prior to the Effective Date,
the continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent to the
Effective Date shall not thereafter be deemed to interfere with the
performance of the Executive's responsibilities to the Corporation.
(b) Compensation. (i) Base Salary. During the Employment
Period, the Executive shall receive a base salary ("Base Salary")
at a monthly rate at least equal to the highest monthly base salary
paid to the Executive by the Corporation during the twelve-month
period immediately preceding the month in which the Effective Date
occurs. During the Employment Period, the Base Salary shall be
reviewed at least annually and shall be increased at any time and
from time to time as shall be consistent with increases in base
salary awarded in the ordinary course of business to other key
executives of the Corporation. Any increase in Base Salary shall
not serve to limit or reduce any other obligation to the Executive
under this Agreement. Base Salary shall not be reduced after any
such increase.
(ii) Annual Bonus. In addition to Ease Salary, the Executive
shall be awarded, for each fiscal year during the Employment
Period, an annual bonus (an "Annual Bonus") in cash at least equal
to the average bonus received by the Executive from the Corporation
in respect of the three fiscal years immediately preceding the
fiscal year in which the Effective Date occurs.
(iii) Incentive, Savings and Retirement Plans. In addition to
Base Salary and Annual Bonus payable as hereinabove provided, the
Executive shall be entitled to participate during the Employment
Period in all incentive, savings and retirement plans and programs,
whether qualified or non-qualified, then applicable to other key
executives of the Corporation and its affiliates (including the
Corporation's 1981 Stock Option Plan, the Long-Term Performance
Incentive Plan, the 1986 Stock Award Plan, the 1981 Employee Stock
Appreciation Rights Plan, the Employees' Stock Ownership Plan and
the Employees' Retirement Savings Plan, in each case to the extent
then in effect or as subsequently amended); provided, however, that
such plans and programs, in the aggregate, shall provide the
Executive with compensation, benefits and reward opportunities at
least as favorable as the most favorable such compensation benefits
and reward opportunities provided by the Corporation for the
Executive under such plans and programs as in effect at any time
during the 90-day period immediately preceding the Effective
IV-58
Date or, if more favorable to the Executive, as provided at any
time thereafter with respect to other key executives.
(iv) Welfare Benefit Plans. During the Employment Period,
the Executive and/or the Executive's family, as the case may be,
shall be eligible for participation in and shall receive all
benefits under welfare benefit plans provided by the Corporation
(including, without limitation, medical, prescription, dental,
disability, salary continuance, executive life, group life,
accidental death and travel accident insurance plans and programs),
at least comparable to those in effect at any time during the
90-day period immediately preceding the Effective Date which would
be most favorable to the Executive or, if more favorable to the
Executive, as in effect at any time thereafter with respect to
other key executives.
(v) 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 most favorable policies and procedures of the Corporation and
its affiliates in effect at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable to
the Executive, as in effect at any time thereafter with respect to
other key executives.
(vi) Fringe Benefits. During the Employment Period, the
Executive shall be entitled to fringe benefits, in accordance with
the most favorable policies of the Corporation and its affiliates
in effect at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the
Executive, as in effect at any time thereafter with respect to
other key executives.
(vii) 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 those provided to the Executive
at any time during the 90-day period immediately preceding the
Effective Date which would be most favorable to the Executive or,
if more favorable to the Executive, as provided at any time
thereafter with respect to other key executives.
(viii) Vacation. During the Employment Period, the Executive
shall be entitled to paid vacation in accordance with the most
favorable policies of the Corporation and its affiliates as in
effect at any time during the 90-day period immediately preceding
the Effective Date or, if more favorable to the Executive, as in
effect at any time thereafter with respect to other key executives.
5. Termination. (a) Death or Disability. This Agreement
shall terminate automatically upon the Executive's death. The
Corporation may terminate this Agreement, after having established
the Executive's Disability (pursuant to the definition of
"Disability" set forth below), by giving to the
IV-59
Executive written notice of its intention to terminate the
Executive's employment. In such a case, the Executive's employment
with the Corporation shall terminate effective on the 180th day
after receipt of such notice (the "Disability Effective Date"),
provided that, within 180 days after such receipt, the Executive
shall not have returned to full-time performance of the Executive's
duties. For purposes of this Agreement, "Disability" means
disability which, at least 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 the
Executive's legal representative (such agreement as to
acceptability not to be withheld unreasonably).
