-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CVvjbOByK4sOUBJeC/w8tArlOxD+/7c4EmVQrRmWR3qXExIf3hHZdf3LtpNTkB9M ViYHK91C2kFq7JfCRpf5tA== 0000950130-97-001433.txt : 19970401 0000950130-97-001433.hdr.sgml : 19970401 ACCESSION NUMBER: 0000950130-97-001433 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 15 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970331 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TAMBRANDS INC CENTRAL INDEX KEY: 0000096277 STANDARD INDUSTRIAL CLASSIFICATION: CONVERTED PAPER & PAPERBOARD PRODS (NO CONTAINERS/BOXES) [2670] IRS NUMBER: 131366500 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08714 FILM NUMBER: 97570594 BUSINESS ADDRESS: STREET 1: 777 WESTCHESTER AVE CITY: WHITE PLAINS STATE: NY ZIP: 10604 BUSINESS PHONE: 9146966000 MAIL ADDRESS: STREET 1: 777 WESTCHESTER AVE CITY: NEW YORK STATE: NY ZIP: 10604 FORMER COMPANY: FORMER CONFORMED NAME: TAMPAX INC DATE OF NAME CHANGE: 19840502 10-K 1 FORM 10-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 _______________________ FORM 10-K (Mark One) [x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1996 OR [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 1-8714 TAMBRANDS INC. -------------- (Exact name of registrant as specified in its charter) Delaware 13-1366500 - -------------------------------- ---------- (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 777 Westchester Avenue White Plains, New York 10604 - --------------------------------------- ----- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code, is 914-696-6000 ------------ Securities registered pursuant to Section 12(b) of the Act: Name of each exchange Title of each class on which registered --------------------- Common Stock, par New York Stock Exchange value $.25 per share; and Pacific Stock Exchange Common Share Purchase Rights Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- -------- (Facing Sheet Continuation) Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained in this Form 10-K, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] The aggregate market value of the voting stock held by non-affiliates of the registrant as of February 18, 1997 was $ 1,624,649,987. (For this computation, the registrant has excluded the market value of all shares of its Common Stock reported as beneficially owned by officers and directors of the registrant; such exclusion shall not be deemed to constitute an admission that any such person is an "affiliate" of the registrant.) As of March 14, 1997, 36,948,862 shares of the registrant's Common Stock were outstanding. Documents Incorporated by Reference - ----------------------------------- Part III of this Form 10-K incorporates by reference portions of the definitive Proxy Statement for the registrant's annual meeting of shareholders to be held on April 22, 1997, filed with the Securities and Exchange Commission pursuant to Regulation 14A. 2 PART I ------ Item 1. Business - ------ -------- General - ------- Tambrands Inc.("Tambrands") was incorporated under the laws of the State of Delaware in 1936. Tambrands' principal executive offices are located at 777 Westchester Avenue, White Plains, New York 10604 (telephone number 914-696-6000). Tambrands and its subsidiaries (the "Company") have been manufacturing and marketing menstrual tampons, which are sold under the trademark TAMPAX(R) since 1936. The Company is the leading manufacturer and marketer of tampons in the world. The Company operates in one industry segment, personal care products. In recent years, the Company has focused on its core TAMPAX tampon business worldwide and has placed an increased emphasis on the development and marketing of new products. The Company currently has manufacturing operations in five countries. In 1996, TAMPAX tampons were sold in over 150 countries. The Company's eight largest markets are the United States, the United Kingdom, France, Canada, Spain, CIS (principally Russia and Ukraine), Italy and Belgium. Recent Developments - ------------------- During the third quarter of 1996, the Company announced that it was implementing a single global organizational structure and a restructuring to increase efficiency, eliminate duplication, improve decision-making, and get new and improved products to the global market more quickly. A $46.2 million restructuring charge ($37.0 million after-tax) was taken to provide for the costs associated with restructuring production facilities around the world to support this global strategy. The restructuring program involves a reduction in the number of worldwide plants from nine to five and a reduction of 1,100 jobs from the worldwide workforce. Approximately 500 new jobs will be created from the upgrade of the remaining manufacturing facilities and expanded marketing and product development capabilities. See Note 6, "Restructuring Charge," included in the Notes to Consolidated Financial Statements incorporated by reference in item 8 of Part II hereof. As part of the Company's new global organization, Thomas J. Mason was appointed Executive Vice President and Chief Operating Officer of Tambrands. Also during 1996, Bruce P. Garren was appointed Vice President - General Counsel, Michael A. Hecht was appointed Vice President - Controller, and Sheila A. Hopkins was appointed Vice President - U.S. Marketing. During 1996, the Company launched five new TAMPAX products in 14 markets around the world. TAMPAX NATURALS(TM), the only widely available tampon or pad to be made of 100% cotton, was introduced in the United States and Canada. 3 TAMPAX SIMPLE, a value brand, was introduced in Mexico. The Company introduced its TAMPAX COMPAK(R) brand in several Asian markets and TAMPAX SATIN in Italy. The Company also expanded its presence in the non-applicator segment by introducing its non-applicator tampons in a number of additional markets, including the United States. During 1996 and the beginning of 1997, the Company extended its international distribution alliance with SCA Molnlycke, a major global personal care products company headquartered in Sweden, whose products include sanitary pads and panty-liners. The Company now distributes Molnlycke's products in the United Kingdom, as well as Russia, and, commencing in mid-1997, Molnlycke will distribute the Company's products in France. The combined Tampax/Molnlycke line of products is the sanitary protection market leader in the United Kingdom and Russia and is expected to be a leader in France. The alliance significantly enhances the Company's strength in the international marketplace. The Company's 1996 capital spending programs comprised investments in equipment to improve product quality and productivity, modernize production facilities and manufacture and launch new products. See "Management's Discussion and Analysis of Results of Operations and Financial Condition" incorporated by reference in item 7 of Part II hereof. The Company intends to continue its efforts to achieve productivity gains to improve margins, speed up the supply chain, and generate funds. Tambrands converted to a holding company structure as of December 31, 1996, with Tambrands remaining as the ultimate parent company and two new subsidiaries, Tambrands Mfg. Inc. and Tambrands Sales Corp., now performing manufacturing, sales and certain other functions. The Company does not expect any material effects on its business as a result of the new structure. Products - -------- Menstrual tampons represent all of the Company's net sales. The Company is the only tampon manufacturer to broadly offer a product in each of the three major market segments: cardboard applicator, plastic applicator and non-applicator. The Company's largest selling tampon is the TAMPAX flushable applicator tampon, which first became commercially available in 1936 and was upgraded and relaunched in 1995. The new 100%-cotton TAMPAX NATURALS tampon is made of all natural components and has a flushable, biodegradable applicator. It currently is being sold in the United States, Canada and Puerto Rico. The TAMPAX SATIN TOUCH(R) tampon has a rounded-end applicator with a patented, high gloss surface. This tampon, which was introduced in the United States in 1994, offers the ease and comfort of a plastic applicator, but with an all-paper applicator that is flushable and biodegradable. SATIN TOUCH was introduced nationally in Canada in 1993 and in 4 Puerto Rico and several Caribbean locations in 1995. In 1996, the Company introduced the TAMPAX SATIN(R) tampon in Italy. This tampon is similar to the SATIN TOUCH tampon and was first introduced in France in 1994. In 1995, it was introduced in Spain and Belgium, and in Denmark and Finland under the trademark TAMPAX SILKS(TM). The Company announced in 1996 that the new 100%-cotton SATIN Naturals tampon would be launched in 1997 in the United Kingdom. In 1994, the Company introduced nationally in the United Kingdom its TAMPAX TAMPETS(R) tampon. This non-applicator tampon has been sold in Ireland since 1993 and was introduced in 1995 in Australia, Israel and Portugal. In 1996, TAMPAX Non-Applicator tampons were launched in France, Russia, New Zealand and several other countries. TAMPAX tampons with plastic applicators are sold in the United States and Canada and, since 1995, have been sold in Brazil. TAMPAX COMPAK(R) tampons, with a compact all-plastic applicator, are sold in France, Spain and the United Kingdom, as well as in the United States, Canada and several other smaller markets. In 1996, the Company began marketing an improved COMPAK tampon with a shorter applicator and a wrapper for applicator disposal, and introduced COMPAK tampons in additional small markets. In 1994, the Company introduced nationally in the United States the TAMPAX LITES(R) tampon. This tampon is also sold in Canada and New Zealand, and is especially designed for use on days of light menstruation, when other tampons might be too absorbent for comfortable use. The Company sells TAMPAX comfort shaped flushable applicator tampons, with an all-paper rounded-end applicator and a slimmer design than the Company's original flushable applicator product. This tampon is sold in the United States, New Zealand and Japan. In 1996, the Company introduced a new value-brand tampon, TAMPAX SIMPLE tampons. This product, which has been introduced in test market in Mexico, has an all-paper applicator which is flushable and biodegradable. The Company continues to evaluate the possible introduction of its existing products in additional markets, as well as additional new products and product enhancements. Marketing and Sales - ------------------- Marketing operations are conducted either directly by the Company, or by third-party brokers or sales agents and distributors. Sales are made directly to drug, grocery, variety and discount stores and other comparable outlets, as well as to wholesalers and distributors. Sales to discount stores, including mass merchandisers and club stores, have been increasing as a percentage of total sales. For the years 1994, 1995 and 1996, Wal-Mart, together with its affiliated stores, accounted for approximately 10.3%, 11.1% and 12.2%, respectively, of the Company's net sales worldwide. No single customer (including distributors) of the Company accounted for 10% or more of total net sales 5 prior to 1994. The marketplace for consumer products is becoming increasingly global and currently is characterized by growing trade consolidation and expansion across geographic borders. Substantially all sales involve extensions of credit. Credit terms generally are consistent with terms typically extended under local industry practices. In the United States, the Company typically offers a discount of 2% if payment is received within 30 days. In Canada, a 1% discount is typically offered if payment is received within 20 days. In the United Kingdom and most other European markets, discounts generally are not offered and payment terms range from 30 to 90 days. In other markets, credit terms with longer collection periods are common, and in some developing markets discounts for prompt payment are offered. Default rates by the Company's customers in the United States have been at or below industry averages, based on information from the Credit Research Foundation. In the United States, the Company's internal sales management group directly handles sales to certain large customer accounts. These sales have been increasing as a percentage of total sales. Other sales in the United States and sales in Belgium, France and the Netherlands are handled through third-party sales brokers, who also may sell other branded consumer products but generally do not carry products that compete with the products of the Company. Sales are conducted in the Czech Republic, Poland, Russia, Ukraine and the United Kingdom by the Company and in the People's Republic of China by its joint venture. In Canada, sales are conducted both by third-party sales brokers and by the Company. Sales are conducted in other countries through third-party distributors and agents. The Company's sales forces in the Czech Republic, Poland, Russia, Ukraine and the United Kingdom distribute or act as broker with respect to certain household consumer products for several other companies. The Company believes that the trend by retailers and distributors to reduce inventories and the related adverse impact on shipments will continue in future periods. The size of inventories at the trade level varies from month to month, sometimes considerably, due to a number of factors. Media advertising is important to the overall success of the TAMPAX tampon brand. In the United States, Canada and Europe, the Company focuses its advertising on women aged 12-34, using a variety of media, including television and print advertisements. The Company intends to aggressively proceed with its support of the TAMPAX tampon franchise with advertising, promotion and product line extensions. During 1996, the Company assigned its worldwide advertising account to Foote, Cone & Belding. 6 During 1996, the Company changed the way it groups markets to focus more on common attributes of the consumer. Countries are now grouped into three tampon market "clusters": "very developed," "moderately developed," and "undeveloped." Each cluster is defined by category strength, common consumer attitudes, usage behaviors, cultural issues and other factors. This clustering approach drives the Company's global marketing plans, educational programs and product portfolio decisions. The Company provides significant educational and informational support for young women. The Company seeks to attract and retain customers through its teen education program, which is designed to help young women understand the various forms of sanitary protection and promotes trial usage of TAMPAX tampons. In certain markets, like Russia and China, the Company uses sampling with young women and physician awareness programs. In the Company's largest markets, the Company conducts school education programs that include videos, lecturers and booklets. In addition, during 1996, the Company was the first sanitary protection manufacturer to establish a web site targeted at young women. The web site is designed to answer young women's questions, obtain their feedback and provide product samples. Competition - ----------- Highly competitive conditions prevail in the feminine protection industry. The Company competes primarily on the basis of product performance, value and brand recognition. In the United States, there are four other manufacturers whose sales, directly or through subsidiaries, are significant in the total sanitary protection market: Johnson & Johnson, Kimberly-Clark Corporation, Playtex Family Products Corporation and The Procter & Gamble Company. Each of these corporations manufactures and sells external pads or menstrual tampons or both. Each makes and sells products other than external pads and tampons, and the total sales of all products by and the capitalization of each of Johnson & Johnson, Kimberly-Clark and Procter & Gamble are substantially greater than the total sales and capitalization of the Company. These factors may be helpful to the respective competitive positions of these companies in the feminine protection industry. Substantially all of the tampons manufactured by the above- mentioned four companies are sold under these companies' brand names. In addition, there is a small but growing private label segment of the industry. Management believes that the TAMPAX tampon's leading market share position in the U.S. tampon category (approximately 49.2% in dollars and 51.0% in units for the year 1996, according to Nielsen Marketing Research) and strong brand loyalty among consumers (as verified by household panel data obtained by Nielsen Marketing Research), are positive factors in the Company's ability to compete in the feminine protection industry. (Information obtained from Nielsen represents Nielsen estimates only.) During 1996, the level 7 of competitive activity continued to increase in the United States, particularly in the areas of price discounting and new product introductions. The Company's U.S. volume in 1996 was lower than in 1995, primarily as a result of increased competitive activity in the form of retail price promotions and new product introductions. According to Nielsen Marketing Research, the Tampax U.S. market share in units for 1996 declined 2.7 share points versus 1995, primarily due to this increased competitive activity. However, the U.S. tampon category in units, as measured by Nielsen, improved 0.6 percentage points for 1996 versus 1995 and the Company's quarterly U.S. market share percentages for 1996 trended upward after the second quarter. The fourth quarter U.S. market share of 52.1%, as measured by Nielsen, was the Company's highest quarterly share for the year. Highly competitive conditions prevail in virtually all foreign markets. Competition tends to be fragmented and regional in nature in most of those markets, but tampons produced by, or under license from, Johnson & Johnson and Playtex, and external pads produced by, or under license from, Johnson & Johnson, Kimberly-Clark and Procter & Gamble, are sold in many of the foreign markets where the Company does business. During 1996, Johnson & Johnson marketed plastic applicator tampons manufactured by Playtex in a number of foreign markets where the Company does business. Competitive activity remained at high levels in Europe in 1996. This activity included the continued aggressive marketing of several external pad products. The worldwide market for consumer products remains highly competitive and sensitive to price. The Company expects that this trend will continue. However, in the second half of 1996, two competitors took selective price increases in the United States. Management will continue to evaluate price increase opportunities as appropriate. The Company anticipates a continuation of the current high level of advertising and promotional activities and new product introductions by competitors, along with continued growth in the private label sector. Raw Materials - ------------- The Company is increasing its sourcing of raw materials on a global basis. The principal raw materials used in the Company's business are cotton and rayon for tampons, paper and plastic for tampon applicators, and paperboard for cartons and containers. Most of these raw materials are readily available in the market from many sources. The cost of manufacturing continues to be impacted by the prior years' increases in raw material costs. Recently, as a result of the downward trend of pulp and paper prices and global purchasing efficiencies, the impact of these costs has moderated somewhat. 8 Trademarks and Patents - ---------------------- The Company owns a number of trademarks, trademark registrations and trademark applications in the United States and other countries, which, in the opinion of management, are significant. The Company's trademark registrations vary in duration and are typically renewable by the Company. Certain features of TAMPAX tampons are the subject of U.S. and foreign patents or patent applications owned by the Company. In management's opinion, certain of these patents are significant. The duration of the Company's patents ranges from 2 to 18 years (i.e., the patents have expiration dates ranging from the year 1999 to the year 2015). Research and Development - ------------------------ The Company maintains a research and development laboratory at its facility in Palmer, Massachusetts. Management believes that developing better protecting and more comfortable and convenient products, and products which are environmentally sound, is important to maintaining the Company's competitive position. Research is directed toward these goals. The Company expended $12.6 million, $12.2 million and $10.7 million for research and development in 1996, 1995 and 1994, respectively. Employees - --------- It is anticipated that approximately 1,100 jobs will be eliminated as a result of the worldwide restructuring program announced in 1996. However, it is expected that approximately 500 new jobs will be created from the upgrade of the remaining manufacturing facilities and expanded marketing and product development capabilities. At December 31, 1996, the Company employed approximately 2,900 persons. Foreign and Domestic Operations; Export Sales - --------------------------------------------- The information regarding foreign and domestic operations of the Company set forth on pages F-18 and F-19 in Note 12, "Segment and Geographic Information," included in the Notes to Consolidated Financial Statements, is incorporated herein by reference. Over the past three years, sales by the Company's foreign operations accounted for approximately one-half of total unit sales. In 1996, sales between geographic areas and export sales of the Company were not significant. Item 2. Properties - ------ ---------- Domestic Properties - ------------------- The Company owns and operates three manufacturing plants in the United States, located in Auburn, Maine; Claremont, New Hampshire; and Rutland, Vermont. As part of its 9 worldwide restructuring program announced in 1996, the Company plans to close and sell its Vermont facility during 1997. The Company is consolidating its U.S. manufacturing operations in its two other domestic plants. Product and process research and development, and certain accounting, data processing and sales and logistics operations are conducted at the Company's Technical Center, located in Palmer, Massachusetts. The Company owns each of these plants and the Technical Center. The Company leases headquarters office space in White Plains, New York. During the last fiscal year, the Company's domestic plants were suitable and adequate for the Company's requirements. The Company's domestic plants operate principally on a three-shift basis, and management believes that these plants have sufficient additional capacity to satisfy the anticipated requirements of the Company. Foreign Properties - ------------------ As part of its worldwide restructuring program announced in 1996, the Company's manufacturing plants in Ireland and Russia were closed in 1996. The plant in Russia has been sold and it is anticipated that the plant in Ireland will be sold in 1997. Also as part of this restructuring program, the Company's manufacturing plant in France will be closed. The Company owns and operates manufacturing plants in Ukraine and the United Kingdom. In addition, the joint venture in the People's Republic of China, in which the Company has an 80% interest, has contractual rights to use a manufacturing plant there. The French and Irish manufacturing operations are being consolidated in the U.K. plant. The Company leases office space in the United Kingdom, Brazil, Canada, France, Mexico, Switzerland, China and Hong Kong as well as in several other countries. During the last fiscal year, the Company's foreign facilities were suitable and adequate for the Company's requirements. In general, these foreign manufacturing facilities operate on a three-shift basis, and management believes that these facilities have sufficient additional capacity to satisfy the anticipated requirements of the Company. Item 3. Legal Proceedings - ------ ----------------- The Company is a defendant in a small number of product liability lawsuits based on allegations that toxic shock syndrome ("TSS") was contracted through the use of tampons. A small number of pre-suit claims involving similar TSS allegations have also been asserted. The damages alleged vary from case to case and often include claims for punitive damages. The Company is involved, either as a named defendant or as the result of contractual indemnities, in certain litigation arising out of the operations of certain divested subsidiaries. 10 There are certain other legal proceedings pending against the Company arising out of its normal course of business in which claims for monetary damages are asserted. While it is not feasible to predict the outcome of these legal proceedings and claims with certainty, management is of the belief that any ultimate liabilities in excess of provisions therefor will not individually or in the aggregate have a material adverse effect on the Company's financial position or results of operations. Item 4. Submission of Matters to a Vote of Security Holders - ------ --------------------------------------------------- No matters were submitted to a vote of security holders during the fourth quarter of the fiscal year covered by this report. Management of the Registrant - ---------------------------- The names and ages of all executive officers of Tambrands, the current office held by each, and the period during which each has served as such are set forth in the following table:
Name Age Current Office Period Served In ---- --- -------------- Current Office -------------- Edward T. Fogarty 60 Chairman, President and 1996 to date Chief Executive Officer (1) Bruce P. Garren 50 Vice President - General Counsel 1996 to date Michael S. Krause 56 Senior Vice President - Global 1995 to date Operations (2) Thomas J. Mason 52 Executive Vice President and 1996 to date Chief Operating Officer (3) Susan J. Riley 38 Senior Vice President - 1995 to date Chief Financial Officer Thomas Soper, III 47 Senior Vice President - Corporate 1994 to date Human Resources and Communications (4) Jerome B. Wainick 56 Vice President-Research and 1990 to date Development
(1) Mr. Fogarty has served as an officer of Tambrands since May 1994. From prior to March 1992 until May 1994, he was employed by Colgate-Palmolive Company as President - USA/Canada/Puerto Rico. (2) Mr. Krause has served as an officer of Tambrands since August 1995. From January 1995 until July 1995, he was employed by the Snacks Division of The Quaker Oats Company as Vice President - Supply Chain. From February 1994 until 11 August 1994, he was employed by Stella Foods Inc. as Executive Vice President -Supply Chain. From prior to March 1992 until February 1994, he was employed by Goody Products, Inc. as Senior Vice President - Operations. (3) Mr. Mason has served as an officer of Tambrands since October 1994. From May 1992 until September 1994, he was employed by Dole Packaged Foods, a division of Dole Food Co., as President. From prior to March 1992 until May 1992, he was employed by Kraft General Foods as Executive Vice President and General Manager, Specialty Products. (4) Mr. Soper has served as an officer of Tambrands since October 1994. From prior to March 1992 until September 1994, he was employed by Alexander & Alexander Services Inc. (a provider of risk management, insurance brokerage and human resource management consulting services) as Senior Vice President - Corporate Human Resources. Each executive officer is appointed by the Board of Directors to serve until the first meeting of directors following the annual meeting of shareholders of Tambrands. Except as indicated in the footnotes above, the principal occupation and employment during the past five years of each of the above-named executive officers have been as an officer or other member of management of Tambrands or one or more of its subsidiaries. Other members of the Tambrands senior management, corporate staff and operating management are as follows: Name Title - ---- ----- George R. Blees Vice President - Financial Planning and Analysis R. Kent Doss Vice President - U.S. Sales Michael A. Hecht Vice President - Controller Sheila A. Hopkins Vice President - U.S. Marketing Michele Jobling Vice President, General Manager - U.K./Ireland John C. LaBonty Vice President, General Manager --- Canada, Asia/Pacific, Latin America Janey M. Loyd Vice President - Business Development and Communications Kathleen B. Makrakis Director - Investor Relations and Shareholder Communications Owen K. Rankin Vice President - Global Marketing 12 Christian Roure Vice President, General Manager - Europe, Africa, Middle East PART II ------- Item 5. Market for Registrant's Common Equity and - ------ ----------------------------------------- Related Shareholder Matters --------------------------- Tambrands Common Stock is traded on the New York and Pacific Stock Exchanges. The following table provides quarterly dividend and Common Stock price range information for the years 1995 and 1996:
Common Stock Price Range (a) --------------------- Dividends High Low Per Share ---- --- --------- 1995 ---- First Quarter $ 47 $ 37 7/8 $ 0.44 Second Quarter 46 1/2 40 1/4 0.44 Third Quarter 48 1/8 42 1/2 0.44 Fourth Quarter 53 43 3/8 0.46 1996 ---- First Quarter $ 52 1/4 $ 46 3/4 $ 0.46 Second Quarter 50 1/4 40 9/16 0.46 Third Quarter 44 3/4 36 0.46 Fourth Quarter 45 1/8 39 3/8 0.46
(a) Reflects trading on the New York Stock Exchange. As of March 14, 1997, there were 6,385 holders of record of Tambrands Common Stock. Item 6. Selected Financial Data - ------ ----------------------- The information required by this item is set forth in a separate section of this Annual Report on Form 10-K under the caption "Selected Financial Data" appearing on page F-2 and is incorporated herein by reference. Item 7. Management's Discussion and Analysis of Results - ------ ----------------------------------------------- of Operations and Financial Condition ------------------------------------- The information required by this item is set forth in a separate section of this Annual Report on Form 10-K 13 under the caption "Management's Discussion and Analysis" beginning on page F-3 and is incorporated herein by reference. Item 8. Financial Statements and Supplementary Data - ------ ------------------------------------------- The information required by this item is set forth in a separate section of this Annual Report on Form 10-K as indicated in the "Index to Financial Information" appearing on page F-1 and is incorporated herein by reference. Item 9. Changes in and Disagreements with Accountants on - ------ ------------------------------------------------ Accounting and Financial Disclosure ----------------------------------- None. PART III - -------- Item 10. Directors and Executive Officers of the Registrant - ------- -------------------------------------------------- The information relating to nominees for election as directors of Tambrands set forth under the caption "Election of Directors" in Tambrands' definitive Proxy Statement for the annual meeting of shareholders to be held on April 22, 1997 is incorporated herein by reference. Mrs. Ruth A. Manton and Mr. John A. Meyers are currently directors of Tambrands, but they are retiring from the Board of Directors and they are not nominees for election as directors at the annual meeting of shareholders to be held on April 22, 1997. Mrs. Manton has been Chairman, President and Chief Executive Officer of Aries Design Management, Inc., New York, New York (a marketing and licensing consulting firm) since before March 1992. She has been a director of Tambrands since 1981 and is 71 years old. Mr. Meyers has been Chairman and President of J.A.M. Enterprises, Vero Beach, Florida (a marketing and publishing consulting firm) since before March 1992. He has been a director of Tambrands since 1989 and is 68 years old. The information on executive officers set forth under the first two paragraphs of the caption "Management of the Registrant" beginning on page 11 hereof is incorporated herein by reference. The information relating to compliance with Section 16(a) of the Securities Exchange Act of 1934, as amended, set forth under the caption "Section 16(a) Beneficial Ownership Reporting Compliance" in Tambrands' definitive Proxy Statement for the annual meeting of shareholders to be held on April 22, 1997 is incorporated herein by reference. Item 11. Executive Compensation - ------- ---------------------- The information regarding executive compensation set forth under the captions "Information Regarding the Board of Directors - Compensation of Directors," "Executive 14 Compensation and Other Information" and "Proposal to Approve an Amendment to the 1991 Stock Option Plan - Amended Plan Grant Table" in Tambrands' definitive Proxy Statement for the annual meeting of shareholders to be held on April 22, 1997 is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners - ------- ------------------------------------------------ and Management --------------- The information regarding the security ownership of certain beneficial owners and management set forth under the caption "Security Ownership by Management and Others" in Tambrands' definitive Proxy Statement for the annual meeting of shareholders to be held on April 22, 1997 is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions - ------- ---------------------------------------------- None. PART IV ------- Item 14. Exhibits, Financial Statement Schedules, - ------- ---------------------------------------- and Reports on Form 8-K ----------------------- As used in this Part, "Company" means Tambrands Inc. (a) Documents filed as part of this report 1. Financial Statements The list of financial statements set forth under the caption "Index to Financial Information" on page F-1 is incorporated herein by reference. 2. Financial Statement Schedules The list of financial statement schedules set forth under the caption "Index to Financial Information" on page F-1 is incorporated herein by reference. All other schedules have been omitted, as the required information is inapplicable or the information is presented in the financial statements or related notes. 3. Exhibits Exhibit Number Description ------- ----------- 3(1) Certificate of Incorporation of the Company, as amended through April 28, 1987, filed April 30, 1987 as Exhibit 4(a) to the Company's Form S-8 Registration Statement (Reg. No. 33-13902), incorporated herein by reference. 3(2) Certificate of Amendment of Certificate of Incorporation of the Company, dated 15 April 24, 1990, filed May 15, 1990 as Exhibit 4(2) to the Company's Report on Form 10-Q for the quarter ended March 31, 1990, incorporated herein by reference. 3(3) Certificate of Amendment of Certificate of Incorporation of the Company, dated April 28, 1992, filed May 15, 1992 as Exhibit 4(2) to the Company's Report on Form 10-Q for the quarter ended March 31, 1992, incorporated herein by reference. 3(4)(a) Resolution of the Board of Directors of the Company authorizing an amendment to the By-Laws of the Company, adopted on January 28, 1997, filed herewith. 3(4)(b) By-Laws of the Company, as amended, filed herewith. 4(1) Description of the rights of security holders set forth in the Certificate of Incorporation of the Company, as amended through April 28,1987, filed April 30, 1987 as Exhibit 4(a) to the Company's Form S-8 Registration Statement (Reg. No. 33- 13902), incorporated herein by reference. 4(2) Description of the rights of security holders set forth in the Certificate of Amendment of Certificate of Incorporation of the Company, dated April 28, 1992, filed May 15, 1992 as Exhibit 4(2) to the Company's Report on Form 10-Q for the quarter ended March 31, 1992, incorporated herein by reference. 4(3) Rights Agreement, dated as of October 24, 1989, between the Company and First Chicago Trust Company of New York, which includes the Form of Right Certificate as Exhibit A and the Summary of Rights to Purchase Common Shares as Exhibit B, filed October 27, 1989 as Exhibit 1 to the Company's Form 8-A Registration Statement, incorporated herein by reference. 4(4)(a) Indenture dated as of December 1, 1993 between the Company and Citibank, N.A., as trustee, relating to the Company's Medium-Term Note Program, filed March 31, 1994 as Exhibit 4(4)(a) to the Company's Form 10-K Report for the year ended December 31, 1993, incorporated herein by reference. 4(4)(b) First Supplemental Indenture dated as of December 31, 1996, among the Company, 16 Tampax Corporation, Tambrands Mfg., Inc. and Tambrands Sales Corp. and Citibank, N.A., as trustee, to Indenture dated as of December 1, 1993 between the Company and Citibank, N.A., as trustee, relating to the Company's Medium-Term Note Program, filed herewith. 4(4)(c) Form of Floating Rate Debt Security, filed December 16, 1993 as Exhibit 4-a to the Company's Report on Form 8-K, incorporated herein by reference. 4(4)(d) Form of Fixed Rate Debt Security, filed December 16, 1993 as Exhibit 4-b to the Company's Report on Form 8-K, incorporated herein by reference. Management Contracts and Compensatory Plans and Arrangements (Exhibits 10(1) - 10(20)) ----------------------- 10(1)(a) 1981 Long Term Incentive Plan, as amended through November 4, 1988, filed as Exhibit 10(1)(a) to the Company's Report on Form 10-K for the year 1988, incorporated herein by reference. 10(1)(b) Amendment to 1981 Long Term Incentive Plan, dated as of February 27, 1990, filed as Exhibit 10(1)(b) to the Company's Report on Form 10-K for the year 1989, incorporated herein by reference. 10(1)(c) Amendment to 1981 Long Term Incentive Plan, effective as of June 25, 1991, filed as Exhibit 10(1)(c) to the Company's Report on Form 10-K for the year 1991, incorporated herein by reference. 10(1)(d) Amendment to 1981 Long Term Incentive Plan, effective as of June 23, 1992, filed as Exhibit 10(1)(d) to the Company's Report on Form 10-K for the year 1992, incorporated herein by reference. 10(1)(e) Amendment to 1981 Long Term Incentive Plan, effective as of February 23, 1993, filed as Exhibit 10(1)(e) to the Company's Report on Form 10-K for the year 1992, incorporated herein by reference. 10(1)(f) Addendum to 1981 Long Term Incentive Plan, filed April 30, 1987 as Exhibit 17 28(a) to the Company's Form S-8 Registration Statement (Reg. No. 33-13902), incorporated herein by reference. 10(2)(a) 1981 Incentive Stock Option Plan, as amended through April 30, 1987, filed April 30, 1987 as Exhibit 28(a) to the Company's Form S-8 Registration Statement (Reg. No. 33-13902), incorporated herein by reference. 10(2)(b) Amendment to 1981 Incentive Stock Option Plan, dated as of February 27, 1990, filed as Exhibit 10(2)(b) to the Company's Report on Form 10-K for the year 1989, incorporated herein by reference. 10(2)(c) Amendment to 1981 Incentive Stock Option Plan, effective as of June 23, 1992, filed as Exhibit 10(2)(c) to the Company's Report on Form 10-K for the year 1992, incorporated herein by reference. 10(2)(d) Amendment to 1981 Incentive Stock Option Plan, effective as of February 23, 1993, filed as Exhibit 10(2)(d) to the Company's Report on Form 10-K for the year 1992, incorporated herein by reference. 10(3)(a) 1991 Stock Option Plan, filed as Exhibit 10(3) to the Company's Report on Form 10-K for the year 1990, incorporated herein by reference. 10(3)(b) First Amendment to 1991 Stock Option Plan, effective as of July 1, 1991, filed as Exhibit 10(3)(b) to the Company's Report on Form 10-K for the year 1991, incorporated herein by reference. 10(3)(c) Second Amendment to 1991 Stock Option Plan, effective as of July 1, 1991, filed as Exhibit 10(3)(c) to the Company's Report on Form 10-K for the year 1991, incorporated herein by reference. 10(3)(d) Third Amendment to 1991 Stock Option Plan, effective as of June 23, 1992, filed as Exhibit 10(3)(d) to the Company's Report on Form 10-K for the year 1992, incorporated herein by reference. 10(3)(e) Fourth Amendment to 1991 Stock Option Plan, effective as of February 23, 1993, filed as Exhibit 10(3)(e) to the 18 Company's Report on Form 10-K for the year 1992, incorporated herein by reference. 10(3)(f) Fifth Amendment to 1991 Stock Option Plan, effective as of February 23, 1993, filed as Exhibit 10(3)(f) to the Company's Report on Form 10-K for the year 1992, incorporated herein by reference. 10(3)(g) Addendum to 1991 Stock Option Plan, filed as Exhibit 10(3)(g) to the Company's Report on Form 10-K for the year 1992, incorporated herein by reference. 10(3)(h) Sixth Amendment to 1991 Stock Option Plan, effective as of February 1, 1994, filed as Exhibit 10(3)(h) to the Company's Report on Form 10-K for the year 1993, incorporated herein by reference. 