(b) Cause. The Corporation may terminate the Executive's
employment for "Cause." For purposes of this Agreement, "Cause"
means (i) an act or acts of dishonesty taken by the Executive and
intended to result in substantial personal enrichment of the
Executive at the expense of the Corporation, (ii) repeated
violations by the Executive of the Executive's obligations under
Section 4(a) of this Agreement which are demonstrably willful and
deliberate on the Executive's part and which are not remedied after
the receipt of notice from the Corporation or (iii) the conviction
of the Executive of a felony.
(c) Termination by Executive for Good Reason. The
Executive's employment may be terminated by the Executive for Good
Reason. For purposes of this Agreement, "Good Reason" means
(i) (A) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position
(including status, offices, titles and reporting requirements),
authority, duties or responsibilities as contemplated by Section
4(a) of this Agreement, or (B) any other action by the Corporation
which results in a diminution in such position, authority, duties
or responsibilities, other than an insubstantial and inadvertent
action which is remedied by the Corporation promptly after receipt
of notice thereof given by the Executive;
(ii) any failure by the Corporation to comply with any
of the provisions of Section 4(b) of this Agreement, other than an
insubstantial and inadvertent failure which is remedied by the
Corporation promptly after receipt of notice thereof given by the
Executive;
(iii) the Corporation's requiring the Executive to be
based at any office or location other than that described in
Section 4(a)(i)(B) hereof, except for travel reasonably required in
the performance of the Executive's responsibilities;
(iv) any purported termination by the Corporation of
the Executive's employment otherwise than as permitted by this
Agreement; or
IV-60
(v) any failure by the Corporation to comply with and
satisfy Section ll(c) of this Agreement.
Anything in this Agreement to the contrary
notwithstanding, any termination by the Executive for any reason
whatsoever during the six month period immediately following the
first anniversary of the date of a Change of Control shall be a
termination for "Good Reason". For purposes of this Section 5(c),
any good faith determination of "Good Reason" made by the Executive
shall be conclusive.
(d) Notice of Termination. Any termination by the
Corporation for Cause or by the Executive for Good Reason shall be
communicated by Notice of Termination to the other party hereto
given in accordance with Section 12(b) of this Agreement. For
purposes of this Agreement, a "Notice of Termination" means a
written notice 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 (which date shall be not more than fifteen (15) days after the
giving of such notice).
(e) Date of Termination. "Date of Termination" means
the date of receipt of the Notice of Termination or any later date
specified therein, as the case may be. If the Executive's
employment is terminated by the Corporation other than for Cause or
Disability, the Date of Termination shall be the date on which the
Corporation notifies the Executive of such termination.
6. Obligations of the Corporation upon Termination. (a)
Death. If the Executive's employment is terminated 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 or earned by
the Executive hereunder at the date of the Executive's death.
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 benefits provided by the Corporation to
surviving families of executives of the Corporation under such
plans, programs and policies relating to family death benefits, if
any, as in effect at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Executive
and/or the Executive's family, as in effect on the date of the
Executive's death with respect to other key executives and their
families.
IV-61
(b) Disability. If the Executive's employment is
terminated by reason of the Executive's Disability, this Agreement
shall terminate without further obligations to the Executive, other
than those obligations accrued or earned by the Executive hereunder
as of the Disability Effective Date. Anything in this Agreement to
the contrary notwithstanding, the Executive shall be entitled after
the Disability Effective Date to receive disability and other
benefits at least equal to the most favorable of those provided by
the Corporation to disabled employees and/or their families in
accordance with such plans, programs and policies relating to
disability, if any, as in effect at any time during the 90-day
period immediately preceding the Effective Date or, if more
favorable to the Executive and/or the Executive's family, as in
effect at any time thereafter with respect to other key executives
and their families.
(c) Cause: Other than for Good Reason. If the Executive's
employment shall be terminated for Cause or the Executive
terminates his employment other than for Good Reason, the
Corporation shall pay the Executive his full Base Salary through
the Date of Termination at the rate in effect at the time Notice of
Termination is given and shall have no further obligations to the
Executive under this Agreement.