10(3)(i) Seventh Amendment to 1991 Stock Option Plan, effective as of January 28, 1997, filed herewith. 10(4)(a) 1989 Restricted Stock Plan, as amended through December 31, 1990, filed as Exhibit 10(4) to the Company's Report on Form 10-K for the year 1990, incorporated herein by reference. 10(4)(b) Amendment to 1989 Restricted Stock Plan, effective as of February 23, 1993, filed as Exhibit 10(4)(b) to the Company's Report on Form 10-K for the year 1992, incorporated herein by reference. 10(4)(c) Amendment to 1989 Restricted Stock Plan, effective as of January 28, 1997, filed herewith. 10(5) Supplemental Executive Retirement Plan, effective July 1, 1986, as amended and restated effective July 1, 1994, filed as Exhibit 10(6) to the Company's Report on Form 10-Q for the quarter ended June 30, 1994, incorporated herein by reference. 10(6) Trust Agreement between the Company and The Northern Trust Company, dated as of October 31, 1988, filed as Exhibit 10(6) to the Company's Report on Form 10-K for the year 1988, incorporated herein by reference. 19 10(7) Pension Plan for Non-Employee Directors, filed as Exhibit 10(10) to the Company's Report on Form 10- K for the year 1990, incorporated herein by reference. 10(8)(a) 1992 Directors Stock Incentive Plan, filed as Exhibit 10(11) to the Company's Report on Form 10- K for the year 1991, incorporated herein by reference. 10(8)(b) First Amendment to 1992 Directors Stock Incentive Plan, effective as of August 18, 1992, filed as Exhibit 10(8)(b) to the Company's Report on Form 10-K for the year 1992, incorporated herein by reference. 10(8)(c) Second Amendment to 1992 Directors Stock Incentive Plan, effective as of February 23, 1993, filed as Exhibit 10(8)(c) to the Company's Report on Form 10-K for the year 1992, incorporated herein by reference. 10(8)(d) Third Amendment to the 1992 Directors Stock Incentive Plan, effective as of August 24, 1993, filed as Exhibit 10(3) to the Company's Report on Form 10-Q/A for the quarterly period ended September 30, 1993, incorporated herein by reference. 10(8)(e) Fourth Amendment to Tambrands Inc. 1992 Directors Stock Incentive Plan, effective as of April 28, 1994, filed as Exhibit 10(7) to the Company's Report on Form 10-Q for the quarter ended June 30, 1994, incorporated herein by reference. 10(8)(f) Fifth Amendment to the Tambrands Inc. 1992 Directors Stock Incentive Plan, effective as of September 1, 1994, filed as Exhibit 10(4) to the Company's Report on Form 10-Q for the quarter ended September 30, 1994, incorporated herein by reference. 10(9)(a) Employment Protection Agreement between the Company and Mr. Edward T. Fogarty, dated as of May 31, 1994, filed as Exhibit 10(1) to the Company's Report on Form 10-Q for the quarter ended June 30, 1994, incorporated herein by reference; 10(9)(b) Amended and Restated Employment Protection Agreement between the Company and Mr. Thomas J. Mason, dated as of October 1, 1996, filed herewith; 20 10(9)(c) Employment Protection Agreement between the Company and Mr. Thomas Soper, III, dated as of October 1, 1996, filed as Exhibit 10(9)(d) to the Company's Report on Form 10-K for the year 1995, incorporated herein by reference; 10(9)(d) Employment Protection Agreement between the Company and Mr. Michael S. Krause, dated as of July 5, 1995, filed herewith; 10(9)(e) Employment Protection Agreement between the Company and Ms. Susan J. Riley, dated as of December 15, 1994, filed herewith; The Company has agreements similar to the agreements listed as Exhibits 10(9)(c), 10(9)(d) and 10(9)(e) with its other executive officers. 10(10) Resolution of the Board of Directors of the Company with respect to the compensation of the Board, adopted on December 13, 1994, filed as Exhibit 10(11) to the Company's Report on Form 10- K for the year 1994, incorporated herein by reference. 10(11) 1995 Directors Stock and Deferred Compensation Plan, effective as of July 1, 1995, included as Exhibit A to the Company's Proxy Statement, dated March 10, 1995, for the annual meeting of shareholders held on April 25, 1995, incorporated herein by reference. 10(12) Executive Severance Program of the Company, filed as Exhibit 10(15) to the Company's Report on Form 10-K for the year 1989, incorporated herein by reference. 10(13) 1981 Annual Incentive Plan of the Company, as amended through March 30, 1995, filed as Exhibit 10(1) to the Company's Report on Form 10-Q for the quarter ended March 31, 1995, incorporated herein by reference. 10(14) Letter Agreement between the Company and Mr. Edward T. Fogarty, dated as of April 25, 1994, filed as Exhibit 10(1) to the Company's Report on Form 10-Q for the quarter ended June 30, 1994, incorporated herein by reference. 10(15) Letter Agreement between the Company and Mr. Thomas Soper, III, dated as of August 21 29, 1994, filed as Exhibit 10(7) to the Company's Report on Form 10-K for the year 1994, incorporated herein by reference. 10(16) Letter Agreement between the Company and Mr. Thomas J. Mason, dated as of October 18, 1994, filed as Exhibit 10(18) to the Company's Report on Form 10-K for the year 1994, incorporated herein by reference. 10(17) Letter Agreement between the Company and Mr. Michael S. Krause, dated as of July 5, 1995, filed as Exhibit 10(1) to the Company's Report on Form 10-Q for the quarter ended September 30, 1995, incorporated herein by reference. 10(18) Restricted Stock Agreement between the Company and Mr. Edward T. Fogarty, dated May 31, 1994, filed as Exhibit 10(3) to the Company's Report on Form 10-Q for the quarter ended June 30, 1994, incorporated herein by reference. 10(19) Stock Option Agreement between the Company and Mr. Edward T. Fogarty, dated May 31, 1994, filed as Exhibit 10(4) to the Company's Report on Form 10-Q for the quarter ended June 30, 1994, incorporated herein by reference. 10(20) Tambrands Inc. 1996 Non-Employee Director Stock Unit Plan, effective as of April 23, 1996, filed as Exhibit 10(1) to the Company's Report on Form 10-Q for the quarter ended June 30, 1996, incorporated herein by reference. 10(21)(a) Commercial Paper Dealer Agreement between the Company and Merrill Lynch Money Markets, Inc., dated November 18, 1992, filed as Exhibit 10(15) (a) to the Company's Report on Form 10-K for the year 1992, incorporated herein by reference. 10(21)(b) Letter Agreement between the Company and the First National Bank of Chicago, dated as of November 18, 1992, filed as Exhibit 10(15)(b) to the Company's Report on Form 10-K for the year 1992, incorporated herein by reference. 10(21)(c) Amended and Restated Credit Agreement by and among the Company, Tambrands Limited, the signatory banks thereto and The Bank 22 of New York, as agent, dated as of September 6, 1994, filed as Exhibit 10(5) to the Company's Report on Form 10-Q for the quarter ended September 30, 1994, incorporated herein by reference. 10(21)(d) Amendment No. 1, dated as of May 5, 1995, to the Amended and Restated Credit Agreement, dated as of September 6, 1994, by and among the Company, Tambrands Limited, the signatory banks thereto and The Bank of New York, as agent, filed as Exhibit 10(3) to the Company's Report on Form 10-Q for the quarter ended June 30, 1995, incorporated herein by reference. 10(21)(e) Amendment No. 2, dated as of December 13, 1996, to the Amended and Restated Credit Agreement, dated as of September 6, 1994, by and among the Company, Tambrands Limited, the signatory banks thereto and The Bank of New York, as agent, filed herewith. 12 Computation of Ratio of Earnings to Fixed Charges, filed herewith. 21 Subsidiaries of the Company, filed herewith. 23 Independent Auditors' Consent, filed herewith. 24 Powers of attorney, filed herewith. 27 Financial Data Schedules, filed herewith (in electronic format only). 23 (b) Reports on Form 8-K The Company filed a Report under Item 5 of Form 8-K on October 23, 1996 in order to file a press release, issued by the Company on October 23, 1996, which contained the Company's third-quarter 1996 results. TAMPAX, COMPAK, LITES, TAMPAX NATURALS, SATIN, SATIN TOUCH, TAMPAX SILKS, SIMPLE and TAMPETS are trademarks of the Company. 24 SIGNATURES ---------- Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. TAMBRANDS INC. /s/EDWARD T. FOGARTY Date: March 28, 1997 By -------------------- Edward T. Fogarty Chairman, President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date --------- ----- ---- /s/ EDWARD T. FOGARTY Chairman, President March 28, 1997 - ------------------------ and Chief Executive EDWARD T. FOGARTY Officer and Director (Principal Executive Officer) /s/ SUSAN J. RILEY Senior Vice March 28, 1997 - ------------------------ President-Chief SUSAN J. RILEY Financial Officer (Principal Financial Officer) /s/ MICHAEL A. HECHT Vice President - March 28, 1997 - ------------------------ Controller MICHAEL A. HECHT (Principal Accounting Officer) 25 Signature Title Date - --------- ----- ---- * Director March 28, 1997 - ----------------------- LILYAN H. AFFINITO * Director March 28, 1997 - ----------------------- ANNE M. BUSQUET * Director March 28, 1997 - ----------------------- PAUL S. DOHERTY * Director March 28, 1997 - ----------------------- JANET HILL * Director March 28, 1997 - ----------------------- ROBERT P. KILEY * Director March 28, 1997 - ----------------------- JOHN LOUDON * Director March 28, 1997 - ----------------------- RUTH M. MANTON * Director March 28, 1997 - ----------------------- JOHN A. MEYERS * Director March 28, 1997 - ----------------------- H.L. TOWER /s/ HOWARD B. WENTZ, JR. Director March 28, 1997 - ----------------------- HOWARD B. WENTZ, JR. 26 * Director March 28, 1997 - ------------------------- ROBERT M. WILLIAMS /s/EDWARD T. FOGARTY * By --------------------- Edward T. Fogarty Attorney-in-Fact 27 INDEX TO FINANCIAL INFORMATION ------------------------------ Page Reference --------- Selected Financial Data................................... F-2 Management's Discussion and Analysis of Results of Operations and Financial Condition................................................. F-3 Financial Statements: Consolidated Statements of Earnings for the years ended December 31, 1996, 1995 and 1994................ F-6 Consolidated Balance Sheets as of December 31, 1996 and 1995...................... F-7 Consolidated Statements of Cash Flows for the years ended December 31, 1996, 1995 and 1994................ F-8 Notes to Consolidated Financial Statements...................................... F-9 Independent Auditors' Report on Consolidated Financial Statements............... F-20 Financial Statement Schedule: II Valuation and Qualifying Accounts............ F-21 Independent Auditors' Report on Financial Statement Schedule.................... F-22 Supplementary Financial Information and Quarterly Data for the years ended December 31, 1996 and 1995................ F-23 F-1 TAMBRANDS INC. Selected Financial Data ($ in thousands, except per share amounts)
Years ended December 31 1996 (a) 1995 (a) 1994 1993 (a) 1992 --------- --------- --------- --------- --------- Net sales $662,112 $683,092 $644,513 $611,465 $684,113 Gross profit 435,764 451,467 438,402 409,759 456,032 Marketing, selling and distribution 248,644 238,558 233,753 202,031 193,477 Administrative and general 48,625 52,546 53,034 61,378 67,823 Restructuring charge 46,221 - - 30,042 - Operating income 92,274 160,363 151,615 116,308 194,732 Litigation Charge - 11,396 - - - Earnings before cumulative effect of accounting change 45,803 85,522 89,729 73,702 122,409 Earnings before cumulative effect of accounting change per share 1.24 2.33 2.43 1.91 3.09 Average number of shares outstanding 36,842 36,671 36,992 38,632 39,640 Total assets 409,966 422,049 379,075 362,398 372,981 Medium-term notes obligations 69,205 80,889 59,983 30,000 - Dividends per share 1.84 1.78 1.70 1.56 1.40
(a) Results and related financial data include restructuring charges in 1996 and 1993 and a litigation charge in 1995. F-2 Management's Discussion and Analysis RESULTS OF OPERATIONS 1996 vs. 1995 Net sales for 1996 were $662.1 million, down 3% from the prior year. The decline in net sales was primarily due to lower worldwide volume principally in the United States. The reduced U.S. volume was primarily a result of increased competitive activity in the form of retail price promotions and new product introductions. The lower volume was partially offset by selective price increases in certain international markets and in the United States. The U.S. tampon category in units improved 0.6 percentage points for the year versus 1995. Tampax U.S. market share in units for the current year declined 2.7 share points versus the prior year to 51%, primarily due to the increased competitive activity discussed above. However, the Company's quarterly U.S. market share has been trending upward since the second quarter of 1996. The fourth quarter U.S. market share of 52.1% was the Company's highest quarterly share for the year. Gross profit as a percentage of net sales was 65.8% compared to 66.1% for the prior year. The lower margin in the current year was primarily the result of the unfavorable volumes discussed above and one-time consolidation costs relating to the restructuring of the Company's manufacturing facilities. The decrease was partially offset by pricing improvements. Marketing, selling and distribution expenses were 4% higher than the prior year. The increase principally reflected promotional support for the launch of Tampax Naturals in the United States and the launch of a non-applicator tampon in France. Administrative and general expenses declined 8% versus the prior year. The decrease was the result of management's continuing efforts to contain overhead costs. During the third quarter of 1996, the Company announced that it was implementing a single global structure and a restructuring to increase efficiency, eliminate duplication, improve decision-making, and get new and improved products to the global market more quickly. A $46.2 million restructuring charge ($37.0 million after-tax) was taken to provide for the costs associated with restructuring production facilities around the world to support this global strategy. The charge included $26.2 million in asset write-downs and $20.0 million in severance and employee related costs in connection with the closure of the manufacturing plants in Tours, France; Tipperary, Ireland; St. Petersburg, Russia; and Rutland, Vermont, U.S.A. The restructuring charge provides for a reduction of 1,100 jobs from the worldwide workforce. However, approximately 500 new jobs will be created from the upgrade of the remaining manufacturing facilities and expanded marketing and product development capabilities. As a result of the restructuring, consolidation costs of approximately $2.8 million were charged to the current year operating results. As of December 31, 1996, approximately 530 jobs had been eliminated and the remaining accrual of $15.5 million related primarily to severance and employee related costs in the United States and France. The restructuring is expected to be substantially complete by December 31, 1997. Operating income of $92.3 million included the pre-tax restructuring charge of $46.2 million. Exclusive of the restructuring charge, operating income decreased by 14% from the prior year. The decrease was principally attributable to the lower sales volume and increased promotional activities, partially mitigated by favorable pricing, as discussed above. Interest, net and other was favorable by 7% compared to 1995. The decrease was primarily due to a reduction in realized foreign exchange losses from the prior year. The effective tax rate for 1996 was 45% compared to 38.6% for 1995. Exclusive of the restructuring charge, which was not fully deductible for tax purposes, the 1996 effective tax rate would have been 36.1%. Exclusive of the litigation charge, the 1995 effective tax rate would have been 37.5%. Comparing the effective tax rates exclusive of these charges, the lower effective tax rate in the current year is primarily due to the additional utilization of foreign tax credits in 1996. Net earnings were $45.8 million ($1.24 earnings per share) for 1996 versus $85.5 million ($2.33 earnings per share) for the prior year. Excluding the restructuring charge, 1996 net earnings would have been $82.8 million ($2.25 earnings per share). Excluding the 1995 litigation charge, the prior year net earnings would have been $94.2 million ($2.57 earnings per share). F-3 TAMBRANDS INC. AND SUBSIDIARIES Outlook The worldwide market for consumer products remains highly competitive and sensitive to price. The Company expects that this trend will continue. However, in the second half of 1996, two competitors took selective price increases in the United States. Management will continue to evaluate price increase opportunities as appropriate. The Company anticipates a continuation of the current high level of advertising and promotional activities and new product introductions by competitors, along with continued growth in the private label sector. The Company intends to aggressively proceed with its support of the Tampax tampon franchise with advertising, promotions and product line extensions. The Company has a significant customer that accounted for 12.2% of net sales in 1996. The cost of manufacturing continues to be impacted by the prior years' increases in raw material and packaging costs. Recently, as a result of the downward trend of pulp and paper prices and global purchasing efficiencies, the impact of these costs has moderated. The full benefit of the restructuring program and other on- going cost reduction activities are expected to lower overall production costs by the beginning of 1998. 1995 vs. 1994 Net sales for 1995 were $683.1 million, an increase of 6% from 1994. The increase was primarily due to higher unit sales in the United States, Russia/Ukraine, Canada, Latin America, and in Europe with the exception of the United Kingdom. The overall increase in unit sales was principally attributable to the strengthening of the tampon category and Tampax market shares over the prior year in our core markets, with the exception of the United Kingdom where the category had declined but toward the end of the year showed improvement. Strong unit sales and favorable foreign currency translation were somewhat offset by lower average prices in the United States due to changes in the sales mix. Gross profit as a percent of net sales was 66.1% for 1995 vs. 68% in 1994. The margin reduction in 1995 was principally due to a change in the mix of product and package sizes, increasing costs of raw and packaging materials, and manufacturing start-up costs in the United States associated with the fourth- quarter 1995 relaunch of the Tampax flushable line and the production of Tampax Naturals, which was launched in early 1996. The decrease in margin was partially offset by productivity improvements resulting from our capital spending program. Marketing, selling and distribution expenses were up 2% compared with the prior year. The increase was primarily due to unfavorable foreign exchange translations and higher marketing expenditures partially offset by lower fourth- quarter advertising and promotional activity in anticipation of the Tampax Naturals launch in the United States. Administrative and general expenses were 1% lower than 1994 primarily as a result of management's continuing efforts to contain overhead costs. A reduction in the United States was partially offset by higher costs in international markets due to management changes. Operating income of $160.4 million was 6% higher than the prior year. The increased sales volume was partially mitigated by the factors reducing gross profit discussed above. Interest, net and other expense decreased slightly in 1995 compared to 1994. A reduction in realized foreign exchange losses was partially offset by higher interest expense resulting from higher average interest rates and higher borrowing levels. In the second quarter of 1995, the Company provided $11.4 million for several legal proceedings related to previously divested non-tampon businesses and for settlement of a securities class action filed in 1993. The effective tax rate for 1995 was 38.6%, compared to 36.7% for 1994. The higher effective tax rate in 1995 was due primarily to the litigation charge, the cost of which is not fully deductible for tax purposes. Exclusive of the litigation charge, the current effective tax rate would have been 37.5% for 1995. Net earnings were $85.5 million ($2.33 earnings per share) compared to $89.7 million ($2.43 earnings per share) in 1994. The principal reason for the decline was due to the litigation charge that the Company took in the second quarter. Exclusive of the litigation charge, net earnings would have been $94.2 million ($2.57 earnings per share) compared to $89.7 million ($2.43 earnings per share) in 1994. F-4 Management's Discussion And Analysis (continued) LIQUIDITY AND CAPITAL RESOURCES Cash Flows from Operating Activities 1996 Cash flows from operating activities were $101.6 million compared to $101.9 for 1995. Improved management of inventories and accounts receivable were primarily offset by a decrease in accounts payable and accrued expenses (excluding special charges) at the end of the current year. As a result, cash flows from operating activities were relatively unchanged versus the prior year. The Company's working capital deficit increased to $19.2 million from $4.1 million in the prior year principally due to the current maturity of medium-term obligations. The current ratio was .9 at December 31, 1996 compared with 1.0 at December 31, 1995. The deficit does not impair the Company's ability to borrow and its credit agreements do not contain any provisions or requirements with respect to working capital. Over the past three years, Cash flows from operating activities were $332.3 million. These funds were used for the payment of dividends, capital expenditures and the repurchase of Common Stock. Management expects that 1997 cash flows will be impacted by $10 to $15 million due to payments relating to the 1996 restructuring. Capital Expenditures The 1996 capital spending programs related to investments in equipment to improve product quality and productivity, modernize production facilities and manufacture and launch new products. Capital expenditures were $39.0 million in 1996, $44.8 million in 1995, and $38.5 million in 1994. 1997 spending levels are expected to approximate those of 1996. Liquidity and Capital Resources During 1996, a strong debt rating and favorable financial climate permitted the Company to borrow at favorable interest rates. The Company's short-term debt is supported by unused revolving credit of $120 million at December 31, 1996 and 1995. Additionally, the Company has a $150 million medium-term note program of which $70 million was outstanding at December 31, 1996 and 1995. Management expects funds generated from operations and borrowing capacity will be adequate to finance the Company's business needs, including working capital, shareholder dividends, additions to property, plant and equipment and completion of the restructuring activities. INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS Statements contained in this Annual Report, other than matters of historical fact, are forward-looking statements and are made based on management's expectations and beliefs concerning future developments and their potential effect on the Company. There can be no assurance that future developments will be in accordance with management's expectations or that the effect of future developments on the Company will be those anticipated by management. Among the factors that could cause actual results to differ materially from such forward- looking statements are the following: - - the market reception given the Company's new products; - - competitive pressures, including new product developments or increased advertising or promotional activity by existing or new competitors or continued growth in the private label tampon segment; - - changes in the market for raw or packaging materials, which could impact the Company's manufacturing costs; - - changes in the pricing of the products of the Company or its competitors; - - changes in consumer preferences affecting the usage of tampons; - - the loss of a significant customer; - - the costs and uncertainties associated with implementation of actions resulting from the Company's ongoing evaluation of its business strategies and organizational structures; - - production delays or inefficiencies; - - the costs and other effects of legal and administrative cases and proceedings, settlements and investigations; - - real or perceived safety or quality issues with respect to the Company's products, whether arising from tampering or otherwise; and - - changes in U.S. or international economic or political conditions, such as inflation or fluctuations in interest or foreign exchange rates. While the Company periodically reassesses material trends and uncertainties affecting the Company's results of operations and financial condition contained in its annual and quarterly reports, the Company does not intend to review or revise any particular forward-looking statement in light of future events. F-5 Consolidated Statements of Earnings TAMBRANDS INC. AND SUBSIDIARIES
Years Ended December 31 (in thousands, except per share amounts) 1996 1995 1994 - -------------------------------------------------------------------------------------------------- NET SALES $662,112 $683,092 $644,513 Cost of products sold 226,348 231,625 206,111 - -------------------------------------------------------------------------------------------------- Gross profit 435,764 451,467 438,402 Selling, administrative and general expenses: Marketing, selling and distribution 248,644 238,558 233,753 Administrative and general 48,625 52,546 53,034 Restructuring charge 46,221 -- -- - -------------------------------------------------------------------------------------------------- 343,490 291,104 286,787 - -------------------------------------------------------------------------------------------------- OPERATING INCOME 92,274 160,363 151,615 Interest, net and other (8,949) (9,632) (9,864) Litigation charge -- (11,396) -- - -------------------------------------------------------------------------------------------------- Earnings before provision for income taxes 83,325 139,335 141,751 Provision for income taxes 37,522 53,813 52,022 - -------------------------------------------------------------------------------------------------- NET EARNINGS $ 45,803 $ 85,522 $ 89,729 - -------------------------------------------------------------------------------------------------- Average number of shares outstanding 36,842 36,671 36,992 Net earnings per share $ 1.24 $ 2.33 $ 2.43 Dividends per share $ 1.84 $ 1.78 $ 1.70 - --------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements. F-6 Consolidated Balance Sheets TAMBRANDS INC. AND SUBSIDIARIES
- -------------------------------------------------------------------------------------------------- Years Ended December 31 (in thousands) 1996 1995 - -------------------------------------------------------------------------------------------------- ASSETS Current assets Cash and cash equivalents $ 11,554 $ 11,135 Accounts receivable, net 99,385 98,047 Inventories 40,331 46,736 Deferred taxes on income 20,964 17,724 Prepaid expenses 12,788 12,289 Other current assets 11,574 13,982 - -------------------------------------------------------------------------------------------------- Total current assets 196,596 199,913 Property, plant and equipment, net 207,639 216,122 Intangible and other assets 5,731 6,014 - -------------------------------------------------------------------------------------------------- Total assets $ 409,966 $ 422,049 - -------------------------------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Short-term debt $ 64,699 $ 55,063 Accounts payable 47,666 48,498 Accrued expenses 78,862 73,330 Taxes on income 24,535 27,078 - -------------------------------------------------------------------------------------------------- Total current liabilities 215,762 203,969 Medium-term obligations 69,205 80,889 Deferred taxes on income 25,781 22,537 Postemployment benefits 4,530 11,682 - -------------------------------------------------------------------------------------------------- Total liabilities 315,278 319,077 Shareholders' equity Common Stock, authorized 300,000,000 shares, par value $.25 per share; issued 43,547,938 shares 10,887 10,887 Retained earnings 452,608 476,252 Cumulative foreign currency translation adjustment (9,606) (14,223) Treasury stock (358,304) (368,543) Unamortized value of restricted stock and pension costs (897) (1,401) - -------------------------------------------------------------------------------------------------- Total shareholders' equity 94,688 102,972 - -------------------------------------------------------------------------------------------------- Total liabilities and shareholders' equity $ 409,966 $ 422,049 - --------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements. F-7 Consolidated Statements of Cash Flows TAMBRANDS INC. AND SUBSIDIARIES
Years Ended December 31 (in thousands) 1996 1995 1994 - --------------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net earnings $ 45,803 $ 85,522 $ 89,729 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 27,557 25,667 24,284 Deferred income taxes (914) 2,158 4,557 Litigation charge (3,282) 4,425 -- Restructuring and other charges 32,716 (3,587) (10,417) Working capital changes: Accounts receivable (542) (14,737) (2,224) Inventories 7,133 (8,326) 1,503 Prepaid expenses and other current assets 1,044 (591) (1,901) Accounts payable and accrued expenses (13,685) 2,974 17,415 Taxes on income 5,781 8,350 5,925 - --------------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities 101,611 101,855 128,871 - --------------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures (39,007) (44,778) (38,470) Proceeds from sales of property, plant and equipment 1,450 108 2,093 Proceeds from sales of marketable securities -- -- 639 - --------------------------------------------------------------------------------------------------------------------- Net cash used in investing activities (37,557) (44,670) (35,738) - --------------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES Payment of dividends (67,837) (65,274) (62,721) Treasury shares repurchased -- (4,326) (71,118) Short-term debt changes (520) (17,448) 6,149 Reduction of medium-term obligations (1,978) (1,094) -- Proceeds from medium-term obligations -- 24,091 29,983 Proceeds from exercise of stock options and other 8,000 5,307 2,422 - --------------------------------------------------------------------------------------------------------------------- Net cash used in financing activities (62,335) (58,744) (95,285) - --------------------------------------------------------------------------------------------------------------------- Effect of exchange rate changes on cash (1,300) (1,182) 730 - --------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents 419 (2,741) (1,422) Cash and cash equivalents at beginning of year 11,135 13,876 15,298 - --------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at end of year $ 11,554 $ 11,135 $ 13,876 - --------------------------------------------------------------------------------------------------------------------- SUPPLEMENTAL CASH FLOW INFORMATION Income taxes paid $ 34,879 $ 44,756 $ 49,500 Interest paid 8,330 9,188 4,573 - ---------------------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements. F-8 Notes to Consolidated Financial Statements (dollar amounts in thousands, except per share amounts) NOTE 1 Accounting Policies The consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States. Principles of Consolidation The consolidated financial statements include the accounts of Tambrands Inc. and all majority owned subsidiaries (the "Company"). All significant intercompany accounts and transactions are eliminated. Foreign Currency Translation For most foreign subsidiaries, the local currency is the functional currency and gains or losses resulting from translation are accumulated in a separate component of shareholders' equity. For subsidiaries operating in highly inflationary economies, the U.S. dollar is the functional currency. In such cases, monetary items are translated using current exchange rates and all other balance sheet items are remeasured at historical exchange rates. Any gains or losses from remeasurement are included in earnings. Cash Equivalents Highly liquid investments with a maturity of three months or less when purchased are considered to be cash equivalents. Inventories Inventories are stated at the lower of cost or market. Cost is determined using the LIFO method for all U.S. inventories. All other inventories are stated at FIFO. Depreciation Depreciation is computed on the straight-line and accelerated methods over the useful lives of the assets. Intangibles Intangible assets are amortized on a straight-line basis over periods not exceeding 40 years. Financial Instruments The Company utilizes derivative financial instruments, principally options and forward contracts, for the purpose of reducing its exposure to adverse fluctuations in foreign exchange rates. These contracts hedge actual and anticipated transactions and balances for periods consistent with the Company's committed and expected exposures. Gains and losses on hedges of existing assets or liabilities are included in the carrying amounts of those assets or liabilities. Gains and losses on contracts that do not qualify as hedges are recognized in earnings. Option premiums are deferred and amortized over the period being hedged. The Company does not hold or issue financial instruments for trading purposes. Advertising Costs Advertising costs are charged to earnings as incurred. Earnings Per Share Earnings per share of Common Stock are based on the average number of shares outstanding during each period. Outstanding stock options do not have a significant dilutive effect. Estimates and Assumptions The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts in the financial statements. Actual results could differ from those estimates. New Accounting Standards The Company adopted Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of Long- Lived Assets and for Long-Lived Assets to Be Disposed Of" as of January 1, 1996, which had no material effect on the consolidated financial statements. The Company utilizes the undiscounted cash flow method to determine impairment in the carrying value of its long-lived assets. Measurement of an impairment loss is determined by reducing the carrying value of assets to fair value. Assets to be disposed of by sale or abandonment, as part of a plan committed to and approved by management, are recorded at the lower of the carrying value or the fair value less the cost to sell. In 1996, the Company adopted the provisions of SFAS No. 123, "Accounting for Stock-Based Compensation". The statement establishes a fair value based method of accounting for stock-based compensation. The provisions of the Statement permit the choice to either recognize as expense in the income statement the fair value of stock options and similar equity instruments or continue the current approach set forth in Accounting Principles Board (APB) Opinion 25, "Accounting for Stock Issued to Employees" and disclose the pro forma effect on net earnings and earnings per share in the footnotes. The Company has elected to continue its current accounting for stock-based compensation granted to employees in accordance with APB 25 and make the required disclosures in the footnotes. F-9 TAMBRANDS INC. AND SUBSIDIARIES NOTE 2 Balance Sheet Components The components of certain balance sheet accounts at December 31 are as follows:
1996 1995 ------------------ ACCOUNTS RECEIVABLE, NET Accounts receivable, trade $ 94,252 $ 93,603 Less allowance for doubtful accounts 1,776 1,667 - ------------------------------------------------------------------ 92,476 91,936 Other 6,909 6,111 - ------------------------------------------------------------------ $ 99,385 $ 98,047 - ------------------------------------------------------------------ INVENTORIES Raw materials $ 10,537 $ 17,952 Finished goods 29,794 28,784 - ------------------------------------------------------------------ $ 40,331 $ 46,736 - ------------------------------------------------------------------ Current cost of LIFO inventories $ 24,395 $ 30,834 Stated value of LIFO inventories 11,371 15,098 - ------------------------------------------------------------------ Excess of current cost over stated value $ 13,024 $ 15,736 - ------------------------------------------------------------------ OTHER CURRENT ASSETS Spare parts inventory $ 9,456 $ 10,460 Other 2,118 3,522 - ------------------------------------------------------------------ $ 11,574 $ 13,982 - ------------------------------------------------------------------ PROPERTY, PLANT AND EQUIPMENT, NET (AT COST) Buildings, leaseholds and improvements $ 62,545 $ 63,972 Machinery, equipment and fixtures 256,311 245,931 Land 3,723 3,802 Construction in progress 32,163 39,724 - ------------------------------------------------------------------ 354,742 353,429 Less accumulated depreciation 147,103 137,307 - ------------------------------------------------------------------ $207,639 $216,122 - ------------------------------------------------------------------ INTANGIBLE AND OTHER ASSETS Cost $ 13,228 $ 12,983 Less accumulated amortization 7,497 6,969 - ------------------------------------------------------------------ $ 5,731 $ 6,014 - ------------------------------------------------------------------ ACCRUED EXPENSES Promotions $ 19,644 $ 20,032 Salaries and benefits 21,203 25,067 Restructuring reserves 16,563 3,916 Other liabilities 21,452 24,315 - ------------------------------------------------------------------ $ 78,862 $ 73,330 - ------------------------------------------------------------------
F-10 Notes to Consolidated Financial Statements (continued) NOTE 3 Statement of Earnings Information Statement of earnings information for the years ended December 31 are as follows:
1996 1995 1994 ---------------------------- Interest, net and other Net financing: Interest income $ 537 $ 1,124 $ 1,304 Interest expense (9,283) (9,206) (7,645) - ------------------------------------------------------------- (8,746) (8,082) (6,341) Net foreign exchange losses (669) (1,743) (3,449) Other 466 193 (74) - ------------------------------------------------------------- $(8,949) $(9,632) $(9,864) - ------------------------------------------------------------- Depreciation $27,013 $25,127 $23,545 Advertising 55,953 63,272 66,484 Research and development 12,643 12,204 10,735
Note 4 Benefit Plans The Company maintains several non-contributory pension plans covering domestic and foreign employees who meet certain minimum service and age requirements and provides supplemental non-qualified retirement benefits to certain officers and key employees. Pensions are based upon earnings of covered employees during their periods of credited service. The Company's funding policy for its pensions is to make the annual contributions required by applicable regulations. In early 1996, the Board of Directors approved the elimination of the Directors Pension Plan with respect to current and future non-employee directors and converted the benefits accrued under the plan into an economic interest in the Company's stock under a phantom stock program. The following table sets forth the funded status of the plans and the amounts recognized in the accompanying financial statements at December 31:
1996 1995 ------------------- Plan assets at fair value, primarily stocks and bonds $120,330 $107,897 - -------------------------------------------------------------------------------------------- Actuarial present value of benefit obligations: Vested benefits 102,366 101,510 Nonvested benefits 6,351 6,510 - -------------------------------------------------------------------------------------------- Accumulated benefit obligation 108,717 108,020 Effect of projected future salary increases 9,840 9,883 - -------------------------------------------------------------------------------------------- Projected benefit obligation 118,557 117,903 - -------------------------------------------------------------------------------------------- Projected benefit obligation (less than) or in excess of plan assets (1,773) 10,006 Deferred actuarial adjustments 10,997 (203) Deferred prior service cost (2,551) (2,913) - -------------------------------------------------------------------------------------------- Accrued pension cost included in accrued expenses $ 6,673 $ 6,890 - --------------------------------------------------------------------------------------------
F-11 TAMBRANDS INC. AND SUBSIDIARIES At December 31, 1996 and 1995, the accumulated benefit obligation of the domestic plans exceeded plan assets by $1,039 and $8,460, respectively. The net cost of pensions included in the Statements of earnings for the years ended December 31 consists of:
1996 1995 1994 ------------------------------ Service cost: benefits earned during the period $ 4,237 $ 3,940 $ 5,045 Interest cost on projected benefit obligation 8,415 8,389 8,093 Actual return on plan assets (14,102) (19,493) 3,375 Net amortization and deferral 5,197 11,900 (10,289) - --------------------------------------------------------------------------------- $ 3,747 $ 4,736 $ 6,224 - ---------------------------------------------------------------------------------
In 1996 and 1995, the discount rates used to determine the projected benefit obligation for the U.S. plans were 7.5% and 7.25%, respectively, and the rate of increase in future compensation in each year was 4.5%. For the international plans, the discount rates used to determine the projected benefit obligation were 8.25% in 1996 and ranged from 7.5% to 8% in 1995. The rates of increase in future compensation were 5.25% in 1996 and ranged from 5% to 6% in 1995. Expected long-term rates of return on plan assets ranged from 9.25% to 10% in 1996 and 8.5% to 10% in 1995. Prior service costs arising from plan amendments are amortized on a straight-line basis over the average remaining service period of employees expected to receive benefits under each plan. The Company sponsors a defined contribution 401(k) savings plan available to domestic employees who meet certain minimum age and service requirements. The Company's contributions to the plan are funded principally with its Common Stock. NOTE 5 Income Taxes Provision for income taxes for the years ended December 31 has been made as follows:
1996 1995 1994 -------------------------- Current tax expense United States $34,595 $45,597 $47,866 Foreign 3,841 6,058 (401) - -------------------------------------------------- 38,436 51,655 47,465 Deferred tax expense United States (2,140) 754 6,699 Foreign 1,226 1,404 (2,142) - -------------------------------------------------- (914) 2,158 4,557 - -------------------------------------------------- $37,522 $53,813 $52,022 - --------------------------------------------------
F-12 Notes to Consolidated Financial Statements (continued) Income Taxes (continued) Provision has not been made for income taxes on foreign subsidiaries' unremitted earnings to the extent that such earnings have been reinvested in the business; any U.S. income taxes payable on the distribution of available earnings should generally be offset by credits for foreign taxes paid. Reconciliation of the statutory federal income tax rates to the Company's effective tax rates for the years ended December 31 are as follows:
1996 1995 1994 ------------------ Statutory federal tax rate 35.0% 35.0% 35.0% State taxes - net of federal benefit 3.2 3.5 4.3 Rate differential on foreign income (1.8) (3.7) (2.3) Effect of litigation charge -- 1.1 -- Effect of restructuring charge 8.3 -- -- Other differences 0.3 2.7 (0.3) - ----------------------------------------------------------- Effective tax rate 45.0% 38.6% 36.7% - -----------------------------------------------------------
During 1996 and 1995, shareholders' equity was credited for $443 and $343, respectively, for tax benefits relating to compensation expense for tax purposes in excess of the amounts recognized for financial reporting purposes. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The components of the net deferred tax assets (liabilities) for the years ended December 31 are as follows:
1996 1995 ----------------- Deferred tax assets: Employee benefits $ 5,532 $ 5,620 Postemployment benefits 1,405 4,098 Intercompany transactions 933 4,588 Accrued liabilities 5,466 4,446 Restructuring 7,994 -- Other 2,540 4,271 - ---------------------------------------------------- 23,870 23,023 - ---------------------------------------------------- Deferred tax liabilities: Property, plant and equipment 23,319 21,351 Safe harbor leases 4,579 5,973 Other 789 512 - ---------------------------------------------------- 28,687 27,836 - ---------------------------------------------------- $(4,817) $(4,813) - ----------------------------------------------------
F-13 TAMBRANDS INC. AND SUBSIDIARIES NOTE 6 Restructuring Charge During the third quarter of 1996, a $46,221 restructuring charge ($36,977 after- tax) was taken to provide for the costs associated with restructuring production facilities around the world to support the Company's global strategy. The charge included $26,156 in asset write-downs and $20,065 in severance and employee related costs in connection with the closure of the manufacturing plants in Tours, France; Tipperary, Ireland; St. Petersburg, Russia; and Rutland, Vermont, U.S.A. The restructuring charge provided for a reduction of 1,100 jobs from the worldwide workforce. However, approximately 500 new jobs will be created from the upgrade of the remaining manufacturing facilities and expanded marketing and product development capabilities. As a result of the restructuring, consolidation costs of approximately $2,772 were charged to the current year operating results. As of December 31, 1996, approximately 530 jobs had been eliminated and the remaining accrual of $15,461 related primarily to severance and employee related costs in the United States and France. The restructuring is expected to be substantially complete by December 31, 1997. NOTE 7 Lease Commitments The Company's lease of its headquarters in White Plains, New York and European headquarters in the United Kingdom are non-cancelable operating leases. Future minimum lease payments under operating leases with terms in excess of one year amount to $4,582 in 1997, $3,994 in 1998, $3,105 in 1999, $2,962 in 2000 and $2,316 in 2001. Rent expense in 1996, 1995 and 1994 amounted to $4,649, $5,029 and $4,270, respectively. NOTE 8 Litigation The Company has been named in product liability litigation and claims arising from the alleged association of tampons with Toxic Shock Syndrome. The cases seek compensatory and punitive damages in various amounts. In the second quarter of 1995, the Company provided for $11,396 ($8,686 after- tax) for expenses related to a securities class action lawsuit, which was settled and dismissed in 1995, and several legal proceedings related to previously divested non-tampon business. Most of these legal proceedings related to previously divested businesses are still pending resolution. There are certain other legal proceedings pending against the Company arising out of its normal course of business in which claims for monetary damages are asserted. While it is not feasible to predict the outcome of these legal proceedings and claims with certainty, management is of the belief that any ultimate liabilities in excess of reserved amounts will not individually or in the aggregate have a material adverse effect on the Company's financial position or results of operations. F-14 Notes to Consolidated Financial Statements (continued) NOTE 9 Obligations Short-term debt consists of commercial paper issued in the United States, bank loans and notes payable. Commercial paper outstanding at December 31, 1996 and 1995 was $47,398 and $42,672, respectively. Bank loans and notes payable at December 31, 1996 and 1995 totaled $5,029 and $10,419, respectively. The weighted-average interest rates for short-term debt at December 31, 1996 and 1995 were 5.7% and 6%, respectively. The Company's short-term debt is supported by unused bank lines of credit amounting to $120,000 at December 31, 1996 and 1995. Commitment fees to secure the lines of credit are not material. At December 31, 1996, there were $11,477 of medium-term obligations outstanding of which $2,272 was payable within the next year. At December 31, 1995, there were $12,869 of medium-term obligations outstanding of which $1,972 was payable within the next year. At the end of both years, these obligations carried interest rates ranging from 7% to 7.9%, had various maturities through June 2003, and had carrying values which approximated market. At December 31, 1996, there were $70,000 of unsecured medium-term notes outstandingof which $10,000 was payable within the next year. At December 31, 1995, $69,992 of unsecured medium-term notes were outstanding.At the end of both years, the notes carried interest rates ranging from 4.7% to 7.4%, had maturities ranging from January 1997 to May 2004, and had carrying values which approximated market. The annual maturities on all medium-term notes and obligations through the next five years amount to $12,272 in 1997, $2,303 in 1998, $32,484 in 1999, $11,728 in 2000 and $878 in 2001. The terms of the Company's financing arrangements include various covenants with which the Company was in compliance at December 31, 1996. NOTE 10 Financial Instruments As part of its risk management program, the Company reduces its exposure to foreign currency fluctuation through the use of forward exchange and option contracts. The Company does not enter into financial instruments for trading or speculative purposes. The agreements entered into are short-term in nature with maturities less than one year and the Company primarily acts as a buyer. The Company contracts only with major financial institutions and no significant exposure exists to any one financial institution. Management believes that credit risk of loss is remote and in any event would be immaterial. The Company had forward exchange contracts with notional values of $11,559 and $7,846 at December 31, 1996 and 1995, respectively. The carrying value of these contracts approximated market. At December 31, 1996, the Company had foreign currency options with notional values of $20,388 and an estimated fair value of $362. At December 31, 1995, the Company had foreign currency options with notional values of $30,373 and an estimated fair value of $322. Premiums are amortized to expense over the option periods and unamortized premiums amounted to $153 and $432 at December 31, 1996 and 1995, respectively. The Company only enters into forward exchange contracts which match the periods of the underlying transactions being hedged. The maximum loss on foreign currency options is the amount of premiums paid for those options. Therefore, the Company has no material exposure through the use of any of these financial instruments. F-15 TAMBRANDS INC. AND SUBSIDIARIES NOTE 11 Shareholders' Equity The changes in Shareholders' equity for the years ended December 31, 1996, 1995, and 1994 are as follows:
Cumulative Common Treasury Retained Translation Stock Stock Earnings Adjustment Other Total ---------------------------------------------------------------- December 31, 1993 $10,887 ($303,948) $430,822 ($20,659) ($2,077) $115,025 Compensation plans 4,050 (759) 3,291 Share repurchase (71,118) (71,118) Net earnings 89,729 89,729 Dividends (62,721) (62,721) Translation adjustment 7,038 7,038 Other 770 770 - ------------------------------------------------------------------------------------------ December 31, 1994 $10,887 ($371,016) $457,071 ($13,621) ($1,307) $ 82,014 Compensation plans 6,799 (1,067) 5,732 Share repurchase (4,326) (4,326) Net earnings 85,522 85,522 Dividends (65,274) (65,274) Translation adjustment (602) (602) Other (94) (94) - ------------------------------------------------------------------------------------------ December 31, 1995 $10,887 ($368,543) $476,252 ($14,223) ($1,401) $102,972 Compensation plans 10,239 (1,610) 8,629 Net earnings 45,803 45,803 Dividends (67,837) (67,837) Translation adjustment 4,617 4,617 Other 504 504 - ------------------------------------------------------------------------------------------ December 31, 1996 $10,887 ($358,304) $452,608 ($ 9,606) ($ 897) $ 94,688 - ------------------------------------------------------------------------------------------
F-16 Notes to Consolidated Financial Statements (continued) Shareholders' Equity (continued) Common Stock The Company has 300 million authorized shares of Common Stock. Changes in outstanding shares for the years ended December 31 are as follows:
1996 1995 1994 ----------------------------------- Shares outstanding at beginning of year 36,722,319 36,674,030 38,292,952 Shares repurchased -- (99,700) (1,718,700) Shares issued for stock option and other employee plans from treasury 210,325 147,989 99,778 - ------------------------------------------------------------------------------------------------------------ Shares outstanding at end of year 36,932,644 36,722,319 36,674,030 - ------------------------------------------------------------------------------------------------------------ Shares held in treasury at end of year 6,615,294 6,825,619 6,873,908 - ------------------------------------------------------------------------------------------------------------
Stock Option Plans The Company has stock option plans which provide for the granting of options to directors, officers and key employees to purchase shares of its Common Stock within ten years, at prices equal to or greater than the fair market value on the date of grant. Stock options vest in increments of one- third over a three year period. In 1996, the Company adopted the provisions of SFAS No. 123, "Accounting for Stock-Based Compensation". The statement establishes a fair value based method of accounting for stock-based compensation. The provisions of the Statement permit the choice to either recognize as expense in the income statement the fair value of stock options and similar equity instruments or continue the current approach set forth in Accounting Principles Board (APB) Opinion 25, "Accounting for Stock Issued to Employees" and disclose the pro forma effect on net earnings and earnings per share in the footnotes. The Company has elected to continue its current accounting for stock-based compensation granted to employees in accordance with APB 25 and make the required disclosures in the footnotes. If compensation cost for the Company's stock-based compensation plans had been recognized in the income statement based on the fair value method, net earnings would have been reduced to the pro forma amounts of $44,636 and $84,798 and earnings per share would have been reduced to the pro forma amounts of $1.21 and $2.31 for 1996 and 1995, respectively. Stock option activity for the years 1996, 1995, and 1994 is as follows:
1996 1995 1994 --------------------- -------------------- -------------------- Weighted Weighted Weighted Number of Average Number of Average Number of Average Shares Price Shares Price Shares Price ------------------------------------------------------------------ Outstanding at beginning of year 2,837,462 $47.95 2,845,634 $47.80 2,524,886 $51.36 Granted 249,814 43.55 308,834 47.78 866,074 38.78 Expired/Forfeited (322,170) 52.23 (219,872) 53.44 (508,672) 51.94 Exercised (132,757) 37.06 (97,134) 34.48 (36,654) 27.57 - ------------------------------------------------------------------------------------------------------------ Outstanding at end of year 2,632,349 $47.55 2,837,462 $47.95 2,845,634 $47.80 - ------------------------------------------------------------------------------------------------------------ Options excercisable at year-end 1,926,689 $48.30 1,823,593 $48.95 1,290,051 $52.73 Weighted-average fair value of options granted during the year $7.77 $9.70
F-17 TAMBRANDS INC. AND SUBSIDIARIES The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The weighted-average assumptions used for grants in 1996 included dividend yields ranging from 3.7% to 4.5%, risk-free interest rates ranging from 5.7% to 6.9%, assumed expected volatilities ranging from 19.4% to 22.5% and expected lives of 6.5 years. The weighted-average assumptions used for grants in 1995 included dividend yields ranging from 3% to 4.2%, risk-free interest rates ranging from 5.7% to 7.5%, assumed expected volatilities ranging from 21.7% to 22.4% and expected lives of 6.5 years. At December 31, 1996 and 1995, the respective number of shares available for granting options were 2,494,714 and 2,442,356. The following table summarizes information about stock options outstanding at December 31, 1996:
Weighted Weighted Exercise Number Average Remaining Average Number Average Price Outstanding Contractual Life Price Exercisable Price - --------------------------------------------------------------------------- $21-29 7,225 1.4 Years $26.71 7,225 $26.71 32-37 561,982 7.6 36.48 454,520 36.45 38-45 685,602 7.8 43.03 429,707 42.93 46-56 1,060,432 6.2 51.66 720,906 52.58 59-69 317,108 6.1 63.39 314,331 63.43 - --------------------------------------------------------------------------- $21-69 2,632,349 6.9 $47.55 1,926,689 $48.30 - ---------------------------------------------------------------------------
NOTE 12 Segment and Geographic Information The Company operates in one industry segment, personal care products. The Company markets these products around the world. Sales are made and credit is granted to drug, grocery, variety and discount stores and other comparable outlets, as well as to wholesalers and distributors. A small number of significant customers are financed through highly leveraged capital structures, making them particularly sensitive to market interest rate changes and other economic variables. The Company had a significant customer that accounted for 12.2%, 11.1% and 10.3% of net sales in 1996, 1995 and 1994, respectively. In the geographic summary that follows, certain overhead costs are allocated to the geographic areas based on the benefit derived by the area. Restructuring charges of $46,221 reduced 1996 Operating income of the United States, Europe and Other international by $26,438, $18,483 and $1,300, respectively. F-18 Notes to Consolidated Financial Statements (continued) Segment and Geographic Information (continued) Information for the years ended December 31 is as follows:
1996 1995 1994 ------------------------------ Net sales United States $371,660 $391,011 $381,975 Europe 214,712 210,567 195,748 Other international 75,740 81,514 66,790 - -------------------------------------------------------------------- $662,112 $683,092 $644,513 - -------------------------------------------------------------------- Operating income United States $112,717 $134,194 $142,931 Europe 46,415 43,530 27,112 Other international 10,601 14,135 10,314 Unallocated items, net (31,238) (31,496) (28,742) Restructuring charge (46,221) -- -- - -------------------------------------------------------------------- $ 92,274 $160,363 $151,615 - -------------------------------------------------------------------- Identifiable assets at December 31 United States $238,744 $237,054 $212,346 Europe $159,287 169,665 152,295 Other international $ 11,935 15,330 14,434 - -------------------------------------------------------------------- $409,966 $422,049 $379,075 - --------------------------------------------------------------------
F-19 Independent Auditors' Report TAMBRANDS INC. AND SUBSIDIARIES [LOGO] KPMG To the Board of Directors and Shareholders of Tambrands Inc.: We have audited the accompanying consolidated balance sheets of Tambrands Inc. and subsidiaries as of December 31, 1996 and 1995 and the related consolidated statements of earnings and cash flows for each of the years in the three-year period ended December 31, 1996. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Tambrands Inc. and subsidiaries as of December 31, 1996 and 1995 and the results of their operations and cash flows for each of the years in the three-year period ended December 31, 1996, in conformity with generally accepted accounting principles. /s/ KPMG Peat Marwick LLP Stamford, Connecticut January 23, 1997 F-20 SCHEDULE II TAMBRANDS INC. AND SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNTS YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 ($ in thousands)
1996 1995 1994 ------------ ------------ ------------ Reserve deducted in the balance sheet from the asset to which it applies Allowance for doubtful accounts: Balance at beginning of period $1,667 $1,456 $1,453 Additions charged to cost and expenses 288 353 93 Reclassification of unrecoverable promotional allowance & other (6) 53 11 Write-off of bad debts (173) (195) (101) ------------ ------------ ------------ Balance at end of period $1,776 $1,667 $1,456 =========== =========== ===========
F-21 INDEPENDENT AUDITORS' REPORT The Board of Directors and Shareholders Tambrands Inc.: Under date of January 23, 1997, we reported on the consolidated balance sheets of Tambrands Inc. and subsidiaries as of December 31, 1996 and 1995, and the related consolidated statements of earnings and cash flows for each of the years in the three-year period ended December 31, 1996, as contained in the annual report on Form 10-K for the year 1996. In connection with our audits of the aforementioned consolidated financial statements, we also have audited the related financial statement schedule as listed in Item 14(a)2 of the annual report on Form 10-K for the year 1996. This financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion on this financial statement schedule based on our audits. In our opinion, the financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. KPMG Peat Marwick LLP /s/ KPMG Peat Marwick LLP Stamford, Connecticut January 23, 1997 F-22 Supplementary Financial Information and Quarterly Data ----------------------------------- Quarterly Data (unaudited)
First Second Third Fourth ------------- --------------- ------------------ -------------- (in millions, except per share amounts) 1996 1995 1996 1995 1996 1995 1996 1995 - ---------------------------------------------------------------------------------------------------------------- Net sales $169.0 $166.9 161.3 $176.3 $175.1 $178.1 $156.7 $161.8 Gross profit 113.1 111.6 107.2 117.9 114.5 116.8 100.9 105.2 Net earnings (loss) 23.6 22.8 13.0 13.0(a) (14.7)(b) 26.7 23.9 23.0 Net earnings (loss) per share 0.64 0.62 0.35 0.36(a) (0.40)(b) 0.73 0.65 0.63
(a) Includes the 1995 Litigation charge as described in the notes to the consolidated financial statements. (b) Includes the 1996 Restructuring charge as described in the notes to the consolidated financial statements. F-23 INDEX TO EXHIBITS ----------------- Exhibit Number Description ------- ----------- 3(1) Certificate of Incorporation of the Company, as amended through April 28, 1987, filed April 30, 1987 as Exhibit 4(a) to the Company's Form S-8 Registration Statement (Reg. No. 33-13902), incorporated herein by reference. 3(2) Certificate of Amendment of Certificate of Incorporation of the Company, dated April 24, 1990, filed May 15, 1990 as Exhibit 4(2) to the Company's Report on Form 10-Q for the quarter ended March 31, 1990, incorporated herein by reference. 3(3) Certificate of Amendment of Certificate of Incorporation of the Company, dated April 28, 1992, filed May 15, 1992 as Exhibit 4(2) to the Company's Report on Form 10-Q for the quarter ended March 31, 1992, incorporated herein by reference. 3(4)(a) Resolution of the Board of Directors of the Company authorizing an amendment to the By-Laws of the Company, adopted on January 28, 1997, filed herewith. 3(4)(b) By-Laws of the Company, as amended, filed herewith. 4(1) Description of the rights of security holders set forth in the Certificate of Incorporation of the Company, as amended through April 28,1987, filed April 30, 1987 as Exhibit 4(a) to the Company's Form S-8 Registration Statement (Reg. No. 33- 13902), incorporated herein by reference. 4(2) Description of the rights of security holders set forth in the Certificate of Amendment of Certificate of Incorporation of the Company, dated April 28, 1992, filed May 15, 1992 as Exhibit 4(2) to the Company's Report on Form 10-Q for the quarter ended March 31, 1992, incorporated herein by reference. 4(3) Rights Agreement, dated as of October 24, 1989, between the Company and First Chicago Trust Company of New York, which includes the Form of Right Certificate as Exhibit A and the Summary of Rights to Purchase Common Shares as Exhibit B, filed October 27, 1989 as Exhibit 1 to the Company's Form 8-A Registration Statement, incorporated herein by reference. 4(4)(a) Indenture dated as of December 1, 1993 between the Company and Citibank, N.A., as trustee, relating to the Company's Medium-Term Note Program, filed March 31, 1994 as Exhibit 4(4)(a) to the Company's Form 10-K Report for the year ended December 31, 1993, incorporated herein by reference. 4(4)(b) First Supplemental Indenture dated as of December 31, 1996, among the Company, Tampax Corporation, Tambrands Mfg., Inc. and Tambrands Sales Corp. and Citibank, N.A., as trustee, to Indenture dated as of December 1, 1993 between the Company and Citibank, N.A., as trustee, relating to the Company's Medium-Term Note Program, filed herewith. 4(4)(c) Form of Floating Rate Debt Security, filed December 16, 1993 as Exhibit 4-a to the Company's Report on Form 8-K, incorporated herein by reference. 4(4)(d) Form of Fixed Rate Debt Security, filed December 16, 1993 as Exhibit 4-b to the Company's Report on Form 8-K, incorporated herein by reference. Management Contracts and Compensatory Plans and Arrangements (Exhibits 10(1) - 10(20)) ----------------------- 10(1)(a) 1981 Long Term Incentive Plan, as amended through November 4, 1988, filed as Exhibit 10(1)(a) to the Company's Report on Form 10-K for the year 1988, incorporated herein by reference. 10(1)(b) Amendment to 1981 Long Term Incentive Plan, dated as of February 27, 1990, filed as Exhibit 10(1)(b) to the Company's Report on Form 10-K for the year 1989, incorporated herein by reference. 10(1)(c) Amendment to 1981 Long Term Incentive Plan, effective as of June 25, 1991, filed as Exhibit 10(1)(c) to the Company's Report on Form 10-K for the year 1991, incorporated herein by reference. 10(1)(d) Amendment to 1981 Long Term Incentive Plan, effective as of June 23, 1992, filed as Exhibit 10(1)(d) to the Company's Report on Form 10-K for the year 1992, incorporated herein by reference. 10(1)(e) Amendment to 1981 Long Term Incentive Plan, effective as of February 23, 1993, filed as Exhibit 10(1)(e) to the Company's Report on Form 10-K for the year 1992, incorporated herein by reference. 10(1)(f) Addendum to 1981 Long Term Incentive Plan, filed April 30, 1987 as Exhibit 28(a) to the Company's Form S-8 Registration Statement (Reg. No. 33-13902), incorporated herein by reference. 10(2)(a) 1981 Incentive Stock Option Plan, as amended through April 30, 1987, filed April 30, 1987 as Exhibit 28(a) to the Company's Form S-8 Registration Statement (Reg. No. 33-13902), incorporated herein by reference. 10(2)(b) Amendment to 1981 Incentive Stock Option Plan, dated as of February 27, 1990, filed as Exhibit 10(2)(b) to the Company's Report on Form 10-K for the year 1989, incorporated herein by reference. 10(2)(c) Amendment to 1981 Incentive Stock Option Plan, effective as of June 23, 1992, filed as Exhibit 10(2)(c) to the Company's Report on Form 10-K for the year 1992, incorporated herein by reference. 10(2)(d) Amendment to 1981 Incentive Stock Option Plan, effective as of February 23, 1993, filed as Exhibit 10(2)(d) to the Company's Report on Form 10-K for the year 1992, incorporated herein by reference. 10(3)(a) 1991 Stock Option Plan, filed as Exhibit 10(3) to the Company's Report on Form 10-K for the year 1990, incorporated herein by reference. 10(3)(b) First Amendment to 1991 Stock Option Plan, effective as of July 1, 1991, filed as Exhibit 10(3)(b) to the Company's Report on Form 10-K for the year 1991, incorporated herein by reference. 10(3)(c) Second Amendment to 1991 Stock Option Plan, effective as of July 1, 1991, filed as Exhibit 10(3)(c) to the Company's Report on Form 10-K for the year 1991, incorporated herein by reference. 10(3)(d) Third Amendment to 1991 Stock Option Plan, effective as of June 23, 1992, filed as Exhibit 10(3)(d) to the Company's Report on Form 10-K for the year 1992, incorporated herein by reference. 10(3)(e) Fourth Amendment to 1991 Stock Option Plan, effective as of February 23, 1993, filed as Exhibit 10(3)(e) to the Company's Report on Form 10-K for the year 1992, incorporated herein by reference. 10(3)(f) Fifth Amendment to 1991 Stock Option Plan, effective as of February 23, 1993, filed as Exhibit 10(3)(f) to the Company's Report on Form 10-K for the year 1992, incorporated herein by reference. 10(3)(g) Addendum to 1991 Stock Option Plan, filed as Exhibit 10(3)(g) to the Company's Report on Form 10-K for the year 1992, incorporated herein by reference. 10(3)(h) Sixth Amendment to 1991 Stock Option Plan, effective as of February 1, 1994, filed as Exhibit 10(3)(h) to the Company's Report on Form 10-K for the year 1993, incorporated herein by reference. 10(3)(i) Seventh Amendment to 1991 Stock Option Plan, effective as of January 28, 1997, filed herewith. 10(4)(a) 1989 Restricted Stock Plan, as amended through December 31, 1990, filed as Exhibit 10(4) to the Company's Report on Form 10-K for the year 1990, incorporated herein by reference. 10(4)(b) Amendment to 1989 Restricted Stock Plan, effective as of February 23, 1993, filed as Exhibit 10(4)(b) to the Company's Report on Form 10-K for the year 1992, incorporated herein by reference. 10(4)(c) Amendment to 1989 Restricted Stock Plan, effective as of January 28, 1997, filed herewith. 10(5) Supplemental Executive Retirement Plan, effective July 1, 1986, as amended and restated effective July 1, 1994, filed as Exhibit 10(6) to the Company's Report on Form 10-Q for the quarter ended June 30, 1994, incorporated herein by reference. 10(6) Trust Agreement between the Company and The Northern Trust Company, dated as of October 31, 1988, filed as Exhibit 10(6) to the Company's Report on Form 10-K for the year 1988, incorporated herein by reference. 10(7) Pension Plan for Non-Employee Directors, filed as Exhibit 10(10) to the Company's Report on Form 10- K for the year 1990, incorporated herein by reference. 10(8)(a) 1992 Directors Stock Incentive Plan, filed as Exhibit 10(11) to the Company's Report on Form 10- K for the year 1991, incorporated herein by reference. 10(8)(b) First Amendment to 1992 Directors Stock Incentive Plan, effective as of August 18, 1992, filed as Exhibit 10(8)(b) to the Company's Report on Form 10-K for the year 1992, incorporated herein by reference. 10(8)(c) Second Amendment to 1992 Directors Stock Incentive Plan, effective as of February 23, 1993, filed as Exhibit 10(8)(c) to the Company's Report on Form 10-K for the year 1992, incorporated herein by reference. 10(8)(d) Third Amendment to the 1992 Directors Stock Incentive Plan, effective as of August 24, 1993, filed as Exhibit 10(3) to the Company's Report on Form 10-Q/A for the quarterly period ended September 30, 1993, incorporated herein by reference. 10(8)(e) Fourth Amendment to Tambrands Inc. 1992 Directors Stock Incentive Plan, effective as of April 28, 1994, filed as Exhibit 10(7) to the Company's Report on Form 10-Q for the quarter ended June 30, 1994, incorporated herein by reference. 10(8)(f) Fifth Amendment to the Tambrands Inc. 1992 Directors Stock Incentive Plan, effective as of September 1, 1994, filed as Exhibit 10(4) to the Company's Report on Form 10-Q for the quarter ended September 30, 1994, incorporated herein by reference. 10(9)(a) Employment Protection Agreement between the Company and Mr. Edward T. Fogarty, dated as of May 31, 1994, filed as Exhibit 10(1) to the Company's Report on Form 10-Q for the quarter ended June 30, 1994, incorporated herein by reference; 10(9)(b) Amended and Restated Employment Protection Agreement between the Company and Mr. Thomas J. Mason, dated as of October 1, 1996, filed herewith; 10(9)(c) Employment Protection Agreement between the Company and Mr. Thomas Soper, III, dated as of October 1, 1996, filed as Exhibit 10(9)(d) to the Company's Report on Form 10-K for the year 1995, incorporated herein by reference; 10(9)(d) Employment Protection Agreement between the Company and Mr. Michael S. Krause, dated as of July 5, 1995, filed herewith; 10(9)(e) Employment Protection Agreement between the Company and Ms. Susan J. Riley, dated as of December 15, 1994, filed herewith; The Company has agreements similar to the agreements listed as Exhibits 10(9)(c), 10(9)(d) and 10(9)(e) with its other executive officers. 10(10) Resolution of the Board of Directors of the Company with respect to the compensation of the Board, adopted on December 13, 1994, filed as Exhibit 10(11) to the Company's Report on Form 10- K for the year 1994, incorporated herein by reference. 10(11) 1995 Directors Stock and Deferred Compensation Plan, effective as of July 1, 1995, included as Exhibit A to the Company's Proxy Statement, dated March 10, 1995, for the annual meeting of shareholders held on April 25, 1995, incorporated herein by reference. 10(12) Executive Severance Program of the Company, filed as Exhibit 10(15) to the Company's Report on Form 10-K for the year 1989, incorporated herein by reference. 10(13) 1981 Annual Incentive Plan of the Company, as amended through March 30, 1995, filed as Exhibit 10(1) to the Company's Report on Form 10-Q for the quarter ended March 31, 1995, incorporated herein by reference. 10(14) Letter Agreement between the Company and Mr. Edward T. Fogarty, dated as of April 25, 1994, filed as Exhibit 10(1) to the Company's Report on Form 10-Q for the quarter ended June 30, 1994, incorporated herein by reference. 10(15) Letter Agreement between the Company and Mr. Thomas Soper, III, dated as of August 29, 1994, filed as Exhibit 10(7) to the Company's Report on Form 10-K for the year 1994, incorporated herein by reference. 10(16) Letter Agreement between the Company and Mr. Thomas J. Mason, dated as of October 18, 1994, filed as Exhibit 10(18) to the Company's Report on Form 10-K for the year 1994, incorporated herein by reference. 10(17) Letter Agreement between the Company and Mr. Michael S. Krause, dated as July 5, 1995, filed as Exhibit 10(1) to the Company's Report on Form 10-Q for the quarter ended September 30, 1995, incorporated herein by reference. 10(18) Restricted Stock Agreement between the Company and Mr. Edward T. Fogarty, dated May 31, 1994, filed as Exhibit 10(3) to the Company's Report on Form 10-Q for the quarter ended June 30, 1994, incorporated herein by reference. 10(19) Stock Option Agreement between the Company and Mr. Edward T. Fogarty, dated May 31, 1994, filed as Exhibit 10(4) to the Company's Report on Form 10-Q for the quarter ended June 30, 1994, incorporated herein by reference. 10(20) Tambrands Inc. 1996 Non-Employee Director Stock Unit Plan, effective as of April 23, 1996, filed as Exhibit 10(1) to the Company's Report on Form 10-Q for the quarter ended June 30, 1996, incorporated herein by reference. 10(21)(a) Commercial Paper Dealer Agreement between the Company and Merrill Lynch Money Markets, Inc., dated November 18, 1992, filed as Exhibit 10(15) (a) to the Company's Report on Form 10-K for the year 1992, incorporated herein by reference. 10(21)(b) Letter Agreement between the Company and the First National Bank of Chicago, dated as of November 18, 1992, filed as Exhibit 10(15)(b) to the Company's Report on Form 10-K for the year 1992, incorporated herein by reference. 10(21)(c) Amended and Restated Credit Agreement by and among the Company, Tambrands Limited, the signatory banks thereto and The Bank of New York, as agent, dated as of September 6, 1994, filed as Exhibit 10(5) to the Company's Report on Form 10-Q for the quarter ended September 30, 1994, incorporated herein by reference. 10(21)(d) Amendment No. 1, dated as of May 5, 1995, to the Amended and Restated Credit Agreement, dated as of September 6, 1994, by and among the Company, Tambrands Limited, the signatory banks thereto and The Bank of New York, as agent, filed as Exhibit 10(3) to the Company's Report on Form 10-Q for the quarter ended June 30, 1995, incorporated herein by reference. 10(21)(e) Amendment No. 2, dated as of December 13, 1996, to the Amended and Restated Credit Agreement, dated as of September 6, 1994, by and among the Company, Tambrands Limited, the signatory banks thereto and The Bank of New York, as agent, filed herewith. 12 Computation of Ratio of Earnings to Fixed Charges, filed herewith. 21 Subsidiaries of the Company, filed herewith. 23 Independent Auditors' Consent, filed herewith. 24 Powers of attorney, filed herewith. 