(d) Termination by Executive for Good Reason: Termination
by Corporation Other Than for Cause or Disability. If, during the
Employment Period, the Corporation shall terminate the Executive's
employment other than for Cause or Disability, or the employment of
the Executive shall be terminated by the Executive for Good Reason:
(i) the Corporation shall pay to the Executive in a
lump sum in cash within 10 days after the Date of Termination (the
"Payment Date") the aggregate of the following amounts:
A. to the extent not theretofore paid, the
Executive's Base Salary through the Date of Termination at the rate
in effect on the Date of Termination or, if higher, at the highest
rate in effect at any time within the three year period preceding
the Effective Date (the "Highest Base Salary"); and
B. the product of (x) the average of the annual
bonuses paid, or payable to the extent deferred, to the Executive
for the three full fiscal years prior to the Effective Date (the
"Recent Bonus") and (y) the fraction obtained by dividing (i) the
number of days between the Date of Termination and the last day of
the last full fiscal year and (ii) 365; and
C. the product of (x) three and (y) the sum of the
Highest Base Salary and (ii) the Recent Bonus; and
D. in the case of compensation previously deferred
by the Executive, all amounts previously deferred and not yet paid
by the Corporation; and
IV-62
(ii) for one year after the Date of Termination, the
Corporation shall continue benefits to the Executive and/or the
Executive's family at least equal to those which would have been
provided to them in accordance with the plans, programs and
policies described in Section 4(b)(iv) of this Agreement if the
Executive's employment had not been terminated, including health
insurance and life insurance, if and as in effect at any time
during the 90-day period immediately preceding the Effective Date
or, if more favorable to the Executive, as in effect at any time
thereafter with respect to other key executives and their families
and for purposes of eligibility for retiree benefits pursuant to
such plans, programs and policies, the Executive shall be
considered to have remained employed until the end of the
Employment Period and to have retired on the last day of such
period.
Anything herein to the contrary notwithstanding, the Executive
may elect in his Notice of Termination to receive the payment
provided for pursuant to Section 6(d)(i)(C) hereof (the "Severance
Payment") in installments. If the Executive elects the installment
method, one-quarter of the Severance Payment shall be paid to the
Executive on the Payment Date and one-quarter of the severance
payment shall be paid to the Executive on each of the next three
anniversaries thereof and, in the case of the latter three
payments, the amounts to be paid shall include interests from the
Payment Date on the remaining unpaid balance of the Severance
Payment calculated at the Morgan Guaranty Trust Company prime rate
as in effect from time to time.
7. 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 affect such rights as the
Executive may have under any stock option or other 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. 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
set-off, counterclaim, recoupment, defense or other claim, right or
action which the Corporation may have against the Executive or
others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of
this Agreement. The Corporation agrees to pay, to the full extent
permitted by law, all legal fees and expenses which the Executive
may reasonably incur as a result of any contest (regardless of the
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outcome thereof) by the Corporation or others of the validity or
enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof or as a result of
any contest by the Executive about the amount of any payment
pursuant to Section 9 of this Agreement, plus in each case interest
at the Federal Rate (as defined below).
9. Gross-up.
(a) In the event it shall be determined that any
payment, benefit or distribution (or combination thereof) by the
Corporation to or for the benefit of Executive (whether paid or
payable or distributed or distributable pursuant to the terms of
this Agreement, or otherwise) (a "Payment") would be subject to
the excise tax imposed by Section 4999 of the Internal Revenue Code
of 1986, as amended (the "Code"), or any interest or penalties are
incurred by Executive with respect to such excise tax (such excise
tax, together with any such interest and penalties, hereinafter
collectively referred to as the "Excise Tax"), Executive shall be
entitled to receive an additional payment (a "Gross-Up Payment") in
an amount such that after payment by Executive of the Excise Tax
imposed upon the Gross-Up Payment, 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 Arthur Andersen &
Co. (the ~Accounting Firm") which shall provide detailed supporting
calculations both to the Corporation and Executive within fifteen
(15) business days of the receipt of notice from 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 an individual, entity or group
effecting the change in ownership or effective control (within the
meaning of Section 280G of the Code), 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, as determined pursuant to this
Section 9, shall be paid by the Corporation to Executive within
five (5) days after the receipt of the Accounting Firm's
determination. If the Accounting Firm determines that no Excise
Tax is payable by Executive, it shall so indicate to Executive in
writing. Any determination by the Accounting Firm shall be binding
upon the Corporation and Executive. As a result of the uncertainty
in the application of Section 4999 of the Code 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
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with the calculations required to be made hereunder. In the event
that the Corporation exhausts its remedies pursuant to Section 9(c)
and 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
Executive.