27 Financial Data Schedules, filed herewith (in electronic format only). EX-3.4.A 2 RESOLUTION OF BOARD OF DIRECTORS OF THE COMPANY EXHIBIT 3(4)(a) Amendment to Bylaws ------------------- RESOLVED, that Article II, Section 8 of the Bylaws of the Corporation -------- be, and it hereby is, amended and restated in its entirety to read as set forth in the attached Exhibit B. EXHIBIT B --------- PROPOSED REVISION TO BYLAWS --------------------------- Article II, Section 8 - --------------------- Each director shall retire from the Board not later than the date of the annual meeting of the stockholders of the Corporation next following his or her 70th birthday. EX-3.4.B 3 BY-LAWS OF THE COMPANY EXHIBIT 3(4)(b) BY-LAWS OF TAMBRANDS INC. -------------- as amended through January 28, 1997 ARTICLE I STOCKHOLDERS. ------------ Section 1. The annual meeting of the stockholders of the Corporation shall be held, at such time and at such place within or without the State of Delaware as may be fixed by the Board of Directors from time to time, for the purpose of electing directors and for the transaction of such other business as may properly be brought before the meeting. Any previously scheduled annual meeting of the stockholders may be postponed by resolution of the Board of Directors upon public notice given on or prior to the date previously scheduled for such annual meeting of stockholders. To be properly brought before an annual meeting, business must be (a) specified in the notice of meeting (or any --- supplement thereto) given by or at the direction of the Board of Directors, (b) --- otherwise properly brought before the meeting by or at the direction of the Board of Directors, or (c) otherwise properly brought before the meeting by a --- stockholder of the Corporation who was a stockholder of record at the time of giving of notice provided for in this Section 1, who is entitled to vote at the meeting and who complied with the notice procedures set forth in this Section 1. For business to be properly brought before an annual meeting by a stockholder, if such business is related to the election of directors of the Corporation, the procedures in Article II, Section 9 of these By-Laws must be complied with. If such business relates to any other matter, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a stockholder's notice shall be delivered to or mailed to and received at the principal executive offices of the Corporation not less than 60 days nor more than 90 days prior to the first anniversary of the preceding year's annual meeting; provided, however, that in the event that the date of the annual meeting is advanced by more than 30 days or delayed by more than 60 days from such anniversary date, notice by the stockholder to be timely must be so delivered not earlier than the 90th day prior to such annual meeting and not later than the close of business on the later of the 60th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made. Such stockholder's notice shall set forth in writing as to each matter the stockholder proposes to bring before the annual meeting (i) a brief description --- of the business desired to be brought before the annual meeting, the reasons for conducting such business at the annual meeting, and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made; and (ii) as to the stockholder giving the notice ---- and the beneficial owner, if any, on whose behalf the nomination or proposal is made (A) the name and address of such stockholder, as they appear on the Corporation's books, and of such beneficial owner and (B) the class and number of shares of the Corporation which are owned beneficially and of record by such stockholder and such beneficial owner. Notwithstanding anything in these By- Laws to the contrary, no business shall be conducted at any annual meeting except in accordance with the -2- procedures set forth in this Section 1. The Chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Section 1, and if he should so determine, the Chairman shall declare to the meeting that any such business not properly brought before the meeting shall not be transacted. For purposes of this Section 1 and Article II, Section 9, "public announcement" shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In addition to the provisions of this Section 1, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth herein. Nothing in these By-Laws shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act. Section 2. Special meetings of the stockholders may be held only upon call of the Board of Directors or of the Executive Committee or of the Chairman of the Board or of the President, at such time and at such place within or without the State of Delaware as may be fixed by the Board of Directors or by the Executive Committee or by the Chairman of the Board or by the President, as the case may be, and as may be stated in the notice setting forth such call. Any previously scheduled special meeting of the stockholders -3- may be postponed by resolution of the Board of Directors upon public notice given on or prior to the date previously scheduled for such special meeting of stockholders. The purpose or purposes of any special meeting of stockholders shall be set forth in the notice of meeting, and, except as otherwise required by law or by the Certificate of Incorporation, no business shall be transacted at any special meeting of stockholders other than the items of business stated in the notice of meeting. The Chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Section 2, and if he should so determine, the Chairman shall declare to the meeting that any such business not properly brought before the meeting shall not be transacted. Section 3. Notice of the time and place of every meeting of stockholders shall be delivered personally or mailed not less than ten days nor more than 60 days prior to such meeting to each stockholder of record entitled to vote thereat, who shall have furnished a written address to the Secretary of the Corporation for the purpose. Such further notice shall be given as may be required by law. Meetings may be held without notice, if all stockholders entitled to vote are present, or if notice is waived by those not present. Section 4. The holders of record of a majority of the shares of the capital stock of the Corporation, issued and outstanding, and entitled to vote, present in person or by proxy shall, except as otherwise provided by -4- law, constitute a quorum at all meetings of the stockholders. Whether or not a quorum is present at the meeting, the Chairman of the meeting or the holders of a majority of such shares so present or represented may adjourn the meeting from time to time. The stockholders present at any duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of sufficient stockholders to constitute the remaining stockholders less than a quorum. Section 5. Meetings of the stockholders shall be presided over by the Chairman of the Board, or if he is not present, by the President, or if neither of them is present, by a Vice President, or, if neither the Chairman of the Board, the President nor a Vice President is present, by a Chairman to be chosen at the meeting. The Secretary of the Corporation, or in his absence, an Assistant Secretary, shall act as Secretary of the meeting, or, if neither the Secretary nor an Assistant Secretary is present, then the meeting shall choose its Secretary. Section 6. Each stockholder entitled to vote at any meeting shall have one vote in person or by proxy for each share of stock held by him which has voting power upon the matter in question at the time; but no proxy shall be voted on after three years from its date, unless such proxy provides for a longer period. Section 7. Unless otherwise provided by express provision of applicable law, the Certificate of Incorporation or these By-Laws, all matters to be decided at a meeting of stockholders shall be by the vote of a majority of the shares present, either in person or by proxy, that are entitled to vote -5- at such meeting, except that the election of directors shall be by a plurality of votes cast. At all elections of directors by the stockholders the voting shall be by ballot. The Corporation shall, in advance of any meeting of stockholders, appoint one or more inspectors to act at the meeting and make a written report thereof. The Corporation may designate one or more persons as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting of stockholders, the Chairman of such meeting shall appoint one or more inspectors to act at such meeting. No director or candidate for the office of director shall be appointed as such inspector. Each inspector shall first take and subscribe an oath or affirmation faithfully to execute the duties of inspector at such meeting with strict impartiality and according to the best of his ability, shall make a certificate of the result of the vote taken after the balloting, and shall have such other duties as are prescribed by law. The Chairman of the meeting shall fix and announce at the meeting the date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at the meeting. Section 8. In order to determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action (other than action by consent, which is the subject of Article I, Section 9 of these By-Laws), the Board of Directors may fix a record date, -6- which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than 60 nor less than 10 days before the date of any such meeting, nor more than 60 days prior to any other such action. A determination of the stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting, provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. Section 9. (a) Unless otherwise provided in the Certificate of Incorporation, any action required to be taken at any annual or special meeting of the stockholders of the Corporation, or any action which may be taken at any annual or special meeting of such stockholders, may, subject to the provisions of this Section 9, be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the actions so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the Corporation. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. (b) Every written consent shall bear the date of signature of each stockholder who signs the consent and no written consent shall be effective to take the corporate action referred to therein unless, within 60 -7- days of the earliest dated consent delivered to the Corporation, written consents signed by a sufficient number of holders to take action are delivered to the Corporation. (c) The record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be fixed by the Board of Directors. Any stockholder seeking to have the stockholders authorize or take corporate action by written consent without a meeting shall, by written notice to the Secretary of the Corporation, request the Board of Directors to fix a record date. Upon receipt of such a request, the Secretary of the Corporation shall, as promptly as practicable, direct the Chairman or the President to call a special meeting of the Board of Directors to be held as promptly as practicable, but in any event not more than 10 days following the date of receipt of such a request. At such a meeting, the Board of Directors shall fix a record date which shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which shall not be more than 10 days after the date that the resolution fixing the record date is adopted by the Board of Directors. Notice of the record date shall be published in accordance with the rules and policies of any stock exchange on which securities of the Corporation are then listed or, if the securities of the Corporation are not listed on a stock exchange, then notice of the record date shall be published in accordance with the rules and policies of the National Association of Securities Dealers Automatic Quotation National Market System. If no record date has been so fixed by the Board of Directors, the record date for determining the stockholders entitled to -8- consent to corporate action in writing without a meeting, where no prior action by the Board of Directors is required by the Delaware General Corporation Law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation. If no date has been fixed by the Board of Directors and prior action by the Board of Directors is required by the Delaware General Corporation Law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action. (d) In the event of the delivery to the Corporation of a written consent or consents purporting to represent the requisite voting power to authorize or take corporate action and/or related revocations, the Secretary of the Corporation shall provide for the safekeeping of such consents and revocations and shall, as promptly as practicable, engage inspectors for the purpose of promptly performing a ministerial review of the validity of the consents and revocations. No action by written consent without a meeting shall be effective until such inspectors have completed their review, determined that the requisite number of valid and unrevoked consents has been obtained to authorize or take actions specified in the consents and certified such determination for entry in the records of the Corporation for the purpose of recording the proceedings of meetings of the stockholders. (e) For purposes of this Section 9, delivery to the Corporation shall be effected by delivery to its registered office in the State of -9- Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the Corporation's registered office shall be by hand or by certified or registered mail, return receipt requested. ARTICLE II DIRECTORS. --------- Section 1. The number of directors shall be fixed by the Board of Directors from time to time by appropriate resolution, provided that the number of directors shall not be less than three. A director shall hold office until his successor is elected and has qualified. A director need not be a stockholder. One-third of the total number of directors shall constitute a quorum for the transaction of business, provided that a quorum shall never be less than two directors. If at any meeting of the Board of Directors there shall be less than a quorum present, a majority of those present may adjourn the meeting from time to time until a quorum shall have been obtained. The Board of Directors may designate the Chairman of the Board as an officer. Section 2. Whenever any vacancy shall have occurred in the Board of Directors by reason of death, resignation, increase in the number of directors, or otherwise, it shall be filled by a majority of the remaining directors, though less than a quorum, and the person so chosen shall hold office for the unexpired term of the director whom he will have succeeded, or in a -10- case of the increase of the number of directors, the person so chosen shall hold office until his successor is elected and has qualified. Section 3. Meetings of the Board of Directors shall be held at such place within or without the State of Delaware as may from time to time be fixed by resolution of the Board, or as may be specified in the notice of any meeting. Regular meetings of the Board of Directors shall be held at such times as may from time to time be fixed by resolution of the Board. Notice need not be given of regular meetings of the Board held at times fixed by resolution of the Board. A meeting of the Board may be held without notice immediately after the annual meeting of stockholders at the same place at which such meeting was held. Special meetings of the Board of Directors may be called at any time by or at the direction of the Board of Directors itself, the Executive Committee, the Chairman of the Board or the President or, in the event of the absence or disability of the Chairman and the President, by or at the direction of the Secretary by oral, telegraphic or written notice to each director, duly served or sent at least 24 hours before such meeting or, if mailed, mailed no later than the fourth calendar day before such meeting. Meetings may be held at any time without notice if all the directors are present or if those not present waive notice of the meeting, in writing. Section 4. The Board of Directors may, in its discretion, by resolution passed by a majority of the whole Board, designate an Executive Committee to consist of the Chairman or the President and such number of other -11- directors (not less than two) as the Board may from time to time determine, which Committee shall have, and may exercise when the Board is not in session, all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it, may declare a dividend or dividends, may authorize the issuance of stock and may adopt a certificate of ownership and merger pursuant to Section 253 (or its successor provision) of the Delaware General Corporation Law; but the power and authority of the Executive Committee shall be subject to the provisions of Section 141(c) (or its successor provision) of the Delaware General Corporation Law and any other applicable statute. The Board may designate one or more directors as alternate members of the Executive Committee, who may replace any absent or disqualified member at any meeting of the Executive Committee. The Board shall have the power at any time to change the membership of the Executive Committee, or to fill vacancies in it, or to dissolve it. The Executive Committee may make such rules for the conduct of its business as it shall from time to time deem necessary or appropriate. A majority of the members of the Executive Committee shall constitute a quorum. Section 5. The Board of Directors may, in its discretion, by resolution passed by a majority of the whole Board, appoint one or more other Committees in addition to the Executive Committee, each consisting of one or more of the directors of the Corporation, which shall have and may exercise such of the powers and authority of the Board of Directors in the management -12- of the business and affairs of the Corporation as shall be conferred by the resolution appointing it, and which, in furtherance thereof, may authorize the seal of the Corporation to be affixed to all papers which may require it; but the power and authority of any such Committee shall be subject to the provisions of Section 141(c) (or its successor provision) of the Delaware General Corporation law and any other applicable statute. The Board may designate one or more directors as alternate members of any such Committee, who may replace any absent or disqualified member at any meeting of such Committee. The Board shall have the power at any time to change the membership of any such Committee, or to fill vacancies in it, or to dissolve it. Any such Committee may make such rules for the conduct of its business as it shall from time to time deem necessary or appropriate. Except as may be otherwise provided by resolution of the Board, a majority of the members of any such Committee, composed of more than two members, shall constitute a quorum. Section 6. Each director who is not also an officer of the Corporation shall receive as compensation for all his or her services as a Director, an annual fee plus an additional fee for attendance at each meeting of the Board of Directors and each meeting of any committee of the Board of which he or she is a member, each such fee to be in such amount as may from time to time be fixed by resolution of the Board. Directors who are also officers shall receive no additional compensation for their services as Directors of the Corporation. -13- Section 7. The Board of Directors may (but need not) elect one of the directors as Chairman of the Board, but a director so elected shall not be an officer or employee of the Corporation, and shall not exercise the functions of an officer, unless expressly so designated as provided in Section 1 of Article III. The Chairman of the Board shall serve until the meeting of the Board next following the ensuing annual meeting of stockholders but may be removed at any time by the affirmative vote of a majority of the members of the Board then in office. Section 8. Each director shall retire from the Board not later than the date of the annual meeting of the stockholders of the Corporation next following his or her 70th birthday. Section 9. Nomination of Directors. (a) Only persons who are ----------------------- nominated in accordance with the procedures set forth in this Section 9 shall be eligible for election as directors of the Corporation. Nominations of persons for election to the Board of Directors of the Corporation may be made at any annual meeting of stockholders by or at the direction of the Board of Directors or by any stockholder of the Corporation entitled to vote for the election of directors at the meeting who was a stockholder of record at the time of giving of notice provided for in this Section 9 and who complies with the notice procedures set forth in this Section 9. Any such nomination by a stockholder shall be made pursuant to timely notice in writing to the Secretary of the Corporation. To be timely notice for an annual meeting, a stockholder's notice shall be delivered to the Secretary of the Corporation at the principal executive offices of the Corporation not less than 60 days nor -14- more than 90 days prior to the first anniversary of the preceding year's annual meeting; provided, however, that in the event that the date of the annual meeting is advanced by more than 30 days or delayed by more than 60 days from such anniversary date, notice by the stockholder to be timely must be so delivered not earlier than the 90th day prior to such annual meeting and not later than the close of business on the later of the 60th day prior to such annual meeting or the 10th day following the day on which public announcement (as defined in Article I, Section 1) of the date of such meeting is first made. Notwithstanding anything in the foregoing sentence to the contrary, in the event that the number of directors to be elected to the Board of Directors of the Corporation is increased and there is no public announcement naming all of the nominees for director or specifying the size of the increased Board of Directors made by the Corporation at least 70 days prior to the first anniversary of the preceding year's annual meeting, a stockholder's notice required by this Section 9 shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary of the Corporation at the principal executive offices of the Corporation not later than the close of business on the 10th day following the day on which such public announcement is first made by the Corporation. Such stockholder's notice shall set forth in writing (i) as to each person whom the stockholder proposes to nominate for election or re-election as a director (A) the name, age, business address and residence address of such person, (B) the principal occupation or employment of such person, (C) the number of shares of stock of the Corporation which are -15- beneficially owned by such person, and (D) any other information relating to such person that is required to be disclosed in connection with the solicitation of proxies for election of directors, or as otherwise required, in each case pursuant to Regulation 14A under the Exchange Act (including, without limitation, such person's written consent to being named in a proxy statement as a nominee and to serving as a director if elected); and (ii) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination is made (A) the name and address of such stockholder, as they appear on the Corporation's books, and of such beneficial owner and (B) the class and number of shares of the Corporation which are owned beneficially and of record by such stockholder and such beneficial owner. (b) Nominations of persons for election to the Board of Directors of the Corporation may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Corporation's notice of meeting (i) by or at the direction of the Board of Directors or (ii) provided that the Board of Directors has determined that directors shall be elected at such special meeting, by any stockholder of the Corporation who is a stockholder of record at the time of giving of notice provided for in this Section 9, who shall be entitled to vote at the meeting and who complies with the notice procedures set forth in this Section 9. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board of Directors, any such stockholder may nominate a person or persons (as the case may be), for election to such position(s) as -16- specified in the Corporation's notice of meeting, if the stockholder's notice shall be delivered to the Secretary of the Corporation at the principal executive offices of the Corporation not earlier than the 90th day prior to such special meeting and not later than the close of business on the later of the 60th day prior to such special meeting or the 10th day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. (c) At the request of the Board of Directors, any person nominated by the Board of Directors for election as a director shall furnish to the Secretary of the Corporation that information required to be set forth in a stockholder's notice of nomination which pertains to the nominee. No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in this Section 9. The Chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the procedures prescribed by these By-Laws and in that event the defective nomination shall be disregarded. In addition to the provisions of this Section 9, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth herein. -17- ARTICLE III OFFICERS. -------- Section 1. The Board of Directors as soon as may be after the election held in each year shall choose a President of the Corporation, one or more Vice Presidents, a Secretary and a Treasurer. One or more of the Vice Presidents may be designated Executive Vice President, and one or more of the Vice Presidents may be designated Senior Vice President. The Board of Directors or the Executive Committee may from time to time appoint such additional Vice Presidents, such Assistant Vice Presidents, Assistant Secretaries and Assistant Treasurers and such other officers as it may deem proper and may fill vacancies in any office. The office of Secretary and Treasurer may be held by the same person and a Vice President of the Corporation may be either the Secretary or the Treasurer. The President shall be chosen from the directors. The Board of Directors may at any time choose a Chairman of the Board. Section 2. The term of office of all officers shall be one year, or until their respective successors are chosen, but any officer may be removed from office at any time by the affirmative vote of a majority of the members of the Board then in office. Section 3. The officers of the Corporation shall each have such powers and duties as generally pertain to their respective offices, as well as such powers and duties as from time to time may be conferred by the Board of Directors or by the Executive Committee. The Treasurer and the Assistant -18- Treasurers may be required to give bond for the faithful discharge of their duties, in such form and with such surety or sureties as the Board of Directors may from time to time prescribe. ARTICLE IV INDEMNIFICATION. --------------- Section 1. Nature of Indemnity. The Corporation shall indemnify any ------------------- person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was or has agreed to become a director or officer of the Corporation, or is or was serving or has agreed to serve at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, including an employee benefit plan, or by reason of any action alleged to have been taken or omitted in such capacity, and may indemnify any person who was or is a party or is threatened to be made a party to such an action, suit or proceeding by reason of the fact that he is or was or has agreed to become an employee or agent of the Corporation, or is or was serving or has agreed to serve at the request of the Corporation as an employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including an employee benefit plan, against expenses (including attorneys' fees), judgments, fines, excise taxes or penalties (including those payable under the Employee Retirement Income Security Act of 1974, as amended) and amounts paid in settlement actually and reasonably -19- incurred by him or on his behalf in connection with such action, suit or proceeding and any appeal therefrom, except to the extent prohibited by the Delaware General Corporation Law, as the same exists or may hereafter be amended (but in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than said law permitted the Corporation to provide prior to such amendment), provided, -------- however, that, except as provided in Section 5 of this Article IV, the - ------- Corporation shall indemnify any such person seeking indemnification in connection with an action, suit or proceeding (or part thereof) initiated by such person only if such action, suit or proceeding (or part thereof) was authorized by the Board of Directors. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, ---- ---------- shall not, of itself, create a presumption that the person did not act in accordance with any applicable standard of conduct under the Delaware General Corporation Law making it permissible for the Corporation to indemnify the claimant for the amount claimed. Section 2. Successful Defense. To the extent that a director, ------------------ officer, employee or agent of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Section 1 hereof or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith. Section 3. Determination That Indemnification Is Proper. Any -------------------------------------------- indemnification of a director or officer of the Corporation under Section 1 of -20- this Article IV (unless ordered by a court) shall be made by the Corporation unless a determination is made that indemnification of the director or officer is not proper in the circumstances because he has not met the applicable standard of conduct or because indemnification would otherwise be prohibited under the Delaware General Corporation Law. Any indemnification of an employee or agent of the Corporation under Section 1 of this Article IV (unless ordered by a court) may be made by the Corporation upon a determination that indemnification of the employee or agent is proper in the circumstances because he has met the applicable standard of conduct and indemnification is not otherwise prohibited. Any such determination shall be made (a) if requested by the indemnitee, by Independent Counsel (as hereinafter defined) in a written opinion to the Board of Directors, a copy of which shall be delivered to the indemnitee, or (b) if no request is made by the indemnitee for a determination by Independent Counsel, (i) by the Board of Directors by a majority vote of a quorum consisting of Disinterested Directors (as hereinafter defined), or (ii) if a quorum of the Board of Directors consisting of Disinterested Directors is not obtainable, or even if obtainable, such quorum of Disinterested Directors so directs, by Independent Counsel in a written opinion to the Board of Directors, a copy of which shall be delivered to the indemnitee, or (iii) by the stockholders of the Corporation. In the event the determination of entitlement to indemnification is to be made by Independent Counsel at the request of the indemnitee, Independent Counsel shall be selected by the indemnitee unless the indemnitee shall request that such selection be made by the Board of Directors, in which event Independent Counsel shall be selected by the Board of Directors. If it -21- is so determined that the indemnitee is entitled to indemnification, payment to the indemnitee shall be made within 10 days after such determination. In making a determination with respect to entitlement to indemnification hereunder, the person, persons or entity making such determination shall presume that the indemnitee is entitled to indemnification under this Article IV, and the Corporation shall have the burden of proof to overcome that presumption in connection with the making by any person, persons or entity of any determination contrary to that presumption. For purposes of this Section 3, "Disinterested Director" means a director of the Corporation who is not and was not a party to the matter in respect of which indemnification is sought by the indemnitee, and "Independent Counsel" means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent: (a) the Corporation or the indemnitee in any matter material to either such party, or (b) any other party to the matter giving rise to a claim for indemnification. Notwithstanding the foregoing, the term "Independent Counsel" shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Corporation or the indemnitee in an action to determine the indemnitee's rights under this Article IV. Section 4. Advance Payment of Expenses. Expenses (including --------------------------- attorney's fees) incurred by a director or officer in defending any civil, criminal, administrative or investigative action, suit or proceeding shall be -22- paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the director or officer to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation as authorized in this Article IV. Such expenses (including attorney's fees) incurred by other employees and agents may be so paid upon such terms and conditions, if any, as the Board of Directors deems appropriate. The Board of Directors may authorize the Corporation's counsel to represent such director, officer or employee or agent in any action, suit or proceeding, whether or not the Corporation is a party to such action, suit or proceeding. Section 5. Procedure for Indemnification of Directors and Officers. ------------------------------------------------------- Any indemnification of a director or officer of the Corporation under Sections 1 and 2 of this Article IV, or advance of costs, charges or expenses to a director or officer under Section 4 of this Article IV, shall be made promptly, and in any event within 30 days, upon the written request of the director or officer. If a determination by the Corporation that the director or officer is entitled to indemnification or advances pursuant to this Article IV is required, and the Corporation fails to respond within 30 days to a written request therefor, the Corporation shall be deemed to have approved such request. If the Corporation denies a written request for indemnification or advances, in whole or in part, or if payment in full pursuant to such request is not made within 30 days, the right to indemnification or advances as granted by this Article IV shall be enforceable by the director or officer in any court of competent jurisdiction. Such -23- person's costs and expenses incurred in connection with successfully establishing his right to indemnification or advances, in whole or in part, in any such action shall also be indemnified by the Corporation. It shall be a defense to any such action (other than an action brought to enforce a claim for advance of costs, charges and expenses under Section 4 of this Article IV where the required undertaking, if any, has been received by the Corporation) that the claimant has not met the applicable standard of conduct or that indemnification is otherwise prohibited under the Delaware General Corporation Law, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including the Board of Directors, Independent Counsel and the Corporation's stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he has met the applicable standard of conduct, nor the fact that there has been an actual determination by the Corporation (including the Board of Directors, Independent Counsel and the Corporation's stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct. Section 6. Survival; Preservation of Other Rights. The foregoing -------------------------------------- provisions of this Article shall be deemed to be a contract between the Corporation and each director, officer, employee and agent who serves in such capacity at any time while these provisions and the relevant provisions of the Delaware General Corporation Law are in effect, and any repeal or modification thereof shall not affect any right or obligation then existing with respect to -24- any state of facts then or previously existing or any action, suit or proceeding previously or thereafter brought or threatened based in whole or in part upon any such state of facts. Such contract may not be modified retroactively without the consent of such director, officer, employee or agent. The indemnification provided by this Article shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any by-law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall inure to the benefit of the heirs, executors and administrators of such a person and shall continue as to a person who has ceased to be a director, officer, employee or agent. The Corporation may, upon a vote of a majority of the directors, enter into an indemnity agreement with any director, officer, employee or agent of the Corporation providing for the maximum right to indemnification permissible under the applicable laws of the State of Delaware. Section 7. Insurance. The Corporation shall purchase and maintain --------- insurance on behalf of any person who is or was or has agreed to become a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, including an employee benefit plan, against any liability asserted against him and incurred by him or on his behalf in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of this Article IV, provided that such -------- -25- insurance is available on acceptable terms, which determination shall be made by a vote of a majority of the entire Board of Directors. Section 8. Savings Clause. If this Article or any portion hereof -------------- shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify each director or officer and may indemnify each employee or agent of the Corporation as to costs, charges and expenses (including attorneys' fees), judgments, fines and amounts paid in settlement with respect to any action, suit or proceeding, whether civil, criminal, administrative or investigative, including an action by or in the right of the Corporation, to the full extent permitted by any applicable portion of this Article that shall not have been invalidated and to the full extent permitted by applicable law. Section 9. Amendments. This Article may be amended solely by the ---------- affirmative vote of (i) a majority of the Board of Directors, but only to the extent that such amendment would permit the Corporation to provide broader indemnification rights than were provided hereby immediately prior to such amendment, or (ii) the holders of 75% or more of the outstanding shares of Common Stock of the Corporation. ARTICLE V CERTIFICATES OF STOCK. --------------------- Section 1. The interest of each stockholder of the Corporation shall be evidenced by certificates for shares of stock in such form as the -26- Board of Directors may from time to time prescribe. The shares in the stock of the Corporation shall be transferred on the books of the Corporation by the holder thereof in person or by his attorney, upon surrender for cancellation of certificates for the same number of shares, with an assignment and power of transfer endorsed thereon or attached thereto, duly executed, with such proof of the authenticity of the signature as the Corporation or its agents may reasonably require. Section 2. The certificates of stock shall be signed by the Chairman of the Board or the President or a Vice President and by the Secretary or an Assistant Secretary, or the Treasurer or an Assistant Treasurer, and may be countersigned and registered in such manner, if any, and sealed as the Board of Directors or the Executive Committee may by resolution prescribe. ARTICLE VI CHECKS, NOTES, ETC. ------------------ All checks and drafts on the Corporation's bank accounts and all bills of exchange and promissory notes, and all acceptances, obligations and other instruments for the payment of money, shall be signed by such officer or officers, agent or agents as shall be thereunto authorized from time to time by the Board of Directors or the Executive Committee. -27- ARTICLE VII OFFICES. ------- The Corporation and the stockholders and the directors may have offices outside of the State of Delaware at such places as shall be determined from time to time by the Board of Directors or the Executive Committee. ARTICLE VIII AMENDMENTS. ---------- The By-Laws of the Corporation, regardless of whether made by the stockholders or by the Board of Directors, may be amended, added to, rescinded or repealed at any meeting of the Board of Directors or of the stockholders, provided notice of the proposed change is given in the notice of the meeting. -28- EX-4.4.B 4 FIRST SUPPL. INDENTURE DATED AS OF DEC. 31, 1996 EXHIBIT 4(4)(b) [EXECUTION COPY] ================================================================================ TAMBRANDS INC. AND TAMPAX CORPORATION AND TAMBRANDS MFG. INC. AND TAMBRANDS SALES CORP. TO CITIBANK, N.A. as Trustee ____________________ First Supplemental Indenture Dated as of December 31, 1996 to Indenture Dated as of December 1, 1993 _______________________ FIRST SUPPLEMENTAL INDENTURE dated as of December 31, 1996 (the "First Supplemental Indenture") among TAMBRANDS INC., a corporation duly organized and existing under the laws of the State of Delaware (the "Company"), having its principal office at 777 Westchester Avenue, White Plains, New York 10604, TAMPAX CORPORATION, a corporation duly organized and existing under the laws of the State of Delaware ("Tampax"), having its principal office at 777 Westchester Avenue, White Plains, New York 10604, TAMBRANDS MFG. INC., a corporation duly organized and existing under the laws of the State of Delaware ("Manufacturing"), having its principal office at 2879 Hotel Road, Auburn, Maine 04211, TAMBRANDS SALES CORP., a corporation duly organized and existing under the laws of the State of Delaware ("Sales"), having its principal office at Bridge and Springfield Streets, Palmer, Massachusetts 01069, and CITIBANK, N.A., a national banking association duly organized and existing under the laws of the United States, as Trustee (the "Trustee"). R E C I T A L S The Company has heretofore executed and delivered to the Trustee a certain Indenture dated as of December 1, 1993 (herein called the "Indenture"). All terms used in this First Supplemental Indenture which are defined in the Indenture shall have the same meanings assigned to them in the Indenture. Immediately prior to the execution and delivery of this First Supplemental Indenture, each of Tampax, Manufacturing and Sales was a wholly- owned subsidiary of the Company. Following the the execution and delivery of this First Supplemental Indenture, the Company will transfer certain assets owned by it to each of Tampax, Manufacturing and Sales. Thereafter, the Company will contribute all the outstanding capital stock of each of Manufacturing and Sales to Tampax, so that Manufacturing and Sales will become direct wholly-owned subsidiaries of Tampax and indirect wholly-owned subsidiaries of the Company. Section 801 of the Indenture provides that the Company shall not convey, transfer or lease its properties and assets substantially as an entirety to any Person unless (1) such Person shall be a corporation, partnership or trust, shall be organized and validly existing under the laws of the United States of America, any State thereof or the District of Columbia and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the principal of and any premium and interest on all the Securities and the performance or observance of every covenant of the Indenture on the part of the Company to be performed or observed, (2) immediately after giving effect to such transaction no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have happened and be continuing and (3) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture comply with Article Eight of the Indenture and that all conditions precedent therein provided for relating to such transaction have been complied with. Section 901(5) of the Indenture provides that, without the consent of the Holders, the Company, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental thereto, in form satisfactory to the Trustee, to add to, change or eliminate any of the provisions of the Indenture in respect of one or more series of Securities, provided that any such addition, change or elimination (A) shall neither (i) apply to any Security of any series created prior to the execution of such supplemental indenture and entitled to the benefit of such provision nor (ii) modify the rights of the Holder of any such Security with respect to such provision or (B) shall become effective only when there is no such Security Outstanding. Section 901(9) of the Indenture provides that, without the consent of any Holders, the Company, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental thereto, in form satisfactory to the Trustee, to cure any ambiguity, to correct or supplement any provision in the Indenture which may be defective or inconsistent with any other provision therein, or to make any other provisions with respect to matters or questions arising under the Indenture, provided that such action shall not adversely affect the interests of the Holders of Securities of any series in any material respect. The Company has delivered to the Trustee (i) an Officers' Certificate and an Opinion of Counsel pursuant to Section 801 of the Indenture, each stating that the transfer of certain assets of the Company to each of Tampax, Manufacturing and Sales being made on or about the date hereof and this First Supplemental Indenture comply with Article Eight of the Indenture and that all conditions precedent therein provided for relating to such transfers have been complied with and (ii) an Opinion of Counsel pursuant to Section 903 of the Indenture stating that the execution of this First Supplemental Indenture is authorized or permitted by the Indenture. Each of the Company, Tampax, Manufacturing and Sales has furnished the Trustee with a copy of a Board Resolution of such corporation authorizing the execution and delivery by such corporation of this First Supplemental Indenture. All things necessary to authorize the guarantee by each of Tampax, Manufacturing and Sales of the Company's obligations under the Indenture, and to make this First Supplemental Indenture when executed by the parties hereto a valid and binding agreement of such parties and supplement to the Indenture have been done and performed. NOW, THEREFORE, for and in consideration of the premises and the covenants contained in this First Supplemental Indenture, the parties hereto hereby agree, for the equal and proportionate benefit of all Holders of the Securities, as follows: SECTION 1. Each of Tampax, Manufacturing and Sales hereby expressly agrees to be unconditionally bound by the terms and provisions of the Guarantee set forth below: For value received, each of TAMPAX CORPORATION ("Tampax"), TAMBRANDS MFG. INC. ("Manufacturing") and TAMBRANDS SALES CORP. ("Sales") (each, a "Guarantor" and, collectively, the "Guarantors"), hereby, jointly and severally, unconditionally guarantees to the Holders of -2- Securities Outstanding at the time of the execution and delivery of the First Supplemental Indenture dated as of December 31, 1996 among the Company, Tampax, Manufacturing, Sales and the Trustee (i) the due and punctual payment of the principal of, premium, if any, and interest on such Securities, when and as the same shall become due and payable, whether at the Stated Maturity, by declaration of acceleration, call for redemption or otherwise, according to the terms thereof and of the Indenture referred to therein, and (ii) the performance or observance of every covenant of the Company under the Indenture. In case of the failure of the Company punctually to make any such payment of principal, premium, if any, or interest, the Guarantors, jointly and severally, hereby agree to cause any such payment to be made punctually when and as the same shall become due and payable, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise, and as if such payment were made by the Company. Each Guarantor hereby agrees that its obligations hereunder shall be as if it were the principal debtor and not merely surety, shall be joint and several with each of the other Guarantors, and shall be absolute and unconditional, irrespective of, and shall be unaffected by, any invalidity, irregularity or unenforceability of such Securities or such Indenture, any failure to enforce the provisions of such Securities or such Indenture, or any waiver, modification or indulgence granted to the Company with respect thereto, by the holder of such Securities hereof or the Trustee or any other circumstance which may otherwise constitute a legal or equitable discharge of a surety or guarantor; provided, however, that, notwithstanding the foregoing, no such waiver, modification or indulgence shall, without the consent of the Guarantors, increase the principal amount of such Securities, change the redemption terms of such Securities or alter the Stated Maturity thereof. The Guarantors hereby waive diligence, presentment, demand of payment, filing of claims with a court in the event of merger or bankruptcy of the Company, any right to require a proceeding first against the Company, protest or notice with respect to such Security or the indebtedness evidenced thereby and all demands whatsoever, and covenant that this Guarantee will not be discharged except by strict and complete performance of the obligations contained in such Securities and this Guarantee. The Guarantors shall be subrogated to all rights of the Holders of such Securities and the Trustee against the Company in respect of any amounts paid to such Holder by the Guarantors pursuant to the provisions of this Guarantee; provided, however, that the Guarantors shall not be entitled to enforce, or to receive any payments arising out of or based upon, such right of subrogation until the principal of, premium if any, and interest on all Securities issued under such Indenture and Outstanding on the date hereof shall have been paid in full. -3- The guarantee set forth above shall be enforceable by the Holders of the Securities to which it applies whether or not such guarantee is endorsed upon or attached to such Securities. SECTION 2. The Company, by its execution of this First Supplemental Indenture, expressly affirms that, notwithstanding the guarantee by Tampax, Manufacturing and Sales to the Holders specified in Section 1 of the obligations of the Company under the Securities specified in Section 1 and the Indenture, the Company shall not be relieved of such obligations. SECTION 3. (a) The following are hereby added to Section 101 of the Indenture: ""Capital Lease Obligation" of any Person means the obligation to pay rent or other payment amounts under a lease of (or other arrangements conveying the right to use) real or personal property of such Person which is required to be classified and accounted for as a capital lease or a liability on the face of a balance sheet of such Person in accordance with GAAP. The stated maturity of such obligation shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty. The principal amount of such obligation shall be the capitalized amount thereof that would appear on the face of a balance sheet of such Person in accordance with GAAP. "Permitted Interest Rate or Currency Protection Agreement" means any agreement entered into with one or more financial institutions in the ordinary course of business that is designed to protect such Person against fluctuations in interest rates or currency exchange rates with respect to Indebtedness, accounts payable or accounts receivable and which shall have a notional amount no greater than the principal amount of such Indebtedness or the amount of such accounts, as the case may be including, without limitation, any such interest rate swap, cap collar, currency forward or currency future agreement. "Purchase Money Indebtedness" of any Person means Indebtedness of such Person incurred for the purpose of financing all or any part of the purchase price or the cost of construction or improvement of equipment or property, but only if such equipment or property is or should be included in "addition to property, plant or equipment" in accordance with GAAP and only if such equipment or property is not being purchased as part of an acquisition of any business. "Transferee Subsidiaries" means Tampax Corporation, Tambrands Mfg. Inc. and Tambrands Sales Corp., each a Delaware corporation." -4- (b) The definition of "Restricted Subsidiary" in Section 101 of the Indenture is hereby amended by adding the following at the end thereof immediately before the period: "and shall include each of the Transferee Subsidiaries" SECTION 4. Subsections (5) and (6) of Section 501 of the Indenture are hereby deleted in their entirety and replaced with the following: "(5) a default under any bond, debenture, note or other evidence of indebtedness for money borrowed by the Company or any Transferee Subsidiary (including a default with respect to Securities of any series other than that series) having an aggregate principal amount outstanding of at least $50,000,000, or under any mortgage, indenture or instrument (including this Indenture) under which there may be issued or by which there may be secured or evidenced any indebtedness for money borrowed by the Company or any Transferee Subsidiary having an aggregate principal amount outstanding of at least $50,000,000, whether such indebtedness now exists or shall hereafter be created, which default shall have resulted in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise have become due and payable, without such indebtedness having been discharged or such acceleration having been cured, waived, rescinded or annulled, within a period of 30 days after there shall have been given, by registered or certified mail, return receipt requested, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Securities of that series a written notice specifying such default and requiring the Company to cause such indebtedness to be discharged or cause such acceleration to be rescinded or annulled, as the case may be, and stating that such notice is a "Notice of Default" hereunder; provided, however, that, subject to the provisions of Sections 601 and 602, the Trustee shall not be deemed to have knowledge of such default unless either (A) a Responsible Officer of the Trustee shall have actual knowledge of such default or (B) the Trustee shall have received written notice thereof from the Company, from any Holder, from the holder of any such indebtedness or from the trustee under any such mortgage, indenture or other instrument; and provided, further, however, that if any such default or acceleration referred to in this clause (5) shall cease or be cured, waived, rescinded or annulled, then the Event of Default hereunder by reason thereof shall be deemed likewise to have been thereupon cured; or (6) the entry by a court having jurisdiction in the premises of (A) a decree or order for relief in respect of the Company or any Transferee Subsidiary in an involuntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or (B) a decree or order adjudging the Company or any Transferee Subsidiary a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company or any Transferee Subsidiary under any applicable Federal or State -5- law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or any Transferee Subsidiary or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of 60 consecutive days; or" SECTION 5. Section 801 of the Indenture is hereby deleted in its entirety and replaced by the following: "The Company and each Transferee Subsidiary shall not consolidate with or merge into any other Person or convey, transfer or lease the properties and assets of the Company and the Transferee Subsidiaries (determined on a combined basis for the Company and the Transferee Subsidiaries) substantially as an entirety to any Person, and the Company shall not permit any Person to consolidate with or merge into the Company or any Transferee Subsidiary or convey, transfer or lease its properties and assets substantially as an entirety to the Company or any Transferee Subsidiary, unless: (1) in case the Company or any Transferee Subsidiary shall consolidate with or merge into another Person or convey, transfer or lease the properties and assets of the Company and the Transferee Subsidiaries (determined on a combined basis for the Company and the Transferee Subsidiaries) substantially as an entirety to any Person, the Person formed by such consolidation or into which the Company or such Transferee Subsidiary is merged or the Person which acquires by conveyance or transfer, or which leases, the properties and assets of the Company and the Transferee Subsidiaries (determined on a combined basis for the Company and the Transferee Subsidiaries) substantially as an entirety shall be a corporation, partnership or trust, shall be organized and validly existing under the laws of the United States of America, any State thereof or the District of Columbia and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the principal of and any premium and interest on all the Securities and the performance or observance of every covenant of this Indenture on the part of the Company to be performed or observed; provided, however, that, with respect only to Securities originally issued after execution and delivery of the First Supplemental Indenture this subsection (1) shall not apply to any conveyance, transfer or lease of properties and assets of the Company to any Transferee Subsidiary; (2) immediately after giving effect to such transaction and treating any indebtedness which becomes an obligation of the Company or any Subsidiary as a result of such transaction as having been incurred by the Company or such Subsidiary at the time of such transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have happened and be continuing; -6- (3) if, as a result of any such consolidation or merger or such conveyance, transfer or lease, properties or assets of the Company or any Transferee Subsidiary would become subject to a mortgage, pledge, lien, security interest or other encumbrance which would not be permitted by this Indenture, the Company or such successor Person, as the case may be, shall take such steps as shall be necessary effectively to secure the Securities equally and ratably with (or prior to) all indebtedness secured thereby; and (4) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture comply with this Article and that all conditions precedent herein provided for relating to such transaction have been complied with." SECTION 6. A new Section 1011 is hereby added to the Indenture as follows: "SECTION 1011. Limitation on Indebtedness of Transferee Subsidiaries. The Company shall not permit any Transferee Subsidiary to, and each Transferee Subsidiary agrees it shall not, incur or suffer to exist any Indebtedness except for: (i) The guarantees provided in Section 1 of the First Supplemental Indenture; (ii) Indebtedness to the Company or any Subsidiary of the Company; (iii) Indebtedness incurred to renew, extend, refinance or refund (each, a "refinancing") Indebtedness otherwise permitted under the provisions of this Section in an aggregate principal amount not to exceed the principal amount of the Indebtedness so refinanced plus the amount of any premium required to be paid in connection with such refinancing pursuant to the terms of the Indebtedness so refinanced, plus the expenses of the Company and such Transferee Subsidiary incurred in connection with such refinancing; provided, however, that Indebtedness the proceeds of which are used to refinance Indebtedness which is subordinate in right of payment to the Securities shall only be permitted if such Indebtedness is subordinated to the Securities to substantially the same extent as the Indebtedness being refinanced; (iv) Indebtedness consisting of Permitted Interest Rate and Currency Protection Agreements; -7- (v) Indebtedness constituting Purchase Money Indebtedness or Capital Lease Obligations; (vi) Indebtedness in respect of performance, surety or appeal bonds provided in the ordinary course of business; (vii) Indebtedness arising from agreements providing for indemnification, adjustment of purchase price or similar obligations, or from guarantees, letters of credit, surety bonds or performance bonds securing any obligation of such Transferee Subsidiary under such agreements, in any case incurred in connection with the disposition of any business or asset of such Transferee Subsidiary; and (viii) Indebtedness not otherwise permitted to be incurred pursuant to the provisions of this Section, and any refinancing of Indebtedness incurred pursuant to this clause (viii) (but only if such refinancing meets the requirements specified in the proviso to clause (iii) above); provided, however, that the principal amount of Indebtedness incurred pursuant to this clause (viii) and outstanding at any time shall not exceed $10,000,000. SECTION 7. All covenants and agreements in this First Supplemental Indenture by each of Tampax, Manufacturing and Sales shall bind their respective successors and assigns, whether so expressed or not. SECTION 8. Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided for or permitted by the Indenture to be made upon, given or furnished to, or filed with the Company which is delivered to the Company in accordance with Section 105 of the Indenture shall be deemed thereby to have been delivered also to each of Tampax, Manufacturing and Sales. SECTION 9. In case any provision in this First Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 10. Nothing in this First Supplemental Indenture, express or implied, shall give to any Person, other than the parties hereto and their successors under the Indenture and the Holders of the Securities, any benefit or any legal or equitable right, remedy or claim under the Indenture. SECTION 11. This First Supplemental Indenture supplements the Indenture and shall be a part and subject to all the terms thereof. Except as supplemented hereby, the Indenture shall continue in full force and effect. -8- SECTION 12. This First Supplemental Indenture may be executed in any number of counterparts, each of which as so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION 13. This First Supplemental Indenture shall be governed by and construed in accordance with the laws of the State of New York. -9- IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written. TAMBRANDS INC. By/s/Susan J. Riley ------------------------------ Susan J. Riley Senior Vice President - Chief Financial Officer Attest: /s/Jonathan W. Emery - ----------------------------- Jonathan W. Emery TAMPAX CORPORATION By/s/Martha Lindsay ---------------------------- Martha Lindsay Vice President and Treasurer Attest: /s/Jonathan W. Emery - ----------------------------- Jonathan W. Emery TAMBRANDS MFG. INC. By/s/Martha Lindsay ---------------------------- Martha Lindsay Treasurer -10- Attest: /s/Jonathan W. Emery - ----------------------------- Jonathan W. Emery TAMBRANDS SALES CORP. By/s/Martha Lindsay ----------------------------- Martha Lindsay Treasurer Attest: Jonathan W. Emery - ------------------------------ Jonathan W. Emery CITIBANK, N.A., as Trustee By/s/Robert T. Kirchner ----------------------------- Name: Robert T. Kirchner Title:Vice President Attest: /s/John Byrnes - --------------------------------- John Byrnes -11- STATE OF NEW YORK ) ) ss.: COUNTY OF WESTCHESTER ) On the 26th day of December, 1996 before me personally came Susan J. Riley, to me known, who, being by me duly sworn, did depose and say that she is the Senior Vice President - Chief Financial Officer of Tambrands Inc., one of the corporations described in and which executed the foregoing instrument; that she knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation, and that she signed her name thereto by like authority. /s/Cynthia M. Luneau ------------------------------ CYNTHIA M. LUNEAU Notary Public - State of New York No. 01LU4957757 Qualified in Dutchess County Commission Expires Oct. 23, 1997 -12- STATE OF NEW YORK ) ) ss.: COUNTY OF WESTCHESTER ) On the 26th day of December, 1996 before me personally came Martha Lindsay, to me known, who, being by me duly sworn, did depose and say that she is the Vice President and Treasurer of Tampax Corporation, one of the corporations described in and which executed the foregoing instrument; that she knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation, and that she signed her name thereto by like authority. /s/Cynthia M. Luneau ------------------------------ CYNTHIA M. LUNEAU Notary Public - State of New York No. 01LU4957757 Qualified in Dutchess County Commission Expires Oct. 23, 1997 -13- STATE OF NEW YORK ) ) ss.: COUNTY OF WESTCHESTER ) On the 26th day of December, 1996 before me personally came Martha Lindsay, to me known, who, being by me duly sworn, did depose and say that she is the Treasurer of Tambrands Mfg. Inc., one of the corporations described in and which executed the foregoing instrument; that she knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation, and that she signed her name thereto by like authority. /s/Cynthia M. Luneau ----------------------------- CYNTHIA M. LUNEAU Notary Public - State of New York No. 01LU4957757 Qualified in Dutchess County Commission Expires Oct. 23, 1997 -14- STATE OF NEW YORK ) ) ss.: COUNTY OF WESTCHESTER ) On the 26th day of December, 1996 before me personally came Martha Lindsay, to me known, who, being by me duly sworn, did depose and say that she is the Treasurer of Tambrands Sales Corp., one of the corporations described in and which executed the foregoing instrument; that she knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation, and that she signed her name thereto by like authority. /s/Cynthia M. Luneau ----------------------------- CYNTHIA M. LUNEAU Notary Public - State of New York No. 01LU4957757 Qualified in Dutchess County Commission Expires Oct. 23, 1997 -15- STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) On the 30th day of December, 1996 before me personally came Robert Kirchner, to me known, who, being by me duly sworn, did depose and say that he is a Vice President of Citibank, N.A., the association described in and which executed the foregoing instrument; that he/she knows the seal of said association; that the seal affixed to said instrument is such seal; that it was so affixed by authority of the Board of Directors of said association, and that he/she signed his/her name thereto by like authority. /s/Doris Ware -------------------------------- DORIS WARE Notary Public, State of New York No. 01WA5017421 Qualified in Queens County Commission Expires September 7, 1997 -16- EX-10.3.I 5 SEVENTH AMENDMENT TO 1991 STOCK OPTION PLAN EXHIBIT 10(3)(i) SEVENTH AMENDMENT TO THE TAMBRANDS INC. 1991 STOCK OPTION PLAN ----------------------------------------- WHEREAS, TAMBRANDS INC. (the "Company") adopted the 1991 Stock Option Plan (the "Plan"); and WHEREAS, pursuant to Section 11 of the Plan, the Board of Directors retained the right to amend the Plan; NOW, THEREFORE, the Plan is amended as follows: 1. Section 2 (b) is amended in its entirety to read as follows: "Committee" shall mean the Compensation Committee of the Board or such other committee as may from time to time be appointed by the Board to administer the Plan; provided, however, that (i) no member of the Committee shall be - eligible to participate in the Plan, (ii) the Committee shall always consist of -- at least two members and (iii) each member of the Committee shall qualify as a --- non-employee director for purposes of Rule 16b-3 (or any successor rule thereto), as promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended. 2. This Seventh Amendment to the Plan shall be effective as of January 28, 1997. IN WITNESS WHEREOF, the Company has caused this Seventh Amendment to the 1991 Stock Option Plan to be executed by its duly authorized officer as of the 28th day of January, 1997. TAMBRANDS INC. By: /s/ Thomas Soper, III ----------------- Title: Senior Vice President - Corporate Human Resources and Communications ---------------------------- WITNESS: - -------- /s/ Jonathan W. Emery - --------------------- Title: Corporate Counsel and Assistant Secretary ----------------------------------------- EX-10.4.C 6 AMENDMENT TO 1989 RESTRICTED STOCK PLAN EXHIBIT 10(4)(c) AMENDMENT TO THE TAMBRANDS INC. 1989 RESTRICTED STOCK PLAN -------------------------- WHEREAS, TAMBRANDS INC. (the "Company") adopted the 1989 Restricted Stock Plan (the "Plan"); and WHEREAS, pursuant to Section 9 of the Plan, the Compensation Committee of the Board of Directors retained the right to amend the Plan; NOW, THEREFORE, the Plan is amended as follows: 1. The definition of "Committee" in Section 2 of the Plan is amended and restated to read in its entirety as follows: "Committee" shall mean the Compensation Committee of the Board or such other committee as may from time to time be appointed by the Board to administer the Plan; provided, however, that (i) no member of the Committee - shall be eligible to participate in the Plan, (ii) the Committee shall -- always consist of at least two members and (iii) each member of the --- Committee shall qualify as a non-employee director for the purposes of Rule 16b-3 (or any successor rule thereto), as promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended. 2. This Amendment to the Plan shall be effective as of January 28, 1997. IN WITNESS WHEREOF, the Company has caused this Amendment to the 1989 Restricted Stock Plan to be executed by its duly authorized officer as of the 28th day of January, 1997. TAMBRANDS INC. By: /s/ Thomas Soper,III ---------------------- Senior Vice President - Corporate Title: Human Resources and Communications ---------------------------------- WITNESS: - -------- /s/ Jonathan W. Emery - ---------------------- Title: Corporate Counsel and Assistant Secretary ----------------------------------------- EX-10.9.B 7 AMENDED/RESTATED EMPLOYMENT PROTECTION AGREEMENT EXHIBIT 10(9)(b) AMENDED AND RESTATED EMPLOYMENT PROTECTION AGREEMENT ------------------------------- THIS AMENDED AND RESTATED AGREEMENT between Tambrands Inc., a Delaware corporation (the "Corporation"), and Thomas J. Mason (the "Executive"), dated as of this 1st day of October, 1996. W I T N E S S E T H : - - - - - - - - - - WHEREAS, the Corporation and the Executive have previously entered into an agreement dated as of October 18, 1994 providing the Corporation and the Executive with certain rights upon the occurrence of a change of control (the "Prior Agreement") to assure the Corporation of continuity of management in the event of any Change of Control; WHEREAS, the Executive has been promoted to a considerably more senior position the compensation for which is considerably in excess of the compensation for his prior position; WHEREAS, the Corporation and the Executive have agreed to amend and restate the Prior Agreement to provide greater benefits to the Executive, which are commensurate with his new position. NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, it is hereby agreed by and between the Corporation and the Executive as follows: 1. Operation of Agreement. The effective date of this Agreement shall ---------------------- be the date on which a Change of Control (as defined below) occurs (the "Effective Date"), provided that if the Executive is not employed by the Corporation on the Effective Date this Agreement shall be void and without effect. This Agreement shall terminate on September 30, 1999, provided that the termination date of this Agreement shall be extended for one additional year on October 1, 1997 and each subsequent October 1, unless the Executive shall have received written notice from the Corporation prior to the July 1 immediately preceding such October 1 that the Board of Directors of the Corporation (the "Board") has determined that the termination date of this Agreement shall not be so extended. Notwithstanding the foregoing, this Agreement shall not terminate on the date determined in accordance with the preceding sentence if a Change of Control shall have occurred prior to such date. 2. Definitions. (a) Change of Control. For purposes of this ----------- ----------------- Agreement, a "Change of Control" shall be deemed to have occurred if: (i) any --- person (as defined in Section 3(a)(9) of the Securities Exchange Act of 1934, as amended from time to time (the "Exchange Act"), and as used in Sections 13(d) and 14(d) thereof)), excluding the Corporation, any majority owned subsidiary of the Corporation (a "Subsidiary") and any employee benefit plan sponsored or maintained by the Corporation or any Subsidiary (including any trustee of such plan acting as trustee), but including a "group" as defined in Section 13(d)(3) of the Exchange Act (a "Person"), becomes the beneficial owner of shares of the Corporation having at least 20% of the total number of votes that may be cast for the election of directors of the Corporation (the "Voting Shares") provided, however, that such an event shall not constitute a Change of Control if the acquiring Person has entered into an agreement with the Corporation approved by the Board which materially restricts the right of such Person to direct or influence the management or policies of the Corporation; (ii) the shareholders of the Corporation shall approve any ---- merger or other business combination of the Corporation, sale of the Corporation's assets or combination of the foregoing transactions (a "Transaction") other than a Transaction involving only the Corporation and one or more of its Subsidiaries, or a Transaction immediately following which the shareholders of the Corporation immediately prior to the Transaction continue to have a majority of the voting power in the resulting entity excluding for this purpose any shareholder owning directly or indirectly more than 10% of the shares of the other company involved in the Transaction, or (iii) within any 24- ----- month period beginning on or after September 30, 1996, the persons who were directors of the Corporation immediately before the beginning of such period (the "Incumbent Directors") shall cease (for any reason other than death) to constitute at least a majority of the Board or the board of directors of any successor to the Corporation, provided that any director who was not a director as of September 30, 1996 shall be deemed to be an Incumbent Director if such director was elected to the Board by, or on the recommendation of or with the approval of, at least two-thirds of the directors who then qualified as Incumbent Directors either actually or by prior operation of this Section 2(a)(iii). (b) Participation by Executive. Notwithstanding the foregoing, no -------------------------- Change of Control shall be deemed to have occurred for purposes of this Agreement by reason of any actions or events in which the Executive participates in a capacity other than in his capacity as the Executive (or as a director of the Corporation or a Subsidiary, where applicable). 3. Employment Period. If the Executive is employed on the Effective ----------------- Date, the Corporation agrees to continue the Executive in its employ, and the Executive agrees to remain in the employ of the Corporation, for the period (the "Employment Period") commencing on the Effective Date and ending on the earliest to occur of (i) the second anniversary of the Effective Date, (ii) the --- ---- Executive's normal retirement date under the Corporation's retirement plans as in effect from time to time and (iii) the date of any termination of the ----- Executive's employment in accordance with Section 6 of this Agreement. 4. Position and Duties. (a) No Reduction in Position. During the ------------------- ------------------------ Employment Period, the Executive's position (including titles), authority and responsibilities shall be at least commensurate with the highest of those held, exercised and assigned at any time during the 90-day period immediately preceding the Effective Date. (b) Business Time. From and after the Effective Date, the Executive ------------- agrees to devote his full business time during normal business hours to the business and affairs of the Corporation and to use his best efforts to perform faithfully and efficiently the responsibilities as- -2- signed to him hereunder, to the extent necessary to discharge such responsibilities, except for (i) reasonable time spent in serving on corporate, civic or charitable boards or committees approved by the Board, in each case only if and to the extent not substantially interfering with the performance of such responsibilities, and (ii) periods of vacation and sick leave to which he is entitled. It is expressly understood and agreed that the Executive's continuing to serve on any boards and committees on which he is serving or with which he is otherwise associated with the consent or approval of the Corporation immediately preceding the Effective Date shall not be deemed to interfere with the performance of the Executive's services to the Corporation. 5. Compensation. (a) Base Salary. During the Employment Period, the ------------ ----------- Executive shall receive a base salary ("Base Salary") at a monthly rate at least equal to the monthly salary paid to the Executive by the Corporation and any of its affiliated companies immediately prior to the Effective Date. The Base Salary shall be reviewed at least once each year after the Effective Date, and may be increased (but not decreased) at any time and from time to time by action of the Board or any committee thereof or any individual having authority to take such action in accordance with the Corporation's regular practices. Neither payment of the Base Salary nor payment of any increased Base Salary after the Effective Date shall serve to limit or reduce any other obligation of the Corporation hereunder. For purposes of the remaining provisions of this Agreement, the term "Base Salary" shall mean Base Salary as defined in this Section 5(a) or, if increased after the Effective Date, the Base Salary as so increased. (b) Annual Bonus. In addition to the Base Salary, the Executive shall ------------ be awarded for each fiscal year of the Corporation ending during the Employment Period an annual bonus (either pursuant to a bonus plan or program of the Corporation or otherwise) in cash at least equal to the last annual bonus (annualized, if awarded in respect of a partial year) awarded to the Executive under the Annual Incentive Plan of the Corporation prior to the Effective Date ("Annual Bonus"). If a fiscal year of the Corporation begins, but does not end, during the Employment Period, the Executive shall receive an amount with respect to such fiscal year at least equal to the amount of the Annual Bonus multiplied by a fraction, the numerator of which is the number of days in such fiscal year occurring during the Employment Period and the denominator of which is 365. Each amount payable in respect of the Executive's Annual Bonus shall be paid not later than the last day of March of the year next following the year for which the Annual Bonus (or pro-rated portion) is earned or awarded, unless electively deferred by the Executive pursuant to any deferral programs or arrangements that the Corporation may make available to the Executive, in which event such deferred amount shall be payable in accordance with the terms of such deferral program or arrangement. Neither the Annual Bonus nor any bonus amount paid in excess thereof after - 3 - the Effective Date shall serve to limit or reduce any other obligation of the Corporation hereunder. (c) Incentive and Savings Plans and Retirement Programs. In addition --------------------------------------------------- to the Base Salary and Annual Bonus payable as hereinabove provided, during the Employment Period, the Executive shall be entitled to participate in all incentive and savings plans and programs, including stock option plans and other equity-based compensation plans, and in all retirement plans, on a basis providing him with the opportunity to receive compensation (without duplication of the amount payable as an Annual Bonus) and benefits equal to those provided by the Corporation to the Executive on an annualized basis under such plans and programs as in effect at any time during the 90-day period immediately preceding the Effective Date. (d) Benefit Plans. During the Employment Period, the Executive and his ------------- family shall be entitled to participate in or be covered under all welfare benefit plans and programs of the Corporation and its affiliated companies, including all medical, dental, disability, group life, accidental death and travel accident insurance plans and programs, as in effect at any time during the 90-day period immediately preceding the Effective Date. (e) Expenses. During the Employment Period, the Executive shall be -------- entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance with the policies and procedures of the Corporation as in effect at any time during the 90-day period immediately preceding the Effective Date. (f) Vacation and Fringe Benefits. During the Employment Period, the ---------------------------- Executive shall be entitled to paid vacation and fringe benefits in accordance with the policies of the Corporation as in effect at any time during the 90-day period immediately preceding the Effective Date. (g) Office and Support Staff. During the Employment Period, the ------------------------ Executive shall be entitled to an office or offices of a size and with furnishings and other appointments, and to secretarial and other assistance, at least equal to the most favorable of the foregoing provided to the Executive at any time during the 90-day period immediately preceding the Effective Date. 6. Termination. (a) Death, Disability or Retirement. Subject to the ----------- ------------------------------- provisions of Section 1 hereof, this Agreement shall terminate automatically upon the Executive's death or attainment of normal retirement age under the Corporation's retirement plans as in effect from time to time, provided that, after the Effective Date, the normal retirement age may not be lowered for purposes of this Agreement without the Executive's consent. The Corporation may terminate this Agreement, after having established the Executive's Disability, by giving the Executive written notice of its intention to terminate his employment, and his employment with the Corporation shall terminate effective on the 90th day after receipt of such notice if, within 90 days after such receipt, the - 4 - Executive shall fail to return to full-time performance of his duties. For purposes of this Agreement, "Disability" means disability which, after the expiration of more than 26 weeks after its commencement, is determined to be total and permanent by a physician selected by the Corporation or its insurers and acceptable to the Executive or his legal representatives (such agreement to acceptability not to be withheld unreasonably). (b) Voluntary Termination. Notwithstanding anything in this Agreement --------------------- to the contrary, the Executive may, upon not less than 30 days' written notice to the Corporation, voluntarily terminate employment during the Employment Period for any reason (including early retirement under the terms of the Corporation's retirement plan as in effect from time to time), provided that any termination by the Executive pursuant to Section 6(d) of this Agreement on account of Good Reason (as defined therein) shall not be treated as a voluntary termination under this Section 6(b). (c) Cause. The Corporation may terminate the Executive's employment ----- during the Employment Period for Cause. For purposes of this Agreement, "Cause" means (i) an act or acts of dishonesty or gross misconduct on the Executive's --- part which result or are intended to result in material damage to the Corporation's business or reputation or (ii) repeated material violations by the ---- Executive of his obligations under Section 4 of this Agreement which violations are demonstrably willful and deliberate on the Executive's part. (d) Good Reason. The Executive may terminate his employment during the ----------- Employment Period for Good Reason. For purposes of this Agreement, "Good Reason" means (i) a good faith determination by the Executive that, without his prior written consent, the Corporation or any of its officers has taken or failed to take any action (including, without limitation, (A) exclusion of the --- Executive from consideration of material matters within his area of responsibility, (B) statements or actions which undermine the Executive's --- authority with respect to persons under his supervision or reduce his standing with his peers, (C) a pattern of discrimination against or --- harassment of the Executive or persons under his supervision and (D) the --- subjection of the Executive to procedures not generally applicable to other similarly situated executives) which changes the Executive's position (including titles), authority or responsibilities under Section 4 of this Agreement or reduces the Executive's ability to carry out his duties and responsibilities under Section 4 of this Agreement; (ii) any failure by the Corporation to comply with any of the provisions of Section 5 of this Agreement, other than an insubstantial or inadvertent failure remedied by the Corporation promptly after receipt of notice thereof from the Executive; (iii) the Corporation's requiring the Executive to be employed at any location more than 50 miles further from his principal residence than the location at which the Executive was employed immediately preceding the Effective Date; or - 5 - (iv) any failure by the Corporation to obtain the assumption of and agreement to perform this Agreement by a successor as contemplated by Section 14(b) of this Agreement, provided that the successor has had actual written notice of the existence of this Agreement and its terms and an opportunity to assume the Corporation's responsibilities under this Agreement during a period of 10 business days after receipt of such notice. (e) Notice of Termination. Any termination by the Corporation for --------------------- Cause or by the Executive for Good Reason during the Employment Period shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 15(c) of this Agreement. For purposes of this Agreement, a "Notice of Termination" means a written notice given, in the case of a termination for Cause, within 10 business days of the Corporation's having actual knowledge of all of the events giving rise to such termination, and in the case of a termination for Good Reason, within 180 days of the Executive's having actual knowledge of the events giving rise to such termination, and which (i) indicates the specific termination provision in this Agreement relied upon, - --- (ii) sets forth in reasonable detail the facts and circumstances claimed to - ---- provide a basis for termination of the Executive's employment under the provision so indicated, and (iii) if the termination date is other than the date ----- of receipt of such notice, specifies the termination date of this Agreement (which date shall be not more than 15 days after the giving of such notice). The failure by the Executive to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason shall not waive any right of the Executive hereunder or preclude the Executive from asserting such fact or circumstance in enforcing his rights hereunder. (f) Date of Termination. For purposes of this Agreement, the term ------------------- "Date of Termination" means (i) in the case of a termination for which a Notice --- of Termination is required, the date of receipt of such Notice of Termination or, if later, the date specified therein and (ii) in all other cases, the actual date on which the Executive's employment terminates during the Employment Period. 