(c) 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 ten (10) business days after 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. Executive shall not pay such claim prior to
the expiration of the thirty (30) day period following the date on
which it 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 Executive in
writing prior to the expiration of such period that it desires to
contest such claim, 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 to effectively 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 Executive harmless, on an after-tax basis, for
any Excise Tax (including interest and penalties with respect
thereto) imposed as a result of such representation and payment of
costs and expenses. Without limitation on 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 forego 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 Executive to
pay the tax claimed and sue for a refund or contest the claim in
any permissible manner, and Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in
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a court of initial jurisdiction and in one or more appellate
courts, as the Corporation shall determine; provided, however, that
if the Corporation directs Executive to pay such claim and sue for
a refund, the Corporation shall advance the amount of such payment
to Executive, on an interest-free basis, and shall indemnify and
hold Executive harmless, on an after-tax basis, from any Excise 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 provided, further, that if Executive
is required to extend the statute of limitations to enable the
Corporation to contest such claim, Executive may limit this
extension solely to such contested amount.
(d) If, after the receipt by Executive of an amount
advanced by the Corporation pursuant to Section 9(c), Executive
becomes entitled to receive any refund with respect to such claim,
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
Executive of an amount advanced by the Corporation pursuant to
Section 9(c), a determination is made that Executive shall not be
entitled to any refund with respect to such claim and the
Corporation does not notify Executive in writing of its intent to
contest such denial of refund prior to the expiration of thirty
(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. 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, which shall have been obtained by the
Executive during the Executive's employment by the Corporation or
any of its affiliated companies and which shall not be public
knowledge (other than by acts by the Executive or his
representatives in violation of this Agreement). After termination
of the Executive's employment with the Corporation, the Executive
shall not, without the prior written consent of the Corporation,
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 10 constitute a basis for deferring or withholding any
amounts otherwise payable to the Executive under this Agreement.
11. 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.
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(b) This Agreement shall inure to the benefit of and
be binding upon the Corporation and its successors.
(c) The Corporation will require any successor
(whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or
assets of the Corporation to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the
Corporation would be required to perform it if no such succession
had taken place. As used in this Agreement, "Corporation" shall
mean the Corporation as hereinbefore defined and any successor to
its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
12. Miscellaneous. (a) This Agreement shall be governed
by and construed in accordance with the laws of the State of New
Jersey, without reference to principles of conflict of laws. The
captions of this Agreement are not part of the provisions hereof
and shall have no force or effect. 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.
(b) 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:
Mark W. Sickles
712 Belmont Road
Ridgewood, NJ 07450
If to the Corporation:
C.R. BARD, INC.
730 Central Avenue
Murray Hill, New Jersey 07974
Attention: General Counsel
or to such other address as either party shall have furnished to
the other in writing in accordance herewith. Notice and
communications shall be effective when actually received by the
addressee.
(c) The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
IV-67
(d) 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) The Executive's failure to insist upon strict
compliance with any provision hereof shall not be deemed to be
waiver of such provision or any other provision thereof.
(f) This Agreement contains the entire understanding
of the Corporation and the Executive with respect to the subject
matter hereof.
(g) The Executive and the Corporation acknowledge
that the employment of the Executive by the Corporation is "at
will", and, prior to the Effective Date, may be terminated by
either the Executive or the Corporation at any time. Upon a
termination of the Executive's employment or upon the Executive's
ceasing to be an officer of the Corporation, in each case, prior to
the Effective Date, there shall be no further rights under this
Agreement.
IN WITNESS WHEREOF, the Executive has hereunto set his hand
and, pursuant to the authorization from its Board of Directors, the
Corporation has caused these presents to be executed in its name on
its behalf, all as of the day and year first above written.
Mark W. Sickles /s/
Mark W. Sickles
C. R. BARD, INC.
By: William H. Longfield /s/
Name: William H. Longfield
Title: President and
Chief Executive Officer
Attest: Jean F. Miller /s/
Jean F. Miller
Assistant Secretary
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