7. Obligations of the Corporation upon Termination. (a) Death. If ----------------------------------------------- ------ the Executive's employment is terminated during the Employment Period by reason of the Executive's death, this Agreement shall terminate without further obligations to the Executive's legal representatives under this Agreement other than those obligations accrued hereunder at the date of his death, including, for this purpose (i) the Executive's full Base Salary through the Date of --- Termination, (ii) the product of the Annual Bonus and a fraction, the numerator ---- of which is the number of days in the current fiscal year of the Corporation through the Date of Termination, and the denominator of which is 365 (the "Pro- rated Bonus Obligation"), (iii) any compensation previously deferred by the ----- Executive (together with any accrued earnings thereon) and not yet paid by the Corporation and (iv) any other amounts or benefits owing to the Executive under ---- the then applicable employee benefit plans or policies of the Corporation (such amounts specified in clauses (i), (ii), (iii) and (iv) are hereinafter referred to as "Accrued Obligations"). Unless otherwise directed by the - 6 - Executive (or, in the case of any employee benefit plan qualified (a "Qualified Plan") under Section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code"), as may be required by such plan), all such Accrued Obligations shall be paid to the Executive's legal representatives in a lump sum in cash within 30 days of the Date of Termination. Anything in this Agreement to the contrary notwithstanding, the Executive's family shall be entitled to receive benefits at least equal to the most favorable level of benefits available to surviving families of executives of the Corporation and its affiliates under such plans, programs and policies relating to family death benefits, if any, of the Corporation and its affiliates in effect at any time during the 90-day period immediately preceding the Effective Date. (b) Disability. If the Executive's employment is terminated by reason ---------- of the Executive's Disability, the Executive shall be entitled, after the Date of Termination until the date when the Employment Period would otherwise have terminated, to continue to participate in or be covered under the benefit plans and programs referred to in Section 5(d) of this Agreement or, at the Corporation's option, to receive equivalent benefits by alternate means at least equal to those provided in accordance with Section 5(d) of this Agreement. Unless otherwise directed by the Executive (or, in the case of any Qualified Plan, as may be required by such plan), the Executive shall also be paid all Accrued Obligations in a lump sum in cash within 30 days of the Date of Termination. Anything in this Agreement to the contrary notwithstanding, the Executive shall be entitled to receive disability and other benefits at least equal to the most favorable level of benefits available to disabled employees and/or their families in accordance with the plans, programs and policies maintained by the Corporation or its affiliates relating to disability at any time during the 90-day period immediately preceding the Effective Date. (c) Cause and Voluntary Termination. If, during the Employment Period, ------------------------------- the Executive's employment shall be terminated for Cause or voluntarily terminated by the Executive (other than on account of Good Reason), the Corporation shall pay the Executive the Accrued Obligations other than the Pro- rated Bonus Obligation. Unless otherwise directed by the Executive (or, in the case of any Qualified Plan, as may be required by such plan), the Executive shall be paid all such Accrued Obligations in a lump sum in cash within 30 days of the Date of Termination and the Corporation shall have no further obligations to the Executive under this Agreement. (d) Termination by Corporation other than for Cause or Disability and ----------------------------------------------------------------- Termination by Executive for Good Reason. (i) Lump Sum Payment. If, during - ---------------------------------------- ---------------- the Employment Period, the Corporation terminates the Executive's employment other than for Cause or Disability, or the Executive terminates his employment for Good Reason, the Corporation shall pay to the Executive in a lump sum in cash within 15 days after the Date of Termination the aggregate of the following amounts: (A) if not theretofore paid, the Executive's Base Salary through the Date of Termination at the rate specified in Section 5(a) of this Agreement; - 7 - (B) a cash amount equal to three times the sum of (1) the Executive's annual Base Salary at the rate specified in Section 5(a) of this Agreement; (2) the Annual Bonus; and (3) the present value, calculated using the annual federal short- term rate as determined under Section 1274(d) of the Code, of (without duplication) (x) the annual cost to the Corporation (based on the --- premium rates or other costs to it) of obtaining coverage equivalent to the coverage under the plans and programs described in Section 5(d) of this Agreement, and (y) the annualized value of the fringe benefits --- described under Section 5(f) of this Agreement; provided, however, that in no event shall the Executive be entitled to receive under this clause (B) more than the product obtained by multiplying the amount determined under this clause by a fraction whose numerator shall be the number of months (including fractions of a month) which at the Date of Termination remain until the Executive's normal retirement date under the Corporation's retirement plan or any successor plan as in effect from time to time and whose denominator shall be 24, and provided further that, with respect to the life and medical insurance coverage referred to in Section 5(d) of this Agreement, at the Executive's election made prior to the Date of Termination, the Corporation shall use its best efforts to secure conversion coverage and shall pay the cost of such coverage in lieu of paying the lump sum amount attributable to such life or medical insurance coverage; and (C) a cash amount equal to any amounts (other than amounts payable to the Executive under any Qualified Plans) described in Sections 7(a)(iii) and (iv) of this Agreement. (ii) Discharge of Corporation's Obligations. Subject to the performance -------------------------------------- of its obligations under this Section 7(d), the Corporation shall have no further obligations to the Executive in respect of any termination by the Executive for Good Reason or by the Corporation other than for Cause or Disability, except to the extent expressly provided under any of the plans referred to in Section 5(c) or 5(d) of this Agreement. 8. Non-exclusivity of Rights. Nothing in this Agreement shall prevent ------------------------- or limit the Executive's continuing or future participation in any benefit, bonus, incentive or other plan or program provided by the Corporation or any of its affiliated companies and for which the Executive may qualify, nor shall anything herein limit or otherwise prejudice such rights as the Executive may have under any stock option or other plans or agreements with the Corporation or any of its affiliated companies. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan or program of the Corporation or any of - 8 - its affiliated companies at or subsequent to the Date of Termination shall be payable in accordance with such plan or program. 9. Certain Additional Payments by the Corporation. ---------------------------------------------- (a) Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment or distribution by the Corporation to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, but determined without regard to any additional payments required under this Section 9) (a "Payment") would be subject to the excise tax imposed by Section 4999 of the Code (or any successor provision) or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then the Executive shall be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after payment by the Executive of all taxes with respect to the Gross-Up Payment (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. (b) Subject to the provisions of Section 9(c), all determinations required to be made under this Section 9, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by KPMG Peat Marwick or other firm then auditing the accounts of the Corporation (the "Accounting Firm") which shall provide detailed supporting calculations both to the Corporation and the Executive within 15 business days of the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by the Corporation. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, or is unwilling or unable to perform its obligations pursuant to this Section 9, the Executive shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Corporation. Any Gross-Up Payment, determined pursuant to this Section 9, shall be paid by the Corporation to the Executive within five days of the receipt of the Accounting Firm's determination. Any determination by the Accounting Firm shall be binding upon the Corporation and the Executive. As a result of the potential uncertainty in the application of Section 4999 of the Code (or any successor provision) at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Corporation should have been made ("Underpayment"), consistent with the calculations required to be made hereunder. In the event that the Corporation exhausts its remedies pursuant to Section 9(c) and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the - 9 - amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Corporation to or for the benefit of the Executive. (c) The Executive shall notify the Corporation in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Corporation of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than 10 business days after the Executive is informed in writing of such claim and shall apprise the Corporation of the nature of such claim and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which he gives such notice to the Corporation (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Corporation notifies the Executive in writing prior to the expiration of such period that it desires to contest such claim, the Executive shall: (i) give the Corporation any information reasonably requested by the Corporation relating to such claim, (ii) take such action in connection with contesting such claim as the Corporation shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Corporation, (iii) cooperate with the Corporation in good faith in order effectively to contest such claim, and (iv) permit the Corporation to participate in any proceedings relating to such claim; provided, however, that the Corporation shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limiting the foregoing provisions of this Section 9(c), the Corporation shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Corporation shall determine; provided, however, that if the Corporation directs the Executive to pay such claim and sue for a refund, the Corporation shall advance the amount of such payment to the Executive, on an interest-free basis, and shall indemnify and hold the Executive - 10 - harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Corporation's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority. (d) If, after the receipt by the Executive of an amount advanced by the Corporation pursuant to Section 9(c), the Executive becomes entitled to receive any refund with respect to such claim, the Executive shall (subject to the Corporation's complying with the requirements of Section 9(c)) promptly pay to the Corporation the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Executive of an amount advanced by the Corporation pursuant to Section 9(c), a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Corporation does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid. 10. Full Settlement. The Corporation's obligation to make the payments --------------- provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Corporation may have against the Executive or others whether by reason of the subsequent employment of the Executive or otherwise. In no event shall the Executive be obligated to seek other employment by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement, and no amount payable under this Agreement shall be reduced on account of any compensation received by the Executive from other employment. In the event that the Executive shall in good faith give a Notice of Termination for Good Reason and it shall thereafter be determined by mutual consent of the Executive and the Corporation or by a tribunal having jurisdiction over the matter that Good Reason did not exist, the employment of the Executive shall, unless the Corporation and the Executive shall otherwise mutually agree, be deemed to have terminated, at the date of giving such purported Notice of Termination, by mutual consent of the Corporation and the Executive and, except as provided in the last preceding sentence, the Executive shall be entitled to receive only those payments and benefits which he would have been entitled to receive at such date otherwise than under this Agreement. 11. Legal Fees and Expenses. In the event that a claim for payment of ----------------------- benefits under this Agreement is disputed, the Corporation - 11 - shall pay all reasonable legal fees and expenses incurred by the Executive in pursuing such claim, provided that the Executive is successful as to at least part of the disputed claim by reason of litigation, arbitration or settlement. 12. Confidential Information. The Executive shall hold in a fiduciary ------------------------ capacity for the benefit of the Corporation all secret or confidential information, knowledge or data relating to the Corporation or any of its affiliated companies, and their respective businesses, (i) obtained by the --- Executive during his employment by the Corporation or any of its affiliated companies and (ii) not otherwise public knowledge (other than by reason of an ---- unauthorized act by the Executive). After termination of the Executive's employment with the Corporation, the Executive shall not, without the prior written consent of the Corporation, unless compelled pursuant to an order of a court or other body having jurisdiction over such matter, communicate or divulge any such information, knowledge or data to anyone other than the Corporation and those designated by it. In no event shall an asserted violation of the provisions of this Section 12 constitute a basis for deferring or withholding any amounts otherwise payable to the Executive under this Agreement. 13. Employment Contract or Severance Benefits. Notwithstanding ----------------------------------------- anything else in this Agreement to the contrary, any amount payable to the Executive hereunder on account of his termination of employment shall be reduced on a dollar-for-dollar basis by each dollar actually paid to the Executive with respect to such termination under the terms of any employment contract between the Executive and the Corporation or under any severance program or policy applicable to the Executive. Nothing in this Agreement shall be construed to require duplication of any compensation, benefits or other entitlements provided to the Executive by the Corporation under the terms of any employment contract which may address similar matters. 14. Successors. (a) This Agreement is personal to the Executive and, ---------- without the prior written consent of the Corporation, shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives. (b) This Agreement shall inure to the benefit of and be binding upon the Corporation and its successors. The Corporation shall require any successor to all or substantially all of the business and/or assets of the Corporation, whether direct or indirect, by purchase, merger, consolidation, acquisition of stock, or otherwise, by an agreement in form and substance satisfactory to the Executive, expressly to assume and agree to perform this Agreement in the same manner and to the same extent as the Corporation would be required to perform if no such succession had taken place. 15. Miscellaneous. (a) Applicable Law. This Agreement shall be ------------- -------------- governed by and construed in accordance with the laws of the State of Delaware, applied without reference to principles of conflict of laws. - 12 - (b) Amendments. This Agreement may not be amended or modified ---------- otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives. (c) Notices. All notices and other communications hereunder shall be ------- in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to the Executive: at the address listed below If to the Corporation: Tambrands Inc. 777 Westchester Avenue White Plains, New York 10604 Attention: Secretary (with a copy to the attention of the General Counsel) or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notices and communications shall be effective when actually received by the addressee. (d) Tax Withholding. The Corporation may withhold from any amounts --------------- payable under this Agreement such Federal, State or local taxes as shall be required to be withheld pursuant to any applicable law or regulation. (e) Severability. The invalidity or unenforceability of any provision ------------ of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. (f) Captions. The captions of this Agreement are not part of the -------- provisions hereof and shall have no force or effect. IN WITNESS WHEREOF, the Executive has hereunto set his hand and the Corporation has caused this Agreement to be executed in its name on its behalf, and its corporate seal to be hereunto affixed and attested by its Assistant Secretary, all as of the day and year first above written. - 13 - ATTEST: TAMBRANDS INC. /s/ Jonathan W. Emery By /s/ Edward T. Fogarty - ------------------------- ---------------------------- Corporate Counsel and Title: Chairman, President and Assistant Secretary Chief Executive Officer (Seal) EXECUTIVE: Thomas J. Mason /s/ Thomas J. Mason ---------------------------- Address: Tambrands Inc. 777 Westchester Avenue White Plains, New York 10604 - 14 - EX-10.9.D 8 EMPLOYMENT PROTECTION AGREEMENT EXHIBIT 10(9)(d) EMPLOYMENT PROTECTION AGREEMENT ------------------------------- THIS AGREEMENT between Tambrands Inc., a Delaware corporation (the "Corporation"), and Michael S. Krause (the "Executive"), dated as of this 5th day of July, 1995. W I T N E S S E T H : - - - - - - - - - - WHEREAS, the Corporation and the Executive have agreed to enter into an agreement providing the Corporation and the Executive with certain rights upon the occurrence of a Change of Control (as defined below) to assure the Corporation of continuity of management in the event of any Change of Control; NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, it is hereby agreed by and between the Corporation and the Executive as follows: 1. Operation of Agreement. The effective date of this Agreement shall ---------------------- be the date on which a Change of Control occurs (the "Effective Date"), provided that if the Executive is not employed by the Corporation on the Effective Date this Agreement shall be void and without effect. This Agreement shall terminate on July 31, 1998, provided that the termination date of this Agreement shall be extended for one additional year on August 1, 1996 and each subsequent August 1, unless the Executive shall have received written notice from the Corporation prior to the May 1 immediately preceding such August 1 that the Board of Directors of the Corporation (the "Board") has determined that the termination date of this Agreement shall not be so extended. Notwithstanding the foregoing, this Agreement shall not terminate on the date determined in accordance with the preceding sentence if a Change of Control shall have occurred prior to such date. 2. Definitions. (a) Change of Control. For purposes of this ----------- ----------------- Agreement, a "Change of Control" shall be deemed to have occurred if: (i) any --- person (as defined in Section 3(a)(9) of the Securities Exchange Act of 1934, as amended from time to time (the "Exchange Act"), and as used in Sections 13(d) and 14(d) thereof)), excluding the Corporation, any majority owned subsidiary of the Corporation (a "Subsidiary") and any employee benefit plan sponsored or maintained by the Corporation or any Subsidiary (including any trustee of such plan acting as trustee), but including a "group" as defined in Section 13(d)(3) of the Exchange Act (a "Person"), becomes the beneficial owner of shares of the Corporation having at least 20% of the total number of votes that may be cast for the election of directors of the Corporation (the "Voting Shares") provided, however, that such an event shall not constitute a Change of Control if the acquiring Person has entered into an agreement with the Corporation approved by the Board which materially restricts the right of such Person to direct or influence the management or policies of the Corporation; (ii) the share- ---- holders of the Corporation shall approve any merger or other business combination of the Corporation, sale of the Corporation's assets or combination of the foregoing transactions (a "Transaction") other than a Transaction involving only the Corporation and one or more of its Subsidiaries, or a Transaction immediately following which the shareholders of the Corporation immediately prior to the Transaction continue to have a majority of the voting power in the resulting entity excluding for this purpose any shareholder owning directly or indirectly more than 10% of the shares of the other company involved in the Transaction, or (iii) within any 24-month period beginning on or after ----- July 5, 1995, the persons who were directors of the Corporation immediately before the beginning of such period (the "Incumbent Directors") shall cease (for any reason other than death) to constitute at least a majority of the Board or the board of directors of any successor to the Corporation, provided that any director who was not a director as of July 5, 1995 shall be deemed to be an Incumbent Director if such director was elected to the Board by, or on the recommendation of or with the approval of, at least two-thirds of the directors who then qualified as Incumbent Directors either actually or by prior operation of this Section 2(a)(iii). (b) Participation by Executive. Notwithstanding the foregoing, no -------------------------- Change of Control shall be deemed to have occurred for purposes of this Agreement by reason of any actions or events in which the Executive participates in a capacity other than in his capacity as the Executive (or as a director of the Corporation or a Subsidiary, where applicable). 3. Employment Period. If the Executive is employed on the Effective ----------------- Date, the Corporation agrees to continue the Executive in its employ, and the Executive agrees to remain in the employ of the Corporation, for the period (the "Employment Period") commencing on the Effective Date and ending on the earliest to occur of (i) the second anniversary of the Effective Date, (ii) the --- ---- Executive's normal retirement date under the Corporation's retirement plans as in effect from time to time and (iii) the date of any termination of the ----- Executive's employment in accordance with Section 6 of this Agreement. 4. Position and Duties. (a) No Reduction in Position. During the ------------------- ------------------------ Employment Period, the Executive's position (including titles), authority and responsibilities shall be at least commensurate with the highest of those held, exercised and assigned at any time during the 90-day period immediately preceding the Effective Date. (b) Business Time. From and after the Effective Date, the Executive ------------- agrees to devote his full business time during normal business hours to the business and affairs of the Corporation and to use his best efforts to perform faithfully and efficiently the responsibilities assigned to him hereunder, to the extent necessary to discharge such responsibilities, except for (i) reasonable time spent in serving on corporate, civic or charitable boards or committees approved by the Board, in each case only if and to the extent not substantially 2 interfering with the performance of such responsibilities, and (ii) periods of vacation and sick leave to which he is entitled. It is expressly understood and agreed that the Executive's continuing to serve on any boards and committees on which he is serving or with which he is otherwise associated with the consent or approval of the Corporation immediately preceding the Effective Date shall not be deemed to interfere with the performance of the Executive's services to the Corporation. 5. Compensation. (a) Base Salary. During the Employment Period, the ------------ ----------- Executive shall receive a base salary ("Base Salary") at a monthly rate at least equal to the monthly salary paid to the Executive by the Corporation and any of its affiliated companies immediately prior to the Effective Date. The Base Salary shall be reviewed at least once each year after the Effective Date, and may be increased (but not decreased) at any time and from time to time by action of the Board or any committee thereof or any individual having authority to take such action in accordance with the Corporation's regular practices. Neither payment of the Base Salary nor payment of any increased Base Salary after the Effective Date shall serve to limit or reduce any other obligation of the Corporation hereunder. For purposes of the remaining provisions of this Agreement, the term "Base Salary" shall mean Base Salary as defined in this Section 5(a) or, if increased after the Effective Date, the Base Salary as so increased. (b) Annual Bonus. In addition to the Base Salary, the Executive shall ------------ be awarded for each fiscal year of the Corporation ending during the Employment Period an annual bonus (either pursuant to a bonus plan or program of the Corporation or otherwise) in cash at least equal to the last annual bonus (annualized, if awarded in respect of a partial year) awarded to the Executive under the Annual Incentive Plan of the Corporation prior to the Effective Date ("Annual Bonus"). If a fiscal year of the Corporation begins, but does not end, during the Employment Period, the Executive shall receive an amount with respect to such fiscal year at least equal to the amount of the Annual Bonus multiplied by a fraction, the numerator of which is the number of days in such fiscal year occurring during the Employment Period and the denominator of which is 365. Each amount payable in respect of the Executive's Annual Bonus shall be paid not later than the last day of March of the year next following the year for which the Annual Bonus (or pro-rated portion) is earned or awarded, unless electively deferred by the Executive pursuant to any deferral programs or arrangements that the Corporation may make available to the Executive, in which event such deferred amount shall be payable in accordance with the terms of such deferral program or arrangement. Neither the Annual Bonus nor any bonus amount paid in excess thereof after the Effective Date shall serve to limit or reduce any other obligation of the Corporation hereunder. (c) Incentive and Savings Plans and Retirement Programs. In addition --------------------------------------------------- to the Base Salary and Annual Bonus payable as hereinabove provided, during the Employment Period, the Executive shall be entitled to - 3 - participate in all incentive and savings plans and programs, including stock option plans and other equity based compensation plans, and in all retirement plans, on a basis providing him with the opportunity to receive compensation (without duplication of the amount payable as an Annual Bonus) and benefits equal to those provided by the Corporation to the Executive on an annualized basis under such plans and programs as in effect at any time during the 90-day period immediately preceding the Effective Date. (d) Benefit Plans. During the Employment Period, the Executive and his ------------- family shall be entitled to participate in or be covered under all welfare benefit plans and programs of the Corporation and its affiliated companies, including all medical, dental, disability, group life, accidental death and travel accident insurance plans and programs, as in effect at any time during the 90-day period immediately preceding the Effective Date. (e) Expenses. During the Employment Period, the Executive shall be -------- entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance with the policies and procedures of the Corporation as in effect at any time during the 90-day period immediately preceding the Effective Date. (f) Vacation and Fringe Benefits. During the Employment Period, the ---------------------------- Executive shall be entitled to paid vacation and fringe benefits in accordance with the policies of the Corporation as in effect at any time during the 90-day period immediately preceding the Effective Date. (g) Office and Support Staff. During the Employment Period, the ------------------------ Executive shall be entitled to an office or offices of a size and with furnishings and other appointments, and to secretarial and other assistance, at least equal to the most favorable of the foregoing provided to the Executive at any time during the 90-day period immediately preceding the Effective Date. 6. Termination. (a) Death, Disability or Retirement. Subject to the ----------- ------------------------------- provisions of Section 1 hereof, this Agreement shall terminate automatically upon the Executive's death or attainment of normal retirement age under the Corporation's retirement plans as in effect from time to time, provided that, after the Effective Date, the normal retirement age may not be lowered for purposes of this Agreement without the Executive's consent. The Corporation may terminate this Agreement, after having established the Executive's Disability, by giving the Executive written notice of its intention to terminate his employment, and his employment with the Corporation shall terminate effective on the 90th day after receipt of such notice if, within 90 days after such receipt, the Executive shall fail to return to full-time performance of his duties. For purposes of this Agreement, "Disability" means disability which, after the expiration of more than 26 weeks after its commencement, is determined to be total and permanent by a physician selected by the Corporation or its insurers and acceptable to the Executive or his legal representatives (such agreement to acceptability not to be withheld unreasonably). - 4 - (b) Voluntary Termination. Notwithstanding anything in this Agreement --------------------- to the contrary, the Executive may, upon not less than 30 days' written notice to the Corporation, voluntarily terminate employment during the Employment Period for any reason (including early retirement under the terms of the Corporation's retirement plan as in effect from time to time), provided that any termination by the Executive pursuant to Section 6(d) of this Agreement on account of Good Reason (as defined therein) shall not be treated as a voluntary termination under this Section 6(b). (c) Cause. The Corporation may terminate the Executive's employment ----- during the Employment Period for Cause. For purposes of this Agreement, "Cause" means (i) an act or acts of dishonesty or gross misconduct on the Executive's --- part which result or are intended to result in material damage to the Corporation's business or reputation or (ii) repeated material violations by the ---- Executive of his obligations under Section 4 of this Agreement which violations are demonstrably willful and deliberate on the Executive's part. (d) Good Reason. The Executive may terminate his employment during the ----------- Employment Period for Good Reason. For purposes of this Agreement, "Good Reason" means (i) a good faith determination by the Executive that, without his prior written consent, the Corporation or any of its officers has taken or failed to take any action (including, without limitation, (A) exclusion of the --- Executive from consideration of material matters within his area of responsibility, (B) statements or actions which undermine the Executive's --- authority with respect to persons under his supervision or reduce his standing with his peers, (C) a pattern of discrimination against or --- harassment of the Executive or persons under his supervision and (D) the --- subjection of the Executive to procedures not generally applicable to other similarly situated executives) which changes the Executive's position (including titles), authority or responsibilities under Section 4 of this Agreement or reduces the Executive's ability to carry out his duties and responsibilities under Section 4 of this Agreement; (ii) any failure by the Corporation to comply with any of the provisions of Section 5 of this Agreement, other than an insubstantial or inadvertent failure remedied by the Corporation promptly after receipt of notice thereof from the Executive; (iii) the Corporation's requiring the Executive to be employed at any location more than 50 miles further from his principal residence than the location at which the Executive was employed immediately preceding the Effective Date; or (iv) any failure by the Corporation to obtain the assumption of and agreement to perform this Agreement by a successor as contemplated by Section 14(b) of this Agreement, provided that the successor has had actual written notice of the existence of this Agreement and its terms and an opportunity to assume the Corporation's respon- - 5 - sibilities under this Agreement during a period of 10 business days after receipt of such notice. (e) Notice of Termination. Any termination by the Corporation for --------------------- Cause or by the Executive for Good Reason during the Employment Period shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 15(c) of this Agreement. For purposes of this Agreement, a "Notice of Termination" means a written notice given, in the case of a termination for Cause, within 10 business days of the Corporation's having actual knowledge of all of the events giving rise to such termination, and in the case of a termination for Good Reason, within 180 days of the Executive's having actual knowledge of the events giving rise to such termination, and which (i) indicates the specific termination provision in this Agreement relied upon, - --- (ii) sets forth in reasonable detail the facts and circumstances claimed to - ---- provide a basis for termination of the Executive's employment under the provision so indicated, and (iii) if the termination date is other than the date ----- of receipt of such notice, specifies the termination date of this Agreement (which date shall be not more than 15 days after the giving of such notice). The failure by the Executive to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason shall not waive any right of the Executive hereunder or preclude the Executive from asserting such fact or circumstance in enforcing his rights hereunder. (f) Date of Termination. For purposes of this Agreement, the term ------------------- "Date of Termination" means (i) in the case of a termination for which a Notice --- of Termination is required, the date of receipt of such Notice of Termination or, if later, the date specified therein and (ii) in all other cases, the actual date on which the Executive's employment terminates during the Employment Period. 7. Obligations of the Corporation upon Termination. (a) Death. If ----------------------------------------------- ------ the Executive's employment is terminated during the Employment Period by reason of the Executive's death, this Agreement shall terminate without further obligations to the Executive's legal representatives under this Agreement other than those obligations accrued hereunder at the date of his death, including, for this purpose (i) the Executive's full Base Salary through the Date of --- Termination, (ii) the product of the Annual Bonus and a fraction, the numerator ---- of which is the number of days in the current fiscal year of the Corporation through the Date of Termination, and the denominator of which is 365 (the "Pro- rated Bonus Obligation"), (iii) any compensation previously deferred by the ----- Executive (together with any accrued earnings thereon) and not yet paid by the Corporation and (iv) any other amounts or benefits owing to the Executive under ---- the then applicable employee benefit plans or policies of the Corporation (such amounts specified in clauses (i), (ii), (iii) and (iv) are hereinafter referred to as "Accrued Obligations"). Unless otherwise directed by the Executive (or, in the case of any employee benefit plan qualified (a "Qualified Plan") under Section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code"), as may be required by such plan), all such Accrued Obligations shall be paid to the Executive's legal representatives in a lump sum in cash within 30 days of the Date of Termination. Anything in this Agreement to the contrary notwithstanding, the Executive's family - 6 - shall be entitled to receive benefits at least equal to the most favorable level of benefits available to surviving families of executives of the Corporation and its affiliates under such plans, programs and policies relating to family death benefits, if any, of the Corporation and its affiliates in effect at any time during the 90-day period immediately preceding the Effective Date. (b) Disability. If the Executive's employment is terminated by reason ---------- of the Executive's Disability, the Executive shall be entitled, after the Date of Termination until the date when the Employment Period would otherwise have terminated, to continue to participate in or be covered under the benefit plans and programs referred to in Section 5(d) of this Agreement or, at the Corporation's option, to receive equivalent benefits by alternate means at least equal to those provided in accordance with Section 5(d) of this Agreement. Unless otherwise directed by the Executive (or, in the case of any Qualified Plan, as may be required by such plan), the Executive shall also be paid all Accrued Obligations in a lump sum in cash within 30 days of the Date of Termination. Anything in this Agreement to the contrary notwithstanding, the Executive shall be entitled to receive disability and other benefits at least equal to the most favorable level of benefits available to disabled employees and/or their families in accordance with the plans, programs and policies maintained by the Corporation or its affiliates relating to disability at any time during the 90-day period immediately preceding the Effective Date. (c) Cause and Voluntary Termination. If, during the Employment Period, ------------------------------- the Executive's employment shall be terminated for Cause or voluntarily terminated by the Executive (other than on account of Good Reason), the Corporation shall pay the Executive the Accrued Obligations other than the Pro- rated Bonus Obligation. Unless otherwise directed by the Executive (or, in the case of any Qualified Plan, as may be required by such plan), the Executive shall be paid all such Accrued Obligations in a lump sum in cash within 30 days of the Date of Termination and the Corporation shall have no further obligations to the Executive under this Agreement. (d) Termination by Corporation other than for Cause or Disability and ----------------------------------------------------------------- Termination by Executive for Good Reason. (i) Lump Sum Payment. If, during - ---------------------------------------- ---------------- the Employment Period, the Corporation terminates the Executive's employment other than for Cause or Disability, or the Executive terminates his employment for Good Reason, the Corporation shall pay to the Executive in a lump sum in cash within 15 days after the Date of Termination the aggregate of the following amounts: (A) if not theretofore paid, the Executive's Base Salary through the Date of Termination at the rate specified in Section 5(a) of this Agreement; (B) a cash amount equal to two times the sum of (1) the Executive's annual Base Salary at the rate specified in Section 5(a) of this Agreement; - 7 - (2) the Annual Bonus; and (3) the present value, calculated using the annual federal short- term rate as determined under Section 1274(d) of the Code, of (without duplication) (x) the annual cost to the Corporation (based on the --- premium rates or other costs to it) of obtaining coverage equivalent to the coverage under the plans and programs described in Section 5(d) of this Agreement, and (y) the annualized value of the fringe benefits --- described under Section 5(f) of this Agreement; provided, however, that in no event shall the Executive be entitled to receive under this clause (B) more than the product obtained by multiplying the amount determined under this clause by a fraction whose numerator shall be the number of months (including fractions of a month) which at the Date of Termination remain until the Executive's normal retirement date under the Corporation's retirement plan or any successor plan as in effect from time to time and whose denominator shall be 24, and provided further that, with respect to the life and medical insurance coverage referred to in Section 5(d) of this Agreement, at the Executive's election made prior to the Date of Termination, the Corporation shall use its best efforts to secure conversion coverage and shall pay the cost of such coverage in lieu of paying the lump sum amount attributable to such life or medical insurance coverage; and (C) a cash amount equal to any amounts (other than amounts payable to the Executive under any Qualified Plans) described in Sections 7(a)(iii) and (iv) of this Agreement. (ii) Discharge of Corporation's Obligations. Subject to the performance -------------------------------------- of its obligations under this Section 7(d), the Corporation shall have no further obligations to the Executive in respect of any termination by the Executive for Good Reason or by the Corporation other than for Cause or Disability, except to the extent expressly provided under any of the plans referred to in Section 5(c) or 5(d) of this Agreement. 8. Non-exclusivity of Rights. Nothing in this Agreement shall prevent ------------------------- or limit the Executive's continuing or future participation in any benefit, bonus, incentive or other plan or program provided by the Corporation or any of its affiliated companies and for which the Executive may qualify, nor shall anything herein limit or otherwise prejudice such rights as the Executive may have under any stock option or other plans or agreements with the Corporation or any of its affiliated companies. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan or program of the Corporation or any of its affiliated companies at or subsequent to the Date of Termination shall be payable in accordance with such plan or program. - 8 - 9. Certain Additional Payments by the Corporation. ---------------------------------------------- (a) Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment or distribution by the Corporation to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, but determined without regard to any additional payments required under this Section 9) (a "Payment") would be subject to the excise tax imposed by Section 4999 of the Code (or any successor provision) or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then the Executive shall be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after payment by the Executive of all taxes with respect to the Gross-Up Payment (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. (b) Subject to the provisions of Section 9(c), all determinations required to be made under this Section 9, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by KPMG Peat Marwick or other firm then auditing the accounts of the Corporation (the "Accounting Firm") which shall provide detailed supporting calculations both to the Corporation and the Executive within 15 business days of the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by the Corporation. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, or is unwilling or unable to perform its obligations pursuant to this Section 9, the Executive shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Corporation. Any Gross-Up Payment, determined pursuant to this Section 9, shall be paid by the Corporation to the Executive within five days of the receipt of the Accounting Firm's determination. Any determination by the Accounting Firm shall be binding upon the Corporation and the Executive. As a result of the potential uncertainty in the application of Section 4999 of the Code (or any successor provision) at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Corporation should have been made ("Underpayment"), consistent with the calculations required to be made hereunder. In the event that the Corporation exhausts its remedies pursuant to Section 9(c) and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Corporation to or for the benefit of the Executive. - 9 - (c) The Executive shall notify the Corporation in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Corporation of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than 10 business days after the Executive is informed in writing of such claim and shall apprise the Corporation of the nature of such claim and the date on which such claim is requested to be paid. the Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which he gives such notice to the Corporation (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Corporation notifies the Executive in writing prior to the expiration of such period that it desires to contest such claim, the Executive shall: (i) give the Corporation any information reasonably requested by the Corporation relating to such claim, (ii) take such action in connection with contesting such claim as the Corporation shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Corporation, (iii) cooperate with the Corporation in good faith in order effectively to contest such claim, and (iv) permit the Corporation to participate in any proceedings relating to such claim; provided, however, that the Corporation shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on a after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limiting the foregoing provisions of this Section 9(c), the Corporation shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Corporation shall determine; provided, however, that if the Corporation directs the Executive to pay such claim and sue for a refund, the Corporation shall advance the amount of such payment to the Executive, on an interest-free basis, and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect - 10 - to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statue of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Corporation's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority. (d) If, after the receipt by the Executive of an amount advanced by the Corporation pursuant to Section 9(c), the Executive becomes entitled to receive any refund with respect to such claim, the Executive shall (subject to the Corporation's complying with the requirements of Section 9(c)) promptly pay to the Corporation the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Executive of an amount advanced by the Corporation pursuant to Section 9(c), a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Corporation does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid. 10. Full Settlement. The Corporation's obligation to make the payments --------------- provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Corporation may have against the Executive or others whether by reason of the subsequent employment of the Executive or otherwise. In no event shall the Executive be obligated to seek other employment by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement, and no amount payable under this Agreement shall be reduced on account of any compensation received by the Executive from other employment. In the event that the Executive shall in good faith give a Notice of Termination for Good Reason and it shall thereafter be determined by mutual consent of the Executive and the Corporation or by a tribunal having jurisdiction over the matter that Good Reason did not exist, the employment of the Executive shall, unless the Corporation and the Executive shall otherwise mutually agree, be deemed to have terminated, at the date of giving such purported Notice of Termination, by mutual consent of the Corporation and the Executive and, except as provided in the last preceding sentence, the Executive shall be entitled to receive only those payments and benefits which he would have been entitled to receive at such date otherwise than under this Agreement. 11. Legal Fees and Expenses. In the event that a claim for payment of ----------------------- benefits under this Agreement is disputed, the Corporation shall pay all reasonable legal fees and expenses incurred by the Executive in pursuing such claim, provided that the Executive is successful as to at - 11 - least part of the disputed claim by reason of litigation, arbitration or settlement. 12. Confidential Information. The Executive shall hold in a fiduciary ------------------------ capacity for the benefit of the Corporation all secret or confidential information, knowledge or data relating to the Corporation or any of its affiliated companies, and their respective businesses, (i) obtained by the --- Executive during his employment by the Corporation or any of its affiliated companies and (ii) not otherwise public knowledge (other than by reason of an ---- unauthorized act by the Executive). After termination of the Executive's employment with the Corporation, the Executive shall not, without the prior written consent of the Corporation, unless compelled pursuant to an order of a court or other body having jurisdiction over such matter, communicate or divulge any such information, knowledge or data to anyone other than the Corporation and those designated by it. In no event shall an asserted violation of the provisions of this Section 12 constitute a basis for deferring or withholding any amounts otherwise payable to the Executive under this Agreement. 13. Employment Contract or Severance Benefits. Notwithstanding ----------------------------------------- anything else in this Agreement to the contrary, any amount payable to the Executive hereunder on account of his termination of employment shall be reduced on a dollar for dollar basis by each dollar actually paid to the Executive with respect to such termination under the terms of any employment contract between the Executive and the Corporation or under any severance program or policy applicable to the Executive. Nothing in this Agreement shall be construed to require duplication of any compensation, benefits or other entitlements provided to the Executive by the Corporation under the terms of any employment contract which may address similar matters. 14. Successors. (a) This Agreement is personal to the Executive and, ---------- without the prior written consent of the Corporation, shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives. (b) This Agreement shall inure to the benefit of and be binding upon the Corporation and its successors. The Corporation shall require any successor to all or substantially all of the business and/or assets of the Corporation, whether direct or indirect, by purchase, merger, consolidation, acquisition of stock, or otherwise, by an agreement in form and substance satisfactory to the Executive, expressly to assume and agree to perform this Agreement in the same manner and to the same extent as the Corporation would be required to perform if no such succession had taken place. 15. Miscellaneous. (a) Applicable Law. This Agreement shall be ------------- -------------- governed by and construed in accordance with the laws of the State of Delaware, applied without reference to principles of conflict of laws. - 12 - (b) Amendments. This Agreement may not be amended or modified ---------- otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives. (c) Notices. All notices and other communications hereunder shall be ------- in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to the Executive: at the address listed below If to the Corporation: Tambrands Inc. 777 Westchester Avenue White Plains, New York 10604 Attention: Secretary (with a copy to the attention of the General Counsel) or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notices and communications shall be effective when actually received by the addressee. (d) Tax Withholding. The Corporation may withhold from any amounts --------------- payable under this Agreement such Federal, State or local taxes as shall be required to be withheld pursuant to any applicable law or regulation. (e) Severability. The invalidity or unenforceability of any provision ------------ of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. (f) Captions. The captions of this Agreement are not part of the -------- provisions hereof and shall have no force or effect. IN WITNESS WHEREOF, the Executive has hereunto set his hand and the Corporation has caused this Agreement to be executed in its name on its behalf, and its corporate seal to be hereunto affixed and attested by its Assistant Secretary, all as of the day and year first above written. - 13 - ATTEST: TAMBRANDS INC. /s/ Barry K. Misenheimer By /s/ Edward T. Fogarty - ------------------------- ------------------------------- Assistant Secretary Title: President and Chief Executive Officer (Seal) EXECUTIVE: Michael S. Krause /s/ Michael S. Krause --------------------------------- Address: Tambrands Inc. 777 Westchester Avenue White Plains, New York 10604 - 14 - EX-10.9.E 9 EMPLOYMENT PROTECTION AGREEMENT EXHIBIT 10(9)(e) EMPLOYMENT PROTECTION AGREEMENT ------------------------------- THIS AGREEMENT between Tambrands Inc., a Delaware corporation (the "Corporation"), and Susan J. Riley (the "Executive"), dated as of this 15th day of December, 1994. W I T N E S S E T H : - - - - - - - - - - WHEREAS, the Corporation and the Executive have agreed to enter into an agreement providing the Corporation and the Executive with certain rights upon the occurrence of a Change of Control (as defined below) to assure the Corporation of continuity of management in the event of any Change of Control; NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, it is hereby agreed by and between the Corporation and the Executive as follows: 1. Operation of Agreement. The effective date of this Agreement shall ---------------------- be the date on which a Change of Control occurs (the "Effective Date"), provided that if the Executive is not employed by the Corporation on the Effective Date this Agreement shall be void and without effect. This Agreement shall terminate on December 31, 1997, provided that the termination date of this Agreement shall be extended for one additional year on January 1, 1995 and each subsequent January 1, unless the Executive shall have received written notice from the Corporation prior to the September 1 immediately preceding such January 1 that the Board of Directors of the Corporation (the "Board") has determined that the termination date of this Agreement shall not be so extended. Notwithstanding the foregoing, this Agreement shall not terminate on the date determined in accordance with the preceding sentence if a Change of Control shall have occurred prior to such date. 2. Definitions. (a) Change of Control. For purposes of this ----------- ----------------- Agreement, a "Change of Control" shall be deemed to have occurred if: (i) any --- person (as defined in Section 3(a)(9) of the Securities Exchange Act of 1934, as amended from time to time (the "Exchange Act"), and as used in Sections 13(d) and 14(d) thereof)), excluding the Corporation, any majority owned subsidiary of the Corporation (a "Subsidiary") and any employee benefit plan sponsored or maintained by the Corporation or any Subsidiary (including any trustee of such plan acting as trustee), but including a "group" as defined in Section 13(d)(3) of the Exchange Act (a "Person"), becomes the beneficial owner of shares of the Corporation having at least 20% of the total number of votes that may be cast for the election of directors of the Corporation (the "Voting Shares") provided, however, that such an event shall not constitute a Change of Control if the acquiring Person has entered into an agreement with the Corporation approved by the Board which materially restricts the right of such Person to direct or influence the management or policies of the Corporation; (ii) the share- ---- holders of the Corporation shall approve any merger or other business combination of the Corporation, sale of the Corporation's assets or combination of the foregoing transactions (a "Transaction") other than a Transaction involving only the Corporation and one or more of its Subsidiaries, or a Transaction immediately following which the shareholders of the Corporation immediately prior to the Transaction continue to have a majority of the voting power in the resulting entity excluding for this purpose any shareholder owning directly or indirectly more than 10% of the shares of the other company involved in the Transaction, or (iii) within any 24-month period beginning on or after ----- December 31, 1994, the persons who were directors of the Corporation immediately before the beginning of such period (the "Incumbent Directors") shall cease (for any reason other than death) to constitute at least a majority of the Board or the board of directors of any successor to the Corporation, provided that any director who was not a director as of December 31, 1994 shall be deemed to be an Incumbent Director if such director was elected to the Board by, or on the recommendation of or with the approval of, at least two-thirds of the directors who then qualified as Incumbent Directors either actually or by prior operation of this Section 2(a)(iii). (b) Participation by Executive. Notwithstanding the foregoing, no -------------------------- Change of Control shall be deemed to have occurred for purposes of this Agreement by reason of any actions or events in which the Executive participates in a capacity other than in his capacity as the Executive (or as a director of the Corporation or a Subsidiary, where applicable). 3. Employment Period. If the Executive is employed on the Effective ----------------- Date, the Corporation agrees to continue the Executive in its employ, and the Executive agrees to remain in the employ of the Corporation, for the period (the "Employment Period") commencing on the Effective Date and ending on the earliest to occur of (i) the second anniversary of the Effective Date, (ii) the --- ---- Executive's normal retirement date under the Corporation's retirement plans as in effect from time to time and (iii) the date of any termination of the ----- Executive's employment in accordance with Section 6 of this Agreement. 4. Position and Duties. (a) No Reduction in Position. During the ------------------- ------------------------ Employment Period, the Executive's position (including titles), authority and responsibilities shall be at least commensurate with the highest of those held, exercised and assigned at any time during the 90-day period immediately preceding the Effective Date. (b) Business Time. From and after the Effective Date, the Executive ------------- agrees to devote his full business time during normal business hours to the business and affairs of the Corporation and to use his best efforts to perform faithfully and efficiently the responsibilities assigned to him hereunder, to the extent necessary to discharge such responsibilities, except for (i) reasonable time spent in serving on corporate, civic or charitable boards or committees approved by the Board, in each case only if and to the extent not substantially -2- interfering with the performance of such responsibilities, and (ii) periods of vacation and sick leave to which he is entitled. It is expressly understood and agreed that the Executive's continuing to serve on any boards and committees on which he is serving or with which he is otherwise associated with the consent or approval of the Corporation immediately preceding the Effective Date shall not be deemed to interfere with the performance of the Executive's services to the Corporation. 5. Compensation. (a) Base Salary. During the Employment Period, the ------------ ----------- Executive shall receive a base salary ("Base Salary") at a monthly rate at least equal to the monthly salary paid to the Executive by the Corporation and any of its affiliated companies immediately prior to the Effective Date. The Base Salary shall be reviewed at least once each year after the Effective Date, and may be increased (but not decreased) at any time and from time to time by action of the Board or any committee thereof or any individual having authority to take such action in accordance with the Corporation's regular practices. Neither payment of the Base Salary nor payment of any increased Base Salary after the Effective Date shall serve to limit or reduce any other obligation of the Corporation hereunder. For purposes of the remaining provisions of this Agreement, the term "Base Salary" shall mean Base Salary as defined in this Section 5(a) or, if increased after the Effective Date, the Base Salary as so increased. (b) Annual Bonus. In addition to the Base Salary, the Executive shall ------------ be awarded for each fiscal year of the Corporation ending during the Employment Period an annual bonus (either pursuant to a bonus plan or program of the Corporation or otherwise) in cash at least equal to the last annual bonus (annualized, if awarded in respect of a partial year) awarded to the Executive under the Annual Incentive Plan of the Corporation prior to the Effective Date ("Annual Bonus"). If a fiscal year of the Corporation begins, but does not end, during the Employment Period, the Executive shall receive an amount with respect to such fiscal year at least equal to the amount of the Annual Bonus multiplied by a fraction, the numerator of which is the number of days in such fiscal year occurring during the Employment Period and the denominator of which is 365. Each amount payable in respect of the Executive's Annual Bonus shall be paid not later than the last day of March of the year next following the year for which the Annual Bonus (or pro-rated portion) is earned or awarded, unless electively deferred by the Executive pursuant to any deferral programs or arrangements that the Corporation may make available to the Executive, in which event such deferred amount shall be payable in accordance with the terms of such deferral program or arrangement. Neither the Annual Bonus nor any bonus amount paid in excess thereof after the Effective Date shall serve to limit or reduce any other obligation of the Corporation hereunder. (c) Incentive and Savings Plans and Retirement Programs. In addition --------------------------------------------------- to the Base Salary and Annual Bonus payable as hereinabove provided, during the Employment Period, the Executive shall be entitled to - 3 - participate in all incentive and savings plans and programs, including stock option plans and other equity based compensation plans, and in all retirement plans, on a basis providing him with the opportunity to receive compensation (without duplication of the amount payable as an Annual Bonus) and benefits equal to those provided by the Corporation to the Executive on an annualized basis under such plans and programs as in effect at any time during the 90-day period immediately preceding the Effective Date. (d) Benefit Plans. During the Employment Period, the Executive and his ------------- family shall be entitled to participate in or be covered under all welfare benefit plans and programs of the Corporation and its affiliated companies, including all medical, dental, disability, group life, accidental death and travel accident insurance plans and programs, as in effect at any time during the 90-day period immediately preceding the Effective Date. (e) Expenses. During the Employment Period, the Executive shall be -------- entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance with the policies and procedures of the Corporation as in effect at any time during the 90-day period immediately preceding the Effective Date. (f) Vacation and Fringe Benefits. During the Employment Period, the ---------------------------- Executive shall be entitled to paid vacation and fringe benefits in accordance with the policies of the Corporation as in effect at any time during the 90-day period immediately preceding the Effective Date. (g) Office and Support Staff. During the Employment Period, the ------------------------ Executive shall be entitled to an office or offices of a size and with furnishings and other appointments, and to secretarial and other assistance, at least equal to the most favorable of the foregoing provided to the Executive at any time during the 90-day period immediately preceding the Effective Date. 6. Termination. (a) Death, Disability or Retirement. Subject to the ----------- ------------------------------- provisions of Section 1 hereof, this Agreement shall terminate automatically upon the Executive's death or attainment of normal retirement age under the Corporation's retirement plans as in effect from time to time, provided that, after the Effective Date, the normal retirement age may not be lowered for purposes of this Agreement without the Executive's consent. The Corporation may terminate this Agreement, after having established the Executive's Disability, by giving the Executive written notice of its intention to terminate his employment, and his employment with the Corporation shall terminate effective on the 90th day after receipt of such notice if, within 90 days after such receipt, the Executive shall fail to return to full-time performance of his duties. For purposes of this Agreement, "Disability" means disability which, after the expiration of more than 26 weeks after its commencement, is determined to be total and permanent by a physician selected by the Corporation or its insurers and acceptable to the Executive or his legal representatives (such agreement to acceptability not to be withheld unreasonably). - 4 - (b) Voluntary Termination. Notwithstanding anything in this Agreement --------------------- to the contrary, the Executive may, upon not less than 30 days' written notice to the Corporation, voluntarily terminate employment during the Employment Period for any reason (including early retirement under the terms of the Corporation's retirement plan as in effect from time to time), provided that any termination by the Executive pursuant to Section 6(d) of this Agreement on account of Good Reason (as defined therein) shall not be treated as a voluntary termination under this Section 6(b). (c) Cause. The Corporation may terminate the Executive's employment ----- during the Employment Period for Cause. For purposes of this Agreement, "Cause" means (i) an act or acts of dishonesty or gross misconduct on the Executive's --- part which result or are intended to result in material damage to the Corporation's business or reputation or (ii) repeated material violations by the ---- Executive of his obligations under Section 4 of this Agreement which violations are demonstrably willful and deliberate on the Executive's part. (d) Good Reason. The Executive may terminate his employment during the ----------- Employment Period for Good Reason. For purposes of this Agreement, "Good Reason" means (i) a good faith determination by the Executive that, without his prior written consent, the Corporation or any of its officers has taken or failed to take any action (including, without limitation, (A) exclusion of the --- Executive from consideration of material matters within his area of responsibility, (B) statements or actions which undermine the Executive's --- authority with respect to persons under his supervision or reduce his standing with his peers, (C) a pattern of discrimination against or --- harassment of the Executive or persons under his supervision and (D) the --- subjection of the Executive to procedures not generally applicable to other similarly situated executives) which changes the Executive's position (including titles), authority or responsibilities under Section 4 of this Agreement or reduces the Executive's ability to carry out his duties and responsibilities under Section 4 of this Agreement; (ii) any failure by the Corporation to comply with any of the provisions of Section 5 of this Agreement, other than an insubstantial or inadvertent failure remedied by the Corporation promptly after receipt of notice thereof from the Executive; (iii) the Corporation's requiring the Executive to be employed at any location more than 50 miles further from his principal residence than the location at which the Executive was employed immediately preceding the Effective Date; or (iv) any failure by the Corporation to obtain the assumption of and agreement to perform this Agreement by a successor as contemplated by Section 14(b) of this Agreement, provided that the successor has had actual written notice of the existence of this Agreement and its terms and an opportunity to assume the Corporation's respon- - 5 - sibilities under this Agreement during a period of 10 business days after receipt of such notice. (e) Notice of Termination. Any termination by the Corporation for --------------------- Cause or by the Executive for Good Reason during the Employment Period shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 15(c) of this Agreement. For purposes of this Agreement, a "Notice of Termination" means a written notice given, in the case of a termination for Cause, within 10 business days of the Corporation's having actual knowledge of all of the events giving rise to such termination, and in the case of a termination for Good Reason, within 180 days of the Executive's having actual knowledge of the events giving rise to such termination, and which (i) indicates the specific termination provision in this Agreement relied upon, - --- (ii) sets forth in reasonable detail the facts and circumstances claimed to - ---- provide a basis for termination of the Executive's employment under the provision so indicated, and (iii) if the termination date is other than the date ----- of receipt of such notice, specifies the termination date of this Agreement (which date shall be not more than 15 days after the giving of such notice). The failure by the Executive to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason shall not waive any right of the Executive hereunder or preclude the Executive from asserting such fact or circumstance in enforcing his rights hereunder. (f) Date of Termination. For purposes of this Agreement, the term ------------------- "Date of Termination" means (i) in the case of a termination for which a Notice --- of Termination is required, the date of receipt of such Notice of Termination or, if later, the date specified therein and (ii) in all other cases, the actual date on which the Executive's employment terminates during the Employment Period. 7. Obligations of the Corporation upon Termination. (a) Death. If ----------------------------------------------- ------ the Executive's employment is terminated during the Employment Period by reason of the Executive's death, this Agreement shall terminate without further obligations to the Executive's legal representatives under this Agreement other than those obligations accrued hereunder at the date of his death, including, for this purpose (i) the Executive's full Base Salary through the Date of --- Termination, (ii) the product of the Annual Bonus and a fraction, the numerator ---- of which is the number of days in the current fiscal year of the Corporation through the Date of Termination, and the denominator of which is 365 (the "Pro- rated Bonus Obligation"), (iii) any compensation previously deferred by the ----- Executive (together with any accrued earnings thereon) and not yet paid by the Corporation and (iv) any other amounts or benefits owing to the Executive under ---- the then applicable employee benefit plans or policies of the Corporation (such amounts specified in clauses (i), (ii), (iii) and (iv) are hereinafter referred to as "Accrued Obligations"). Unless otherwise directed by the Executive (or, in the case of any employee benefit plan qualified (a "Qualified Plan") under Section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code"), as may be required by such plan), all such Accrued Obligations shall be paid to the Executive's legal representatives in a lump sum in cash within 30 days of the Date of Termination. Anything in this Agreement to the contrary notwithstanding, the Executive's family - 6 - shall be entitled to receive benefits at least equal to the most favorable level of benefits available to surviving families of executives of the Corporation and its affiliates under such plans, programs and policies relating to family death benefits, if any, of the Corporation and its affiliates in effect at any time during the 90-day period immediately preceding the Effective Date. (b) Disability. If the Executive's employment is terminated by reason ---------- of the Executive's Disability, the Executive shall be entitled, after the Date of Termination until the date when the Employment Period would otherwise have terminated, to continue to participate in or be covered under the benefit plans and programs referred to in Section 5(d) of this Agreement or, at the Corporation's option, to receive equivalent benefits by alternate means at least equal to those provided in accordance with Section 5(d) of this Agreement. Unless otherwise directed by the Executive (or, in the case of any Qualified Plan, as may be required by such plan), the Executive shall also be paid all Accrued Obligations in a lump sum in cash within 30 days of the Date of Termination. Anything in this Agreement to the contrary notwithstanding, the Executive shall be entitled to receive disability and other benefits at least equal to the most favorable level of benefits available to disabled employees and/or their families in accordance with the plans, programs and policies maintained by the Corporation or its affiliates relating to disability at any time during the 90-day period immediately preceding the Effective Date. (c) Cause and Voluntary Termination. If, during the Employment Period, ------------------------------- the Executive's employment shall be terminated for Cause or voluntarily terminated by the Executive (other than on account of Good Reason), the Corporation shall pay the Executive the Accrued Obligations other than the Pro- rated Bonus Obligation. Unless otherwise directed by the Executive (or, in the case of any Qualified Plan, as may be required by such plan), the Executive shall be paid all such Accrued Obligations in a lump sum in cash within 30 days of the Date of Termination and the Corporation shall have no further obligations to the Executive under this Agreement. (d) Termination by Corporation other than for Cause or Disability and ----------------------------------------------------------------- Termination by Executive for Good Reason. (i) Lump Sum Payment. If, during - ---------------------------------------- ---------------- the Employment Period, the Corporation terminates the Executive's employment other than for Cause or Disability, or the Executive terminates his employment for Good Reason, the Corporation shall pay to the Executive in a lump sum in cash within 15 days after the Date of Termination the aggregate of the following amounts: (A) if not theretofore paid, the Executive's Base Salary through the Date of Termination at the rate specified in Section 5(a) of this Agreement; (B) a cash amount equal to two times the sum of (1) the Executive's annual Base Salary at the rate specified in Section 5(a) of this Agreement; - 7 - (2) the Annual Bonus; and (3) the present value, calculated using the annual federal short- term rate as determined under Section 1274(d) of the Code, of (without duplication) (x) the annual cost to the Corporation (based on the --- premium rates or other costs to it) of obtaining coverage equivalent to the coverage under the plans and programs described in Section 5(d) of this Agreement, and (y) the annualized value of the fringe benefits --- described under Section 5(f) of this Agreement; provided, however, that in no event shall the Executive be entitled to receive under this clause (B) more than the product obtained by multiplying the amount determined under this clause by a fraction whose numerator shall be the number of months (including fractions of a month) which at the Date of Termination remain until the Executive's normal retirement date under the Corporation's retirement plan or any successor plan as in effect from time to time and whose denominator shall be 24, and provided further that, with respect to the life and medical insurance coverage referred to in Section 5(d) of this Agreement, at the Executive's election made prior to the Date of Termination, the Corporation shall use its best efforts to secure conversion coverage and shall pay the cost of such coverage in lieu of paying the lump sum amount attributable to such life or medical insurance coverage; and (C) a cash amount equal to any amounts (other than amounts payable to the Executive under any Qualified Plans) described in Sections 7(a)(iii) and (iv) of this Agreement. (ii) Discharge of Corporation's Obligations. Subject to the performance -------------------------------------- of its obligations under this Section 7(d), the Corporation shall have no further obligations to the Executive in respect of any termination by the Executive for Good Reason or by the Corporation other than for Cause or Disability, except to the extent expressly provided under any of the plans referred to in Section 5(c) or 5(d) of this Agreement. 8. Non-exclusivity of Rights. Nothing in this Agreement shall prevent ------------------------- or limit the Executive's continuing or future participation in any benefit, bonus, incentive or other plan or program provided by the Corporation or any of its affiliated companies and for which the Executive may qualify, nor shall anything herein limit or otherwise prejudice such rights as the Executive may have under any stock option or other plans or agreements with the Corporation or any of its affiliated companies. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan or program of the Corporation or any of its affiliated companies at or subsequent to the Date of Termination shall be payable in accordance with such plan or program. - 8 - 9. Certain Additional Payments by the Corporation. ---------------------------------------------- (a) Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment or distribution by the Corporation to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, but determined without regard to any additional payments required under this Section 9) (a "Payment") would be subject to the excise tax imposed by Section 4999 of the Code (or any successor provision) or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then the Executive shall be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after payment by the Executive of all taxes with respect to the Gross-Up Payment (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. (b) Subject to the provisions of Section 9(c), all determinations required to be made under this Section 9, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by KPMG Peat Marwick or other firm then auditing the accounts of the Corporation (the "Accounting Firm") which shall provide detailed supporting calculations both to the Corporation and the Executive within 15 business days of the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by the Corporation. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, or is unwilling or unable to perform its obligations pursuant to this Section 9, the Executive shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Corporation. Any Gross-Up Payment, determined pursuant to this Section 9, shall be paid by the Corporation to the Executive within five days of the receipt of the Accounting Firm's determination. Any determination by the Accounting Firm shall be binding upon the Corporation and the Executive. As a result of the potential uncertainty in the application of Section 4999 of the Code (or any successor provision) at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Corporation should have been made ("Underpayment"), consistent with the calculations required to be made hereunder. In the event that the Corporation exhausts its remedies pursuant to Section 9(c) and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Corporation to or for the benefit of the Executive. - 9 - (c) The Executive shall notify the Corporation in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Corporation of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than 10 business days after the Executive is informed in writing of such claim and shall apprise the Corporation of the nature of such claim and the date on which such claim is requested to be paid. the Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which he gives such notice to the Corporation (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Corporation notifies the Executive in writing prior to the expiration of such period that it desires to contest such claim, the Executive shall: (i) give the Corporation any information reasonably requested by the Corporation relating to such claim, (ii) take such action in connection with contesting such claim as the Corporation shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Corporation, (iii) cooperate with the Corporation in good faith in order effectively to contest such claim, and (iv) permit the Corporation to participate in any proceedings relating to such claim; provided, however, that the Corporation shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on a after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limiting the foregoing provisions of this Section 9(c), the Corporation shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Corporation shall determine; provided, however, that if the Corporation directs the Executive to pay such claim and sue for a refund, the Corporation shall advance the amount of such payment to the Executive, on an interest-free basis, and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect - 10 - to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statue of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Corporation's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority. (d) If, after the receipt by the Executive of an amount advanced by the Corporation pursuant to Section 9(c), the Executive becomes entitled to receive any refund with respect to such claim, the Executive shall (subject to the Corporation's complying with the requirements of Section 9(c)) promptly pay to the Corporation the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Executive of an amount advanced by the Corporation pursuant to Section 9(c), a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Corporation does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid. 10. Full Settlement. The Corporation's obligation to make the payments --------------- provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Corporation may have against the Executive or others whether by reason of the subsequent employment of the Executive or otherwise. In no event shall the Executive be obligated to seek other employment by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement, and no amount payable under this Agreement shall be reduced on account of any compensation received by the Executive from other employment. In the event that the Executive shall in good faith give a Notice of Termination for Good Reason and it shall thereafter be determined by mutual consent of the Executive and the Corporation or by a tribunal having jurisdiction over the matter that Good Reason did not exist, the employment of the Executive shall, unless the Corporation and the Executive shall otherwise mutually agree, be deemed to have terminated, at the date of giving such purported Notice of Termination, by mutual consent of the Corporation and the Executive and, except as provided in the last preceding sentence, the Executive shall be entitled to receive only those payments and benefits which he would have been entitled to receive at such date otherwise than under this Agreement. 11. Legal Fees and Expenses. In the event that a claim for payment of ----------------------- benefits under this Agreement is disputed, the Corporation shall pay all reasonable legal fees and expenses incurred by the Executive in pursuing such claim, provided that the Executive is successful as to at - 11 - least part of the disputed claim by reason of litigation, arbitration or settlement. 12. Confidential Information. The Executive shall hold in a fiduciary ------------------------ capacity for the benefit of the Corporation all secret or confidential information, knowledge or data relating to the Corporation or any of its affiliated companies, and their respective businesses, (i) obtained by the --- Executive during his employment by the Corporation or any of its affiliated companies and (ii) not otherwise public knowledge (other than by reason of an ---- unauthorized act by the Executive). After termination of the Executive's employment with the Corporation, the Executive shall not, without the prior written consent of the Corporation, unless compelled pursuant to an order of a court or other body having jurisdiction over such matter, communicate or divulge any such information, knowledge or data to anyone other than the Corporation and those designated by it. In no event shall an asserted violation of the provisions of this Section 12 constitute a basis for deferring or withholding any amounts otherwise payable to the Executive under this Agreement. 13. Employment Contract or Severance Benefits. Notwithstanding ----------------------------------------- anything else in this Agreement to the contrary, any amount payable to the Executive hereunder on account of his termination of employment shall be reduced on a dollar for dollar basis by each dollar actually paid to the Executive with respect to such termination under the terms of any employment contract between the Executive and the Corporation or under any severance program or policy applicable to the Executive. Nothing in this Agreement shall be construed to require duplication of any compensation, benefits or other entitlements provided to the Executive by the Corporation under the terms of any employment contract which may address similar matters. 14. Successors. (a) This Agreement is personal to the Executive and, ---------- without the prior written consent of the Corporation, shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives. (b) This Agreement shall inure to the benefit of and be binding upon the Corporation and its successors. The Corporation shall require any successor to all or substantially all of the business and/or assets of the Corporation, whether direct or indirect, by purchase, merger, consolidation, acquisition of stock, or otherwise, by an agreement in form and substance satisfactory to the Executive, expressly to assume and agree to perform this Agreement in the same manner and to the same extent as the Corporation would be required to perform if no such succession had taken place. 15. Miscellaneous. (a) Applicable Law. This Agreement shall be ------------- -------------- governed by and construed in accordance with the laws of the State of Delaware, applied without reference to principles of conflict of laws. - 12 - (b) Amendments. This Agreement may not be amended or modified ---------- otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives. (c) Notices. All notices and other communications hereunder shall be ------- in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to the Executive: at the address listed below If to the Corporation: Tambrands Inc. 777 Westchester Avenue White Plains, New York 10604 Attention: Secretary (with a copy to the attention of the General Counsel) or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notices and communications shall be effective when actually received by the addressee. (d) Tax Withholding. The Corporation may withhold from any amounts --------------- payable under this Agreement such Federal, State or local taxes as shall be required to be withheld pursuant to any applicable law or regulation. (e) Severability. The invalidity or unenforceability of any provision ------------ of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. (f) Captions. The captions of this Agreement are not part of the -------- provisions hereof and shall have no force or effect. IN WITNESS WHEREOF, the Executive has hereunto set his hand and the Corporation has caused this Agreement to be executed in its name on its behalf, and its corporate seal to be hereunto affixed and attested by its Corporate Counsel, all as of the day and year first above written. - 13 - ATTEST: TAMBRANDS INC. /s/ Jonathan W. Emery By /s/ Edward T. Fogarty - ------------------------- ------------------------------- Corporate Counsel Title: President and Chief Executive Officer (Seal) EXECUTIVE: Susan J. Riley /s/ Susan J. Riley ------------------------------ Address: Tambrands Inc. 777 Westchester Avenue White Plains, New York 10604 - 14 - EX-10.21.E 10 AMENDMENT NO. 2 TO THE AMENDED AND RESTATED CREDIT EXHIBIT 10(21)(e) AMENDMENT NO. 2 --------------- AMENDMENT NO. 2 (this "Amendment"), dated as of December 13, 1996, to the --------- Amended and Restated Credit Agreement, dated as of September 6, 1994, among Tambrands Inc. (the "Company"), Tambrands Limited, the Lenders party thereto ------- (the "Lenders") and The Bank of New York, as agent (the "Agent"), as amended by ------- ----- Amendment No. 1, dated as of May 5, 1995 (the "Agreement"). --------- RECITALS -------- 1. Capitalized terms used herein that are not herein defined shall have the meanings ascribed thereto by the Agreement. 2. The Borrowers have requested that the Agreement be amended as set forth herein. The Agent is willing to amend the Agreement upon the terms and conditions herein contained. Therefore, in consideration of the RECITALS and the terms and conditions herein contained, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Borrowers and the Agent hereby agree that the Agreement be amended in the following respects: 3. Paragraph 1.1 is amended to add the following definitions thereto in their appropriate alphabetic order: "Intercompany Indebtedness": Indebtedness of a Subsidiary of the Company ------------------------- due to the Company or to another Subsidiary of the Company. "MTN Notes": the Medium-Term Notes of the Company issued under the --------- Indenture, dated as of December 1, 1993, between the Company and Citibank, N.A., as Trustee, as amended or supplemented from time to time. "MTN Notes Guaranties": the Guaranties (contained in the First Supplemental -------------------- Indenture referred to below) by each of the Transferee Subsidiaries of the payment of the MTN Notes outstanding at the time of the execution and delivery of the First Supplemental Indenture, dated as of December 31, 1996, among the Company, the Transferee Subsidiaries and Citibank, N.A., as Trustee. "Transferee Subsidiaries": each of Tampax Corporation, a Delaware ----------------------- corporation and a wholly-owned Subsidiary of the Company ("Tampax") and ------ Tambrands Mfg., Inc. and Tambrands Sales Corp., each a Delaware corporation and each a wholly-owned Subsidiary of Tampax, and indirectly, of the Company. 4. Paragraph 8.3 is amended in its entirety to read as follows: 8.3 Sale of Assets. -------------- Sell, assign, exchange, lease, transfer or otherwise dispose of, or enter into sales and leasebacks with respect to, any of its assets (other than Margin Stock), other than in the ordinary course of business, or permit any of its Subsidiaries so to do, in an aggregate amount, on and after the Effective Date, in excess of 15% of its Consolidated assets (determined in accordance with GAAP), such assets to be valued at book value, provided, however, that the foregoing shall not prohibit (i) the Company from selling or transferring any of its assets to Transferee Subsidiaries, or (ii) a Transferee Subsidiary from selling or transferring any of its assets to the Company or to another Transferee Subsidiary. 5. Paragraph 8.7 is amended in its entirety to read as follows: "8.7 Contingent Obligations. ---------------------- Create, incur, assume or suffer to exist any Contingent Obligation, or permit any Subsidiary so to do, if, after giving effect thereto, the aggregate amount of all Contingent Obligations (other than the MTN Notes Guaranties) of the Company and its Subsidiaries (determined in accordance with GAAP) would exceed $10,000,000 or, except with respect to the MTN Notes Guaranties, permit any Transferee Subsidiary to create, incur, assume or suffer to exist any Contingent Obligation." 6. The following paragraph is added to the Agreement immediately after paragraph 8.7: "8.8 Indebtedness of Transferee Subsidiaries. --------------------------------------- Permit any Transferee Subsidiary to create, incur, assume or suffer to exist any Indebtedness (other than Intercompany Indebtedness) if, after giving effect thereto, the aggregate amount of all Indebtedness (other than Intercompany Indebtedness) of all Transferee Subsidiaries would exceed $10,000,000." -2- 7. This Amendment shall not be effective until such time (the "Amendment --------- No. 2 Effective Date") as each of the following conditions has been fulfilled: - -------------------- (i) The Agent shall have received an original of this Amendment (i) executed by a duly authorized officer or officers of each of the Borrowers, and (ii) consented to by the Required Lenders. (ii) On and as of the Amendment No. 2 Effective Date, no Default or Event of Default shall have occurred or be continuing. (iii) The MTN Notes Guaranties shall be in substantially the form attached to this Amendment. 8. The Borrowers reaffirm and admit the validity and enforceability of the Loan Documents and all of their obligations thereunder, agree and admit that they have no defenses to or offsets against any of their obligations to the Lenders or the Agent under the Loan Documents, and represent and warrant that there exists no Default or Event of Default, and that the representations and warranties contained in the Agreement are true and correct on and as of the date hereof, except such thereof as relate solely to an earlier date. 9. Except as amended hereby, the Loan Documents shall remain in full force and effect, and no amendment of any term or condition of the Agreement herein contained shall be deemed to be an amendment of any other term or condition contained in the Agreement or any other Loan Document or constitute a waiver of any Default or Event of Default. 10. This Amendment may be executed in any number of counterparts all of which, taken together, shall constitute one Amendment. In making proof of this Amendment, it shall only be necessary to produce the counterpart executed and delivered by the party to be charged. 11. THIS AMENDMENT IS BEING EXECUTED AND DELIVERED IN, AND IS INTENDED TO BE PERFORMED IN, THE STATE OF NEW YORK AND SHALL BE CONSTRUED AND ENFORCEABLE IN ACCORDANCE WITH, AND BE GOVERNED BY, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS. -3- The Borrowers and the Agent have caused this Amendment No. 2 to be duly executed as of the date first above written. TAMBRANDS INC. By: /s/ Susan J. Riley ------------------ Title: Senior Vice President - Chief Financial Officer ----------------------- TAMBRANDS LIMITED By: /s/ Seth E. Herbert -------------------- Title: Director ------------------- THE BANK OF NEW YORK, Individually and as Agent By /s/ Georgia M. Pan-Kita ----------------------- Title: Assistant Vice President ------------------------ Each of the Lenders hereby consents to the execution and delivery of this Amendment by the Agent: BANK BRUSSELS LAMBERT, NEW YORK BRANCH -4- By: /s/ Ann E. Hardy ---------------- Title: Assistant Vice President ------------------------- By: /s/ Dominick Vangaever ---------------------- Title: Senior Vice President - Credit ------------------------------ CITIBANK, N.A. By: /s/ William G. Martens III -------------------------- Title: Attorney-in-Fact ------------------- NATIONAL WESTMINSTER BANK plc By: / s/ Grey Stoehle ----------------- Title: Vice President ---------------- ROYAL BANK OF CANADA By /s/ Sheryl H. Greenberg ------------------------ Title: Manager ---------------------- FLEET NATIONAL BANK By: /s/ D.E. Bambach ---------------- Title: Senior Vice President --------------------- -5- FORM OF MTN NOTES GUARANTIES ---------------------------- SECTION 1 Each of Tampax, Manufacturing and Sales hereby expressly agrees to be unconditionally bound by the terms and provisions of the Guarantee set forth below: For value received, each of TAMPAX CORPORATION ("Tampax"), TAMBRANDS MFG. INC. ("Manufacturing") and TAMBRANDS SALES CORP. ("Sales") (each, a "Guarantor" and, collectively, the "Guarantors"), hereby, jointly and severally, unconditionally guarantees to the Holders of Securities Outstanding at the time of the execution and delivery of the First Supplemental Indenture dated as of December 31, 1996 among the Company, Tampax, Manufacturing, Sales and the Trustee (i) the due and punctual payment of the principal of, premium, if any, and interest on such Securities, when and as the same shall become due and payable, whether at the Stated Maturity, by declaration of acceleration, call for redemption or otherwise, according to the terms thereof and of the Indenture referred to therein, and (ii) the performance or observance of every covenant of the Company under the Indenture. In case of the failure of the Company punctually to make any such payment of principal, premium, if any, or interest, the Guarantors, jointly and severally, hereby agree to cause any such payment to be made punctually when and as the same shall become due and payable, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise, and as if such payment were made by the Company. Each Guarantor hereby agrees that its obligations hereunder shall be as if it were the principal debtor and not merely surety, shall be joint and several with each of the other Guarantors, and shall be absolute and unconditional, irrespective of, and shall be unaffected by, any invalidity, irregularity or unenforceability of such Securities or such Indenture, any failure to enforce the provisions of such Securities or such Indenture, or any waiver, modification or indulgence granted to the Company with respect thereto, by the holder of such Securities hereof or the Trustee or any other circumstance which may otherwise constitute a legal or equitable discharge of a surety or guarantor; provided, however, that, notwithstanding the foregoing, no such waiver, modification or indulgence shall, without the consent of the Guarantors, increase the principal amount of such Securities, change the redemption terms of such Securities or alter the Stated Maturity thereof. The Guarantors hereby waive diligence, presentment, demand of payment, filing of claims with a court in the event of merger or bankruptcy of the Company, any right to require a proceeding first against the Company, protest or notice with respect to such Security or the indebtedness evidenced thereby and all demands whatsoever, and covenant that this Guarantee will not be discharged except by strict and complete performance of the obligations contained in such Securities and this Guarantee. -6- The Guarantors shall be subrogated to all rights of the Holders of such Securities and the Trustee against the Company in respect of any amounts paid to such Holder by the Guarantors pursuant to the provisions of this Guarantee; provided, however, that the Guarantors shall not be entitled to enforce, or to receive any payments arising out of or based upon, such right of subrogation until the principal of, premium if any, and interest on all Securities issued under such Indenture and Outstanding on the date hereof shall have been paid in full. The guarantee set forth above shall be enforceable by the Holders of the Securities to which it applies whether or not such guarantee is endorsed upon or attached to such Securities. -7- EX-12 11 COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES EXHIBIT 12 TAMBRANDS INC. FORM 10-K PART IV, ITEM 14., EXHIBIT 12 COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES The following table sets forth the Company's ratio of earnings to fixed charges for the periods indicated. Year Ended (in thousands, except ratios) ----------------------------------------------- 1996 1995 1994 1993 1992 Earnings: Income before income taxes $83,325 $139,335 $141,751 $118,652 $191,863 Fixed charges 10,817 10,866 9,054 6,549 6,470 ----------------------------------------------- EARNINGS $94,142 $150,201 $150,805 $125,201 $198,333 =============================================== Fixed charges: Interest portion of operating lease expense: Operating lease expense $4,649 $5,029 $4,270 $5,027 $4,031 Assumed interest factor 0.33 0.33 0.33 0.33 0.33 ----------------------------------------------- Interest portion of operating lease expense 1,534 1,660 1,409 1,659 1,330 Interest expense 9,283 9,206 7,645 4,890 5,140 ----------------------------------------------- FIXED CHARGES $10,817 $10,866 $9,054 $6,549 $6,470 =============================================== RATIO OF EARNINGS TO FIXED CHARGES 8.7 13.8 16.7 19.1 30.7 =============================================== EX-21 12 SUBSIDIARIES OF THE REGISTRANT EXHIBIT 21 TAMBRANDS INC. Subsidiaries of the registrant. - -------------------------------
(1) (2) (3) Percentage of Voting Securities Owned --------------------------- State or Country By the By Other Name of Subsidiary of Organization Company Subsidiaries - ------------------ ---------------- ------- ------------- Tampax Corporation Delaware 100% Tambrands Sales Corp. Delaware 100% (a) Tambrands Mfg. Inc. Delaware 100% (a) TIM International Delaware 100% Investments Incorporated Tambrands PACE, Inc. Delaware 100% Tambrands Limited United Kingdom 100% (a) Shenyang Tambrands People's Republic 80% Company Limited of China Tambrands Dosmil, S.A. de C.V. Mexico 100% (b) Tambrands de Venezuela, C.A. Venezuela 100% (c) Tambrands Industria e Brazil 99% (d) Comercio Limitada Tambrands AG Switzerland 100% (a) Tambrands Canada Inc. Canada 100% (a) Tambrands spol. s.r.o. Czech Republic 100% (c) Tambrands France S.A. France 100% (a) Tambrands Ireland Limited Ireland 100% (e) ZAO Tambrands Russia 100% (a)
(1) (2) (3) Percentage of Voting Securities Owned --------------------------- State or Country By the By Other Name of Subsidiary of Organization Company Subsidiaries - ------------------ ---------------- ------- ------------- Tambrands Polska Sp. z o.o. Poland 100% (c) Industrial Catenation South Africa 100% (a) Services (Pty) Ltd. Tambrands South Africa South Africa 100% (f) (Pty) Ltd. Tambrands Ukraine Ukraine 100% (g)
Notes: (a) Owned by Tampax Corporation. (b) Owned by TIM International Investments Incorporated. (c) Owned by Tambrands PACE, Inc. (d) Owned by the Company in part directly and in part indirectly through Tampax Corporation. (e) Owned by Tambrands Limited. (f) Owned by Industrial Catenation Services (Pty) Ltd. (g) Owned by Tambrands Limited and Tambrands PACE, Inc. EX-23 13 CONSENT OF KPMG PEAT MARWICK LLP EXHIBIT 23 INDEPENDENT AUDITORS' CONSENT The Board of Directors Tambrands Inc.: We consent to incorporation by reference in the Registration Statement No. 33- 50961 on Form S-3 and Nos. 2-77947, 33-13902, 33-36746, 33-40161, 33-43713, 33- 50398 and 33-64269 on Form S-8 of Tambrands Inc. of our reports dated January 23, 1997, relating to the consolidated balance sheets of Tambrands Inc. and subsidiaries as of December 31, 1996 and 1995, and the related consolidated statements of earnings, and cash flows for each of the years in the three-year period ended December 31, 1996, and the related schedule, which reports appear in the December 31, 1996 annual report on Form 10-K of Tambrands Inc. KPMG Peat Marwick LLP /s/ KPMG Peat Marwick LLP Stamford, Connecticut March 28, 1997 EX-24 14 POWERS OF ATTORNEY EXHIBIT 24 POWER OF ATTORNEY ----------------- KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby make, constitute and appoint Edward T. Fogarty and Howard B. Wentz, Jr., and each of them, with full power to act without the other, the true and lawful attorney of the undersigned, in the name, place and stead of the undersigned to execute on behalf of the undersigned, as Director of Tambrands Inc., the Annual Report on Form 10-K for the year ended December 31, 1996 of Tambrands Inc., and any and all amendments thereto, to be filed with the Securities and Exchange Commission ("SEC") pursuant to the Securities Exchange Act of 1934, as amended ("Act"), and any and all other instruments which either of said attorneys deems necessary or advisable to enable Tambrands Inc. to comply with the Act, the rules, regulations and requirements of the SEC in respect thereof, and the securities or Blue Sky laws of any State or other governmental subdivision, giving and granting to each of said attorneys full power and authority to do and perform each and every act and thing whatsoever necessary or appropriate to be done in and about the premises as fully to all intents as the undersigned might or would do if personally present at the doing thereof, with full power of substitution and revocation, thereby ratifying and confirming all that said attorneys or substitutes may or shall lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunto executed this power of attorney on the date indicated below. /s/LILYAN H. AFFINITO _______________________ Lilyan H. Affinito Dated: March 12, 1997 POWER OF ATTORNEY ----------------- KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby make, constitute and appoint Edward T. Fogarty and Howard B. Wentz, Jr., and each of them, with full power to act without the other, the true and lawful attorney of the undersigned, in the name, place and stead of the undersigned to execute on behalf of the undersigned, as Director of Tambrands Inc., the Annual Report on Form 10-K for the year ended December 31, 1996 of Tambrands Inc., and any and all amendments thereto, to be filed with the Securities and Exchange Commission ("SEC") pursuant to the Securities Exchange Act of 1934, as amended ("Act"), and any and all other instruments which either of said attorneys deems necessary or advisable to enable Tambrands Inc. to comply with the Act, the rules, regulations and requirements of the SEC in respect thereof, and the securities or Blue Sky laws of any State or other governmental subdivision, giving and granting to each of said attorneys full power and authority to do and perform each and every act and thing whatsoever necessary or appropriate to be done in and about the premises as fully to all intents as the undersigned might or would do if personally present at the doing thereof, with full power of substitution and revocation, thereby ratifying and confirming all that said attorneys or substitutes may or shall lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunto executed this power of attorney on the date indicated below. /s/ANNE M. BUSQUET _____________________ Anne M. Busquet Dated: March 12, 1997 POWER OF ATTORNEY ----------------- KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby make, constitute and appoint Edward T. Fogarty and Howard B. Wentz, Jr., and each of them, with full power to act without the other, the true and lawful attorney of the undersigned, in the name, place and stead of the undersigned to execute on behalf of the undersigned, as Director of Tambrands Inc., the Annual Report on Form 10-K for the year ended December 31, 1996 of Tambrands Inc., and any and all amendments thereto, to be filed with the Securities and Exchange Commission ("SEC") pursuant to the Securities Exchange Act of 1934, as amended ("Act"), and any and all other instruments which either of said attorneys deems necessary or advisable to enable Tambrands Inc. to comply with the Act, the rules, regulations and requirements of the SEC in respect thereof, and the securities or Blue Sky laws of any State or other governmental subdivision, giving and granting to each of said attorneys full power and authority to do and perform each and every act and thing whatsoever necessary or appropriate to be done in and about the premises as fully to all intents as the undersigned might or would do if personally present at the doing thereof, with full power of substitution and revocation, thereby ratifying and confirming all that said attorneys or substitutes may or shall lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunto executed this power of attorney on the date indicated below. /s/ PAUL S. DOHERTY _________________________ Paul S. Doherty Dated: March 12, 1997 POWER OF ATTORNEY ----------------- KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby make, constitute and appoint Edward T. Fogarty and Howard B. Wentz, Jr., and each of them, with full power to act without the other, the true and lawful attorney of the undersigned, in the name, place and stead of the undersigned to execute on behalf of the undersigned, as Director of Tambrands Inc., the Annual Report on Form 10-K for the year ended December 31, 1996 of Tambrands Inc., and any and all amendments thereto, to be filed with the Securities and Exchange Commission ("SEC") pursuant to the Securities Exchange Act of 1934, as amended ("Act"), and any and all other instruments which either of said attorneys deems necessary or advisable to enable Tambrands Inc. to comply with the Act, the rules, regulations and requirements of the SEC in respect thereof, and the securities or Blue Sky laws of any State or other governmental subdivision, giving and granting to each of said attorneys full power and authority to do and perform each and every act and thing whatsoever necessary or appropriate to be done in and about the premises as fully to all intents as the undersigned might or would do if personally present at the doing thereof, with full power of substitution and revocation, thereby ratifying and confirming all that said attorneys or substitutes may or shall lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunto executed this power of attorney on the date indicated below. /s/JANET HILL __________________________ Janet Hill Dated: March 12, 1997 POWER OF ATTORNEY ----------------- KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby make, constitute and appoint Edward T. Fogarty and Howard B. Wentz, Jr., and each of them, with full power to act without the other, the true and lawful attorney of the undersigned, in the name, place and stead of the undersigned to execute on behalf of the undersigned, as Director of Tambrands Inc., the Annual Report on Form 10-K for the year ended December 31, 1996 of Tambrands Inc., and any and all amendments thereto, to be filed with the Securities and Exchange Commission ("SEC") pursuant to the Securities Exchange Act of 1934, as amended ("Act"), and any and all other instruments which either of said attorneys deems necessary or advisable to enable Tambrands Inc. to comply with the Act, the rules, regulations and requirements of the SEC in respect thereof, and the securities or Blue Sky laws of any State or other governmental subdivision, giving and granting to each of said attorneys full power and authority to do and perform each and every act and thing whatsoever necessary or appropriate to be done in and about the premises as fully to all intents as the undersigned might or would do if personally present at the doing thereof, with full power of substitution and revocation, thereby ratifying and confirming all that said attorneys or substitutes may or shall lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunto executed this power of attorney on the date indicated below. /s/ROBERT P. KILEY _________________________ Robert P. Kiley Dated: March 12, 1997 POWER OF ATTORNEY ----------------- KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby make, constitute and appoint Edward T. Fogarty and Howard B. Wentz, Jr., and each of them, with full power to act without the other, the true and lawful attorney of the undersigned, in the name, place and stead of the undersigned to execute on behalf of the undersigned, as Director of Tambrands Inc., the Annual Report on Form 10-K for the year ended December 31, 1996 of Tambrands Inc., and any and all amendments thereto, to be filed with the Securities and Exchange Commission ("SEC") pursuant to the Securities Exchange Act of 1934, as amended ("Act"), and any and all other instruments which either of said attorneys deems necessary or advisable to enable Tambrands Inc. to comply with the Act, the rules, regulations and requirements of the SEC in respect thereof, and the securities or Blue Sky laws of any State or other governmental subdivision, giving and granting to each of said attorneys full power and authority to do and perform each and every act and thing whatsoever necessary or appropriate to be done in and about the premises as fully to all intents as the undersigned might or would do if personally present at the doing thereof, with full power of substitution and revocation, thereby ratifying and confirming all that said attorneys or substitutes may or shall lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunto executed this power of attorney on the date indicated below. /s/JOHN LOUDON _________________________ John Loudon Dated: March 12, 1997 POWER OF ATTORNEY ----------------- KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby make, constitute and appoint Edward T. Fogarty and Howard B. Wentz, Jr., and each of them, with full power to act without the other, the true and lawful attorney of the undersigned, in the name, place and stead of the undersigned to execute on behalf of the undersigned, as Director of Tambrands Inc., the Annual Report on Form 10-K for the year ended December 31, 1996 of Tambrands Inc., and any and all amendments thereto, to be filed with the Securities and Exchange Commission ("SEC") pursuant to the Securities Exchange Act of 1934, as amended ("Act"), and any and all other instruments which either of said attorneys deems necessary or advisable to enable Tambrands Inc. to comply with the Act, the rules, regulations and requirements of the SEC in respect thereof, and the securities or Blue Sky laws of any State or other governmental subdivision, giving and granting to each of said attorneys full power and authority to do and perform each and every act and thing whatsoever necessary or appropriate to be done in and about the premises as fully to all intents as the undersigned might or would do if personally present at the doing thereof, with full power of substitution and revocation, thereby ratifying and confirming all that said attorneys or substitutes may or shall lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunto executed this power of attorney on the date indicated below. /s/RUTH M. MANTON ___________________________ Ruth M. Manton Dated: March 12, 1997 POWER OF ATTORNEY ----------------- KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby make, constitute and appoint Edward T. Fogarty and Howard B. Wentz, Jr., and each of them, with full power to act without the other, the true and lawful attorney of the undersigned, in the name, place and stead of the undersigned to execute on behalf of the undersigned, as Director of Tambrands Inc., the Annual Report on Form 10-K for the year ended December 31, 1996 of Tambrands Inc., and any and all amendments thereto, to be filed with the Securities and Exchange Commission ("SEC") pursuant to the Securities Exchange Act of 1934, as amended ("Act"), and any and all other instruments which either of said attorneys deems necessary or advisable to enable Tambrands Inc. to comply with the Act, the rules, regulations and requirements of the SEC in respect thereof, and the securities or Blue Sky laws of any State or other governmental subdivision, giving and granting to each of said attorneys full power and authority to do and perform each and every act and thing whatsoever necessary or appropriate to be done in and about the premises as fully to all intents as the undersigned might or would do if personally present at the doing thereof, with full power of substitution and revocation, thereby ratifying and confirming all that said attorneys or substitutes may or shall lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunto executed this power of attorney on the date indicated below. /s/JOHN A. MEYERS ___________________________ John A. Meyers Dated: March 12, 1997 POWER OF ATTORNEY ----------------- KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby make, constitute and appoint Edward T. Fogarty and Howard B. Wentz, Jr., and each of them, with full power to act without the other, the true and lawful attorney of the undersigned, in the name, place and stead of the undersigned to execute on behalf of the undersigned, as Director of Tambrands Inc., the Annual Report on Form 10-K for the year ended December 31, 1996 of Tambrands Inc., and any and all amendments thereto, to be filed with the Securities and Exchange Commission ("SEC") pursuant to the Securities Exchange Act of 1934, as amended ("Act"), and any and all other instruments which either of said attorneys deems necessary or advisable to enable Tambrands Inc. to comply with the Act, the rules, regulations and requirements of the SEC in respect thereof, and the securities or Blue Sky laws of any State or other governmental subdivision, giving and granting to each of said attorneys full power and authority to do and perform each and every act and thing whatsoever necessary or appropriate to be done in and about the premises as fully to all intents as the undersigned might or would do if personally present at the doing thereof, with full power of substitution and revocation, thereby ratifying and confirming all that said attorneys or substitutes may or shall lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunto executed this power of attorney on the date indicated below. /s/H.L. TOWER ______________________________ H.L. Tower Dated: March 12, 1997 POWER OF ATTORNEY ----------------- KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby make, constitute and appoint Edward T. Fogarty and Howard B. Wentz, Jr., and each of them, with full power to act without the other, the true and lawful attorney of the undersigned, in the name, place and stead of the undersigned to execute on behalf of the undersigned, as Director of Tambrands Inc., the Annual Report on Form 10-K for the year ended December 31, 1996 of Tambrands Inc., and any and all amendments thereto, to be filed with the Securities and Exchange Commission ("SEC") pursuant to the Securities Exchange Act of 1934, as amended ("Act"), and any and all other instruments which either of said attorneys deems necessary or advisable to enable Tambrands Inc. to comply with the Act, the rules, regulations and requirements of the SEC in respect thereof, and the securities or Blue Sky laws of any State or other governmental subdivision, giving and granting to each of said attorneys full power and authority to do and perform each and every act and thing whatsoever necessary or appropriate to be done in and about the premises as fully to all intents as the undersigned might or would do if personally present at the doing thereof, with full power of substitution and revocation, thereby ratifying and confirming all that said attorneys or substitutes may or shall lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunto executed this power of attorney on the date indicated below. /s/ROBERT M. WILLIAMS ____________________________ Robert M. Williams Dated: March 12, 1997 EX-27 15 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FULL YEAR 10K 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS YEAR DEC-31-1996 DEC-31-1996 OCT-01-1996 JAN-01-1996 DEC-31-1996 DEC-31-1996 11,554 11,554 0 0 101,161 101,161 (1,776) (1,776) 40,331 40,331 196,596 196,596 354,742 354,742 (147,103) (147,103) 409,996 409,966 215,762 215,762 69,205 69,205 10,887 10,887 0 0 0 0 83,801 83,801 409,966 409,966 156,692 662,112 156,692 662,112 55,777 226,348 55,777 226,348 0 0 288 288 (2,379) (8,949) 37,409 83,325 13,503 37,522 23,906 45,803 0 0 0 0 0 0 23,906 45,803 0.65 1.24 0.65 1.24
-----END PRIVACY-ENHANCED MESSAGE-----